Mistras Group, Inc. (NYSE:MG) Q4 2024 Earnings Call Transcript

Mistras Group, Inc. (NYSE:MG) Q4 2024 Earnings Call Transcript March 6, 2025

Operator: Thank you for joining MISTRAS Group’s Conference Call for its Fourth Quarter and Fiscal Year ending December 31, 2024. My name is Tanya and I’ll be your event manager today. We will be accepting questions after management’s prepared remarks. I would now like to turn the call over to Thomas Tobolski, Treasurer. Your line is open.

Thomas Tobolski: Thank you, Tanya. Good morning, everyone and welcome to MISTRAS Group’s fourth quarter and full year 2024 earnings conference call. I’m joined today by Manny Stamatakis, the Company’s Executive Chairman of the Board; Natalia Shuman, President and Chief Executive Officer; and Ed Prajzner, Senior Executive Vice President and Chief Financial Officer. Our press release and the accompanying slides that we will be referring to today can be found within the Investor Relations section of our website. As shown on Slide 2, I want to remind everyone that remarks made during this conference call as well as supplemental information provided on our website contain certain forward-looking statements and involve risks and uncertainties as described in MISTRAS’s SEC filings.

The Company’s actual factors that can cause actual results to differ are discussed in the Company’s most recent annual report on Form 10-K and other reports filed with the SEC. The discussion in this conference call will also include certain non-GAAP financial measures that we believe are useful to investors evaluating the Company’s performance, but that were not prepared in accordance with U.S. GAAP. A reconciliation of these non U.S. GAAP financial measures to the most directly comparable U.S. GAAP financial measures can be found in the tables contained in yesterday’s press release and the Company’s related current report on Form 8-K. These reports are available at the Company’s website in the Investors section as well as on the SEC’s website.

I will now turn the call over to Manny Stamatakis.

Manuel Stamatakis: Thanks Tommy. Good morning everyone. Thank you for joining us today. Before we commence today’s conference call, I want to take a minute to reflect on the life of Dr. Sotirios J. Vahaviolos, the Company’s Founder, Chairman Emeritus and Board Director. Sotirios passed away nearly one month ago on February 6, 2025. On behalf of the Board of Directors and the entire MISTRAS family, I want to express our profound appreciation for the immeasurable contributions Dr. Vahaviolos made to the company, our shareholders and the communities we serve. A visionary leader and pioneer in the field of Non-Destructive Testing and Acoustic Emission. Dr. Vahaviolos founded MISTRAS, originally Physical Acoustics Corporation in 1978 and dedicated over four decades to building it into a global leader in testing, inspection and Asset Protection Solutions.

His expertise, leadership and commitment to excellence were instrumental in shaping the Company’s strategic direction and fostering a culture of innovation that remains at the core of MISTRAS today. His legacy will endure and live on as we move MISTRAS forward in his memory. Our Products and Systems segment, along with our NDT and AE services will remain as essential competencies at the core of MISTRAS’s capabilities, enabling the company to deliver on its overall mission and purpose. On a personal note, on behalf of the entire company, I want to express our deepest sympathies to the entire Vahaviolos family. In remembrance of Dr. Sotirios Vahaviolos, I ask for a brief moment of silence. Thank you. I am sure Sotirios is looking down and smiling about our improved 2024 Q4 and full year results.

Our consolidated fourth quarter results allowed us to exceed our revised annual guidance with the bottom line expanding significantly, demonstrating the margin accretive actions that we have instituted into our business model. On a full year basis revenue was up in all reported segments, Products and Systems included, and across all of our industries served, illustrating the increasing diversity of our growing end markets. Adjusted EBITDA was up over 25% versus the prior year, reflecting significant improvement in our operating leverage. And our adjusted EBITDA margin expanded by 200 basis points over the period and was our highest EBITDA margin since 2016. Our operating income of $39.8 million for the full year 2024 was also the highest level since 2016.

I am also pleased with our fourth consecutive quarter generating net income growth, which was a function of our continued annual revenue growth, gross profit expansion and selling, general and administrative expense reductions. Year-over-year, 2024 was a very good year for MISTRAS. I believe 2025 will be even better as the company will continue to build momentum and energy around the profitable growth and to ensure that our leadership team consists of the best and the brightest. I am extremely confident in the course forward for MISTRAS. As Executive Chair, I will remain involved in overseeing the strategic path forward to maximize shareholder value and to support the new invigorated senior leadership team led by our new President and Chief Executive Officer, Natalia Shuman.

