Q4 2023 FTC Solar Inc Earnings Call

Participants

Bill Michalek; VP, IR; FTC Solar, Inc.

Ahmad Chatila; Director; FTC Solar, Inc.

Cathy Behnen; CFO; FTC Solar, Inc.

Patrick Cook; Chief Commercial Officer; FTC Solar, Inc.

Philip Shen; Analyst; ROTH MKM

Pavel Molchanov; Analyst; Raymond James & Associates

Jeff Osborne; Anlayst; TD Cowen

Donovan Schafer; Analyst; Northland Capital Markets

Amit Dayal; Analyst; H.C.Wainwright & Co., LLC

Presentation

Operator

Thank you for standing by, and welcome to the FTC solar Fourth Quarter 2023 earnings conference call. (Operator Instructions) Please be advised that today's call is being recorded. I will now turn the call to your host, Mr. Bill Michalek, Vice President, Investor Relations. Please go ahead.

Bill Michalek

Thank you, and welcome, everyone to FTC Solar's Fourth Quarter 2023 earnings conference call. For today's call, and you may have reviewed our earnings release and supplemental financial information, which were posted earlier today. If you've not reviewed these documents, they're available on the Investor Relations section of our website at FTCSolar.com
I'm joined today by modular, a member of the Board of Directors and a co-founder, Cathy Bain and the Company's Chief Financial Officer, and Patrick Cook, the company's Chief Commercial Officer.
Before we begin, I remind everyone that today's discussion contains forward-looking statements based on our assumptions and beliefs in the current environment and speaks only as of the current date. As such, these forward-looking statements include risks and uncertainties and actual results and events could differ materially from our current expectations. Please refer to our press release and other SEC filings for more information on specific risk factors. We assume no obligation to update such information except as required by law.
As you'd expect we'll discuss both GAAP and non-GAAP financial measures today. Please note that the earnings release issued this afternoon includes a full reconciliation of each non-GAAP financial measure to the nearest applicable GAAP measure. In addition, we'll discuss our backlog and our definition of this metric is included in our press release. With that, I'll turn the call over to Ahmad.

