TrueBlue, Inc. (NYSE:TBI) Q2 2024 Earnings Call Transcript

TrueBlue, Inc. (NYSE:TBI) Q2 2024 Earnings Call Transcript August 5, 2024

TrueBlue, Inc. misses on earnings expectations. Reported EPS is $-3.4502 EPS, expectations were $-0.03.

Operator: Greetings and welcome to the TrueBlue Second Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. As a reminder, this conference is being recorded. At this time, I’d like to remind everyone that today’s call and slide presentations contain forward-looking statements, all of which are subject to risks and uncertainties and management assumes no obligation to update or revise any forward-looking statements. These risks and uncertainties, some of which are described in today’s press release and SEC filings, could cause the actual results to differ materially from those in these forward-looking statements.

Management uses non-GAAP measures when presented financial results. You are encouraged to review the non-GAAP reconciliations in today’s earnings release or at trueblue.com under the Investor Relations’ section for a complete understanding of these terms and their purpose. Any comparisons made today are based on a comparison to the same period in the prior year, unless otherwise stated. Lastly, a copy of the company’s prepared remarks will be provided on TrueBlue’s Investor website at the conclusion of today’s call and a full transcript and audio replay will be available soon after the call. It is now my pleasure to turn the call over to Taryn Owen, President and Chief Executive Officer.

Taryn Owen: Thank you, operator and welcome everyone, to today’s call. I am joined by our Chief Financial Officer, Carl Schweihs. We appreciate you being here with us. As we discussed on our last call, the current operating environment is challenging with economic uncertainty and client caution continuing to weigh on the temporary staffing industry. We are managing through the current market cycle with discipline and agility as we advance our strategic priorities to capture market share and enhance our long-term profitability. Revenue for the quarter was $396 million, down 17% compared to the prior year as uncertainty around interest rates, inflation, and other factors continued to drive reduced business spend and curbed hiring trends.

Our revenue trends declined over the quarter as we did not see typical seasonal sequential builds in our on-demand business. We took decisive cost actions across the organization to deliver efficiencies and reduce operating costs, which is consistent with our strategic priorities. Not only have we aligned our operating structure with current market demand, we have simultaneously created greater agility and flexibility to scale as needed when customer volume returns. We understand the current labor market dynamics and our teams are laser-focused on driving sales and ensuring we are capitalizing on every opportunity to serve our customers. As our teams stay highly engaged with clients to address their immediate and evolving needs, we have made significant progress advancing our strategic priorities.

Our commitment to accelerating our digital transformation, expanding in attractive end markets, and simplifying our organizational structure will enable us to capture market share, deliver more sustainable growth, and enhance our long-term profitability. Positioning our contingent staffing business to better compete in the digital-forward future is a key component of our strategic plan. We continued the rollout of our new, proprietary JobStack app during the quarter, and we are on track to complete the rollout this year. We have already had some early success with our initial launch in the form of improved usability for our associates using a fully digital application and onboarding process, as well as our ability to leverage real-time insights to implement changes and make it easier for our customers and our associates to engage with us.

We are excited about the future opportunities this proprietary technology creates in allowing us to control our roadmap and quickly address evolving user needs. The successful rollout will represent a significant achievement in the digital transformation of our business, providing us with the platform to implement competitive enhancements and strengthen our market position through a differentiated experience that combines our technology with our expansive market presence and expertise. Another key strategic priority is our expansion in high-growth, less-cyclical, and under-penetrated end markets to capitalize on secular growth opportunities. We have made solid progress in attractive end markets such as skilled trades and healthcare. Within skilled trades, we have grown in renewable energy work and commercial driving services by leveraging our deep expertise and expanded service offerings, such as our renewable energy apprenticeship program and our driver management services.

We have also made progress in expanding our healthcare presence across the organization, both in commercial staffing and RPO engagements. Within RPO, we continued diversifying into higher skilled placements with recent wins serving the government sector, and expanding existing relationships with higher skilled roles, including engineering, technology, and corporate positions. We are energized by this early success winning new deals and expanding our customer count in high-growth and high-value end markets. We are confident that as customer volumes return, the scale of these opportunities will drive further revenue expansion. The third element of our strategic plan is the simplification of our organizational structure to drive enhanced focus, growth, and profitability.