In our effort to select a new CEO, MISTRAS undertook its most expansive search in the Company’s history by reviewing over 20 candidates. Our Board of Directors was thrilled with the selection of Natalia Shuman, and I can share firsthand that she has hit the ground running in her first two months as CEO. And I am extremely confident in her ability to lead this company forward. Under her leadership, you will see a new and more invigorated MISTRAS in 2025. Natalia brings more than 20 years of executive leadership experience, including over eight years in the testing, inspection and certification industry, making her uniquely positioned to lead MISTRAS into its next phase of growth and success. She drove growth at Eurofins Scientific as Group Executive Vice President and Group Operating Council member from 2021 to 2024.

Prior to this, she transformed Bureau Veritas as its North American CEO from 2017 to 2021. And before that, she was innovating at Kelly Services in her role as Head of International Business. Natalia is a proven leader with a track record of success and has driven transformative growth, developed high-performing teams and led organizations through pivotal periods of change. I would now like to hand the call over to Natalia so that you can hear directly from her before she turns the call over to Ed to give a more detailed overview of our recent financial results. Natalia, the call, the gavel and the legacy are now in your hands, and we are all excited for the future of MISTRAS, but I’m not putting any pressure on you.

Natalia Shuman: Good morning, everyone, and thank you. Thank you very much, Manny. I sincerely appreciate the warm welcome from you, the entire Board of Directors and my team. I’m deeply honored to be leading MISTRAS Group into its next phase of growth, building on the strong foundation established by Dr. Vahaviolos with the goal of driving meaningful value for all our customers and in turn, for all our shareholders. I have spent my first 60 days on the job actively talking to customers, being in the field at our in-house laboratories, meeting with the teams as well as discussing operational strategies with Manny, the Board of Directors and other stakeholders. Our strong partnership with our valuable customers, leading technologies and committed management teams create a solid foundation that aligns well with our long-term vision.

I am very excited for the prospects of continued profitable growth heading in 2025 and beyond. 2024 was a truly pivotal year for MISTRAS under Manny’s leadership as Interim CEO, wherein the road map for success was built and the company achieved a number of significant milestones, including the second highest level of adjusted EBITDA in the Company’s history. Additionally, we have the successful execution of Project Phoenix. The Company’s SG&A level in dollars and as a percentage of revenue was at the lowest level it has been in over five years. The Company’s more efficient business model and cost discipline provide a significant level of operating leverage given our organic growth aspirations. As shown on Slide 7, the diversification across our end markets and the revenue growth in all of our segments and industries that we serve in full year 2024 over 2023 are creating strong momentum for us.

I look forward to updating you throughout this year as we make additional progress, and I’m very excited for the journey. I would now like to turn the call over to Ed for more details on the fourth quarter and full year 2024 results.

Edward Prajzner: Thank you, Natalia, and good morning, everyone. Due to our improved results and operating leverage, as shown on Slide 8, we generated $25.7 million of operating cash flow and $20.8 million of free cash flow during the fourth quarter. We used this cash flow to paydown $20.1 million of bank debt during the fourth quarter, and our bank-defined leverage level dropped to below 2.5x as of December 31, 2024. This is the lowest level this ratio has been since the third quarter of 2018. We continue to fund our organic growth initiatives, including our investment in capital expenditures with cash flow, strengthening our capabilities and footprint to better support our customers. As you might recall, our net cash flow generation lagged our expectations in the earlier part of 2024.

We are pleased with the gains made in the fourth quarter, and we plan to maintain that momentum as we head into 2025, as we believe self-funded growth represents an attractive and durable option to drive shareholder returns. Turning to our full year results, as shown on Slide 9. 2024 consolidated revenue was $729.6 million, a 3.4% increase over 2023. As Natalia said, revenue increased in all reported segments and across all industries served in 2024. This was led by strong performance in the aerospace and defense industry, which experienced a substantial revenue increase of 13% on a full year basis to $87 million. Our core energy industries and infrastructure industry revenue were also up in 2024 over ’23. Full year gross profit increased to $213.1 million, up 4.6% as compared to the prior year, with gross profit margin expanding 30 basis points.

The increase in gross profit margin to 29.2% was primarily due to the strong growth in our aerospace and defense industry business, which offers a higher-than-average margin. SG&A for the full year 2024 was $156.4 million, down 6.2% or $10.4 million compared to $166.8 million in 2023 as a result of ongoing cost calibration and disciplined spending. SG&A for the 12 months ended December 31, 2024, was 21.4% of revenue, a 220 basis point reduction from the prior year and the lowest level it has been since 2017. Reorganization and other costs were $5.5 million for the full year 2024 compared with $12.3 million in the prior year. These costs were incurred to facilitate the Company’s expense containment as well as the recalibration of our initiatives.

Income from operations was $39.8 million for the full year 2024 compared to an operating loss of $1.9 million in 2023. On a non-GAAP basis, operating income was $46.2 million for the full year 2024 compared to $25.2 million in the prior year, an increase of 83.3%. This 8-year high was due in large part to our Project Phoenix initiative, strong growth in our aerospace and defense business and improved performance in our International segment. Interest expense was $3.9 million for the fourth quarter, down from $4.7 million in the prior year quarter. We anticipate lower annual interest expense in 2025 through direct debt paydowns with free cash flow as well as with continued deleveraging as our adjusted EBITDA grows, both of which would serve to improve our overall cost of debt via a lower credit margin spread.

We anticipate interest expense being approximately $2 million lower in 2025 versus 2024 to be about $15 million next year, assuming no changes in the underlying SOFR rate and our anticipated TTM leverage level of less than 2.5x. Our effective income tax rate was 21.8% for the full year 2024 and lower than our statutory rate due to several discrete benefits recognized throughout the year. This effective rate in 2024 was a significant improvement over the 6.5% income tax benefit rate in 2024 due to a nondeductible goodwill impairment in 2023. We anticipate that our effective income tax rate would be approximately 25% in 2025. Our net income was $19 million or $0.60 per diluted share for the year ended December 31, 2024. Full year 2024 net income, excluding special non-GAAP items, was $22.7 million or $0.72 per diluted share, excluding these same special non-GAAP items.

This EPS performance is the highest level we have generated since 2016. Adjusted EBITDA was $82.5 million for the full year 2024 compared to $65.8 million in the prior year, an increase of $16.7 million or 25.3%. This increase in adjusted EBITDA was primarily attributable to a favorable business mix and overhead cost containment initiatives. And this adjusted EBITDA improvement represents a nearly 70% operating leverage conversion of the incremental revenue increase in 2024 into adjusted EBITDA. With respect to our consolidated results during the fourth quarter, our overall revenue level was down 5.1% as expected due to the anticipated decline in oil and gas revenue. However, given the strong operating leverage built into our business model, our income from operations increased by $9.8 million as compared to the fourth quarter of 2023 despite this lower level of revenue.

And our cash conversion was equally strong in the fourth quarter of 2024 with free cash flow increasing $12.1 million over the fourth quarter of 2023. With respect to our segments, as shown on Slide 10, the North America segment revenue in the fourth quarter was $136.9 million, down 7.5% from $148 million in the prior year. This revenue decrease was primarily due to the anticipated decrease in North America midstream industry as well as a relatively moderate fall turnaround season in 2024, which had been anticipated. This segment’s fourth quarter ’24 gross profit was $38.9 million compared to $42.9 million in the prior year. Gross profit margin was 28.4% for the fourth quarter of ’24, a 60 basis point decrease from the prior year period. This decrease in gross profit margin was primarily due to sales mix.

The International segment fourth quarter 2024 revenue was $35 million, up 3.6% from $33.8 million in the prior year. International segment revenue increased in each quarter of 2024 compared to the prior year period and increased 9.3% on a full year basis. This was primarily attributable to double-digit revenue growth experienced in our international energy and aerospace and defense industries. International segment of fourth quarter 2024 gross profit was $10.1 million with a gross profit margin of 29% compared to 27.7% in the prior year period. On a full year basis, 2024 International segment gross profit was $39.8 million, an increase of $6.2 million or 18.5% over full year ’23, with gross profit margin increasing 29.3% — to 29.3% from 27% in ’23.

This 230 basis point increase was primarily attributable to improved operating leverage and a favorable business mix. The product and segment — the Products & Systems segment experienced strong growth in profitability with a 5.2% increase in revenue from $13 million in 2023 to $13.7 million in 2024, yet experienced an 840% increase in income from operations from $0.3 million in ’23 to $2.5 million in 2024. This success was driven by cost reductions and efficiency improvements, which we expect to continue. We are pleased with the performance of this segment and its offerings, including Acoustic Emission competencies and online monitoring capabilities, which provide us with a competitive advantage that differentiates MISTRAS from competitors.

On a full year basis, our net cash provided by operating activities was $50.1 million for 2024 compared to $26.7 million in the prior year. Free cash flow, a non-GAAP financial measure, was $27.1 million for full year 2024 compared to $3.1 million in the prior year. This increase was primarily attributable to significantly improved financial results in 2024 and improvements in working capital management, particularly in accounts receivable reduction despite the higher level of annual revenue. Capital expenditures were fairly consistent year-over-year at $23 million for full year 2024 compared to $23.6 million in the prior year. The company continues to invest in efficiency improvement opportunities, including internal workflow automation and productivity enhancements.

Our gross debt was $169.6 million as of December 31, 2024, compared to $190.4 million as of December 31, 2023, a decrease of $20.8 million. This decrease in gross debt year-over-year was attributable to a significant paydown resulting from our favorable cash flow generation in 2024. The Company’s net debt, a non-GAAP measure, was $151.3 million as of December 31, 2024, compared to $172.8 million as of December 31, 2023. All in all, our efforts throughout 2024 are driving improved performance. I am optimistic about 2025 and beyond as we continue to implement initiatives that leverage the unparalleled talent experience, capabilities and knowledge that have made MISTRAS a leader in the industry for over 40 years, thanks to the vision of Dr. Sotirios Vahaviolos.

We sincerely appreciate your continued support as stakeholders, and we expect to reward your patience with improved results in full year 2025 and beyond. At this time, I would like to turn the call back over to Natalia for her closing remarks before we move on to take your questions.

Natalia Shuman: Thank you. Thank you, Ed. Given my recent appointment as CEO, effective January 1 of this year, the senior leadership team and I have been and we will continue to review our entire business portfolio with a focus on continuing to grow adjusted EBITDA and earnings per share as well as continuing to improve our margins. Additionally, the U.S. dollar to euro exchange rate strengthened since we set our budget and this unanticipated foreign currency exchange risk should unfavorably impact actual revenue translation in ’25. We believe this FX risk will be essentially neutral on our adjusted EBITDA margin and other profitability metrics. Nevertheless, we will be assessing this FX risk as well as potential impact of the recently announced U.S. foreign tariffs on our business and financial results for fiscal 2025.

And once this assessment is complete, we anticipate releasing guidance for fiscal 2025 with our goal to continue driving profitable growth, margin expansion and increasing EPS. There are a few segments and end markets that I am most excited about. Our suite of industrial, IoT, its connected digital software and data analytics being one of them. This data evaluation journey with our customers dates back to our founding as a company, and we will further leveraging this competency for growth in the future. Our PCMS software and service offering remains at the core of our OneSource application. We will also continue with our long-term strategy of increased investments in solutions for aerospace and defense industries at our in-laboratory testing locations, and we will further expand our service offerings to include more additive manufacturing and mechanical work beyond quality inspection and testing.

We will also continue to expand our scope of work in private space industry as a result of robust demand for our Non-Destructive and Destructive Testing Services in this area. As such, we expect continued strong performance in this industry over the long term. While we acknowledge that there are some challenging market conditions that many of our customers within the oil and gas industry are experiencing, we are encouraged by our current level of bid activity and are optimistic that we will continue to gain market share by offering a complete suite of integrity services to provide a meaningful ROI to our customers, and we will also plan to further diversify our operations into other end markets. Additionally, we’ll keep expanding our field inspection business by investing in newer technologies such as the ART crawler as well as building advanced logistical capabilities using drones, robotics and rope access.

Our strong fourth quarter results provide evidence and confidence for our future performance, given our newly found disciplined approach and newly established processes. Our continued robust cost management, strategic partnership with our valuable portfolio of clients and our skillful workforce have us excited for the prospect of continued profitable growth for MISTRAS. I am very pleased to lead nearly 5,000 employees who believe in our vision and are working hard every day to achieve our goals and objectives. I also can feel the high level of energy throughout the organization and our customers are responding in kind as well with increasing level of ROI recognition for the value that MISTRAS employees bring to the equation in delivering on our mission to maximize safety and operational uptime for our customers’ critical assets.

