V2X, Inc. (NYSE:VVX) Q2 2023 Earnings Call Transcript

V2X, Inc. (NYSE:VVX) Q2 2023 Earnings Call Transcript August 8, 2023

V2X, Inc. misses on earnings expectations. Reported EPS is $0.06 EPS, expectations were $0.66.

Operator: Good day, and welcome to the V2X Second Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Michael Smith, Vice President of Treasury, Investor Relations and Corporate Development at V2X.

Michael Smith : Thank you. Good afternoon, everyone. Welcome to the V2X Second Quarter 2023 Earnings Conference Call. Joining us today are Chuck Prow, President and Chief Executive Officer; and Susan Lynch, Senior Vice President and Chief Financial Officer. Slides for today’s presentation are available on the Investor Relations section of our website, www.gov2x.com. Please turn to Slide 3. During today’s presentation, management will be making forward-looking statements pursuant to the safe harbor provisions of the federal securities laws. Please review our safe harbor statements in our press release and presentation materials for a description of some of the factors that may cause actual results to differ materially from the results contemplated by these forward-looking statements.

The company assumes no obligation to update its forward-looking statements. Additionally, I would like to point out that, in addition to GAAP earnings, we will be discussing and reporting various adjusted non-GAAP metrics, including pro forma revenue, adjusted EBITDA and margin, adjusted operating cash flow, adjusted net income and adjusted diluted earnings per share. The definition of these non-GAAP measures can be found in our presentation materials available on our Investor Relations website and in our press release filed with the SEC. At this time, I would like to turn the call over to Chuck Prow, President and Chief Executive Officer of V2X.

Chuck Prow : Thank you, Mike. Good afternoon, everyone. Thank you for joining us on the call today. Please turn to Slide 4. This afternoon, Susan and I will update you on a strong second quarter for V2X. Our over 10% organic revenue growth, significant bookings and awards, and key near-term opportunities are representative of our momentum and differentiation in the marketplace. Our future results reflect the continued innovation, value and commitment that our talented employees are bringing to our clients’ most complex missions. I’d like to highlight a foundational aspect of our business and one that I and the V2X senior leadership team are extremely proud of. With more than 42% of our U.S. employees reporting a military background, V2X is a leading participant in the veterans ecosystem.

I am pleased to announce that, during the second quarter, V2X was once again recognized as a leading employer of veteran VETS Indexes. Our employees, culture and diversity enable success for V2X, and I’d like to thank our over 15,000 global employees that are helping drive positive results across our business while improving outcomes for our clients. Please turn to Slide 5. Our strong 10.2% year-over-year revenue growth continues a double-digit performance demonstrated last quarter and is due to continued expansion on existing programs, contribution from new awards, as well as further success in securing recompete wins. Adjusted EBITDA for the quarter was $76.4 million or 7.8% margin and adjusted diluted earnings per share was $1.01. Importantly, during the second quarter, our net debt-to-EBITDA leverage ratio improved and is now below 3.5x.

The Pacific or INDOPACOM region continues to be a key long-term growth driver for V2X. Revenue increased 41% year-over-year in the region, driven by expansion on existing programs, new efforts and exercises, including Talisman Sabre. The mission requirements continue to increase in the region. Just a couple of weeks ago, the Secretary of Defense conducted a week-long trip in the region, visiting with allies to discuss enhanced force posture, capability development, defense industrial-based cooperation and regional security integration. While overseas, the Secretary also visited with American service member participating in the Talisman Sabre 2023 exercise. The exercise involved more than 30,000 military personnel from 13 nations. V2X is privileged to support this important biannual exercise that is strengthening partnerships and interoperability among key allies.

Looking ahead, we see numerous opportunities to further support our clients’ initiatives and priorities in the region. Bookings activity in the quarter was strong at $2.1 billion in awards to V2X, resulting in a book-to-bill ratio of 2.2x. This yielded a total backlog of $13 billion, growing 10% sequentially. Recent awards, including Naval Test Wing Pacific would drive backlog to over $13.5 billion. Our backlog position V2X for positive momentum leading into 2024. Contributing to bookings was notable success in capturing several new business pursuits, including a $100 million 5-year task order with the Department of State to provide logistics support internationally. This represents our most substantive and strategic win with the Department of State and is a culmination of a multiyear client engagement and targeted growth campaign.

