V2X, Inc. (NYSE:VVX) Q3 2023 Earnings Call Transcript

V2X, Inc. (NYSE:VVX) Q3 2023 Earnings Call Transcript November 6, 2023

V2X, Inc. misses on earnings expectations. Reported EPS is $-0.21 EPS, expectations were $0.84.

Operator: Thank you for joining us for V2X Third Quarter 2023 Earnings Conference Call and Webcast. Today’s call is being recorded. My name is Sherry, I will be the operator for today’s call. At this time, all participants have been placed in the listen-only mode. Following management’s presentation, I will open up the call for a question-and-answer session. [Operator Instructions] And now I’ll pass the call over to your host, Mike Smith, Vice President of Treasury, Investor Relations and Corporate Development for V2X. You may begin.

Michael Smith: Thank you. Good morning, everyone. Welcome to the V2X third quarter 2023 earnings conference call. Joining us today are Chuck Prow, President and Chief Executive Officer; and Shawn Mural, Senior Vice President and Chief Financial Officer. Slides for today’s presentation are available on the Investor Relations section of our website, 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’d like to point out that in addition to GAAP earnings, we will be discussing and reporting various adjusted non-GAAP metrics, including 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’d like to turn the call over to Chuck Prow.

Chuck Prow: Thank you, Mike, and good morning everyone. Thank you for joining us on the call today. I’d like to take a second to introduce and welcome Shawn Mural, our new Chief Financial Officer. Shawn joined V2X from RTX Corporation just last month. Shawn brings a wealth of financial experience, most recently serving as CFO of Raytheon, as well as a deep understanding of the aerospace and defense industry, which will be beneficial to V2X as we continue to the next phase of our company’s growth.

Shawn Mural: Thank you, Chuck. I’m excited to join V2X, be part of the continued success of the company, executing on our strategy and delivering on our commitments, to increase value to shareholders.

Chuck Prow: Please turn to Slide 3. Before we get started, in advance of Veterans Day, I would like to take a moment to recognize all veterans for their service to our nation, particularly those who are part of the V2X team and support many of our clients’ critical missions, every day and in all environments. We thank you, for all you do for our nation and for our company. I’d also like to recognize all of the 15,000 plus V2X global employees, for their continued around-the-clock and uninterrupted support to our clients, especially in light of current global affairs. Your commitment and resilience are unwavering and something, we are extraordinarily proud of. Finally, I would like to note that V2X recently released its inaugural environmental, social and governance or ESG report.

This report, which is now available on our website marks a significant milestone for our company, furthering our long-standing commitment to ESG and creating long-term value for our stakeholders. Our ESG journey has always been an integral part of our corporate values, and we continue to make great strides towards a brighter, and more sustainable future. Please turn to Slide 4. Revenue in the third quarter exceeded $1 billion, which is a record for V2X and was driven by growth in CENTCOM and INDOPACOM. Adjusted EBITDA for the quarter was $64.7 million, or 6.5% margin, and adjusted diluted earnings per share was $0.73. Our margin in the quarter was lower than expected, due to contract mix changes, higher volume for mission and infrastructure support, as well as the performance in certain integrated electronic security programs.

We have taken the actions necessary, to improve the program performance issues, we experienced this quarter. Our cash flow generation was strong and has enabled V2X, to reduce its net debt by approximately $89 million through the third quarter. Furthermore, our solid fundamental profile has allowed V2X to improve its interest expense through a repricing of our Term Loan B. Our backlog in the third quarter increased to $13.3 billion, an all-time high for the company, and was driven by bookings of $1.3 billion, which represents a 1.3 book-to-bill for the quarter at over three times revenue. Our backlog represents solid revenue visibility going into 2024. Notable bookings in the third quarter include our $440 million Naval Test Wing Pacific Award, which achieved full operational capability in September.

We were also awarded a $190 million contract for training support services that, I will discuss in greater detail shortly. During the quarter, we continued the organic expansion of our environmental capabilities and were awarded an $85 million, two-year contract to support the recovery and remediation of drinking water in the Pacific region. This win builds on V2X at original work won in December of 2021, to support the Department of Defense with the establishment of a water supply system for military housing at Red Hill, Hawaii. Our ability to deliver solutions that generate tangible results and public health benefits have led, to incremental work and are now helping, to deliver safe drinking water, to the local communities. This capability has also been leveraged to win similar work in Japan.