Ahmad Chatila

Thanks, Bill. And good afternoon, everyone, for joining the call today as the representative of the Board as the company progresses through this interim period prior to announcing our next CEO has discussed on last call have been helping facilitate communication between management and the Board and monitoring key growth activities and initiatives during this interim period.
On today's call, I'll touch on some of the recent progress the team has made and address the CEO search before turning it over to Kathy to review the financials at a high level, I'd summarize the key takeaways from this call in the following way, fourth quarter financial results were in line with our targets to following an 18 month stretch with limited purchase orders, which has led to depressed revenue level, the company has seen an acceleration in closing purchase orders, which improved visibility and lays the foundation for a second half revenue recovery. And three, the company is progressing well in improving efficiencies and lowering the breakeven revenue level. Based on the management team's current outlook, the Company expect to grow revenue in 2024 and transition into profitability on a quarterly basis in the second half of the year.
So what are some of the issues the Company has faced and what progress has been made recently? First and most importantly, the company has seen an acceleration of contracted projects or signed purchase orders from January 2022 through June 2023. While we continued to grow our contracted and awarded projects largely through project awards, we had depressed levels of contracted projects and slower rate of conversion from awarded to contracted. That has led to current depressed revenue levels, which we now expect a trough here in the first half of 2024. More recently, the company has been laser focused on customers spending as much time with them as possible in a cross-functional effort to improve engagement and best support the full range of customer needs.
Aside from intense customer focus, the company has also been enhancing its product portfolio. The combination of these efforts has resulted in a significant increase in the rate of contracted projects, about [50 million] per month over the past eight months and has been accelerating every quarter. This includes greater success in converting previously awarded projects into contracted projects with purchase orders. The sustained booking success we've seen now is the foundation for the revenue recovery that will start in earnest in the second half of this year.
Frankly, that rate should be many times larger than 50 million per month. And that's how we're driving it. But we're heading in the right direction and rebuilding based on the success contracted projects are now approximately $415 million of the total backlog.
On the backlog. the Board has reviewed and is comfortable with the Company's $1.7 billion in backlog. However, it has been heavily skewed towards awarded versus contracted historically, resulting in less visibility as to when such awarded, but uncontracted projects will convert to purchase orders and revenue. As noted, we have made significant progress recently on having a higher percentage of the backlog be attributable to contracted projects. Backlog also continues to be heavily skewed towards the US and two projects.
The U.S. currently represents 80% of backlog in terms of technology, about 72% of backlog is two D and the remaining 18% being either 1P or a combination of 1P and 2P. The majority of projects added over the last two quarters had been one fee helping to diversify backlog.
Second, the market for 2B prep tractors have recovered and have and we have our strongest and most comprehensive product portfolio to date. In 2022, amid the module shortage, there was about 80% drop in the market for 2B trackers as more scarce modules were largely allocated to relatively easier project sites, which tended to be lumpy with module availability improved. We're seeing a more normalized market for Tupi with a very good pipeline activity. We're also seeing a ramp in interest in our 1P Pioneer tracker, which was certified in the third quarter of last year. Pioneer brings to once the much of what customers have loved about our 2P technology when the Company added one P. one P. tracker alongside our 2P solution and software, we thought about our ability to be truly solution oriented partner for our customers and that we could truly be technology-agnostic and optimize each individual project site to maximize the benefit to our customers.
We now have several examples of projects or portfolios of projects that we have won that have combined both 1P and 2P technologies with many more than the pipeline. Third, we are improving business processes. As noted on the November call that while the Company has become more efficient and lower product costs, there were opportunities to accelerate decision, making close gaps within the product portfolio faster and increase customer interaction. The company under the leadership of Cathy san and Patrick has been diligently focused on improving business processes across the board, emphasizing customer engagement, customer satisfaction and purchase orders.
Customer visits have increased tenfold and broadened across functions to accelerate the feedback loop on quality, product roadmap and future needs and enhance overall customer experience. This is augmented by a newly formed customer advisory board to which we've appointed renewable expert Anthony catalysts, Chairman. We've also implemented a Net Promoter Score system to help us better measure and drive engagement and satisfaction. Fourth, we continue to further improve our cost roadmap to enable higher sustainable long-term gross margins. The Company's cost roadmap has historically been hampered by high steel content due to the shift to large format modules, which was exacerbated during the steel price dislocation in 2021. The Company has made great strides in optimizing steel content and bringing manufacturing costs in line with those of its leading competitors.
This has helped us significantly improve our average new product project margins, which has started to show through our financials. In addition, we expect continued cost improvements over the next 18 months as the Company continues to work on its design to value and design for manufacturing initiatives, supported by rigorous process and excellent engineering team we are confident that these improvements and strength of our average new project margins will enable greater than 20% gross margin in the future as our revenue levels scales.
And finally, our breakeven cost has been greatly improved. Our breakeven revenue level has historically been over well over $100 million per quarter. We've now brought that down to what we believe to be approximately$ 50 million to $60 million going forward, depending whether or not we pay a bonus. This reduction has been driven by a higher direct margins as well as a reduction in keen focus on OpEx and overhead costs.
Our operating expenses in Q4, for example, were the lowest level in nearly two years as we have focused on operational efficiency. While maintaining or increasing investment in key areas that support growth and pipeline conversion like a strengthened sales team.
So overall, while the near term depressed revenue level is disappointing, I believe the Company is making good progress in repositioning for a strong recovery. The company has an expanding portfolio of excellent tracker solutions that are well regarded in the industry customer engagements. The top priority. We're always already seeing an improvement in purchase orders that are the foundation for our revenue growth in the future.
The market for Tupy trackers is improving. We are improving our systems and process across the board, including pricing, we have a product cost structure to enable 20% plus long-term gross margin and company cost structure, which has been reduced to enable quarterly profitability in 2024. We have a lot of things going for us with a great team. It's very it's really just a matter of getting revenue LEVEL up to see the profitability and cash flow potential to start to show through.
And the last topic for me is just a quick update on the status of your CEO search as Shekhar outlined on the November call. We want to be very deliberate in our approach. We did not want to disrupt the progress on key initiatives of the Company and wanted to take our time to find the right CEO. That said, we have started the process and have seen great deal of interest. The Board is focusing the process on highly qualified candidates, both within the industry and adjacent industries identify CEO, capable of leading the Company for a long tenure. We have a short list of excellent candidates. The Board will plan to name a successor at the appropriate time when the process has concluded. With that, I'll turn it over to Cathy.

