Lincoln Educational Services Corporation (NASDAQ:LINC) Q1 2023 Earnings Call Transcript May 8, 2023

Operator: Good day and thank you for standing by. Welcome to the Q1 2023 Lincoln Educational Services Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised, that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Michael Polyviou. Please go ahead.

Michael Polyviou: Thank you, Latonia, and good morning, everyone. Before the market opened today, Lincoln Educational Services issued its news release reporting financial results for the first quarter ended March 31, 2023. The release is available on the Investor Relations portion of the company’s corporate website at www.lincolntech.edu. Joining us today on the call are Scott Shaw, President and CEO; and Brian Meyers, Chief Financial Officer. Today’s call is being broadcast live on the company’s website and replay of the call will be archived on the company’s website. Statements made by Lincoln’s management on today’s call regarding the company’s business that are not historical facts may be forward-looking statements as the term is identified in federal securities laws.

The words may, will, expect, believe, anticipate, project, plan, intend, estimate and continue as well as similar expressions are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results. The company cautions you that these statements reflect current expectations about the company’s future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond the company’s control that may influence the accuracy of the statements and the projections upon which the segment and statements are based. Factors that may affect the company’s results include, but are not limited to, the risks and uncertainties discussed in the Risk Factors section of the annual report on Form 10-K and the quarterly report on Form 10-Q filed with the Securities and Exchange Commission.

Forward-looking statements are based on the information available at the time those statements are made in management’s good faith belief as of the time with respect to the future events. All forward-looking statements are qualified in their entirety by this cautionary statement, and Lincoln undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events or otherwise after the date thereof. Now, I’ll hand the call over to Scott Shaw, President and CEO of Lincoln Educational Services. Scott, please go ahead.

Scott Shaw: Thank you, Michael, and welcome everyone. We had a great start to 2023 with revenue growing nearly 7% starts from ongoing campuses growing 6.4% and adjusted EBITDA from those campuses growing more than 15%. We continue to make good progress on our key growth initiatives, including implementing our hybrid teaching model, centralizing our financial aid application process, launching 10 new programs at our existing campuses and developing our newest campus in the Atlanta area. The progress we made with starts in the first quarter follows the 4.7% student start growth we generated in the fourth quarter. Moreover, our momentum continues in the second quarter and has increased our confidence. And with this greater visibility, we are increasing our revenue and earnings outlook for the full year, while still forecast a solid year-over-year student start growth.

Brian will review our guidance specifics during his remarks. A few weeks ago, I read an article on Time Magazine titled how America has started to fall out of love with college degrees. I encourage you all to read this article. It’s quite fascinating and I believe supports the view that college isn’t for everyone. We have discussed some of the dynamics mentioned in the article on prior calls. However, in 2019, Americans ranked preparing for college tenth on a survey conducted by Populus, a nonpartisan think tank, which asks respondents every year to rank answers to the question, what is the purpose of education? In 2022, respondents ranked it 47 out of 57 items. We have seen both in terms of the financial meltdown in 2008 and the COVID-19 pandemic, students are continuing to question the value of a college degree.

And even more so, we are experiencing conversations at the high school level that were not happening five, 10 and 15 years ago. This is good news for organizations such as Lincoln Tech that are an alternative to college and provide a faster, more affordable way to start a career. Key to leveraging this shift in growing our company and building returns to our stockholders is our new hybrid teaching model, which we began to implement at our campuses in 2022. This model delivers our programs with hands on learning on campus combined with a greater component of classwork delivered through online instruction. It enables our students to work part time or manage other commitments, while they pursue their Lincoln education, which will enable a higher percentage of students to graduate.

The model provides greater flexibility, efficiency and overall capacity at our existing campuses and was a major factor behind our growing first quarter revenue from campus operations by more than $5 million. Transitioning to our hybrid teaching model is going well and as we forecasted, it resulted in increased instructional costs in the near term. We will be transitioning campuses and programs to this new model for the next 24 months and as more and more programs complete their transition from being 100% on ground into the hybrid model, we will increasingly gain leverage from the model starting with significant savings coming in the latter half of 2024. Second major growth initiative is centralizing our financial aid process. Once fully operational, we believe centralizing this critical function will accelerate financial aid applications and assist in our effort to build student starts.