We are proud, to be supporting such an important environmental mission, and believe there is significant opportunity, to expand our efforts to other geographic reaches. Additionally, and related to the Pacific. During the quarter, we were awarded a small, but important subcontract to support the establishment of a smart warehousing capability for the Navy in Guam. This builds on our work performed at naval-based Coronado developing a 5G enabled smart warehouse. In Guam, V2X will provide 5G asset tracking, design, implementation and testing, as well as cybersecurity support. Our continued expansion in the Pacific or INDOPACOM has resulted in a 25% year-over-year increase in revenue in the third quarter. We believe INDOPACOM remains a key growth driver for V2X.

Of note, on October 19, the DoD released its China Military Power Report, which continues to identify China as a top-facing challenge. The report details China’s national, economic and military strategy, current capabilities and future modernization goals pursuant, to that country’s stated objectives in the region and across the globe. The DoD is continuing to invest in capabilities for new operational concepts, deepening relationships with regional allies, and modernizing its force posture in the region. We remain committed to supporting our clients’ initiatives and priorities in the region. I’m pleased to announce that subsequent to the quarter end, V2X was awarded a $458 million, five-year fixed price program to provide organizational, intermediate and limited depot level maintenance and logistics support for the F-5 Adversary Aircraft for the Navy and Marine Corps.

The F-5 contract, combined with our Naval Test Wing Pacific and Atlantic Awards equates, to over $1.7 billion we have been awarded with the U.S. Navy over the past 18 months. These wins are a testament, to our strong past performance as well as our commitment, to delivering unique and value-added solutions that, provide differentiation and enhance client outcomes. Importantly, we are executing the expand the base component of our strategic framework, and we’re successful in achieving extended scope, through client engagement initiatives on existing business, which have yielded $332 million of awards in the quarter, and $1.2 billion year-to-date. This is a testament to our deep client relationships, past performance and capabilities. Beyond the awards we’ve just discussed, we believe our strong pipeline of new business, including $6 billion of bids currently pending award and the $19 billion of bids, we plan to submit over the next 12 months bode well for future growth.

Regarding guidance. Based on our performance to-date and the strength of our backlog, we are increasing the 2023 revenue midpoint. With respect to adjusted EBITDA and adjusted EPS, we are lowering our outlook and midpoint to reflect Q3 performance, reduced joint venture income in the year, as well as delay in national security-related effort. With strong revenue, performance and collection year-to-date, we are maintaining guidance for adjusted net cash provided by operating activities. Please turn to Slide 5. We are purpose-built to deliver technology and operational solutions across the mission lifecycle. We remain focused on providing converged solutions in our core operations and logistics, aerospace, training and technology markets. Last quarter, we spoke about V2X’s operational technology capabilities and solutions, and our unique ability to deliver engineering, software development, testing and production solutions in support of modernization and sustainment efforts.

Today, I’d like to discuss the training market and how V2X is delivering comprehensive global training solutions while shaping the foundation for the modernization of next-generation, live, virtual and constructive training. V2X has a track record of being a leader in this market with institutional knowledge that has been built over almost 30-years of managing U.S. combat training centers. We provide training for any environment, anywhere in the world and proudly support the training of approximately 120,000 war-fighters annually. During the quarter, we secured a $190 million, five year fixed price contract to continue providing training and range operation services to the U.S. Army in CENTCOM, specifically at Camp Arifjan and Camp Buehring in Kuwait.

The V2X team will provide training support services as well as instruction for operation and maintenance of training aids, devices and simulators, fixed and deployable ranges, and numerous facilities. If you visited Kuwait today, you would see V2X employees providing a full spectrum of services that support the mission lifecycle. This includes operating and maintaining installations and infrastructures, providing end-to-end cybersecurity and network engineering support, aviation, maintenance and repair and training. This breath and scale allows V2X the opportunity to deliver higher value, high-impact services through the expansion of scope on existing business and execution of our sell-through model. Beyond CENTCOM, V2X also delivers training solutions at Fort Irwin in California, which is home to the U.S. Army’s National Training Center.