Cathy Behnen

Thanks, Ahmad, and good afternoon, everyone. I'll provide some additional color on our fourth quarter performance and our outlook. Beginning with a discussion of the fourth quarter, revenue came in at $23.2 million, which is at the midpoint of our target range. This revenue level represents a decrease of 24.1% relative to last quarter and 11.5% relative to the year-ago quarter.
GAAP gross profit was $0.7 million or 3% of revenue compared to gross profit of $3.4 million or 11.1% of revenue in the prior quarter. On a non-GAAP basis, gross profit was $1.1 million or 4.8% of revenue, while down sequentially from a normalized 9.5% in Q3 on lower revenue and cost absorption. The Q4 margin represents our fourth consecutive quarter of positive gross margin and was toward the high end of our guidance range. We continue to believe that we have significant margin upside when our revenue level recovery.
Our GAAP operating expenses were $12.4 million on a non-GAAP basis, excluding stock-based compensation and certain other costs, operating expenses were $10.8 million, which includes a $3.1 million credit loss provision relating to specific customer accounts that was not included in our guidance ranges.
Excluding this charge, our non-GAAP operating expenses would have been $7.8 million or below or better than our guidance range and representing the lowest level in more than two years that we have diligently look for efficiencies across the Company. While continuing to invest strategically in areas that support growth. Said normalized $7.8 million would compare to a normalized $9.2 million in the prior quarter and $10 million in the year ago quarter.
GAAP net loss was $11.2 million, or $0.09 per share compared to a loss of $16.9 million or $0.14 per share in the prior quarter and a net loss of $20.5 million or $0.2 per share in the year-ago quarter. Adjusted EBITDA loss, which excludes approximately $1.1 million, including stock-based compensation expense and other non-cash items, was $10.1 million compared to losses of $9.7 million in the prior quarter and $11 million in the year ago quarter. Excluding the $3.1 million charge, adjusted EBITDA loss would have been $7 million, better than the midpoint of our guidance.
To touch briefly on annual results, full year 2023 revenue was $127 million, representing a 3.2% increase versus 2022. The increase was primarily attributable to higher product volumes and ASPs, partially offset by a decline in logistics revenue and ASPs.
GAAP gross profit was $8.3 million or 6.5% of revenue compared to gross loss of $27.2 million or negative 22.1% of revenue in the prior year. On a non-GAAP basis, gross profit was $10.6 million or 8.4% of revenue compared to a gross loss of $23.3 million or 18.9% of revenue in the prior year. The company's product cost reduction efforts, including a design-to-value initiatives to improve product margin is the primary driver of the significant year-over-year improvement.
GAAP operating expenses were $59.1 million on a non-GAAP basis, OpEx was $43.9 million, which includes approximately $7.4 million in credit loss provisions. Excluding this amount, our operating expenses would have been $36.5 million compared to $41.5 million on a similar basis in the prior year. GAAP net loss was $50.3 million compared to $99.6 million in 2022. Adjusted EBITDA loss, which excludes stock-based compensation expense and other non-cash items, was $34.1 million compared to a loss of $66.4 million in 2022.
Finally, regarding liquidity, we ended the quarter with $25.2 million in cash on the balance sheet. Our receivables at about five times by payable. And based on expected timing of payments and deposits, we expect cash to be about flat sequentially in Q1. We continue to hold no debt on the balance sheet and have about $65 million remaining under the ATM program at the end of the quarter. As previewed on the last call, we did not utilize the ATM in Q4, and we similarly don't plan to utilize it in Q1. With all these factors and the expected customer deposits, we will tightly manage those deposits. And by our payments, our backlog number of $1.7 billion with approximately $213 million added since November 8.
With that, let us turn our focus to the outlook based on our current view we expect Q1 revenues to be down sequentially and represents a trough in revenue for the year. Specifically, our coverage targets for the first quarter call for the following revenue between $10 million and $15 million, non-GAAP gross loss between $3.8 million and $1.8 million or between negative 38% and 12% of revenue. As you might expect the percentage ranges vary more greatly at these lower revenue levels.
Non-gaap operating expenses between $8 million and $9 million, and finally, adjusted EBITDA loss between $12.6 million and $9.8 million. Beyond Q1, we expect to see sequential revenue growth for the remainder of the year with revenue being weighted towards the second half. We expect to be approximately breakeven on an adjusted EBITDA basis in the third quarter before moving squarely profitable in the fourth quarter.
With that, we conclude our prepared remarks, and I will turn it over to the operator for any questions. Operator?

Question and Answer Session

Operator

(Operator Instructions) Philip Shen, ROTH.

Philip Shen

Thanks for taking my questions. On a couple of years ago, your business customer wins and momentum were rising pretty quickly in an oligopolistic market. I believe that Jinko and LONGi module USLPA. detention has really hurt you guys that said, these module vendors have been cleared and are shipping actively into the U.S. and have been for some time. Why haven't you been able to ramp your revenues with them. Were there previously awarded orders, for example that you ended losing to others? Can you give us some color on what how what's happening as these guys ramp up, although on your side you're not able to?

Patrick Cook

No, thanks for the question moment. I think we haven't seen any material contract cancellations really, first and foremost and the second part is we're seeing the ramp back in two P with these contracts and awarded orders that are moving from our backlog into our into POs and revenue. But that ramp has been quite frankly, a little bit slower than what anybody was expecting on the call.

Philip Shen

Shifting over to I think you guys said of the $1.7 billion of backlog, maybe Florida is $50 million or -ish roughly that number is on contracting. Can you kind of correct that figure? And then also how much is expected to be delivered in '24. So if you just look at the contracted volumes, how much is sure.

Patrick Cook

So let me clarify a kind of $1.7 billion. So $415 million of the $1.7 billion has purchase orders. Some of those have defined schedules and some of those schedules we're working through with the customers. And Kathy, we're not giving quarterly kind of breakdown of guidance on where that former $415 million ultimately going to going to play out.

Philip Shen

Right. Can you give it by year though, if not quarterly, like how much of that $415 million in '24 versus '25?

Cathy Behnen

Yes, we're not giving full-year guidance, but that those are starting to move. And if you look at kind of how we have laid it out. We gave you at our Q1 guidance as we showed you that were moving to breakeven in Q3, and that will be profitable in Q4. So I think if you kind of model that out, that gives you a baseline of what's coming through in 2024 and the rest will be coming in beyond that.

Philip Shen

Okay. I see the sequential growth. I just don't know what is the rate of growth. And so it's a tough time. And just I guess with the breakeven in profitability in Q4 and our execution has been tough. I know some of our recent checks suggests you may need to win back the trust of customers. Like how do you go about doing that? I know it's one step at a time and execution improvement. Have you guys thought through here or can you communicate what that plan might be? Thanks.

Ahmad Chatila

Yes, thank you, Phil. This is Mark, you're correct. We had missteps in the past. That's why we are where we are. But the team has done an amazing job over the last eight months, actually the prior even the prior management teams, they really have worked very hard to correct a lot of issues in the past and by having intense external focus, upgrading the quality systems, improving our cost roadmap, broadening our portfolio so that the sales teams when they go and meet customers, they have more than just to be to sell.
And even in the 2P product, there was not enough variety and it's what we're finding. And that portfolio got improved a lot over the last couple of years, and we continue to improve it now and. Because of that we're able to really book [50 million] a month. That's a significant number, like [100 million, 50 million] a quarter. And that's how that's how the team is correcting itself.

Philip Shen

Thank you for the color and my Patrick, Cathy, I'll pass it on.

Operator

Pavel Molchanov, Raymond James.

Pavel Molchanov

Yes, thanks for taking the question. So you have clearly been taking quite a bit of corporate costs out of the system that Q1 run rate of between $8 million and $9 million and non-GAAP operating expenses. Is that the kind of a steady state for the rest of the year or does it have further room to?
It declined?

Ahmad Chatila

I'll start with that. And Cathy, you can add the answer is this is the run rate we might increase of in the second half of the year, a little bit puzzled. We really I the team is trying to invest in sales and engineering. I think we cut a lot of the overhead, the things that we didn't need as much, but you can expect that that's the run rate and we it might increase a little bit in the second half of the year because we want to add more salespeople, we want to add more engineers.

Cathy Behnen

Yes, and I would just add onto that. We know we have we have really worked on this diligently and we do keep a very laser focus on our operating expenses and just continue to drive it, right? So we control the things we can control. And so we've really managed that. We have improved our processes and systems to really continue that control and how that monitoring through good metrics and Home Depot from reviews on a period-over-period basis.

Pavel Molchanov

And you mentioned that your bulk of the backlog and new additions are domestic. If we go back a few years, you were making a strong effort to diversify into Australia, parts of Africa and so forth. Given the amount of headcount that you've cut, are you able to play in these overseas geographies?

Ahmad Chatila

The answer is yes, but there's a lot the absolutely we can. Some of the overhead we cut is because we learned that we don't need it and we might need to add a little bit more salespeople, more effective salespeople in various regions.
Let me go back also to your prior question. We cut OpEx because it's not because we want to be a company that is smaller in revenue. We're trying to be efficient. We're not going to scale the company to be a 30 million a quarter company we do not believe that we're booking at 50 million a month. I recognize that we cannot be 50 million in revenue a month soon.
But as long as we continue that trend and it's accelerating actually in Q3, Q4 is better than Q3. And so far in Q1 is better than Q4. One data revenue can expand. So we actually want to set the company for nice growth and high profitability while being efficient, we have enough resources to be in the 50 million to 75 million booking a month. I think if we want to grow to 150 million , then we might add more people and expand internationally more aggressively. I hope that gives you some color.
Yes.

Pavel Molchanov

And then maybe just following up on now on the international aspect, last August, you announced some good-sized deal with them, a developer in Italy and Spain. And I think the plan was to start delivering late '23 and kind of continue through '24. Is that timetable still correct?

Patrick Cook

Yes, from most project goes the announcement we did with 5G, the 300 megawatt portfolio, we're looking still the majority of that revenue to be delivered kind of in 2024. And like we said into 2025, we saw a couple of project delays and small nature in 2023, but largely the portfolio this is still intact.

Pavel Molchanov

All right. Thanks very much.

Operator

Jeff Osborne, TT Cowen.

Jeff Osborne

Hey, good evening. A couple of questions on my side. I was wondering, Amada, if you could just address in looking back the awarded backlog conversion into the contracted under the prior management team as you diagnose why that was a challenge. Is there a way of framing that?

Ahmad Chatila

Just first of all, I want to thank the prior management team to really growing the business to that level. I think you know, a lot of it had to do that. We needed everyone to be on the road also to help customers move the award that the contracted and adding more salespeople getting stuff done internally. And that's what it is really it's a lot of blocking and tackling. And I think we learned our lessons and now we're going to intensify that activity.

Jeff Osborne

Good to hear. And then you made some comments that I just wanted to tie in into the financials.
As well. But you made reference to using more steel than your peers and then a 12 to 18-month sort of design-to-value and redesign of the portfolio to use less steel. If I heard you right to get to the 20% gross margin level is the comment about the $50 million to $60 million in revenue in the third quarter, depending on the bonus payment schedule. Does that assume that you hit a 20% gross margin? Or do you hit 20% after that 18 months time period?

Ahmad Chatila

I believe others can do you know that we do not hit 20% gross margin in Q3 because we have absorption issues issues. So the way I look at the direct margin and the answer is we are on a good path already at this moment. We are competitive on steel content, maybe with a little bit better scale, we can negotiate better with steel manufacturers. I think maybe that's an area we can improve or some of our logistics and supply chain networks. And in certain international areas, we can improve, I think, to get to 20% gross margin we need more than $50 million, $60 million.
How much capital do you think we need to be like $100 million a quarter? Yes, yes, I would say we need to be at $105 million a quarter and we'll get to 20% gross margin.
Yes, $105 million.

Jeff Osborne

Okay. Got it. Thanks for being precise, but the question is just as it relates to the IRA., is there any credits assumed in the guidance for Q1? Or how do we think about that for the outlook for the year.

Cathy Behnen

And now we have we have not assumed the credits and into our guidance and we are utilizing our facility at Alba field that we have capacity to manufacture domestic content and provide that to our customers as needed. But we have not put that into our forecast as of P&L.

Jeff Osborne

Perfect. That's all I had. Thank you, Cathy.

Cathy Behnen

Thank you.

Ahmad Chatila

Thank you.