As with the hybrid model, we’re making investments during 2023, but we’ll see improvements faster than with the hybrid transition. We expect to see stronger start rates later this year followed by cost savings in 2024. The expansion of our corporate partnerships is a major factor behind the continued demand for Lincoln graduates. When we last talked with you in March, we told you about the launch of the Johnson Controls Academy at our Columbia, Maryland campus. The creation of the Academy evolved from a successful five year partnership between our two companies and aims to onboard approximately 130 or more new technicians each year for Johnson Controls. Meanwhile, the new Tesla partnership, which enrolled its first class at our Denver campus back in December is expanding to our Columbia, Maryland campus with classes starting later this year.

We also established an advanced training program for Peterbilt, for our diesel graduates and Hunter Engineering established a training center at our Denver campus with their most sophisticated alignment — equipment, which our students will use as well as Hunter Engineering customers and professionals. As I’ve said any number of times before, our partnerships give our students greater career opportunities and help us enrich the education and training a Lincoln Tech student receives. We are currently in discussions with some of our other corporate partners to expand their relationships. Our company blazed the trail in terms of creating innovative customized training programs for many corporations needing to add skilled talent to their workforce to meet growth objectives.

And our students are directly benefiting from the expanded lucrative career opportunities created through these partnerships. In recent months, an additional potential driver of demand for our style of training and for our graduates is emerging at some of our campuses. Local governments, traditional nonprofit colleges and industry associations have begun approaching Lincoln to explore ways we can provide training solutions to help meet the continued demand for a skilled workforce. The realization that our country and our employers need more skilled hands on talent is growing. And as it grows, Lincoln’s position as a leader with quality programs and graduates continues to attract interest. We will explore these opportunities and move forward with those that provide the greatest benefits.

As we mentioned back in March, our objective is to add 10 programs at existing campuses by the first quarter of 2025. This organic growth generates the fastest and highest return on investment as we leverage our existing infrastructure, campus management and market knowledge. We anticipate that these 10 new programs will reach their full run rate after approximately three years of operation. At which time each is expected to provide an average of $1 million in added profitability annually. We made solid progress on this initiative during the quarter due to launch of a new medical assistant program at our East Windsor campus and electrical program at our Allentown, Pennsylvania campus. We are targeting one additional launch by the year end with the remainder opening in 2024.

In addition to the electrical and medical assisting programs I just mentioned, we are focused on adding HVAC, welding and automotive. Combined, these five programs are some of our most successful and in demand curriculum. Our fourth growth initiative is to develop one new campus per year for the next five years, The first set results from the initiative is our second campus location in Atlanta. The build out of this campus continues as we work through local regulatory approvals and are aiming for our first classes at this facility to begin by the first quarter of next year. We continue to expect that within four years of its opening, the 56,000 square foot facility will be generating approximately $20 million in annual revenue and $5 million in annual EBITDA.

Even with the investments in our growth initiatives, our debt free balance sheet remains strong. We continue to support our stock buyback initiatives and will increase our cash balances by the end of the second quarter with the expected sale of our Nashville property. With this success we have generated from our hybrid teaching model, centralized financial aid and program expansion, we are building a more scalable and higher return business. Continued strong demand for our programs combined with the efficiency and growth from the investment in our operations, which include the early contribution from our new Atlanta, Georgia campus enable us to forecast that our adjusted EBITDA will approximately double from 2022 levels by 2025. I should note that our initiatives are predicated on the current environment of moderate economic growth, high employment rates and no recession.

With that said, we are benefiting from a positive trend of individuals considering hands on careers. Our leads are increasing as our enrollments. And once all the changes with our centralized financial aid processes are completed, we should be better able to capitalize on this increased demand with even more new starts despite the challenging environment. Should economic growth deteriorate and historic trends from such a condition repeat, we are poised to benefit even more and with our new hybrid model can efficiently scale up to meet higher levels of demand. Looking ahead to the remainder of 2023, the headwinds of a low employment economy are tempering somewhat, although the demand for highly skilled students remains strong. As I mentioned earlier, we are well positioned to achieve all guidance metrics for the full year, which would position us to generate long term growth for all of our stakeholders in the years ahead.

