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Edited Transcript of TST earnings conference call or presentation 8-Aug-18 12:00pm GMT

Q2 2018 TheStreet Inc Earnings Call

NEW YORK Sep 10, 2018 (Thomson StreetEvents) -- Edited Transcript of TheStreet Inc earnings conference call or presentation Wednesday, August 8, 2018 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* David A. Callaway

TheStreet, Inc. - President, CEO & Director

* Eric F. Lundberg

TheStreet, Inc. - CFO

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Conference Call Participants

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* Kara Lyn Anderson

B. Riley FBR, Inc., Research Division - Senior Analyst of Discovery Group

* Mark Nicholas Argento

Lake Street Capital Markets, LLC, Research Division - Head of Capital Markets & Senior Research Analyst

* Michael John Grondahl

Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for holding, and welcome to TheStreet.com's Second Quarter 2018 Financial Results.

It is now my pleasure to introduce our first presenter, Mr. Eric Lundberg.

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Eric F. Lundberg, TheStreet, Inc. - CFO [2]

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Good morning, and thank you, David. Thank you for joining us to discuss TheStreet's financial and operating results for the second quarter of 2018. Joining me on the call today is David Callaway, our President and Chief Executive Officer.

Before we begin, I'd like to remind you that management will make forward-looking statements during the course of this call and our actual results could differ materially. Some of the risks and uncertainties that could impact our business are included in our 10-K.

In addition, our presentation will include non-GAAP financial measures, and we have provided reconciliations to the most comparable GAAP measures in our earnings press release, which is available on our website.

First, I'd like to address the recent sale of our RateWatch business that occurred in Q2. As most of you know, we sold RateWatch effective June 20 to S&P for $33.5 million or 4.4x LTM revenue. As a result, the Q2 and year-to-date 2018 operating results, exclude RateWatch, as it's now reflected in discontinued operations. The proceeds from the sale, coupled with the simplification of our capital structure as a result of the TCV 180 transaction back in November, provide our board considerable flexibility as it considers all options with the goal of providing increased value to our shareholders.

I would also like to note upfront that our renewed focus on creating a subscription-based consumer business model is working quite well, despite the earned revenues numbers you've seen this morning, and I look forward to providing you with the exciting underlying metrics and trends we see which support the positive outlook for that part of our business.

Q2, just to remind you, discontinued operations include RateWatch revenues and expenses for the periods indicated and are recorded as part of net income but excluded from the revenue and expense line items for the periods discussed.

Total revenues for Q2 were $13.6 million, down $500,000 or 3% from Q2 last year. Net loss from continuing operations was $900,000 for Q2 compared to a net loss of $300,000 last year. Net income for the second quarter included the $27.6 million gain on sale of RateWatch, totaled $27.5 million or $0.54 per diluted share, compared to $300,000 or $0.01 per diluted share for the second quarter of last year.

Adjusted EBITDA for the second quarter of 2018 was $400,000 compared to $1.3 million from the prior year period. The lion's share of the year-over-year declines are due from a decline in advertising revenue, which is a direct result of our strategic shift to focus more on our subscription-based consumer business model. With that, I'd like to tell you that our total deferred subscription revenue was $23.2 million at the end of June this year, which is up $1.8 million or 8% compared to the second quarter of last year. This was led by both BoardEx and Premium, each of which is up approximately $900,000 at June 30 this year.

And now that the heavy lifting has been done to create a consumer-centric subscription business, we are able to more intimately focus and analyze the business drivers for the next phase of our growth and continue to integrate technologies such as Lytics, Zuora and Salesforce and sharply focus on sales, product development, acquisition and retention marketing, all driven and supported by creative and efficient, effective use of our data analytics, enabling us to create engaging and compelling content for a sophisticated audience.

On the B2C side, Business-to-Consumer revenue totaled $6.9 million for the second quarter of this year, down $1.2 million or 15% compared to the second quarter of last year, almost entirely due to the decline in advertising revenue as I mentioned. B2C subscription revenue for the second quarter of this year was $4.8 million, a decrease of $200,000 or 3% from $5 million in the second quarter of last year. This decrease primarily resulted from a 6% decline in the weighted average number of subscriptions, partially offset by a 3% increase in the average revenue recognized per sub. New sales increased by $300,000 or 6% year-over-year bookings recorded during the second quarter.

Let's take an even deeper dive into the drivers of the subscription business, which clearly show a healthy and improving business. New orders average price, bookings, conversions and renewal rates are all up year-over-year. New orders are now up year-over-year 9 consecutive months and up 38% since the start of 2018. Average price is up 5.4% for the first half of 2018, compared to the first 6 months of last year.

Total bookings are up 8.2% since the beginning of the year. Conversion rates are just above 60% as of June compared to 44% last year. And renewal rate is just under 80% as of June compared to 64% last year. The result of these strong underlying metrics are evident in our total sub count, which is now up 4 consecutive months through June. Also as I already mentioned, our deferred revenue for the premium business is up $900,000 or 9% from Q2 last year. Dave will provide more color on this exciting part of our business a little bit later.

We're also excited about our promising consumer events business. B2C event revenue was $200,000 for the second quarter of this year, which was an increase of $100,000 as compared to last quarter -- last year's quarter. But this doesn't tell the whole story. Let me remind you that in 2016, our consumer business had 0 event revenue. In 2017, in the midst of a massive turnaround, we still managed to generate $400,000 dollars in event revenue. And now in 2018, we consider events a dependable and margin-friendly source of revenue going forward and already have contracts for events totaling almost $800,000 for this year.

Not to mention it promotes customer engagement, which in turn strengthens the customer relationship. And as we thoughtfully analyze data as the basis for our customer-centric consumer business and determine the topics and issues most important to our audience, we're able to intelligently create custom events that we know will be compelling and result in strong engagement.

B2C advertising revenue declined $1.1 million, which is essentially the entire segment decline this quarter, primarily due to the strategic decision to reduce marginally profitable programmatic advertising. We see higher value from an engaged customer willing to pay for content, and the decline in advertising revenue was directly the result of our strategic decision to reduce this marginally profitable programmatic advertising, and instead focus on our subscription business model. The decline in advertising was expected naturally as paid user visits would sharply decline.

But if we look more closely under the hood, you'll find that going forward, ad revenue should become a quality source of support revenue for our sub business. Organic, low-cost search traffic has grown almost 2% year-over-year. We're converting our free site audience into paid Premium subs as our website's order were up 56% year-over-year. And our audience is more engaged, they're spending more time on our site, up almost 40% year-over-year.

Turning to our B2B business. B2B revenue, which includes subscriptions, information services and events revenue, primarily for the deal on BoardEx, totaled $6.7 million for the second quarter, up $700,000 or 12.3% as compared to the second quarter of last year. B2B deferred subscription revenue increased $900,000 or 8% from the second quarter of last year. B2B revenue continues its strong and growing momentum, now comprising almost half of the total revenue of the company.

Looking at the individual parts of B2B. BoardEx continues its accelerated growth with total revenue growing $0.5 million or 18.2% in Q2 as compared to the prior year, all driven by growth in subscription revenue from new sales, which were up 13%, as well as extremely strong renewal rates at 96%, and an increase in average revenue per subscription. Total BoardEx deferred revenue is now $6.3 million, up 16% from Q2 of last year.

Foreign exchange adjustments had a positive impact as well on the quarter, contributing $89,000 to BoardEx' Q2 revenue. We now have -- over 1/3 of our BoardEx subscription sales are multiyear, 2- and 3-year contracts. These 2- and 3-year contracts, the deferred aspect of those components are not yet reflected on our balance sheet. But if they were, that would total an additional $6-plus million of deferred revenue that we would recognize on our balance sheet.

The Deal has turned the corner. Total revenue increased $200,000 during Q2 of this year from the same quarter last year, primarily due to our rapidly growing events business. Our new sub sales through June are over $300,000, which is already more than all of last year's total. Renewals through June are at 96% and the events business continues to establish itself as the host of must-attend events in the finance community. Our Annual Corporate Governance New York event revenue totaled over $500,000, up almost $200,000 compared to last year. Our inaugural Deal Awards in New York was sold out, generated $130,000 in revenue, and we plan to continue to host and improve this event going forward, including a London-based award event later this year.