All U.S. military services, as well as other government agencies and some foreign military units train at the NTC. Additionally, V2X provides similar services at the Joint Multinational Readiness Center or JMRC in Germany, which oversees training of USs Army Europe. JMRC provides training capabilities to the U.S. Army, European allies and other partners. JMRC integrates multinational participation into every rotation. As you can see, V2X is delivering training capabilities at scale across the globe. We also continue to invest in the future and are developing the next generation of training capabilities, techniques and enablers. Please turn to Slide 6. We remain focused on delivering solutions that can be applied across all aspects of our client’s mission lifecycle.

This slide identifies representative capabilities and programs that V2X is delivering for our clients across the globe. V2X is differentiating its capabilities and service offerings at the intersection of technology and operations. The scale, breadth and diversification of our capabilities and offerings provide end-to-end support of our client’s requirements, expands the V2X addressable market, provides additional opportunities for our people, and will continue to create value. Please turn to Slide 7. The capabilities just discussed are demonstrating momentum, which is visible in our $1.3 billion of awards and record $13.3 billion of backlog. Importantly, our funded backlog is approximately $3.2 billion, which is up from $2.6 billion at the end of 2022.

This provides strong revenue visibility moving into 2024. Backlog does not include the $458 million F-5 contract discussed earlier. Additionally, backlog does not include the approximately $100 million cybersecurity support award that was announced in the first quarter as the contract remains in protest status. Finally, beyond the previously mentioned awards, we believe our strong pipeline of new business, including $6 billion of bids pending award and the $19 billion of bids we plan to submit over the next 12 months bode well for our ability to continue adding new work to backlog. Now I’d like to turn the call over to Shawn for a review of the financials. Shawn?

Shawn Mural: Thank you, Chuck, and good morning, everyone. Please turn to Slide 8 where I’ll discuss our third quarter results. V2X reported revenue of $1 billion in the quarter, 4.5% growth year-over-year, which was a record for the company as Chuck mentioned. This top-line performance was achieved through expansion on existing programs, the contribution from recent new business phasings and securing over $1 billion in recompete programs year-to-date. Several successful captures throughout the year have contributed to revenue growth for the company. This includes our initial task order with the Department of State, which was awarded in Q2 and reached full operational capability approximately two weeks ahead of schedule. Importantly, our performance has already resulted in additional scope and work related to this effort.

Adjusted EBITDA, which adds back merger and integration-related costs was $64.7 million with a 6.5% margin. Adjusted EBITDA and margin in the third quarter was lower on a year-over-year basis due to contract mix driven by mission and infrastructure support volume, performance on certain integrated electronic security programs, and strong execution achieved in the prior year. We expect a sequential improvement in adjusted EBITDA and margin in the fourth quarter. Adjusted diluted EPS, which adds back amortization of intangible assets, integration and debt issuance costs was $0.73 based on 31.8 million shares outstanding. Interest expense for the quarter was $30.3 million. Cash interest expense, which adds back amortization of debt issuance costs was $28.1 million.

Please turn to Slide 9, where I’ll discuss our year-to-date portfolio composition. Our geographic mix through the third quarter reflects our progression and expansion in the Middle East and the Pacific. The Middle East comprises 30% of revenue and the Pacific now contributes 7% of our revenue. Our revenue from the U.S. and Europe currently comprises 58% and 5% respectively. From a client perspective, our engagement initiatives and growth on LOGCAP V have increased our percentage of revenue with the army to 41%. Navy contributes 31% to revenue and is expected to increase in 2024 as we execute a full year of Naval Test Wing Pacific and reach full operational capability on the F-5 program. Regarding contract type, a percentage of cost plus revenue is currently 54%.

Based on our current backlog and pipeline, we believe our contract mix will likely remain more weighted towards cost-plus type of contracts in the near term. Please turn to Slide 10 to discuss cash and liquidity. Cash generation was strong and net cash provided by operating activities was $135.2 million year-to-date. Adjusted net cash provided by operating activities was $83.6 million year-to-date, which adds back $20.9 million of M&A and integration costs with $13.4 million of CARES Act payments and removes the $85.8 million contribution from the markup. Cash on the balance sheet at quarter end was $76.3 million excluding $2 million of restricted cash. At the end of the quarter, net debt was $1.132 billion. Our cash generation has enabled us to reduce total debt by $88.9 million year-to-date.