Now, I’ll turn the call over to Brian for a review of our first quarter financial results and 2023 outlook. Brian?

Brian Meyers: Thanks, Scott. Good morning. I’ll review a few operational developments before turning to our first quarter financial results and outlook for 2023. First, during the first quarter the company repurchased 104,000 shares at an average price of $5.34 under the share repurchase plan that was extended and expanded by our Board of Directors earlier this year. Since May 2022, we’ve repurchased 10 million shares of stock buying back 1.7 million shares. Lincoln has $30 million remaining under its current share repurchase authorization available through May 2024. Second, we continue to make progress towards the opening of our new Atlanta campus, which will welcome students in early 2024. During the first quarter, we incurred approximately $250,000 of start-up costs and $1.5 million of capital expenditures.

Turning to our financial results. First, effective this quarter, we updated our segment reporting structure, we now have a simplified structure with one segment containing all our active campuses, our Transitional segment and corporate. The Campus Operations segment includes all of our campus except the single campus reported under the Transitional segment. The Transitional segment includes any campus approved for closure. It includes our Summerville, Massachusetts campus, which will close this year. I’ll note that we have no plans to close any additional campuses. Corporate, which includes unallocated expenses incurred on behalf of the entire company. Future changes in student demand, more and more of our campuses already or in the near future will offer a combination of automotive, skilled trade and nursing programs.

As a result, our historical segment reporting in which each campus was placed in either the transportation, skilled trades or health care and other professional segment, no longer reflects the way in which we operate the business. The new simplify reporting represents our current operations. I will note that our press release does provide information regarding student starts and population at our active campuses based on program type with the categories being transportation and skilled trades and health care and other professions. Since this breakdown is now based on actual programs rather than the old campus segment basis, it better reflects the trends in our student population. Now, I’ll review our first quarter, excluding the Transitional segment with our Summerville campus closure.

Revenues during the first quarter increased 6.9% or $5.6 million to $86.4 million. The drivers of this increase was: one, a 9% increase in average revenue per student; two, a 6.4% increase in student starts, which improved our population as the quarter progressed; and three, higher revenue from our corporate partnerships. We are very pleased with our solid organic growth in Q1 and the student demand seen so far during the second quarter. The robust average revenue per student growth over prior year was driven by both tuition increases and our new hybrid teaching model, which increases program efficiencies and accelerate the daily rate, particularly in our evening programs. Consolidated operating expenses were $87.3 million, up 7.7% over the prior year, including several onetime costs such as our new Atlanta campus startup costs, severance and other nonrecurring expenses.

Excluding onetime expenses, total operating costs would have been approximately $86 million, in line with our expectations. As a side note, on January 1, 2023, Lincoln adopted a new accounting pronouncement commonly referred to as CECL. Under the CECL standard, companies are required to develop an expected credit loss methodology based on historical data, combined with both current conditions and anticipated future developments. Accordingly, the cumulative impact from the CECL adoption was recorded as a reduction to retained earnings of $7.9 million net of tax impact. Outside of this entry on our balance sheet, the change in methodology did not have a material impact to our first quarter income statement. Our adjusted EBITDA for Q1 was $2.1 million after the add back of noncash and nonrecurring items.

Please refer to the adjusted EBITDA details in our non-GAAP disclosures — non-GAAP schedule reflecting our Q1 earnings release. Due to the previously mentioned robust growth in revenue per student and effective expense controls. This profitability was slightly ahead of our internal plan for the quarter. We are very pleased with the financial performance of our campuses as adjusted EBITDA increased by $1.5 million compared to the prior year, representing a 15% improvement, while revenue grew nearly 7%. Shifting to our strong balance sheet. At quarter end, we had total cash of nearly $60 million and continued to have no debt outstanding. While our cash flow from operations were essentially flat, we consider this to be a strong performance as we historically see negative cash from ops during the first quarter due to our seasonality.