We are branching out and hosting a Deal Economy event in Chicago this September, and we have already met our revenue targets and now expect to exceed them.

Turning to operating expenses for Q2. Operating expenses for the second quarter of this year were $14.9 million as compared to $14.2 million for the second quarter of last year, an increase of $700,000. Higher operating expenses for the quarter resulted from staffing and compensation expense, primarily a noncash comp with the issuance of RSUs related to retention efforts for key employees; an increase in bonus and commissions from stronger performance over the prior year; and an increase in compensation and recruiting costs as we have invested in product development, SEO and technology.

In addition, higher marketing spends and event costs were recorded during the period related to the launch of our new Premium product, Retirement Daily, and increased efforts in search engine marketing and costs related to the additional event revenue generated during the period. The company also incurred higher year-over-year data platform and technology and consulting costs as we invest in our Premium business.

Higher professional fees were also recorded during the current quarter. These increased costs were partially offset by planned reductions in traffic acquisition costs, lower freelance costs and benefits realized in exchange rates.

Turning to the balance sheet. The company ended the second quarter of this year with cash and cash equivalents, restricted cash and marketable securities of $44.9 million, up $31 million as compared to $13.9 million at December of past year. The increase in cash is twofold: The initial net proceeds of $28.2 million distributed to the company at the close of the sale of RateWatch; and $5.6 million of cash generated from our operations. With 44% of our cash -- assets in free cash, as I mentioned earlier, we are in an extraordinary position of flexibility as our board considers all strategic initiatives for appropriate allocation of resources to drive our growth strategy and provide increased value to you, our shareholders.

With that, I'd like to turn the call over to our CEO, David Callaway.

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David A. Callaway, TheStreet, Inc. - President, CEO & Director [3]

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Thanks, Eric, and good morning, folks. The second quarter marked another milestone in our turnaround efforts. The sale of RateWatch, a productive and profitable part of TheStreet for more than 10 years, further focused our business on our 2 main institutional and consumer units and provided an influx of about $30 million in new cash that gives our Board of Directors and management even more flexibility to dictate our future.

Following last year's successful removal of a preferred shareholding that hamstrung the company for years, we now have flexibility to create value for our shareholders and more than $44 million behind us, and cash from operations growing every quarter.

Eric detailed for you the improvement in our subscription revenue stream as new product technologies and focus on our RealMoney and Action Alerts PLUS offerings finally begin to yield results. I'm thrilled today to be able to tell our shareholders that after several months of improvements, we believe we will cross the threshold into positive year-over-year subscriber-earned revenue growth for our Premium business sometime in this year's third quarter.

The shift in strategy does not come without some pain on the advertising side as Eric said. But I'd like to point out that the decline in advertising in Q2 was a little bit better than the first by about $200,000, which leads us to believe that those declines from reducing our programmatic advertising spend have plateaued, indeed even begun to bounce back as we've shifted strategies from display advertising to focusing on sponsorships and events. Even though our audience is smaller, it's better, allowing us to raise CPMs more than 20% this year and to maintain our core endemic advertisers who so value TheStreet's high-end readership of financial advisors and active investors.

Consumer events also helped, and we've got several more in the pipeline for the second half of the year that we believe will help us significantly exceed last year's total event revenue of $400,000. As Eric said, we've already booked twice that for this year, and we've got high hopes of doing a lot more.

Some of the new product highlights from Q2 include the launch of our new subscription product, Retirement Daily, with Robert Powell, which is off to a great start with a big event planned on that later on this year, a valuable complement to our existing market-focused products.

Also we broke into the AI universe in the second quarter, with our first voice product, a partnership with SpokenLayer to deliver our content to Google Home, Alexa, and other popular voice-activated products.

Finally, we complemented the project to get out news -- finally, we completed the project to get our news on the Symphony platform for institutional investors, and we just signed a similar deal with Money.Net, another new FinTech platform.

Moving on to our institutional business. BoardEx continues to exceed expectations, growing total revenue more than 18% in the second quarter. Renewal rates, always strong in the mid-90% range, are pacing at 96% through Q2 and new business is up 13%.