At this time, I would like to ask the operator to open the call to your questions.

Q&A Session

Operator: Certainly. [Operator Instructions] Our first question will be coming from John Franzreb of Sidoti & Company. Your line is open, John.

John Franzreb: Good morning everyone, and thanks for taking the questions. Natalia, welcome aboard. I’d like to start the first question directly to you. You mentioned in your prepared remarks that you not only return facilities, but you met with major customers. I’m curious what kind of feedback you got from customers, about their perception of MISTRAS, and what they can do better?

Natalia Shuman: Super encouraged with the positive feedback that we’re hearing from the customers, and in fact they are really excited about our – the complete suite of our offerings. When we are talking about the entire solution, for integrity and asset performance management, and I’m starting with the software analytics, engineering services, testing, inspection. So there’s so much that we can do to unlock the value of our offerings. So the customers are really excited about that.

John Franzreb: Good, good to hear. And I guess Ed, this might be more directed towards you. The receivable issue that you had in the past, is that fully behind you, or is there still repricing of some contracts that need to be done?

Edward Prajzner: [technical difficulty] over the course of the year. So yes, we believe that’s well at hand and that’s become a very top priority for management to focus on. So we feel good about that heading into ’25.

John Franzreb: Fair enough. I got to admit everybody, that didn’t come through entirely clear on my end, but that might be my issue only. The next question I got is what are your thoughts about the upcoming turnaround season, relative to last year’s first half, strong one, is it a tough comp still, or are you any kind of qualitative impact, or review of the turnaround season would be helpful?

Operator: Please remain on your line.

Edward Prajzner: I’m sorry, are you still hearing us? Okay.

John Franzreb: That is much, much better.

Edward Prajzner: Oh, sorry. John, are – you hearing us? Okay, so the operator interrupted us here, you hear me okay, John?

John Franzreb: Yes, but I got. The last two responses were fairly broken up.

Edward Prajzner: Oh, sorry. Hopefully you’re hearing me okay clearly now?

John Franzreb: Much, much better. Yes, sir.

Edward Prajzner: Okay. Sorry about that. Yes. So we expect ’25 to be a normalized year in the turnaround. Oil and gas and turnarounds in particular. As you just pointed out, ’24 was sort of lopsided. The front end was very strong. The spring turnaround season was rather robust. The fall turnaround season we just completed was not. Expect an inverse of that in ’25. We see that the spring will be weaker, the fall will be more robust. So year-over-year it’s normalized. The volume is relatively similar, but it does fall into those two halves. So ’25 will be essentially the opposite effect as we saw in ’24.

John Franzreb: That makes perfect sense. Thanks for the color. And one last question. I’ll get back into queue. Can you talk a little bit about data analytics? From what I recall, there were some delays in the second half of last year that were pushing jobs into 2025, that would have implied double-digit growth. Is that still the case? Are there additional delays that we should be cognizant of?

Natalia Shuman: Our data analytical solutions business revenue was indeed down in ’24. And this is due to the timing of certain projects, and implementation delays. So, but we will have investments going into the business, and we do anticipate growth in ’25. In particular, PCMS continues to be in demand, due to the heavier focus on production efficiencies, and the capital discipline that is in this oil and gas segment. So this – Jim Redmon, who leads our data analytical business, is very optimistic about growth prospects. And at this point, PCMS software has been implemented more than 50% of oil of the U.S. based refineries and market share continues to grow. So we are very optimistic.

John Franzreb: Okay. Thanks for taking my questions. I’ll get back into queue.

Edward Prajzner: Thank you.

Operator: And one moment for our next question. Our next question will be coming from Mitchell Pinheiro of Sturdivant & Company. Your line is open, Mitchell.

Mitchell Pinheiro: Yes. Hi, good morning. So a question. Just curious how did tariffs affect your business? Excuse me? We’re having trouble hearing you on our end. If you could, something is wrong with the communication here.

Edward Prajzner: I’m sorry about that, Mitch. We’re on the same exact line. We were just speaking their prepared remarks. We apologize for that. Any better, any better right now?

