U.S. Markets closed
  • S&P 500

    3,638.35
    +8.70 (+0.24%)
     
  • Dow 30

    29,910.37
    +37.90 (+0.13%)
     
  • Nasdaq

    12,205.85
    +111.44 (+0.92%)
     
  • Russell 2000

    1,855.27
    +10.25 (+0.56%)
     
  • Crude Oil

    45.53
    -0.18 (-0.39%)
     
  • Gold

    1,788.10
    -23.10 (-1.28%)
     
  • Silver

    22.55
    -0.81 (-3.46%)
     
  • EUR/USD

    1.1956
    +0.0043 (+0.3587%)
     
  • 10-Yr Bond

    0.8460
    -0.0320 (-3.64%)
     
  • Vix

    20.84
    -0.41 (-1.93%)
     
  • GBP/USD

    1.3299
    -0.0058 (-0.4322%)
     
  • USD/JPY

    104.0330
    -0.2170 (-0.2082%)
     
  • BTC-USD

    16,830.90
    +106.11 (+0.63%)
     
  • CMC Crypto 200

    329.43
    -8.06 (-2.39%)
     
  • FTSE 100

    6,367.58
    +4.65 (+0.07%)
     
  • Nikkei 225

    26,644.71
    +107.40 (+0.40%)
     

Edited Transcript of PLUS.OQ earnings conference call or presentation 4-Nov-20 9:30pm GMT

·24 min read

Q2 2021 ePlus inc Earnings Call HERNDON Nov 15, 2020 (Thomson StreetEvents) -- Edited Transcript of ePlus inc earnings conference call or presentation Wednesday, November 4, 2020 at 9:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Elaine D. Marion ePlus inc. - CFO * Kleyton L. Parkhurst ePlus inc. - Senior VP of Corporate Development & Assistant Secretary * Mark P. Marron ePlus inc. - CEO, President & Director ================================================================================ Conference Call Participants ================================================================================ * Brett Anthony Knoblauch Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst * Margaret Marie Niesen Nolan William Blair & Company L.L.C., Research Division - Analyst * Matthew John Sheerin Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Equity Research Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, ladies and gentlemen. Welcome to the ePlus earnings results conference call. As a reminder, this conference is being recorded. I would like to introduce your host for today's conference, Mr. Kley Parkhurst, Senior Vice President. Sir, you may begin. -------------------------------------------------------------------------------- Kleyton L. Parkhurst, ePlus inc. - Senior VP of Corporate Development & Assistant Secretary [2] -------------------------------------------------------------------------------- Thank you for joining us today. On the call is Mark Marron, CEO and President; Elaine Marion, CFO; Darren Raiguel, COO and President of ePlus Technology; and Erica Stoecker, General Counsel. I want to take a moment to remind you that the statements we make this afternoon that are not historical facts may be deemed to be forward-looking statements and are based on management's current plans, estimates and projections. Actual and anticipated future results may vary materially due to certain risks and uncertainties detailed in the earnings release we issued this afternoon in our periodic filings with the Securities and Exchange Commission, including our Form 10-K for the year ended March 31, 2020, and our Form 10-Q for the period ending September 30, 2020, when filed. The company undertakes no responsibility to update any of these forward-looking statements in light of new information or future events. In addition, during the call, we may make reference to non-GAAP financial measures, and we've included a GAAP financial reconciliation in our earnings release, which is posted on the Investor Information section of our website at www.eplus.com. I'd now like to turn the call over to Mark Marron. Mark? -------------------------------------------------------------------------------- Mark P. Marron, ePlus inc. - CEO, President & Director [3] -------------------------------------------------------------------------------- Thank you, Kley, and thank you, everyone, for participating in today's call to discuss our fiscal 2021 second quarter results. There are several key takeaways from the quarter that I believe are important. First, we continue to successfully execute in a challenging business environment, supporting our customers with the solutions and services they need while addressing the health and safety of our staff. Second, we are leveraging our scale and broad capabilities to address the IT requirements of enterprise customers where demand for products and solutions was strongest in the second quarter, and we continue to serve our mid-market customers as well, many of whom have required additional value-added services from us as they are experiencing reduced staffing levels, yet need to support remote workforces as well as continue on the path of digital transformation to remain competitive. Third, we are focused on optimizing our cost base while aligning resources to focus on growth areas and meet our customers' needs. Second quarter operating expenses declined 5.6% year-on-year attributable to reduced travel and entertainment expense, and we are looking for long-term structural savings in areas such as facilities. During the quarter, operating income was up year-over-year even with a tough comparison. Next, our portfolio approach of offering technology and financing to our clients provides ePlus a competitive advantage during these uncertain economic times. And finally, ePlus' strong balance sheet gives us the financial flexibility to make organic investments to drive growth and to consider acquisitions. Our second quarter was another period of strong execution in a challenging business environment. Our team continues to operate effectively and support our customers with the products and services they require for remote and hybrid workforces. We have continuously adjusted our go-to-market plans and services delivery models to meet the challenges of the current environment. The positive for ePlus is our solutions, services and investments have always been focused on current and future customer needs. And we have the engineering and vendor credentials to pivot and adjust to changing requirements in the most relevant areas, such as cloud, security, digital transformation, and collaboration. We are pleased to report that our technology segment grew both product sales and services revenues, which is even more impressive given the very difficult comparison from last year. During the second quarter, our 5.4% technology net revenue growth reflected strong demand for our solutions and services, led by diverse customer segments, including our largest enterprise customers and our state, local, and education customers. Given our continued emphasis on managed services, which offer annuity-quality revenue, and the buildout of our related service offerings, we saw year-on-year growth in services in the second quarter of 2.8% on top of 35% growth in services last year. Our professional and staffing services continues to be impacted by COVID-19, which limits access to customer facilities and can slow down projects. We experienced a strong quarter for product sales to enterprise customers, which tend to be lower margin as well as the change in business mix versus last year. While this pressured our gross margin, it remains at industry-high levels. We believe that, after investing in cloud, networking and security upgrades as a result of the early COVID-19 remote workforce initiatives, many customers turn to upgrading their end-user devices which are typically sold at lower margins and require less services. In addition, there was a very strong demand in the state, local and education space for these types of products. We also experienced a lower gross-to-net adjustment, which impacted margins, which Elaine will discuss. More importantly, we fulfilled our customers' needs in a challenging environment, and we remain very well positioned to continue to supply them as their trusted partner. At the same time, we made progress reducing operating expenses and other costs, which declined 4.2% sequentially primarily reflecting reduced travel, entertainment, and marketing expenses. This led to growth in operating income, despite lower gross profit. While we expect some of the cost to return once the pandemic passes, we continue to seek to optimize costs by taking additional actions, including reducing our facilities costs. ePlus has always had a conservative approach to credit risk and continues to benefit from its diversified customer base in many different industries, with technology, telecom, financial, health care, and state, local, and education representing the largest verticals. Importantly, we have very limited exposure to categories that have been hardest hit by COVID, such as hospitality, travel, and retail. During these challenging times, many customers are looking for flexibility, cost savings, and operational efficiencies from their technology partners, along with building their stronger security postures. Some of the ways we've been able to help our customers in these solution areas is with enterprise software license agreements, cloud collaboration solutions and service desk deals, along with providing flexible payment terms. Shifting to our financing business. This is a key competitive advantage for ePlus. Clients can access our financing offerings to close budgetary gaps, consistent with prior periods of economic softness. We think our financing arm has an important role to play with our state, local, and education customers, given the likely reduction in state tax revenues associated with COVID 19. For example, we have been and will be able to provide the solutions they need now, while reducing their overall long-term cost. Our strong balance sheet provides us with the financial flexibility and the ability to continue to make organic growth investments and seek out acquisitions at a time when others are financially constrained. We continue to look for opportunities to expand our geographic footprint and our solution set and service offerings. I will now turn the call over to Elaine to discuss the financial metrics of the second quarter. Elaine? -------------------------------------------------------------------------------- Elaine D. Marion, ePlus inc. - CFO [4] -------------------------------------------------------------------------------- Thank you, Mark, and thank you, everyone, for joining us today. We are pleased with our fiscal 2021 second quarter results. Our consolidated net sales for the second quarter were $433.1 million, an increase of 5.2% from the prior year's quarter, mainly due to increased demand from our enterprise and state, local, and education customers, and particularly for product sales, as we sold more hardware during the quarter. In the technology segment, net sales increased 5.4% year-over-year to $419.4 million, with product and service revenues increasing 5.8% and 2.8%, respectively. The increase in service revenues was due to our emphasis on managed services and, in particular, strength from our enhanced maintenance support offering. Adjusted gross billings were $601.1 million, a 3.8% increase from $579.1 million in the year ago quarter. The adjustment from adjusted gross billings to net sales was 30.2%, compared to 31.3% last year, as we had a particularly strong growth period for sales of third-party maintenance software and services last year. Financing segment revenue decreased 0.9% to $13.7 million, as an increase in transactional gains was more than offset by lower post-contract earnings during the quarter. Results from our financing segment tend to be uneven from period to period. Looking at our end markets in the technology segment on a trailing 12-month basis, telecom, media and entertainment, and technology continue to be our 2 largest customer end markets, accounting for 20% and 19% of technology net sales, respectively. State, local, and education, health care, and financial services followed, accounting for 16%, 15% and 13%, respectively. The remaining 17% were distributed among several other customer types. Consolidated gross profit decreased 3.9% to $99 million from $103 million in the prior year. Consolidated gross margin was down 210 basis points to 22.9%, compared to 25% last year. Gross profit for the technology segment decreased 4.8% to $87.2 million primarily due to the decline in product margin. Product margin was 18.6%, a decrease of 230 basis points, due to higher sales of hardware to enterprise customers during the period and a decrease in the proportion of sales recorded on a net basis. Service margin was down 130 basis points to 37% primarily due to an increase in revenue from managed services, which tend to be at a lower average margin. In the financing segment, gross profit increased 2.7% to $11.8 million, due to lower depreciation costs from operating leases. Consolidated operating expenses decreased 5.6% to $70.5 million. We benefited from lower travel and entertainment and advertising and marketing expenses, due to COVID-19 travel restrictions that were in place. Partly offsetting the decrease was a $719,000 increase in SG&A related to a higher allowance for credit losses within our financing segment due to growth in our financing receivables. Last year's quarter included a partial quarter of salaries and benefits from the ABS acquisition, resulting in a lower compare. Our consolidated head count at the end of September 2020 was 1,497, a decline of 8.1% compared to 1,629 last year, and a decline of 2.5% from the sequential quarter. Consolidated operating income increased 0.4% to $28.5 million. Our effective tax rate for the quarter increased to 30.8%, above last year's 29.1%, due to an adjustment to the federal benefit from state taxes. For the year, we expect our tax rate to be between 29% and 30%. Our consolidated net earnings amounted to $19.8 million, or $1.48 per diluted share, down 1.3% and 2% from $20.1 million, or $1.51 per diluted share, respectively, last year. Non-GAAP diluted earnings per share were $1.68, compared to $1.81 last year. Our diluted shares outstanding totaled 13.4 million, the same as in the year ago quarter. I will now turn to our consolidated year-to-date results. Net sales for the first 6 months of fiscal 2021 decreased 0.6% to $788.1 million. Net sales in the technology segment decreased 0.7% to $760.6 million, and adjusted gross billings increased 1.8% to $1.1 billion. Consolidated gross profit amounted to $197.5 million, a 0.9% increase. Consolidated gross margin expanded 40 basis points to 25.1%, and our technology segment gross margin increased 30 basis points to 22.9%. Net earnings grew 2.5% to $37.2 million or $2.78 per diluted share. Adjusted EBITDA increased 0.5% to $64.3 million, and non-GAAP diluted earnings per share decreased 2.1% to $3.19. Moving to the balance sheet. We ended the quarter with cash and cash equivalents of $161.1 million, an increase of 86.8% from March 31, 2020, due to decreased working capital in our technology segment. The majority of the increase in cash is related to certain of our manufacturer partners temporarily offering extended terms due to COVID 19. The largest program ended on October 24, 2020, and therefore, we expect our working capital to normalize. As a reminder, we also have approximately $181 million in our financing portfolio, and historically, we have been able to monetize transactions within our financing portfolio by funding those transactions of third-party financial institution. Inventory levels increased to $73.8 million, reflecting committed projects underway. Our inventory levels vary depending on specific customer projects and progress. Our cash conversion cycle at the end of the quarter was 23 days, a decrease of 2 days, compared to the year ago quarter and an improvement from 30 days at June 30, 2020. Considering the environment we operate in right now, we continue to monitor the impact of COVID-19 on our business and capital allocation priorities. At the same time, we constantly evaluate opportunities to invest in our business organically and via acquisitions. COVID-19 continues to impact our customer base, particularly in the mid-market. As the pandemic continues, we are uncertain as to how it will affect demand in the second half of fiscal 2021. We focus on innovative solutions for medium and large commercial businesses as well as state, local, and higher education customers, and we continue to believe our solutions are well positioned in the marketplace. Most of our employees continue to work from home, except for certain roles in our configuration centers, those on-site at our customer locations, and those who have voluntarily returned to our headquarters. As we approach our 30th anniversary, I am delighted with our success and culture, which has shined throughout the pandemic. Our employees have worked tirelessly juggling careers and families since the pandemic began, and I would like to thank them for all their diligence and strength. Thank you for your time today. And I will now turn the call back over to Mark. Mark? -------------------------------------------------------------------------------- Mark P. Marron, ePlus inc. - CEO, President & Director [5] -------------------------------------------------------------------------------- Thanks, Elaine. I'm pleased with the ability our team has shown over the last few months to pivot where the business has shifted and to sell the solutions and services that are most in demand. We continue to manage well through a difficult environment and have taken steps to emerge a leaner enterprise, align the growth areas and with a lower cost base. Our competitive advantages, including our highly qualified team of sales professionals and engineers and our strong balance sheet support our long-term growth potential. Operator, I would now like to open the call for questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Your first question comes from the line of Maggie Nolan from William Blair. -------------------------------------------------------------------------------- Margaret Marie Niesen Nolan, William Blair & Company L.L.C., Research Division - Analyst [2] -------------------------------------------------------------------------------- I know, Elaine, you were saying that it's difficult to assess the impact of COVID from here on out. But a lot of companies that have been seeing that maybe the June quarter was kind of the low point from a COVID standpoint for a lot of the services businesses. As you look at the next couple of quarters, do you think you can build on the sequential growth kind of continue that trend going forward, just keeping in mind that COVID aside, you've got some tough compares on a year-over-year basis as well, particularly coming up in that December quarter? -------------------------------------------------------------------------------- Mark P. Marron, ePlus inc. - CEO, President & Director [3] -------------------------------------------------------------------------------- Yes. Maggie, it's Mark. So related to services, one, it was a tough compare. So last year, it was up roughly 35%. What we saw in the services space is a couple of different things we've talked about over time. In the annuity part of our business was actually pretty strong. So the things we've talked about with managed services, enhanced maintenance services was actually pretty strong and what kind of carried our services. We did see where there were some projects where customers were just buying products in some of the enterprise accounts. And we also saw some of the, what I'd call, project services and staffing was actually down year-over-year, mainly due to not being able to get on site at our customer sites. -------------------------------------------------------------------------------- Margaret Marie Niesen Nolan, William Blair & Company L.L.C., Research Division - Analyst [4] -------------------------------------------------------------------------------- Got it. Then, as you think about moving forward, less direct contact, as you were just kind of mentioning. Have there been changes to the pricing structure of your services deal? -------------------------------------------------------------------------------- Mark P. Marron, ePlus inc. - CEO, President & Director [5] -------------------------------------------------------------------------------- To the pricing? No. No difference on the pricing. In fact, what you normally see in that space and what we've seen, Maggie, if you're providing the right value from a consultative and annuity, the customers are willing to pay for it because they need the service. So haven't seen anything dramatically related to any kind of what I'd call price reductions in that space. -------------------------------------------------------------------------------- Margaret Marie Niesen Nolan, William Blair & Company L.L.C., Research Division - Analyst [6] -------------------------------------------------------------------------------- And then, on the margin side of things, in the prepared remarks, you mentioned some long-term structural savings. Can you give us an idea of what the new kind of normalized margin profile of the company might look like, given some of these structural changes to expenses? -------------------------------------------------------------------------------- Mark P. Marron, ePlus inc. - CEO, President & Director [7] -------------------------------------------------------------------------------- Yes. Well, Maggie, there's a few things there, so I'll do kind of your gross margins and then drop down to your, I'll call it operating margins for lack of anything else. On the gross margins, what we saw this quarter was it was a really tough compare to last year, if you look at our margins. So that was the first thing that came into play. The other things that affected our gross margins this quarter, one was a lower gross to net, which affected our margins by about 100 basis points. We also -- as we talked on prior calls, it was in land and expand in this case, but we had some of our bigger enterprise customers that were buying laptops, kind of the commodity play that we don't normally play at, that we're at lower margins. So between the tough compare, the gross to net, and kind of the product margins on some of those bigger deals, that's what affected our gross margins. What I think you're starting to see in our OpEx is we've obviously seen savings in our travel and entertainment. You're seeing some savings in our acquisition-related cost, if you will. And I think over time, you'll see a little more operating leverage as it relates to just operating expenses overall as we go forward, as we kind of streamline things. For example, when folks are leaving through attrition, we're not hiring. We are making hires as it relates to strategic hires, but I think you'll see some savings as we move through the coming quarters. -------------------------------------------------------------------------------- Operator [8] -------------------------------------------------------------------------------- Your next question comes from the line of Matt Sheerin from Stifel. -------------------------------------------------------------------------------- Matthew John Sheerin, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Equity Research Analyst [9] -------------------------------------------------------------------------------- A question, Mark, just following up on Maggie's question regarding demand. You did talk about you saw a big increase sequentially in products, but it sounds like more transactional type of products. You did talk about client devices and laptops, but could you be more specific in terms of what you're seeing? And is that more on the client device side versus network infrastructure, storage, and servers? -------------------------------------------------------------------------------- Mark P. Marron, ePlus inc. - CEO, President & Director [10] -------------------------------------------------------------------------------- Yes, Matt. So we did see some on the device side that we normally don't cite. As we've kind of talked about in previous calls, we moved away from the commodity play years ago and kind of try to move towards the value-add with the services and higher-end kind of value products. With that said, in the new market that we're in with COVID, we've had some of our bigger customers looking for some serious laptop orders that we've been able to fulfill, as you know, at lower margins. With that said, though, we're still fulfilling infrastructure needs for our customers, so as they're building up their devices and working from home, we're building out their infrastructure. We're supporting a lot of customers' move to the cloud. And then, we're seeing a lot in the collaboration and security space as well. So it's kind of across the board what we're seeing there. We are seeing a little uptick in software as well, with some of the software players that are out there, with customers leveraging what we call enterprise license agreements. So kind of gives them the flexibility on licensing, and also, in some cases, it reduces their cost that they make a longer-term commitment. So we're seeing some of that as well, Matt. -------------------------------------------------------------------------------- Matthew John Sheerin, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Equity Research Analyst [11] -------------------------------------------------------------------------------- And in terms of the strength that you're seeing on the product side, are you seeing that continue, where there's some backlog, particularly maybe on the client devices where there's still some product constraints, and particularly on -- in the enterprise -- I mean, sorry, the education space with Chromebooks? -------------------------------------------------------------------------------- Mark P. Marron, ePlus inc. - CEO, President & Director [12] -------------------------------------------------------------------------------- Yes. Well, not so much in the education space for us, Matt. That's not where we play, as we've talked about, with Chromebooks. So for us, our SLED was up nicely. And a lot of it, believe it or not, was in the state and local space that was up real nice for us. And the reason being is leveraging some of our financing capabilities, we're able to help some of those state and localities that are going to have some issues due to tax revenues going forward. So we had a nice quarter for SLED overall, but state and local was up. K-12 was up, actually, with some devices, and higher ed was actually down a little bit this quarter, where last quarter it