But the real story is The Deal. Capitalizing on the strong journalism that is the core of The Deal offering, especially our corporate activism coverage in recent months, our sales team has generated new sales for the first half of this year that already exceed what we did in all of 2017, and 2016 for that matter. Deal customers value our products so much that our renewal rates are also in the mid-90 percentile. But without new business, we can't advance that. Now that we have an energized sales team working directly with our top-rated journalists, The Deal business should quickly follow our Premium business in the year-over-year growth.

Further underpinning The Deal's turnaround, we had a strong quarter in Deal events, as Eric mentioned, our annual corporate governance conference hosted by Jim Cramer, featured some of the top corporate activists in the world, including Paul Singer and Nelson Peltz, we chalked up more than $500,000 in revenue for that event compared to $300,000 last year, and we launched what will be a new event series with an awards breakfast in New York to celebrate Dealmakers of the Year. That event was so successful we plan another one in London in the fourth quarter, and a Chicago version of our popular Deal Economy event coming up next month.

Each quarter now, our business units are improving. With The Deal and Premium finally bursting into positive growth, our deferred revenue rapidly growing in all of our operations and our events business beginning to bear real fruit. You, as our shareholders, have patiently waited for this turnaround, and I'm thrilled today to offer you some of the reasons we're excited going forward. We have a larger cash hoard, which is growing each month, and a committed Board of Directors, with increasing flexibility to develop the next stage of our evolution.

And now I'd like to open this conversation up to analyst questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Mr. Mike Grondahl with Northland Securities.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [2]

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Could you talk a little bit about the attendance that you get at some of those events? Just trying to understand sort of how many investors and people are kind of showing up? Because obviously, if they're not already subscribers, they're very good candidates to be one.

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David A. Callaway, TheStreet, Inc. - President, CEO & Director [3]

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Yes, Mike. Two forms of events, right? There's our consumer events, which Eric talked about, where we had 0 revenue a couple years ago and are getting hundreds of thousands now. So those are investors, financial advisors to some extent, the people that come to Jim Cramer's teach-ins, some of them are our Action Alerts PLUS subscribers and RealMoney subscribers. Others are other forms of active investors who read TheStreet. So those are events that we get sponsored, Mike, but also have some form of ticket sales.

On the institutional events, right, these are people in the industry. They're bankers, they're lawyers, they're corporate executives. And those events are sponsored by a lot of the firms that are Deal customers and in the business. So these -- it's 2 separate audiences. Generally, in these events, we range different sizes. But the bigger ones, like The Deal corporate activism event in June, would have a couple hundred people. Jim's teach-in in May had a couple hundred people, maybe 180, 190 something like that. So they're good, strong events that we seek to do 6-figure revenue situations in all of them. And we're layering on another series of events kind of a -- as backup to complement them, which we call webinars, which are in-studio video events that are [all] sponsored and that we do here in the -- in our headquarters here in New York.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [4]

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Got it. So...

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Eric F. Lundberg, TheStreet, Inc. - CFO [5]

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Mike, it's Eric. I would also just add in that on -- at least on the consumer side, we have large broker-dealers that we get about 90% of the revenue from that are trying to reach the financial advisors and the kind of the high net worth individuals that attend those events.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [6]

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On the sponsor side, got it. Got it.

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Eric F. Lundberg, TheStreet, Inc. - CFO [7]

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Yes. And on both sides, it's roughly 90-10 revenue, 90% from sponsorships, 10% from delegate sale.

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David A. Callaway, TheStreet, Inc. - President, CEO & Director [8]

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Yes. It's really -- the sponsorships are the key. And these high-end advertisers, you can imagine, the big e-brokers and some -- and asset managers, they're trying to reach active investors, low-level institutions. They're trying to reach the financial advisors that are a significant portion of our audience.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [9]

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Got it. And then on The Deal, if you had to call out 1 or 2 things that just turned that business for you, what would those be?