Mitchell Pinheiro: Right now, better. Yes, that’s better right now.

Edward Prajzner: Okay. Sorry about that, yes.

Mitchell Pinheiro: Yes, a set of questions…?

Edward Prajzner: Okay, sorry, sorry. I’ll re-answer that. Sorry, the microphone they have switched in the room here. We apologize for that. Yes, on the tariff question, too early to tell. We are assessing that, but no, no impact at the moment. We’re studying however, what the tariffs might mean to our business.

Mitchell Pinheiro: So. Okay. I mean like, so not putting out guidance, because there is some uncertainty here. I get it. But it’s like, if it’s not going to have that much of an impact, I don’t really understand the connection?

Manuel Stamatakis: Mitch, I’ll jump in on that. As Natalia said, she and her team are evaluating all our lines of business, and we felt it was appropriate for her to take a little time to do that. And once she has had time to look over everything, we will be releasing guidance. It’s not predicated solely on the tariffs.

Mitchell Pinheiro: Okay. Okay. Got it. Understood. And that, just in the oil and guest business, midstream’s been down for three straight quarters. And I always kind of thought midstream was going to be a more, steadier type of revenue line for you guys. Can you talk a little bit about what’s going on the midstream?

Operator: Please stand.

Mitchell Pinheiro: Hello?

Operator: Please stand by. Your conference will resume momentarily. Ladies and gentlemen, please stand by.

Natalia Shuman: I repeat my answer. So the midstream subcategory, did experience some project delays in 2024, but we do expect growth in 2025. There are some regulatory changes that are pending, driving stricter pipeline integrity requirements, and increased demand for the advanced inline inspection technologies that we offer. So that’s what leads us, to believe that we will have improved performance in midstream.

Mitchell Pinheiro: Okay. Thank you for that. And then can you. I’d love a little – learn a little bit more about the data analytical solutions segment. I mean, it’s obviously a big growth focus, but sales were down last year. They were down in the fourth quarter. I’m curious as to why, and what type of strategic changes, or if there’s any strategy changes being made?

Natalia Shuman: There is no strategic changes per se in data analytics. We continue investments in that. As I mentioned before, there are some delays in implementation, but we continue invest in this sector of our business. What is interesting is really that we now have very collaborative sales efforts offering the entire suite of our solutions, starting with the software, digital software, and offering engineering services, the implementation and then going into the inspection testing, and also followed by some of our products, like monitoring technology. So that’s what I think differentiates us and as I mentioned, we already in the 50% of U.S. refineries. So we’re certainly not changing our strategy. The idea is to really extend it, beyond oil and gas industry as well as the extent our market share within oil and gas industry.

Mitchell Pinheiro: Okay. And then, just one more question and I get back in the queue. But on the SG&A side, is like the fourth quarter level, the sustainable level in dollars or – was there some one-time help you had in the fourth quarter? Can you talk about that please?

Edward Prajzner: No, Mitch, that’s a good question. That’s a relatively normal level to annualize going forward. So yes, we have internalized this Project Phoenix discipline into our cost control, cost recalibration. So yes, that’s a relatively good base, to start for modeling forward. We intend to keep very tight controls on overhead up in cost of goods sold, as well as down in SG&A. So yes, that’s a good run rate exiting the year with SG&A.

Mitchell Pinheiro: Okay. All right, well thank you. I appreciate the answers.

Edward Prajzner: Thank you, Mitch.

Operator: Okay. And I’m showing no further questions at this time. I would now like to turn the call back to Manny for closing remarks.

Manuel Stamatakis: Thank you, operator. And thank you everyone for joining this important call today, and also for your continued interest in MISTRAS. With the baton now officially passed to Natalia, she will be providing you with an update on our business, and progress achieved towards our ongoing initiatives, on our next earnings call. As I stated, I am very confident in her abilities, to succeed me as Chief Executive Officer, leading MISTRAS going forward. And I will continue to do my best, to honor the legacy that Dr. Sotirios Vahaviolos built by being a steward of MISTRAS going forward, with a focus on continuing to improve shareholder value. I believe we have an extremely bright future ahead of us with our invigorated executive team, who will lead MISTRAS for years to come, delivering improved results, and generating enhanced value for our shareholders. Safety and asset integrity will remain our core mission and purpose.

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