We have made notable strides in this area with the sale of our on-demand labor business in Canada, consolidation of our on-site and global leadership structures, and elimination of silos amongst our support team and technology functions. As I mentioned, we have also taken disciplined cost actions creating more simplified structure and driving enhanced long-term profitability. Streamlining creates opportunities to reduce inefficiencies and enable greater focus on operational excellence and innovation as we look to realize future growth. We are already seeing benefits from our efforts in the form of increased synergies and cross-selling as we align our internal organization around two core specialties; commercial staffing and direct hire. When we talk about commercial staffing, this encompasses our on-demand and on-site industrial staffing services, as well as our skilled trades and commercial driving services.

While we will continue to go to market under our current, well-established brands, aligning our organizational structure around our core specialties, allows us to better leverage our strengths and assets. Direct hire includes our go-to-market brand PeopleScout, with its strong growth and margin prospects. With a more focused structure, we are able to bring our teams closer to our clients and associates, allowing us to reduce costs and better leverage our combined strengths to deliver long-term, profitable growth. Current labor market dynamics remain challenging and consistent with our efforts to streamline operations, we have taken actions to create immediate efficiencies and strategically position us for even stronger growth and profitability when customer demand volumes return.

Evolving workforce needs and structural staffing shortages will create compelling opportunities for our business, and our competitive strengths, tremendous assets and clear strategic priorities position us well to capitalize. The long-term staffing outlook is positive and we have the right people, technology, and resources to drive our strategic priorities forward. We are excited about the opportunities ahead as we remain committed to enhancing shareholder value and advancing our mission to connect people and work. I will now pass the call over to Carl, who will share further details around our financial results and outlook.

Carl Schweihs: Thank you, Taryn. Total revenue for the quarter was $396 million, a decline of 17% and one point short of our outlook range. Overall, weakness in demand trends continued with economic pressures, driving greater client focus on reducing costs and restricting hiring trends. This led to a lack of sequential build in our on-demand PeopleReady business, resulting in larger year-over-year decline. PeopleReady Q2 revenue was flat to Q1, while historical trends would typically result in low, double-digit growth. While economic uncertainty and client caution continue to weigh on the broader temporary staffing industry, we are capitalizing on growing verticals. Our renewable energy work grew for the eighth consecutive quarter and our commercial driving services delivered its second quarter of growth with near double-digit revenue growth in Q2.

Gross margin was 26.4% for the quarter, down 100 basis points. The primary driver of the decline was unfavorable changes in revenue mix, both from increased renewable energy work as well as a decline in our highest margin business, PeopleScout. As a reminder, PeopleReady’s renewable energy work carries a lower gross margin than the general business due to the pass-through travel costs involved. Outside of these costs, the underlying margin for renewable energy work is consistent with other, large PeopleReady accounts and the impact to total gross margin will normalize as we lapse low volume comparable periods. Unfavorable bill and pay-rate inflation also contributed to the margin decline as we manage pricing pressures typical of this type of economic environment.

These were partially offset by recognition of certain COVID-19 government subsidies, which are excluded from our adjusted net income and adjusted EBITDA calculations. We reduced SG&A by 20%, with 6 points driven by the COVID-19 government subsidies and the remaining decline from disciplined actions to better align our cost structure with client demand and enhance our profitability. We are operating with discipline and focus in the areas we can control and we are confident in our ability to manage through this market cycle with a commitment to enhance our profitability and ensure that we are better positioned as conditions improve. To that end, we have taken over $70 million of costs out of our operating structure and we expect many of these reductions to be permanent due to our simplified organizational structure, enhanced automation and other improved efficiencies, which means enhanced profitability as industry demand rebounds.

We reported a net loss of $105 million this quarter, which included a non-cash goodwill and intangible asset impairment charge of $45 million after-tax, driven by weakness in our demand trends due to the economic uncertainty and our recent stock performance. Also included in our results for the quarter was a valuation allowance charge of $55 million on our deferred tax assets due in large part to the loss incurred from the impairment charge. As a reminder, these charges have no impact on our operations, liquidity or debt covenants. Adjusted net loss was $11 million, while adjusted EBITDA was $1 million. Now, let’s turn to the specifics of our segments. PeopleReady revenue decreased 19%, which includes two points of decline from the sale of our on-demand business in Canada, and segment profit margin was down 280 basis points.