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David A. Callaway, TheStreet, Inc. - President, CEO & Director [10]

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So I love that question, Mike. I am so excited about The Deal's turnaround. And Jeff Davis and his team on the institutional side have continued to boost BoardEx, but the turnaround in The Deal is significant. At the heart of it, it is the business team and the journalists working together. We've always had great journalism on The Deal, it's known for that. And we've really beefed it up by segmenting our coverage areas into 4 areas of specialty such as corporate activism and M&A. And so we focused the coverage, we started getting more scoops and exclusives, and we started promoting it better to The Deal audience. And that just directly resulted in new business, particularly in that corporate activism space where a lot of these activists want to see what we're writing about them. And so the combination of the great journalism and the improved sales effort and the 2 teams working together, which is not always common in a media -- in a digital media company, that combination has directly turned around The Deal business.

And you know, Mike, you've followed us for some time, The Deal business has always been very popular among folks who have already subscribed, but it was difficult to get the new subscribers. We've cracked that nut, and we should start to see, with deferred revenue growth, The Deal continue to grow. Also the event side of The Deal business -- I mean, when we -- when Eric and I came in, in 2016, and Jeff, there was just The Deal Economy conference in December. And now we've got 4, 5, 6 events lined up that are contributing 6-figure revenue sponsorship. So The Deal's in just vastly improving shape right now.

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Eric F. Lundberg, TheStreet, Inc. - CFO [11]

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So Mike, really quickly, the growth in earned revenue this year in the quarter and year-to-date is all attributable to events. But you should know that the earned subscription revenue for the second quarter was almost breakeven, and that's because of the new sales and the extremely strong renewal rates that we're getting in that business. So with the new business and the extremely strong renewal rate, the earned revenue in that business should also turn positive in Q3. But the growth in actual earned revenue for the quarter and year-to-date was all due to the expansion of existing events and the launch of new events.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [12]

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Great, great. Nice to see.

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Operator [13]

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Our next question comes from Mark Argento with Lake Street Capital Markets.

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Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Head of Capital Markets & Senior Research Analyst [14]

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Just a couple follow-ups. Focusing a little bit on BoardEx. Obviously, impressive growth there, up 18%. What are you doing differently there? Are you guys allocating more capital from a marketing perspective to generate that growth? And what do you see as the long-term opportunity with that business?

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David A. Callaway, TheStreet, Inc. - President, CEO & Director [15]

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There's a lot of investment going on into the data functions behind BoardEx, Mark. As you know from past conversations we've had, we're integrating The Deal -- 20 years of Deal data into BoardEx to make it even more valuable. But there's also an increased sales effort. And again, Jeff and the team have focused on new business. New business is up 13% in the quarter. So again, like The Deal, BoardEx is one of those products that once we have -- once somebody buys it, they generally stay with it, mid-90s renewal rates. But having that new business component and the sales effort behind it has really helped push the envelope for us.

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Eric F. Lundberg, TheStreet, Inc. - CFO [16]

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So Mark, a little bit more color. I mean, the entire growth in BoardEx is on the revenue side. Expenses are only up 2% for the year-to-date. So the team is basically doing more with the same amount of cost base. And we continue to drive new customers, we continue to be able to effect a renewed -- a renewal at 96%, and we're able get price increases. And further to that, the team, under Jeff's direction, has rapidly grown the 2- and 3-year contracts that several years ago were primarily 1-year contracts.

And I don't know if you heard my comment before, but we still have $6 million of kind of unbooked deferred revenue for the BoardEx business. They sell 2-, 3-year contracts that we bill annually, that's the way the contract's written. So when we bill it annually, we recognize the AR and deferred revenue. So for year 2 and 3, we sort of have almost this -- I don't want to say off balance sheet because that's -- reminds me of Enron, but we have an unbooked deferred revenue of $6 million that's already contracted for.

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Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Head of Capital Markets & Senior Research Analyst [17]

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Great. And accounting standards don't allow you guys to put that in deferred, you can only when you bill it. Because technically, you billed it, so therefore, you don't -- you can't recognize it.

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Eric F. Lundberg, TheStreet, Inc. - CFO [18]

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Correct.

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Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Head of Capital Markets & Senior Research Analyst [19]

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Got it. All right.

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Eric F. Lundberg, TheStreet, Inc. - CFO [20]

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Correct. And we could bill it, but that's not what our clients want. So...

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Mark Nicholas Argento, Lake Street Capital Markets, LLC, Research Division - Head of Capital Markets & Senior Research Analyst [21]

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Got it. All right. That's helpful. And then just given that cash is almost $1 a share at this point, I know that it's a big strategic conversation. But when you look at the spectrum of possibilities, maybe you could kind of bookend them from share buybacks to buying businesses, maybe help us kind of think a little bit about how you and the board, management and the board is thinking about the cash hoard at this point.

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Eric F. Lundberg, TheStreet, Inc. - CFO [22]

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Well, I think, Mark, you actually did bookend them just there. The -- obviously, these discussions are strategy discussions with the board, they're ongoing, they are not something we can comment about publicly. But there are a variety of options. I can tell you that we don't plan on just sitting on the cash in the bank. The board is eager. We've moved fast in this turnaround, and we know we have a lot to do.

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Operator [23]

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Our next question comes from Kara Anderson with B. Riley.

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Kara Lyn Anderson, B. Riley FBR, Inc., Research Division - Senior Analyst of Discovery Group [24]

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I just wanted to clarify the comment about sort of the advertising against revenue headwind for the balance of the year. Did you guys say that you kind of expected maybe the magnitude to not be as strong in the back half?

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David A. Callaway, TheStreet, Inc. - President, CEO & Director [25]

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Yes. And I think, Kara -- I mean, obviously, anything can happen, right? But -- and advertising is a notorious business where economic cycles affect it, but what we saw -- the plateau we -- the decline we saw in the first quarter that plateaued in the second quarter, indeed begun to bounce back by $200,000. And so -- and that is -- we're not just sitting there and just letting that go away. We've refocused our sales efforts not on display advertising and programmatic advertising, but on taking those endemic advertisers who are focused on TheStreet's vertical financial audience and migrating them from display to things like sponsorship and events, sponsoring the video webinar events I was talking about, sponsoring the consumer events that we were talking about.

And we're starting to see some success there. So the traffic that we lost because we turned our focus away from the programmatic, combined traffic on places like Yahoo!, that resulted in advertising that declined. Now we've found ways to build that back up, and we're going to continue to build it back up.

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Kara Lyn Anderson, B. Riley FBR, Inc., Research Division - Senior Analyst of Discovery Group [26]

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Great. And then just sort of on your operating expense, I guess, structure. Just -- I guess my question's kind of 2-part. If there's any additional corporate costs that come out of the business that might be supported by RateWatch but did not go with the sale, and then whether or not we can sort of annualize your operating cost in the quarter as sort of a run rate or a proxy for the full year.

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Eric F. Lundberg, TheStreet, Inc. - CFO [27]

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So Kara, it's Eric. There's not much of the corporate allocation costs that would come out of the business for the sale of RateWatch. As a smaller public company, we have certain costs and expenditures that are needed. So very little cost actually will come out. As to the second part of that question, we have in the second half, the only thing that I would say that might be slightly different is we do raises effective July 1, and so several percentage points on the staffing comp line should go up.

The only other major expense that I would see going up would be commissions. While not all of the -- well, commissions are way up year-to-date, I expect them to continue to be up. I'd point to the deferred revenue, which is up $1.8 million or almost 9%, both in Premium and BoardEx. Also The Deal's up. So it's not on the earned revenue yet, but it will be.

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Operator [28]

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At this time, we have no other questions in the queue. So I'll turn it back to Mr. Dave Callaway for closing remarks.

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David A. Callaway, TheStreet, Inc. - President, CEO & Director [29]

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All right. I want to thank everybody for joining us. Again, to our shareholders, who've been very patient during this turnaround, we've been moving fast and we will continue to move fast for you. We're excited. We're executing on all of our business lines. The ones that were holding us back in the last couple years are now growing. We've got new revenue streams in events and new business in some of our more important lines. And we think things are moving fast.

Finally, we've got, as you know, this new influx of cash. The board is working diligently to find ways to use that, the best way to increase the value for you. And I look forward to talking to you going forward and to next quarter's earnings call. Thank you.

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Operator [30]

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Ladies and gentlemen, that concludes this morning's presentation. You may disconnect your phone lines, and thank you for joining us this morning.