The net debt to EBITDA leverage ratio was 3.46. Our strong fundamentals and cash flow profile allowed V2X to achieve improved pricing on our Term Loan B, which occurred shortly after the quarter close. We expect the new pricing to yield over $2 million of annual interest expense savings. The company’s liquidity position remains strong with over $500 million in capacity, which includes approximately $434 million of availability on our revolver. Please turn to Slide 11. As Chuck mentioned previously and based on what we are seeing in the business, we are raising the low end and midpoint of our full year revenue projections. This reflects the growth that we have seen on awards from earlier in the year. Giving Q3 results and our Q4 expectations, we are lowering the ranges for adjusted EBITDA and adjusted EPS.

This change incorporates year-to-date results including the program performance issues mentioned earlier, reduced JV income and timing of a national security support activity. We are affirming guidance for adjusted net cash provided by operating activities. Chuck, back over to you.

Chuck Prow: Thanks, Shawn. Please turn to the final slide. I’d like to reiterate our strong belief that V2X is well-poised for future growth and value creation. V2X is a leader in the operational segment of the broader federal services marketplace with a robust $160 billion addressable market, significant contract backlog, differentiated capabilities, diversified portfolio and alignment to well-funded budgets, and our clients most pressing, enduring and contingency critical mission priorities. Now I’d like to open the call to questions. Operator?

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Q&A Session

Operator: [Operator Instructions] Our first question is from Joe Gomes with Noble Capital Markets. Please proceed.

Joe Gomes: Good morning. Thanks for taking my questions.

Chuck Prow: Hi, Joe. How are you?

Joe Gomes: Good. So, Chuck is why don’t maybe give us a little update? Last quarter you talked about the GMR-1000 in the Army and the Air Force, the CDU. How those two programs were proceeding here?

Chuck Prow: Yes, both have actually made progress. We’ve received one of them a sole source. Request for proposal which we’re in the process of providing. Neither of them have started nor will start this year. You know, some of the backdrop there is the current global affairs. But again, we’re very pleased with our client’s acceptance of those two capabilities. And in one case, again, we have in fact received and are responding to a sole-source RFP.

Joe Gomes: Okay, thank you for that. And then, we’ve talked about this in the past you know, in a continuing resolution and normally you have stated how given where you guys are focused, they typically don’t have that big of an impact on V2X. I was just wondering, you got 6 billion of pending awards, obviously there’s plenty more opportunity out there. How if at all, is the continuing resolution impacting you guys the pace of pending awards or maybe pushing out some of these new opportunities that are out there?

Chuck Prow: Joe, you’re right on. The continuing resolution does affect the rate and pace of new awards. We’re very pleased with our $1.3 billion awards we just announced here for the quarter. But you can just tell by the bids submitted as well as the $19 billion of bids in the next year, it continues slow as it has for a while. I will tell you, and you saw some of this in the revenue we just announced, that OPTEMPO is also a big driver of our business and we are seeing, as you would imagine, very high levels of OPTEMPO given what’s going on across the globe.

Joe Gomes: Right. And one more from me, if I may, and I’ll get back in queue. Great job on the recompetes. But just kind of on the flip side, were there any recompetes during the quarter that were meaningful that you lost?

Chuck Prow: No, there was nothing material that was lost. And again, as we talked about in the past, as we look into 2024 as well, we have no recompete more than 2% of revenue that will be awarded next year.

Joe Gomes: Great. Thanks, again. Nice quarter, and I’ll get back in queue.

Chuck Prow: Thank you. Good talking to you.

Operator: Our next question is from Ken Herbert with RBC Capital Markets. Please proceed.

Ken Herbert: Yes. Hi, good morning. Chuck, and Mike and Shawn, welcome to the call.

Chuck Prow: Thank you.

Ken Herbert: Maybe Chuck or Shawn, just to start out, is it possible to parse out maybe the gross margin impact in the quarter from either mix or the – sounds like a specific program around the electronic security or maybe a few programs. But how much of those respectively maybe impacted gross margins or maybe adjusted EBITDA? But how do we think about parsing those out if possible?

Shawn Mural: The best way to think about that is our expectation for the quarter was something closer to $70 million versus $65 million. And the – that gap is from the electronic security program performance issue that we discussed and have addressed, as well as equity income. The remaining amount of EBITDA to the midpoint of the prior guide is all timing related with regard to mix and the national security activity that we discussed.

Ken Herbert: Okay, helpful. And it sounds like your commentary, I mean, the fourth quarter should see a nice sequential inflection, and it sounds like you should have good visibility on that based on the revised guidance. As you look at the fourth quarter, is there any area you’d call out, Chuck, as maybe an area of risk? Or what’s the opportunity, as you think about the range of adjusted EBITDA in the quarter that gets you to sort of the upper end or the lower end for the full year?

Chuck Prow: Again, I think the risk is associated with timing. You know, there are upsides from our kind of business results perspective, given the current global affairs. But there’s also a reality of potential delays. So, the fluidity right now in our client’s demands of us are at a very, very high level, probably the highest level since I’ve been in the role. So I would say the risk is more around timing of things that we had counted on here in the near term. And again, it is timing risk. The opportunities aren’t going away. It’s just a prioritization, given recent global affairs.

Ken Herbert: Okay, that’s helpful. Because it sounds like it’s more just broader timing issues than specifically around, say, timing of the CR. And to that point, I know it’s early, but your backlog activity, contract activity, everything’s great. How much better could top-line growth in ’24 perhaps be than the implied growth this year?

Chuck Prow: So, again, how I would answer that is around the realities of the current global situation. We have a higher OPTEMPO, as you can see in our revenue. But we have several demand signals from our clients that have yet to come to fruition. So that would say is that, we see higher OPTEMPO on our current contracts. We have several demand requirements from our clients which could lead to new contracts. But at this point in time, none of those have actually closed. And again, the situation remains fluid and we continue steadfast support of our clients around the globe.

Ken Herbert: Perfect. Thanks, Chuck.

Chuck Prow: You’re welcome. Good talk.

Operator: Our next question is from Bert Subin with Stifel. Please proceed.

Bert W. Subin: Hi, good morning and appreciate the question. Chuck, has your view towards CENTCOM changed at all following events in Israel? I mean, based on the commentary there, you’ve noted sort of increased demand indications. I think previously we were seeing a lot of growth in INDOPACOM, and I think the expectation was CENTCOM would be pretty flat. I know, Israel itself, I think, falls into EUCOM, but I imagine there’s just greater demand or greater OPTEMPO in the region. Does that now become a story where you’re seeing sort of increased demand for task orders in both parts of your LOGCAP contract?

Chuck Prow: Actually, because of an alignment a couple of years ago, Israel does fall into CENTCOM. Again, that’s a change in the last 18 to 24 months. But I’ll add – I understood your question is exactly the right question. And again, just from a provider to our client’s perspective, we see a very balanced response and the associated balance on OPTEMPO across both INDOPACOM, CENTCOM and particularly Eastern Europe. As you are aware from a LOGCAP perspective, we’re aligned to both CENTCOM and INDOPACOM and we stand ready every day to support our clients as their OPTEMPO changes, as well as to provide input to potential new demand signals wherever we can.

Bert Subin: Maybe following up to that or following up to at least the Ken’s question on the margin side. I think if we went back to the merger, Vectrus and Vertex, the blended multiple just by putting you guys together was right around 8%. I mean, since then, it seems like Legacy Vectrus has been outgrowing due to some of those demand indicators that you mentioned. As we think forward, maybe not 4Q but maybe ’24, ’25 and beyond, is there enough growth sort of on both sides of the business to where you start thinking about 8% plus as synergies come into the mix? And just generally, how should we think about the margin, trying to balance some of these things like, I guess when you’re saying contract mix, you’re talking about being more cost plus heavy, which would make me think, probably more leaning towards the Vectrus side.

So just any commentary about, how to think about margins and whether you think you can get back, to at least at, or above the blended multiple from the merger or the blended margin?

Chuck Prow: Yes. So let’s – I actually wouldn’t characterize that in terms of former like Legacy, Vertex and Vectrus. However, the point that you’re on is an excellent point. At the time the merger was announced, the approximate cost type mix was 50%. And as you saw in this most recent quarter, we were 59% that is, that reflects both continued OPTEMPO and contract awards in our contingency contracts as well as we just, with the recent awards that $1.7 billion of aerospace contracts that we signed between Test Wing Atlantic Pacific and the most recent award that we announced here today. So, those happen to be also cost type contracts, but also in the very early stages of their life cycle. We’ve been very fortunate and blessed, to be winning things that above market rate.

It does take us an option year or two to blend those cost type contracts up with additional fixed price add-ons. So long-winded answer to your question, we remain committed to margin expansion the realities of our current portfolio mix play, a role in that and you know, between now and the time we announced guidance for next year. We’ll package that up very neatly, to include what we expect, to do with regard to our broader cost structure throughout ’24 into, into the future.

Bert Subin: Got it. Okay. Thanks, Chuck. And then just one last question, maybe on the leverage side of things. Can you just update us on what your expectations are, for net leverage in ’24? I think you guys used, to talk about getting two, three times or below three times. Is that still the goal, and during this quarter you paid down quite a bit debt, should we assume that cadence continues?

Shawn Mural: Yes. Hi, Bert. This is Shawn. Thanks for the question. So yes, finished at 3.46, relatively flat, right. Sequentially, the goal remains you know to get down to 3.0, or around it by the end of next year, continued – to continue payment of that debt, to help that position overall. So no, change from that.

Bert Subin: Thank you very much.

Operator: [Operator Instructions] Our next question is from Tobey Sommer with Truist Securities. Please proceed.

Tobey Sommer: Thanks. Just so, I understand the impacts on profitability you know in the quarter and guidance. Is there a lingering effect, or are you, have you normalized in terms of profitability relative, to your prior expectations post quarter and post whatever actions you’ve taken?

Chuck Prow: I would say that the activities that caused us, to not meet our own expectations for the quarter are behind us. As we mentioned on the call – performance related and we’ve obviously aggressively addressed them. We’re going to continue, to drive you go ahead I’m sorry.

Tobey Sommer: No. Please Chuck, you can finish.

Chuck Prow: I’m done. Back to you.

Tobey Sommer: Okay. And then relative to the variability of your clients’ needs, due to current events is there, does that represent more risk to what you had expected to occur, or is it a, you know a more evenly split set of risks and opportunities, depending on how things play out?

Chuck Prow: I would say on that, on that spectrum more opportunity with regard to volume and the risk will be in mix, because there are certain aspects of our business that, attract you know higher margin that, may not be as aggressively pursued by our clients, as they deal with the real world challenges that largely appear that through contingency type contracts.

Tobey Sommer: Okay. That makes sense. And then you had mentioned relative sort of lack of concentration of recompete risk next year, with nothing over 2%. Is the overall year, a below average recompete year, or are you just trying, to convey there’s nothing sort of hugely consequential that’s up for rebid?

Chuck Prow: Both points as we’ve been talking about this now for a while, we are again very fortunate and blessed, to be very front-end loaded on our backlog, because of the recent awards. So, I would say, even as we get into ’25, the recompete risk will be, kind of a lower than average, and that all kind of begins to normalize, into ’25 and into ’26.

Tobey Sommer: Okay. And then with respect to aircraft training and maintenance that, you’ve had some kind of a string of success on here, over the last 18 months. Is there more opportunity there and if so, is it you know new platforms, or other military branches? Thanks.

Chuck Prow: We have – we continue to be thrilled, with the performance of our Aerospace team, from a new business perspective. All three of the major components of that $1.7 billion were takeaway from competitors. So our teams are performing very well, as we’ve talked about in the past, Tobey, we have had some headwinds in terms of, airframe retirements in the KC-10 and the T-1A. The bulk of that headwind occurred here in ’23 and both of those frames, will get down to their kind of stated levels, by the middle to the end of next year. And then once that happens, we have no known retirement headwinds again for quite some time.

Tobey Sommer: Thank you very much.

Chuck Prow: Appreciate it. Good talking to you.

Operator: We have reached the end of our question-and-answer session. I would like to turn the conference back over to Chuck for closing remarks.

Chuck Prow: Very good. Thank you very much. Thank you for joining us today. Again welcome to Shawn. We look forward to talking to you again next quarter. Have a good rest of your day. Thank you.

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