The first quarter includes the benefit of the receipt of Title IV funds that were delayed at year-end, which we discussed on the last call. We continue to explore securing a new credit facility to expand our financial resources as we identify and pursue additional growth initiatives. Lincoln’s strong financial position is attractive to lenders, and we look forward to providing an update as soon as negotiations are completed in the near future. Finally, given our strong start to the year in Q1 and the current outlook for the remainder of the year, we’re making an upward revision to our previously financial guidance. For the first — for the full year 2023, our current outlook for revenue, adjusted EBITDA and adjusted net income is as follows: revenue in the range of $355 million to $365 million; adjusted EBITDA in the range of $21 million to $25 million; adjusted net income in the range of $9 million to $12 million; the outlook for student starts of 5% to 10%; and capital expenditures in the range of $35 million to $40 million remain unchanged.

With that, I’ll conclude my remarks by thanking our entire team, including our faculty and students for their outstanding efforts. We look forward to communicating our progress following the second quarter. And now I’ll turn the call back over to the operator so we can take your questions. Operator?

Q&A Session

Operator: And our first question will come from Alex Paris of Barrington Research. Your line is open.

Alex Paris: Hi, guys. Thanks for taking my questions and congratulations on the beat and race.

Scott Shaw: Yes. Thanks, Alex, and good morning.

Alex Paris: Couple of questions. First off, looks like starts were strong in, both programs, meaning, Transportation and skilled Trades, healthcare and other professions up 6.2% and up 6.7%, respectively. Is there anything you want to call out about that strong result? It was obviously better than I had forecast. I think you said in the prepared comments that headwinds are tapering with regard to this full employment economy. Have you gotten any lift from rising unemployment? I don’t know if that rising unemployment really hit your target market yet at this point.

Scott Shaw: Yes. I would say that we’ve gotten nothing from rising unemployment. We are certainly the ones that I’ve heard that have been unemployed or high-tech individuals. And as far as I know, no one of them have come to us to get a good solid career, but maybe they should. But I think that what we’re seeing is maybe some of the comments I referred to just to this greater awareness that I think that people are looking for alternatives. And there is certainly a lot of discussion out there in the public domain about the shortage for electricians and other such people that I think that, that is making people more receptive and aware that they should look at these careers. And as a leader, that — someone that’s been doing it for so many years, we’re a natural place for people to turn to.

So we’re seeing that. We are spending more in our marketing initiatives, but they’re proving fruitful. The unemployment rate is still very, very low, yet we’re seeing much greater success, frankly, than I would have anticipated. And as we alluded to second quarter, it all seems to be continuing quite nicely.

Alex Paris: Great. And then I appreciate the shift towards the more streamlined reporting given the changes as a result of rolling out programs to the campuses and so on. I did appreciate the starts average population and end-of-period population by program within campus operations. Is that something that you’ll be giving on a go-forward basis as well? Or is that just a transitional thing that you’re giving us?

Scott Shaw: Yes. Go ahead.

Brian Meyers: No, we plan on doing that in each quarter going forward as well.

Alex Paris: Okay. Good. Thanks.

Scott Shaw: It’s a pure read too, Alex, because we are kind of grouping like programs, whereas as we were starting to make this transition and start blending more and more of the programs, even though we said automotive and skilled trades, there was some health care in that and vice versa. There were some skilled trades in our hops before. So now you’ll have a much clearer picture, at least from a population standpoint of where the demand is.

Alex Paris: Great. And then moving on the 10 new programs that you’re going to launch over the next 21 months that included two programs launched in Q1, Medical Assisting in electrical and then the balance, you only have one more before year-end and then the remainder in 2024. Is it already changing? Is there — has there been any change to that rollout schedule at all?

Scott Shaw: Well, it is a little bit delayed. We’re — to be honest, hoping to have more this year, but what we’re finding is regulatory bodies, the state agency, everyone seems to be understaffed and things that should take three months, take four, five, six months to get approvals. So it has delayed some of our rollouts, but just delayed it by a quarter to be more in the first quarter of 2024. Otherwise, things are certainly on track to get the 10 new programs up and running.

Alex Paris: Okay. And same question on the Atlanta campus. You expect your first class in the first quarter of 2024. Just remind me, is that the same as the most recent guidance? Or has that been delayed?

Scott Shaw: It’s been delayed a little bit. Again, we were anticipating at the fourth quarter of this year. There’s still an opportunity potentially to have it open in the fourth quarter of this year, but it’s just taken us much longer to get a sewer permit than one ever thought possible. And that’s what’s delayed that opening. Otherwise, construction is moving well. We’ve purchased equipment in advance. So we don’t have those delays. Again, it’s at these local levels in different communities and advisory boards that seem to be slowing things down. So it could be — we safely say it will be the first quarter of next year.

Brian Meyers: Right. And we did communicate that as well at year-end that was going to be in the first quarter of 2024.

Alex Paris: Okay. Great. That’s what I thought. Last question as to timing. You still expect the Nashville sale to close here in Q2.

Scott Shaw: Yes, we do.

Alex Paris: Okay. Great. Thank you very much for answering my questions. I’ll get back in the queue.

Operator: One moment for our next question. And our next question will come from Steven Frankel of Rosenblatt Securities. Your line is open.

Steven Frankel: Hi. Good morning. Thank you. Scott, could you give us some color on your incoming high school class, especially given the comments you’re making about still feeling like everybody doesn’t have to go to college.

Scott Shaw: Sure. Well, we definitely are seeing more receptivity. Obviously, high schools are open again. So we’re out into more high schools this year than we were last year. And we’re seeing certainly anticipating strong high school starts in the second quarter, and we continue to see strong interest in the third quarter. So we anticipate that our high school program will certainly be greater this year than it was last year, which is positive.

Steven Frankel: And just remind me, in a normal year like pull out COVID, but in a normal year, kind of what percentage of students come directly from high school and given the dynamics you’re seeing today, what do you expect it to be this year?

Scott Shaw: It’s still around 20% of our population is from the high school marketplace. So I’m not anticipating, frankly, dramatic increases there. Oddly enough, we’re seeing stronger increases in our adult market, even though unemployment is so low, but we’re seeing good, solid interest from our high school market.

Steven Frankel: Okay. That’s great. And as you look at that pipeline for the rest of the year, any color on how that breaks down between health care and skilled trades?

Scott Shaw: Yes. I mean our — we don’t get it nearly as many students going into health care from the high school market. I don’t have it in front of me, but I would guess it’s probably easily 75% or 80% in the transportation skilled trades is where a high school students come from. And there are some that go into health care, but not nearly as many.

Steven Frankel: I’m sorry. I was talking about in general. So if you step back and look at your full pipeline…

Scott Shaw: The full pipeline model…

Steven Frankel: And those working through it.

Scott Shaw: Yes. We’re continuing to see growth on both sides, just like we did this quarter without any discipline really taking the lead over the other. We continue to see stronger lead growth and enrollment growth, frankly, in the second quarter than in the first quarter. So beyond that, it’s still too early for me to predict our adult market going into the third and fourth quarter.

Steven Frankel: Great. Thank you.

Operator: One moment for our next question. And our next question comes from Eric Martinuzzi of Lake Street Capital Markets. Your line is open.

Eric Martinuzzi: Yes. When did the tuition increase go into effect? And did that have any impact on the conversions?

Scott Shaw: I don’t think it had any impact on conversions, Eric. We usually put it in the beginning of the year. So last year’s tuition increases, they went in towards the second quarter. That’s why in the first quarter of 2023, we’re seeing the 2022 increases in that quarter. Similar that this year’s increases, we’ll start seeing that as well in the second quarter, but the second quarter should start having the prior year tuition increases in that.

Eric Martinuzzi: Okay. And then the centralized financial aid effort, I think you said you have seven of the 22 campuses. How are we doing on bringing on board the rest of them?

Scott Shaw: Yes. We anticipate bringing them on board before the end of the second quarter, so that they’ll be in before the financially, I’ll say, year completes, in June 30.

Eric Martinuzzi: Okay. I’m not sure if

Scott Shaw: It will be done by the end of Q2.

Eric Martinuzzi: Okay. All right.

Brian Meyers: They’ll also be on the new software. I think the exact date might be July, but they all should be in the new software by July .

Eric Martinuzzi: All right. And then the outlook for the full year, I appreciate the raise. It’s always good to see a beaten guide up. But I was surprised it wasn’t a little bit more incremental adjusted EBITDA on the $7.5 million of revenue bump up. Is there an expense category that is turning out to be a little bit more stubborn than you originally thought?

Scott Shaw: Yes. Some of it is — was in instructional as well as books and tools, some increases higher than our budget, but as well as when you have the better performance get increased as well.

Eric Martinuzzi: Say that last part again?