Operator

Donovan Schafer, Northland Capital Markets

Donovan Schafer

Hey, guys. Thanks for taking my questions. So I might at first, I just want to clarify with your comment around you being at a rate, you have a monthly run rate, I guess right now of booking 50 million per month and adding that to the backlog, do those do you mean 30 million that goes into that PO. bucket, a purchase order that's or contracted? Or is it some of that, does that include awards or projects that go into the awarded bucket? And if it's not one or the other, can you give any kind of Russ, you know, if it's not 100%, 100% the other, can you give us some rough sense of what kind of a mix we're talking there?

Ahmad Chatila

Yes. It's 100% POs purchase orders, contracted, gravy and awarded, it's higher than that.

Donovan Schafer

Okay. Fantastic. And then for for accounts receivable, yes, I think in the past, so that's come down a bit, but not a lot just on a quarter-over-quarter basis and given the fairly low level of revenues in Q3 and Q4?
Yes, I would have expected it to maybe come down a bit more. And I think in the past, you've maybe even talked about improving those collections as a way of providing some of the nearer term funding. So just wondering if we can get an update there?
Yes, it looks like there were I think Kathy mentioned that some of that was written down, but are there other amounts in the accounts receivable that are past 90 days or could be coming under pressure for additional write-downs? Just any updates or clarification there would be helpful.

Cathy Behnen

Yes, sorry, that's on it now and entertain any other write-downs and the accounts receivable balance.

Donovan Schafer

Okay. And then just let's say, per the key talking about Q1 is the trough in on the Q3 call. I think I look back at the transcript. And yes, Patrick, you made the comment that you were expecting to improve revenue performance in the first quarter. And obviously with the guidance that's come out, that hasn't played out as expected. So what is it that gives you that what gives you confidence this time around? I guess that Q1 will be the trough and that you'll see that and you'll see that additional growth in Q2/Q3 that gets you to the to the breakeven? What do you see now?
That's different.

Ahmad Chatila

Thank you. Donovan. This is Amod again. What we see is a more contracted than before. That's what we see. I mean, let me make a statement about infrastructure projects by default. They are never on time, but we do not want to use that excuse our Our problem is we are a smaller company. And because of that, we get we got a lot of a lot of whiplash because we're smaller and subscale. And as we increase our bookings every every all the time and get to hopefully 150 million a month, then our forecasting will become much, much better. So that's our issue. But what happened since last time is we have a lot more contracted than before. So we are more confident right now than the last time that we did the forecast.

Donovan Schafer

Okay. Thank you. That's helpful.
I'll take the rest of my questions offline.

Ahmad Chatila

Thank you, Donna.

Operator

Amit Dayal, H.C. Wainwright.

Amit Dayal

Thank you. Good afternoon, everyone. Most of my questions have been asked, but I just wanted to touch on the backlog number on the footnotes in the press release you indicate some of the backlog is on convertible and just wanted to understand what the extent of going to the backlog in that number is from the wearable side of things and what are the triggers that you will convert this backlog into contracted orders?

Patrick Cook

Yes, we didn't break it out by what verbal and whatnot. I mean, I think the disclosure we put in here was really more tied to the purchase orders and $415 million of the $1.7 billion have purchase orders associated with it. The way we look at kind of the rest of the backlog is through LOIs or not or LI. or verbal agreements in which we check with their customers on a monthly and quarterly basis to make sure these projects progressing. A lot of this is candidly working with the customers to find the delivery schedules. They're getting a model that some of these projects we talked about in previous quarters, our 2025 NTP. type projects that are out into the future as well. So there's a little bit of mix and breakdown as it relates to that.

Amit Dayal

Okay. Thank you for the on. Maybe just the last one for me, Phil, as you sort of get into a recovery phase and on revenue, start planning, et cetera, to the 50 million-plus levels or how do you see with respect to your working capital situation to sort of meet that level of demand, you know, with what your balance sheet looks like right now?

Cathy Behnen

Yes, I think that we're you know, we, Matt, we're managing our working capital and I think we have sufficient working capital to meet the ramp that we have that we see in the back half of the year and we really look at managing the cash. We look at the fact that we have moved that and we look at the fact that you have significantly more receivables than you have payables and we continue to manage that. Our projects we look at from a cash flow, call it a temporary positive approach in terms of deposits that we receive from customers. And that really helps us to manage through and working capital needs.

Amit Dayal

All right, guys, thank you. That's all I have appreciate it. Thank you.

Operator

Thank you. I'm showing no further questions at this time. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect and have a great day.