As I mentioned earlier, PeopleReady revenue was flat compared to the prior quarter and lacked our typical sequential build, leading to a larger-than-expected year-over-year decline. Overall, softness in demand trends continued across most verticals and geographies with lower client volumes, partially offset by continued growth in renewable energy work, which delivered double-digit growth for the quarter. From a margin perspective, the contraction was largely driven by the lower operating leverage as revenue declined, as well as increased revenue mix from renewable energy work, and unfavorable bill/pay rate inflation, with bill rates up 4.0% and pay rates up 4.8%. We are facing the type of pricing pressure we’d expect in this type of economic environment, as customers look to cut costs and staffing companies compete in a lower demand environment.

We continue to demonstrate pricing discipline and we expect this to improve as the business environment returns to growth and demand rebounds. PeopleScout revenue decreased 31% and segment profit margin was down 640 basis points. The decline in demand was driven by lower client volumes as businesses face ongoing economic challenges, leading to cost pressure and uncertainty around their workforce needs. Many are seeing less churn in their employee base and for some, hiring volumes have declined to a level where they are relying more heavily on internal resources to fill jobs. All of these factors are leading to curbed hiring trends and overall reduced market demand. The margin contraction was driven by lower operating leverage as revenue declined.

PeopleManagement revenue decreased 6%, while segment profit margin was up 100 basis points. The decline in demand was driven by lower on-site client volumes, consistent with the macro conditions evident in the verticals we serve, and partially offset by solid growth in our commercial driving services. PeopleManagement’s segment profit margin expanded due to the disciplined cost management actions to better align our cost structure with client demand. Now, let’s turn to the balance sheet. We finished the quarter with no debt, $26 million in cash, and $130 million of borrowing availability. We repurchased $7 million of common stock during the quarter, leaving $38 million remaining under our authorization. We have a solid balance sheet, providing us with strong liquidity position and great flexibility to support future growth opportunities.

Turning to our outlook for the third quarter, we expect a revenue decline of 20% to 14%. This includes 1 percentage point drag on total company revenue growth due to the sale of our on-demand business in Canada. Our outlook reflects a continuation of current market trends, with the year-over-year decline in the third quarter, largely driven by a lack of sequential build that we typically see in our on-demand business. We expect SG&A of $99 million to $103 million, which represents a reduction of roughly $20 million compared to the prior year period, driven by disciplined cost management, and includes approximately $2 million of workforce reduction costs, which will be excluded from our adjusted net income and adjusted EBITDA calculations. Keep in mind, our lean cost structure will drive additional margin improvement as we move through the year and our heightened operating leverage from increased efficiencies will drive enhanced profitability as the demand environment rebounds.

Additional information on the outlook can be found in the earnings presentation shared on our website today. Before we open the call up for questions, I want to turn it back over to Taryn for some closing remarks.

Taryn Owen: Thank you, Carl. As you have heard from us today, we remain committed to advancing our strategic priorities and managing through this challenging market cycle with agility and discipline. Consistent with our efforts to streamline operations, we have taken decisive actions to create immediate efficiencies and strategically position us for even stronger growth and profitability when industry demand rebounds. We are confident that our strategic priorities in combination with our many strengths and assets, will enable us to advance our mission to connect people and work, while delivering long-term value. This concludes our prepared remarks. Operator, please open the call now for questions.

Q&A Session

Operator: Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Mark Marcon with Baird. Please proceed with your question.

Mark Marcon: Good afternoon and thanks for taking my questions. Could you elaborate on the most recent trends? What are you seeing on a month-to-month basis? And what are the latest data points in customer conversations suggest? Is it getting better or worse, especially given that we’ve been getting some fairly weak macro signals most recently? And so I’m really curious in terms of like how the quarter progressed, May to June, June to July? And what are you seeing in the early stages of August?

Taryn Owen: Thank you for the question, Mark. There’s certainly still pressure on our clients to improve their own bottom-line results. We continue to see a focus on reducing costs with many of our customers leaning more on their internal resources and being more selective in both the temporary and full-time positions that they’re choosing to fill. As you know, these cycles are difficult to predict and the best inflection point is when our clients tell us that they have increased hiring needs, and we aren’t hearing that yet. We’re focused on what we can control; driving demand, controlling costs, and advancing our strategic priorities.

Carl Schweihs: And I’ll cover — thanks, Mark, for the question on the inter-quarter trends here. So, look, our outlook reflects a continuation of the current market trends, with the year-over-year decline in the third quarter, largely driven by the lack of typical sequential build in our PeopleReady business. So, just as we’re walking through the quarter, we didn’t see a sequential build in May and June, and we are seeing that same trend in July, which is softer than our pre-pandemic historical averages, and that’s reflected in our outlook. From an end market kind of state trends perspective, I’d say most verticals and geographies saw continued softness, largest being in retail, hospitality and service. And state trends look pretty close and represent the trends that we’re seeing in our end markets as well.

Mark Marcon: That’s really helpful. You did mention that retail hospitality is seeing weakness and you said the state trends. Is there any discernible difference across regions or end markets aside from renewables?

Carl Schweihs: No, that’s what I was kind of pointing to. If we exclude the renewables, which I was talking about, it’s pretty close. There’s no trends in any specific either verticals or state trends that we’re seeing different.

Mark Marcon: And so — and just to go back to your earlier comments. So, without the lack of sequential uptick, I mean, essentially, the year-over-year trends actually worsened as the quarter progressed, correct?

Carl Schweihs: That’s right, from a year-over-year perspective, yes. And that’s why you’re seeing our build into Q3 look pretty flat.

Mark Marcon: Okay. With regards to — can you just talk a little bit about — two different things. Specifically, the $70 million in cost adjustments that you made, can you just outline what specifically was adjusted? How much of a change is there in headcount? How much of a change is there in the office structure? That’s one question. And then I’ve got a follow-up just with regards to the guidance.

Carl Schweihs: Yes, for sure, from a cost perspective. Thanks again, Mark — of that $70 million, look, the vast majority of our costs are in people and headcount. And so as we look where those costs are, I’d say, three-fourths of them are in that area — from a kind of just as we think about our costs, though, I do — I think there’s a couple of things to just point out. Look, we feel good about the progress that we’ve made on the cost structure. We are continuing to stay focused on the things that we can control in this market. If we look back on the quarter, we guided to minus $18 million year-over-year. We overdelivered on those at minus $20 million. There was the one-time benefit of minus $7 million, so we’ve adjusted that out or not minus — $7 million COVID subsidies that we’ve adjusted out.

When we look forward, we’re guiding to a midpoint of $101 million, which is 16% year-over-year. That includes about $2 million of one-time costs related to workforce reductions into the third quarter. So, adjusting that out, would be about 18% down or $99 million, which we’d expect to carry through the year. And so when you kind of think about those cost structures, it’s going to help us incrementally into the future. But that’s where most of those things are coming out. From a headcount, I can give that one for you, too. Year-over-year, we’re down roughly 18% at the end of Q2.

Taryn Owen: And if I could just add to that, Mark. We’ve been talking about a journey that we’ve been on to simplify our org structure and get closer to our customers. And — so when you think about the people cost that we — that have been reduced in our business, think about support structure, back office, leadership roles that we have reduced, while staying — keeping our priority around continuing to invest in the people that are closest to our customers and sales.

Mark Marcon: Taryn thanks for that. With regards to just the offices, can the office count any different today than it was at the end of the first quarter?

Carl Schweihs: Are you asking branch count?

Mark Marcon: Right.

Carl Schweihs: No, there’s not much of a change from Q1. The biggest change that you would see would be the divestiture of our PeopleReady on-demand business, which was roughly around 35 branches, I believe.

Mark Marcon: Great. Thank you. I’ll jump back in the queue.

Carl Schweihs: Of course. Thanks Mark.

Taryn Owen: Thanks Mark.

Operator: Thank you. Our next question comes from the line of Kartik Mehta with Northcoast Research. Please proceed with your question.

Kartik Mehta: Thank you. Taryn and Carl, you guys talked a little bit about pricing and I’m wondering, is there a trend in every business? Or is it specific to a certain segment?

Carl Schweihs: So, the pricing that I was talking about refers to our PeopleReady business on the bill/pay spread.

Kartik Mehta: Okay. And then just your perspective on — as we look in the third quarter, would you anticipate sequential declines for each segment of being about the same as they were for the second quarter?

Carl Schweihs: The sequential decline?

Kartik Mehta: Yes, I guess what I’m asking is the decline — I guess, I apologize, year-over-year decline in the third quarter will be about the same as it was in the second quarter?

Carl Schweihs: Yes, let me just give you kind of the outlook by the segments. I think that would be helpful from a midpoint perspective, Kartik. So, Q3 guidance minus 17%, which includes 1 point from Canada. PeopleReady would be down 21%, which includes 2 points from Canada. PeopleManagement down 4%, PeopleScout down 30%.

Kartik Mehta: Perfect. And just a big picture question for you, Taryn. You guys have done a really good job taking costs out. Obviously, you’re trying to manage the business to reflect what’s happening currently. But eventually, the market is going to turn. And I’m wondering as the business stands today with all the costs kind of you’ve done, what does the outlook look like if we had a 10% to 20% increase in revenue? I know that seems really far away right now considering the trends are there, but eventually, the market returns. And I’m just trying to get a sense of where the cost structure is today and what does that mean for the business?

Carl Schweihs: Yes, thank you for the question, Kartik. Again, yes, we feel really good about the progress we’ve made on our cost structure. So, as we kind of look at our cost structure today, as we mentioned earlier, we’ve taken about $70 million of cost out with many of those reductions being permanent. So, we’d expect our incremental margin on the rebound to be a couple of points north of what our historical performance is. When you’re talking about 10% to 20%, if we run those through our model, Kartik, you’d see enhanced operating leverage. We’d expect anywhere from 30 to 50 basis points of improvement to our historical EBITDA margins and call it an additional $0.15 to $0.30 of free cash flow per share.

Kartik Mehta: So, obviously, a significant improvement from where you are. Yes. And just one last question. Just thoughts on RPO demand, if there’s been any change there from what you saw in last quarter?

Taryn Owen: I’ll take that, Kartik. I would say from an RPO demand perspective, what we’re seeing is reduced volumes from our current customers. And in some cases, our customers are able to handle the volume that they have today with the internal teams that they have. And so we’re certainly staying close to those customers and well-positioned to support them when those demands exceed their ability to do the work themselves. The team has done a really good job of adding additional customers to the portfolio and PeopleScout, but they’re being implemented at subdued hiring levels. And so we’re really excited about the customer retention as well as the customers that we’re adding to that portfolio because we’ll be able to expand upon those relationships when the demand returns.

Carl Schweihs: Just want to add to that one Kartik, we actually saw current count grow sequentially from Q1 to Q2 as well in our PeopleScout business. So, it really is — it’s a volume story here.

Kartik Mehta: Perfect. Thank you very much. I appreciate it.

Taryn Owen: Thanks Kartik.

Operator: Thank you. Our next question comes from the line of Jeff Silber with BMO Capital Markets. Please proceed with your question.

Jeff Silber: Thank you so much. You highlighted the pressure on the bill/pay spread. Is there anything you can do about that? Obviously, it’s margin driven, but I’m just curious is there anything under your control there?

Carl Schweihs: Yes. Thanks Jeff, nice to hear from you. So, from a pay rate perspective, we kind of talked about this bill rate spread and we’ve expected this when the market conditions are like this. The biggest impact that we have are bill rate increases as well as what we’re seeing is the pay rate growth trends moderate. And so we’ve seen that continue from the last couple of years. We’re even seeing that pay rate trend moderate into July. And so making sure that we’re paying the right wages and also pricing our business appropriately to capture as much demand as we can.

Jeff Silber: Okay, that’s fair enough. You mentioned your expansion in some of the less cyclical areas, skill trades, I think we’ve got. Can we talk about what you’re doing or what you’re planning on doing in healthcare, I know it’s somewhat of a different vertical, but maybe give some examples of the type of positioning that you’re placing there?

Taryn Owen: Yes, Jeff, thank you for the question. Happy to — in our PeopleScout business, we’re seeing some nice new wins in healthcare specifically. I’ll just give a couple of examples of recent wins. You heard us talk in the last quarter about a new engagement that we have actually supporting healthcare clinician roles in charter schools and private schools. That opportunity has now been expanded, where the customer is asking us to now hire LPNs, RNs, and professional roles for them. So, that’s the client expansion example. In the biopharmaceutical space, we’ve just won a deal in Europe where we are helping the customer hire really hard-to-fill niche roles as they are looking to expand their hiring base. And so we have a number of stories like that in our PeopleScout business where we’re continuing to add to the portfolio and get some more customer wins there.

Carl Schweihs: Yes. And just to add on to that one, too, Jeff, is, look, we’ve — the strategy in PeopleScout has really been on professional hires and so we’ve made really good strides there. So, if you look at just kind of both number of customers that are hiring professional roles in our base as well as the number of professional placements made, we’re in double-digit growth in both of those. So, making good progress, not only in healthcare, but in our drive for more professional roles.

Jeff Silber: That’s really helpful. Thanks so much.

Carl Schweihs: Thanks Jeff.

Taryn Owen: Thanks Jeff.

Operator: Thank you. And our next question comes from the line of Marc Riddick with Sidoti & Company. Please proceed with your question.

Marc Riddick: Hey good evening.

Carl Schweihs: Hey Marc.

Taryn Owen: Hey Marc.

Marc Riddick: So, I was wondering if you could spend some time talking about — you mentioned in your prepared remarks the progress you’re making with JobStack and the rollout through the year. I was wondering if you could give us a little more detail sort of where you see things currently and some of the things that you have planned as you get through the year? And then maybe some of the benefits that you’re seeing that maybe don’t get to shine as much given the economic conditions, but maybe you can talk a little bit about the benefits that you’re seeing with JobStack?

Taryn Owen: Absolutely, Marc. Thanks for the question. Our new JobStack app has been rolled out to most of our branches and our national accounts, and we are on track to roll out the remainder of the branches before the end of this year. So, we’re excited about that. Our first priority was to get the app rolled out and ensure that we didn’t have any disruption to the business in that process and the team has done just a phenomenal job in that regard. And once we get rolled out, we’ll be able to start really advancing the release of more features that will offer us more of a competitive advantage. I’ll just give a couple of examples of some of the things that we’ve done so far. Our associates are now able to onboard completely in — through the digital application, reducing the time that it takes them to apply and ultimately get dispatched and paid for work.

And so we’re excited about that. We got some feedback early on from the associates that they wanted to be able to engage in this onboarding process through text messaging and so we just implemented that feature in the last month, allowing our associates to engage first via text and get through that process. In addition to that, we just launched a text reminder. So, our associates get a reminder before a shift and they can respond to us and say, yes, they’re going to show up for their shift today or no, they need to call off, in which case that job automatically goes back to the exchange, allowing another associate to take the shift. And just the early results in the first month that, that has been released is that we’re showing an increased fill rate across the business.

So, excited about that feature. And certainly, we have a robust roadmap to continue to roll out enhancements such as that throughout the rest of this year.

Marc Riddick: And then you kind of touched on where I was going with that because it certainly seems to give an opportunity for greater efficiencies and grading pricing power and the like. Can you talk a little bit about maybe the potential for data build and sort of maybe how that can sort of then be utilized down the road as far as maybe improved analytics and the like and sort of the competitive advantages that you’re looking for there? Thanks.

Taryn Owen: Absolutely. That’s certainly part of the strategy is to have those real-time insights that we didn’t have before. So, a couple of examples that we’re looking at. One is an algorithm that will help us serve jobs to associates that are most likely to take the shift and complete the shift with a 5-star rating from our customers. And so really looking at that ability to predict reliability for the associates showing up for work. So, that’s one example. Another that we’re looking at is pricing, really looking at real-time pricing opportunities that we’ll have with the app, with the data and analytics that we’re able to utilize. Thanks for the question, Marc.

Marc Riddick: Thanks for the answer. I appreciate it.

Operator: Thank you. And we have reached the end of the question-and-answer session. I’ll now turn the call back over to Taryn Owen for closing remarks.

Taryn Owen: Thank you, operator and thank you, everyone, for joining us today. I also want to take a moment to thank the entire TrueBlue team for their resilience and dedication to advancing our mission to connect people and work. We look forward to speaking with you at upcoming investor events and on our next quarterly call. If you have any questions, please don’t hesitate to reach out. Have a great evening.

Operator: Thank you. This concludes today’s conference and you may disconnect your lines at this time. Thank you for your participation.