Scott Shaw: So pay incentives as we make — as EBITDA increases and revenue increases, pain sense does increase as well.

Eric Martinuzzi: Got you. Okay. Thanks for taking my questions.

Operator: And our next question will come from Rajiv Sharma of B. Riley. Your line is open.

Rajiv Sharma: Hi. Thank you for taking my question. I have a couple of just sort of clarifications. A, so you still expect Nashville to close in May, any additional color there? Do you still expect that to the same terms as you agreed on? Any change there?

Scott Shaw: Well, we expect to be very similar. We’re still, frankly, having some, I’ll say, final discussions with them. But yes, it should be closing in the next 30 days or so more or less around the same terms, if not the same terms.

Rajiv Sharma: Got it. Great. And then you just mentioned — you talked about these local government programs in addition to the Tesla, the Johnson Controls. Can you talk about the magnitude or just a little bit more color on what kind of programs this would be? Are they entirely corporate paid and not involving Title IV.

Scott Shaw: Yes, actually, a good question. It definitely is not involving Title IV, but frankly some local high schools coming to us, looking for building their skilled trades programs for their students, because they realize that not everyone is going to go to college. And so now they want to increase the opportunities for those students, so it’s a totally different market than what we serve today. And if we’re successful in landing one of these, it also becomes a great feeder for our programs. So what’s most exciting to me is just this greater realization that we need more skilled trades people and people at all levels of education are starting to realize that more. And the more people that do realize that, that will certainly benefit Lincoln, both in the short term and the long term.

Rajiv Sharma: Got it. Just sensing from the commentary, it seems like there’s incrementally positive results sort of expected. You’ve obviously changed the guidance. Expenses are a little higher, too. But the starts, what do you attribute the 5% to 10% rise in starts in a still very low record low unemployment environment.

Scott Shaw: Well, Yes. Well, I mean, I think that, again, since we did raise guidance, certainly holding in, if not getting a little more robust. I think we are getting our message out. I think that our admissions folks are effective in conveying that message as we look to become more streamlined and efficient. Hopefully, that’s adding to our ability to communicate to our students as well. And again, I think there is this general greater awareness that skilled trades in these hands-on careers are an alternative to go into college. Again, it doesn’t have to be everyone that thinks this way nor should everyone think this way. But incrementally, I think more people are realizing that there’s a faster, cheaper way to get a job and Lincoln certainly helps provide that.

And that’s a message we’re trying to convey to the public. We’re trying to convey to the people that reach out to us. We have strong results and good outcomes. We have more companies coming to us because of their dire need for people. So everything is really moving in our direction, which is a positive change.

Rajiv Sharma: Yes. I mean even on the high school fronts, this seems to be a really positive development, right? High schools coming and asking you to have a program for skilled trades, when was the last time a high school did that?

Scott Shaw: Never.

Rajiv Sharma: Right. So is it fair to say that this 5% to 10% growth in starts actually improves if unemployment rises from here or things get a little worse in the economy?

Scott Shaw: Given history, I would say, yes, should get better.

Rajiv Sharma: Right. And also, I know in the last call you had talked a lot about the results in fiscal 2024 being impacted — showing the real run rate of the business. This rise, is it fair to say it flows through into fiscal 2024 as well?

Scott Shaw: Well, certainly, as we continue to build momentum and have a larger carry into population that will only help us and accelerate our progress and that will bode well for us.

Rajiv Sharma: Great. Great. Thank you for taking my questions. I’ll take it offline.

Scott Shaw: Thanks, Raj. I look forward to being at your conference later this month.

Rajiv Sharma: Yes. Thank you. Yes, same here. Bye-bye.

Operator: And I’m showing no further questions. I would now like to turn the call back to Scott Shaw for closing remarks.

Scott Shaw: Great. Thank you all for joining us today. I also would like to thank the hundreds of men and women of Lincoln Tech who strive each day to better serve our students. Our motto has put your potential to work, and it is the care and support that our employees provide that brings this motto to reality for thousands of graduates every year. 2023 is an exciting year for Lincoln Tech as we transition our company for the future and as our strong results in the first quarter demonstrate we are on our way. Thank you again, and we look forward to sharing our continued progress later in the summer. Have a great day.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.