We are also seeing successful results executing our sell-through business model that is leveraging our engineering, software development, testing and production capabilities. V2X has enhanced the breadth of its addressable market with its differentiated solutions, allowing V2X to win new work that I’ll discuss in greater detail shortly. I am pleased to announce that subsequent to the quarter end, V2X began the phase-in of the $440 million Naval Test Wing Pacific award, supporting critical test and evaluation activities for the Navy over the next 7 years. Given the momentum in our business, we are increasing the midpoint of our 2023 guidance for revenue, adjusted EBITDA and adjusted earnings per share. Please turn to Slide 6. V2X is harnessing its converged capabilities and has growing its core programs, securing recompetes and winning new business.

During the quarter, we won over $520 million of recompetes, further extending our strong foundation of business. This includes an 8-year $328 million contract with the Naval Facilities Systems Command to provide infrastructure sustainment, including the application of our unique converged solutions. We also secured a 5-year $122 million contract with NAVAIR Fleet Readiness Center Southwest for depot-level maintenance support services. A compelling example of how our teams are leveraging our core competencies to win new business with new clients is the Department of State win referenced on the prior slide. This Department of State mission is also being supported by our LOGCAP V team, which was awarded a $165 million 1-year task order to provide critical operational and life support logistics to the state effort.

I was in the Middle East region last week engaging with our clients and teams. Our agility and high level of readiness to support mission requirements was evident, recognized by our clients and with a strategic differentiator for V2X in the Department of State and LOGCAP awards. Looking ahead, we see significant opportunity to further support the global missions of the Department of State, while leveraging V2X’s global contingency and logistics capabilities with our geographic footprint. We are seeing successful results executing our sell-through business model by leveraging our engineering and manufacturing center of excellence. This unique facility provides over 900,000 square feet of space, allowing V2X to deliver engineering, software development, testing and production solutions in support of modernization and sustainment efforts.

Our ability to provide full life cycle solutions from concept to sustainment is a significant differentiator that is driving new awards. For example, during the quarter, V2X successfully finalized three separate efforts with new clients that utilize our engineering, integration and manufacturing capabilities. This work is important to note because it is a true representation of the increased pipeline and opportunities due to the merger. We are also awarded an engineering development and prototyping effort with a new client that is expected to lead to new proprietary products with enduring follow-on business. This opportunity represents a brand-new product that will be designed, produced, and sustained by V2X. Our market approach and the merger enabled the successful capture of this program.

Please turn to Slide 7. We see significant opportunities to drive growth with our modernization and sustainment solution across core markets while unlocking additional opportunities that the company was not able to previously pursue. One opportunity we see nearer term is with the proprietary Gateway Mission Router 1000 or GMR-1000, which is a fully ruggedized and cyber-hardened multi-domain router that provides cutting-edge situational awareness. The GMR solution was originally developed and deployed to provide enhanced situational awareness for helicopter pilots. Our continued advancement of the technology have yielded the GMR-1000, which is capable of integrating data from multiple sources across classified and unclassified connections, enabling a fully converged environment on the battlefield.

Over the past year, the GMR-1000 has been successfully integrated and tested on air and land systems, demonstrating its ability to leak information across various technologies and platforms. As an outcome of a successful demonstration, the Army recently issued a notice stating that it intends to issue a sole-source contract to V2X to produce up to 3,000 GMRs. Beyond this potential near-term opportunity, we believe the platform agnostic force multiplying benefits of the GMR-1000 have broad applicability and can be integrated on numerous platforms in support of the DoD’s Joint All Domain Command and Control or JADC2 effort. Please turn to Slide 8. GMR is a perfect example of how V2X is able to combine its deep capabilities and mission expertise to develop cutting-edge solutions for use on tomorrow’s battlefield.

V2X also had a rich history of developing solutions that insert innovative technologies to modernize the capabilities of legacy platforms, significantly improving their useful life. For example, today, V2X is modernizing and enhancing the effectiveness of the F-16 Fighting Falcon by inserting new technology and upgrading the aircraft Center Display Unit or CDU. It’s important to note that V2X is the OEM of the CDU and our success in helping the Air Force provide its pilots with new technology and advanced capabilities at minimal cost has allowed us to expand our original work. We are now extending our efforts across the entire Air Force fleet of F-16, which currently stands at over 1,000 aircraft. We believe V2X is well positioned to grow its work associated with this program and modernization of the F-16.