was up. -------------------------------------------------------------------------------- Matthew John Sheerin, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Equity Research Analyst [13] -------------------------------------------------------------------------------- Okay. And just talking to customers, and I'm sure all of your sales folks have been talking to customers, what's your sense of budgets? Are you going to see kind of the normal budget flush? Or are things on hold and things being switched around just because of priorities and still COVID concerns? -------------------------------------------------------------------------------- Mark P. Marron, ePlus inc. - CEO, President & Director [14] -------------------------------------------------------------------------------- Yes. Good question, Matt. I think it's a few things. I think things are being moved around a little bit based on what technology needs the customers have. Some are trying to do a -- what I'd call a leap forward in buying newer technologies to kind of enable their business from a digital transformation. But to be honest with you, it's still really hard, Matt. If you think of what we're going through with COVID and how hard it is to predict and all the uncertainty there, then you throw in the election and not knowing what's going to happen with the HEROES Act or the stimulus, which could help with some of the spending and some of the verticals that we play in, it's kind of tough to predict. We are seeing that the enterprise seems to have the budget to be able to make the purchases they need to make. And others, it's on a case-by-case basis. But we are seeing some budgets being extended and some sales cycle being extended due to COVID. -------------------------------------------------------------------------------- Matthew John Sheerin, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Senior Equity Research Analyst [15] -------------------------------------------------------------------------------- Okay. And just last for me on the M&A front, and you've certainly been very active there, and it's been a big part of the growth strategy. Just can you talk about in an environment now vis-à-vis COVID and potential challenges there in terms of doing deals? -------------------------------------------------------------------------------- Mark P. Marron, ePlus inc. - CEO, President & Director [16] -------------------------------------------------------------------------------- Yes. It's -- Matt, it is active. So there are a number of companies that are out there, actively looking to be acquired, so the market hasn't slowed down as it relates to opportunities. Where it gets tougher is, normally, you'd go and do your due diligence on site, and with COVID, with all the regulations across state lines, it makes it a little bit more difficult and probably extends the time line in doing M&A, based on having to do a lot of it virtual versus face-to-face. And then, also, understanding once you -- when you're acquiring a company, you kind of want to sit across from the people and get to know them and have them get to know you to feel good. So some of that has obviously slowed down due to COVID. But in terms of opportunities and acquisition opportunities that are out there, it's still fairly robust across the board, both from a territory and from a technical standpoint. -------------------------------------------------------------------------------- Operator [17] -------------------------------------------------------------------------------- (Operator Instructions) Your next question comes from the line of Brett Knoblauch from Berenberg Capital. -------------------------------------------------------------------------------- Brett Anthony Knoblauch, Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst [18] -------------------------------------------------------------------------------- I was wondering if you could maybe expand on the headcount reductions you talked about. Is this maybe due to combination of attrition? Is it downsizing? Or are you guys just trying to drive efficiencies? And maybe, what do you expect that to look like going forward? -------------------------------------------------------------------------------- Mark P. Marron, ePlus inc. - CEO, President & Director [19] -------------------------------------------------------------------------------- Yes, I think, hey, Brett, it's more about realigning. So as the market is changing, as it relates with the drive towards cloud, all the security opportunities that come into it, the consultative opportunities that we're seeing from our customers that need, we're kind of realigning resources. We've made some decisions with underperformers, so make no mistake about that, and through attrition where we haven't backfilled. So we've been able to pare back the headcount that way, in a logical way. We've made the commitment to our employees that we're keeping everybody and doing everything in our power, but we're still going to continue to manage to the business. The other thing is we do have recs open, so there are hires that we want to make. And based on what Elaine talked about in her piece, our financial stability kind of gives us -- our balance sheet gives us that ability to make those decisions as we move forward. I think -- any other questions? -------------------------------------------------------------------------------- Operator [20] -------------------------------------------------------------------------------- There are no further questions at this time. I turn the call back to Mark Marron, CEO, for closing remarks. -------------------------------------------------------------------------------- Mark P. Marron, ePlus inc. - CEO, President & Director [21] -------------------------------------------------------------------------------- All right. Thank you. If I could, thank everybody for joining us. And more importantly, hope everybody has a healthy and happy Thanksgiving and holiday season. With everything we've gone through in 2020, just enjoy your family and friends, be safe, and take care. We'll see you in February. Thank you. -------------------------------------------------------------------------------- Operator [22] -------------------------------------------------------------------------------- Thank you, everyone, for joining. That concludes today's conference call. You may now disconnect.