Nearer-term, we Air Force is expected to award a contract to upgrade approximately 300 CDUs. Longer-term, our team was focused on continuously incorporating new technology to enhance the digital backbone of this important aircraft that’s expected to continue flying for the next couple of decades. Now, I’d like to turn the call over to our Chief Financial Officer, Susan Lynch, to discuss our second quarter results.

Susan Lynch : Thanks, Chuck, and good afternoon, everyone. Please turn to Slide 9. Our second quarter financial results were excellent across the board and reflect continued momentum in our business. Pro forma revenue increased 10.2% year-over-year to $977.9 million. Revenue growth was achieved by expansion on existing programs, the contribution from new business wins award in late 2022 and securing key recompete programs in the first half of 2023. Thus far, in 2023, we witnessed an acceleration of deliverables that were originally contemplated to be recognized in the second half of the year, including the exercises in INDOPACOM. Advancing and protecting our core in addition to growth through new pursuit wins is fundamental to V2X growing its backlog and delivering on its commitments.

During the quarter, our team’s hard work and dedication yielded strong results, driving significant bookings of $2.1 billion. This resulted in a total backlog of $13 billion, which was up 10% on a sequential basis, representing over 3.3x revenue coverage. Our total backlog provides solid visibility for 2023 and beyond, and does not include the over $400 million Naval Test Wing Pacific award or the $100 million 3-year cybersecurity contract win. The cybersecurity award is still under protest and is the sister contract to our OMDAC work, which supports the largest cyber center for the U.S. Army outside of the U.S. We have been incumbent on OMDAC since 1995 and are excited to begin transition and deliver enhanced value for our client in the Continental U.S., adjusted EBITDA, which adds back merger and integration-related cost was $76.4 million or 7.8% margin.

Adjusted EBITDA in the second quarter was driven by program performance, contribution from the exercises in INDOPACOM and recognition of milestones on specific programs that occurred earlier in the year than anticipated. Interest expense for the quarter was $32 million. Cash interest expense, which adds back amortization of debt issuance cost was $29.8 million, adjusted diluted EPS, which adds back amortization of intangible assets, integration and debt issuance cost was $1.01. Diluted shares outstanding were 31.6 million shares. Moving on now to Slide 10. Cash on the balance sheet at quarter end was $70.3 million, and net debt was $1.177 billion. Net debt improved $112 million sequentially in the second quarter. At the end of the quarter, our net consolidated indebtedness to EBITDA or net leverage ratio was 3.48x and approximately 0.4 of a turn improvement from last quarter.

This improved leverage ratio lowers the grid pricing on our term loan, helping to further lower interest expense and offset recent increases in the forward yield curve. We believe our net debt position and leverage ratio will continue to show improvement in 2023 as operating cash flow ramps in the second half of the year, consistent with normal seasonality. Cash flow from operations in the second quarter was $116.6 million and benefited from the establishment of a master accounts receivable purchase agreement for MARPA. This facility further enhances our liquidity and balance sheet flexibility. Adjusted operating cash flow for the quarter was $10.9 million and excludes the benefit of the previously-mentioned MARPA facility and $7.3 million of M&A integration and related payments in the quarter.

With approximately $400 million of available capacity under the revolver and over $70 million of cash on the balance sheet, the company has nearly $500 million of liquidity for future growth and to support the needs of our customers. V2X’s fundamentals remain strong. Our solid free cash flow generation, long-term backlog, and excellent revenue visibility support our ability to rapidly delever, further enhancing equity value for our shareholders. Please turn to Slide 11. I am pleased with our excellent results this quarter, and for the first half of the year, our teams continue to drive excellent results across the board, executing on all aspects of our strategy to be a leader in the operational segment of the broader federal services market.

V2X remains highly aligned to a well-funded and key priority spending areas for our clients, which is creating tailwinds and opportunities for growth. Given the momentum, solid visibility, and positive trends in our business, we are raising the midpoint of our full year revenue, adjusted EBITDA, and adjusted diluted EPS guidance. Now, I’d like to open the call to questions. Operator?

Q&A Session

Operator: [Operator Instructions] Our first question today will come from Ken Herbert of RBC Capital Markets.

Stephen Strackhouse : Chuck, Susan, and Mike, congrats on this quarter. This is Steve Strackhouse on for Ken Herbert. First question would be on the significant bookings in the quarter. It looks like you guys had a really nice quarter with the book-to-bill. Can you maybe discuss the margin profile of that backlog and maybe how the combination of Vertex and Vectrus is really helping generate revenue synergies?

Chuck Prow: Yes. I think — it’s a great question and really have a two-part answer to it. So the — we had a very nice sales quarter. And as normally happened, the mix of those sales are actually pretty much in line with what you see the results that we produce today. I will also say, however, that there were a significant amount of those sales, both with new contracts as well as, what we call, base expansion, the expansion of our existing contracts that were largely due to driving capabilities from both prior organizations into the other clients and missions that we’re, again, privileged to support. So we’re really seeing a really nice set of revenue synergies from the combination. And I’m also thrilled that our win rates have maintained their pre-merger levels, which is obviously something we spend a lot of time making sure it would happen.

Stephen Strackhouse : Got it. And then maybe if I can just ask one more. It looks like free cash flow in the quarter was quite positive. Can you maybe discuss the availability to pay back debt a little bit sooner than initially anticipated? I think your initial goal for the full year was to have a net leverage ratio of about 3.6%. You guys are certainly ahead of that. So just any commentary around that as well.

Susan Lynch : Right. So yes, we implemented the master account services agreement in the quarter, which generated about $113 million of incremental cash flow and took $112 million of that and paid down the revolver, which put us at about 3.48x leverage ratio for the quarter with $1.177 billion of debt. We had previously targeted, Steve, to be at about 3.5x by the end of the year. Right now, we’re going to work hard to get that net debt below $1.1 billion and hopefully to continue to improve our leverage ratio.

Operator: Our next question will come from Brian Gesuale of Raymond James.

Brian Gesuale : Nice job on the quarter. I wanted to maybe peel into that pipeline of opportunities. You’ve got $5 billion pending adjudication and another, what is it, I think you said $19 billion in the pipeline. Those are huge numbers. Can you maybe talk a little bit about where some of the opportunities lie by broader customer sets? That Department of State win was impressive, and it seems like you’re really broadening the base of business as well as the entities are coming together with the integration here.

Chuck Prow: Sure. And what is really great from my perspective to see is that pipeline is a very broad-based pipeline. We have significant opportunities in state additional opportunities. We have opportunities, obviously, with our LOGCAP clients and additional opportunities with regard to potential exercises as well as contingency operations. Our aerospace business continues to have a very, very healthy pipeline, but I’d also like to really emphasize that our advanced technology business to include our advanced solutions that we talked a bit about today continue to be very robust. And those solutions are really the springboard by which we can sell additional services into our existing clients. And the results that we posted this quarter were evident of that strategy, really, really working. The revenue synergies of the combination of becoming apparent to all of us through the numbers and what we posted this quarter.

Brian Gesuale : Fantastic. Maybe just a follow-up because it did sound like some of the products are really starting to gain some traction. Can you remind us maybe the mix of that as a part of the business, just generally speaking? And then I imagine the margin profile is quite accretive as well.

Chuck Prow: The margin profile is accretive that we’re thrilled with. The solutions themselves are yet, I would say, probably a sub-10% of our business, but up from not very much at all. And we’ll also say that the overall advanced technology aspect of our business continues to grow, and is in fact, quite material. So this transition that we’ve been on through the converged strategy and applying that convert strategy to the broader operational segment of the broader federal services marketplace is really bearing out in terms of new awards and new work. And I would like to think that here over the next couple, three, four quarters, we may get more specific in terms of the actual scale and profitability of these solutions we’re talking about.

Brian Gesuale : Great. Just one more for me and then I’ll jump back into the queue. INDOPACOM’s continue to be strong, and we have really ambitious views for that longer-term. Can you maybe help us shape the first half of the year and the second half of the year? Sometimes it can be a little bit lumpy with exercises and other things kind of thrown in there.

Chuck Prow: Yes. So when we’re talking specifically about 2023, the teams did an excellent job in working with our clients. And much of the exercise work that we had planned for the year was, in fact, pulled into the first half of the year. I will tell you, though, that the emphasis from our clients on strengthening the capabilities and presence across the INDOPACOM region remains significant. We have opportunities in our pipeline in the second half of the year and early 2024. And as you’ve seen in the last couple of quarters, the teams have executed very, very nicely in terms of pulling both revenue and profit to the left. We are anticipating a good second half of this year, and I’m going to continue to focus with the team on expediting as much ’24 revenue as we can into the back half of this year.

Susan Lynch : And if I could just add on to that. We transitioned LOGCAP V Kwajalein, April 2022. So as you go into the third quarter, this will be the first time where we have a year-over-year comparison, it is pretty close to apples-to-apples. And the other thing that’s interesting to note is the revenue coming from Asia now is greater than the revenue coming from Europe for V2X, which I found to be interesting.

Operator: Our next question is from Tobey Sommer of Truist Securities.

Tobey Sommer : I’ll pick up where you left off. And say, in the INDOPACOM region, are you positioned now with the right contract vehicles and all the right customers? And I’m basically saying, are there any new customer relationships the company would like to establish in order to kind of even more fully participate with the strategic focus and pivot that direction?

Chuck Prow: Absolutely. I mean, amongst the quantitative revenue and profit that we’re seeing from the INDOPACOM region, what is equally as important as the points of presence that we have across, I believe it’s now more than 13 islands and locations. So we have a very robust pipeline with the Navy in addition to LOGCAP for various bases throughout the region. We have opportunities outside of LOGCAP with the Army. And again, some of the state department opportunities we talked about may include opportunities as well. So the point that I’d really like to emphasize is that, in addition to the revenue and profit, it’s really the points of presence that allow us to bid in a very, very kind of thoughtful and lean way because we’ve already established the necessary infrastructure, such as country registrations, tax capabilities, et cetera, to operate very seamlessly in that region.

Tobey Sommer : Are there additional geographies that from the customers’ perspective for Naval Test Wing that it would make sense operationally to smooth things out and from the customers’ perspective that you could bid on now that you’ve got some significant geographies under your belt?

Chuck Prow: Yes. The way the concept of operation work is that having both Navy Test Wing Atlantic and Pacific is a big deal from a Navy perspective. Again, our points of presence in the Middle East and INDOPACOM have opened up additional avenues for our Aerospace teams to pursue new opportunities. But when we get back to these client campaigns that we talk about often, the focus that we have in our aerospace business is in broadening the scope of our relationships with both the Army as well as the Special Forces and the Air Force. We obviously have work in all of those clients, but the depth that we have in the Navy is something that we’d like to replicate across the entire client set and then with the clients that will come geographies.

Tobey Sommer : Last one for me, if I could sneak one in. When do you think the company will again be poised to entertain material acquisitions based on your scheduled debt repayment and where you’re comfortable from a leverage perspective?

Chuck Prow: Well, we’ve talked about — we wanted to get below 3.5x. We’ve done that now. We really like to be in the 2 to 2.5 range. I want to be very clear that we are always looking at new and creative ways to grow inorganically. But current course and speed, when you take our growth plus pay down, it would probably say after this year. But again, as you know, there are always new and creative ways to grow inorganically if the market conditions are right.

Operator: Our next question is from Joe Gomes of Noble Capital.

Joseph Gomes : Great quarter. So Chuck, in the last quarter when we talked, we had talked a little bit about the pace of award and you said they were a little bit labored on the last call. It looks like that might have changed. Just wanted to get your insight into the kind of the pace of awards that you’re seeing here in the second, what you would expect in the second half of this year?

Chuck Prow: Well, the floodgates broke for the quarter, for sure, and we’re thankful for that. As it was not in the prepared comments, but it wasn’t a press release. We now have $19 billion of total pipe and $5 billion currently under evaluation, which are both up substantially from last quarter. So the point that I would make there is that the rate and pace of the RFPs that we’re responding to is not slowing down at all. As I think has historically been the case is that the awards may be a bit lumpy, but it is fair to say that the pace that we saw here over the last couple of months was significantly improved over, let’s just say, 2022.

Joseph Gomes : And any — in the second quarter, any awards that were given out that you missed out on that you thought you were in good position to win?

Chuck Prow: Well, I think across the portfolio, we’re doing an excellent job of protecting our base, both in terms of recompetes and new wins. When it comes to taking business away from our traditional competitors, I think we’re — as I’ve always said, we don’t give out the run rates, but I think we’ve met with a pretty high average. And again, I don’t want to dig up too much data from the past. But as you might remember, both Navy Test Wing Pacific and Navy Test Wing Atlantic or take away from multiple decade incumbents, if you will. So again, I think from a win rate perspective, we’re continuing to do well. We don’t win them all, but that’s the way the marketplace works. But again, I believe we’re winning more than our fair share, Joe.

Joseph Gomes : And one more, if I may. Historically, we’ve talked about kind of that 40-60 split between the first half and second half and looking what the very strong first half has been, and you’ve talked a couple of times about pulling some business into the first half. It looks like the second — this year is going to be more of a 50-50 split between the first and the second half. Is that accurate?

Chuck Prow: That’s what the guidance would indicate. And again, the execution of our team the last couple of quarters have just been nothing short of outstanding, pulling transactions and deliverables, milestones to the left. That doesn’t always happen. Yes, I’m going to — I’ll continue to bet on the team. But this year, based upon our first half results and the guidance for the full year, it’s looking more like 50-50. And I really attribute that more to the execution of our teams because I think that the normal posture for our business anyway is that 40-60 split we’ve talked about for the last 5 or 6 years.

Operator: Our next question will come from Sahej Singh of Stifel.

Sahej Singh : This is Sahej on for Bert Subin. I guess, maybe I’ll touch on MRO. MRO was expected to be a headwind coming into the year. And now that we’re halfway through the year, how has that headwind changed? And what is your view towards maybe the near-term? And then also the medium-term in terms of opportunities specific to MRO?

Chuck Prow: Yes. First of all, the MRO business is a phenomenal business. And with the elongation of the various platforms out there, that business does nothing but look more promising over time. With regard to the natural retirements that occurred this year, they are on pace to our plan. They’ll continue in place through 2023 and will actually begin to moderate a bit as we move into the second half of ’24. But again, these are all — they were planned retirements, they’re progressing as planned. In fact, some of them actually slowed a bit to the positive side. But again, that MRO business, again, think about as platforms continue to be elongated in terms of their useful life. That is an enormous opportunity for us. The other part — point that I’ll make on that with regard to sustainment, that Indianapolis facility and our 900,000 square feet of kind of manufacturing and modification capabilities is really beginning to demonstrate the life of its own.

The — one of the benefits that we have realized through the Vertex acquisition has been the fact that, that Indianapolis facility is no longer encumbered with OCI reality that they had when they were owned by Raytheon. And so we’re seeing the benefit of that. It’s early stages, early innings, as I’ll say, but we’re seeing some really, really positive signs of that facility and the capability within that facility is going to be good for a long time to come.

Sahej Singh : Okay. That’s helpful. And then maybe I’ll touch on logistics really quick as well. Just generally, what do you see as the staying power of logistics demand, maybe within the Army, and then how strong is that demand across the various different branches? And is it as simple as correlating top line spend to buckets like the Pacific Deterrence Initiative, for example?

Chuck Prow: Yes. I would frame it, yes that, that’s a good way to look at it. But I would also — I would look at the kind of the underlying demand signal is that OCONUS when commands or either exercising or conducting other types of activities, it is the industrial base that is an essential part of that capability. And through LOGCAP and AFCAP for that matter, we have a significant advantage in the CENTCOM and INDOPACOM regions. And so with logistics, as OPTEMPO increases either through natural activities like storms, exercises or activities like we’re seeing today in Eastern Europe, that all is a — again, a demand signal for increased OPTEMPO to both V2X in our industry. The last point I’ll make, just within our prepared remarks and I can’t emphasize it enough, the $100 million State Department win to conduct an important humanitarian activity was currently being supported by $165 million task to do all of the — to do the logistics and life support for that same State Department activity.

That’s the model there. If we can replicate that model, which we fully intend to do, that bodes well for, first of all, the mission intimacy that we will have as an organization as well as future revenue growth over time.

Operator: At this time, we will conclude the question-and-answer session. I’d like to turn the conference back over to Chuck Prow for any closing remarks.

Chuck Prow: Well, thank you, everyone for being on the call today. I’ll thank our analysts for their great questions. We look forward to continuing to drive results, and we’ll talk to you here next quarter. Have a good day.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines.