Atkore Inc. Q4 FY2023 Earnings Call

Good morning. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to Atkore's Fourth Quarter and Full Year 2023 Earnings Conference Call. All lines have been placed in a listen-only mode. After the speakers' remarks, there'll be a question-and-answer session. As a reminder, this conference is being recorded. Thank you. I would now like to turn the conference over to your host, John Deitzer, Vice President of Treasury and Investor Relations. Thank you. You may begin.

Thank you, and good morning, everyone. I'm joined today by Bill Waltz, President and CEO, as well as David Johnson, Chief Financial Officer. We will take your questions after comments from Bill and David. I would like to remind everyone that during this call, we may make projections or forward-looking statements regarding future events or financial performance of the company. Such statements involve risks and uncertainties, but the actual results may differ materially. Please refer to our SEC filings in today's press release, which identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. In addition, any reference in our discussion today to EBITDA means adjusted EBITDA. And any reference to EPS or adjusted EPS means adjusted diluted earnings per share. Adjusted EBITDA and adjusted diluted earnings per share are non-GAAP measures. Reconciliations of non-GAAP measures and the presentation of the most comparable GAAP measures are available in the appendix to today's presentation. With that, I'll turn it over to Bill.

Thanks, John, and good morning, everyone. Starting on Slide 3, I'm pleased to report that Atkore again delivered strong operating results this year, and we remain confident in the future of our company. During our discussion today, we will discuss the quarterly and full year financials as we normally do, but we would also like to take this opportunity to review our strategic growth opportunities and provide some exciting updates regarding capital deployment. Let me start with a quick review of some of our highlights from the year. Turning to Slide 4. 2023 was a great year for Atkore. We delivered financial results well ahead of our expectations, and we made great progress on many of our strategic initiatives. We continue to be recognized as an employer of choice, and I believe that our talented team is a true competitive advantage for our company. I'd like to take this moment to recognize them for the great work and everything they do to support our customers, thank you. David and I are confident in our business, and I'm pleased to report that we repurchased an additional $75 million in stock in Q4. Over the past 24 months, we have now repurchased over $990 million of our stock. We are proud of our accomplishments, and we've worked diligently to evolve Atkore into an industry leader. Now, I'll turn the call over to David to talk through the results from Q4 and the full year.

Thank you, Bill, and good morning, everyone. Moving to our consolidated results on Slide 5. In the fourth quarter, net sales declined 15% year-over-year to $870 million, and our adjusted EPS decreased 24% to $4.21. For the full year, we achieved $3.5 billion in revenue, and our adjusted EPS was $19.40. Adjusted EBITDA for the full year was over $1 billion. Turning to Slide 6 and our consolidated bridges. Volumes were positive in the quarter, and total profitability was stronger than expected. Looking at the full year, net sales decreased by $395 million due to lower average selling prices. As we have been discussing over the past several years, price normalization, primarily in our PVC business, started at the end of FY '22 and has continued through FY '23. However, our profitability on both the adjusted EBITDA and EPS basis was much stronger than originally anticipated. We're extremely pleased with our overall financial performance. Moving to Slide 7 and our segment results. Margins compressed in our Electrical segment in the fourth quarter, driven by continued price normalization in our PVC-related products. Nonetheless, margins were better than expected, and we were encouraged to see volumes in our PVC-related products were flat on both a year-over-year and sequential basis. The year-over-year volume declines in the quarter were in our HDPE and cable products. Shifting over to our S&I segment, volumes increased 18%. Net sales for this part of the business declined due to lower average selling prices resulting from the year-over-year declines in raw material input costs and the impact from solar credits offsetting the strong volume gains. It's important to acknowledge that the declines in adjusted EBITDA and adjusted EBITDA margins include the recognition of the solar credit adjustment to cost of sales. Under the GGAM method, earnings and margins would have been much stronger and closer to 14%. As you may recall from our comments last quarter, we will be using this methodology in FY '24. Turning now to Page 8, we wanted to review some of the volume trends for FY '23 and our outlook for FY '24. In FY '23, we achieved 3% volume growth, which was slightly below our expectations of mid-single-digit percentage growth for the year. During Q4, there was a clear slowdown in demand coming from the telecom industry as the market and channel are working through elevated inventory levels and timing related to some of the government's stimulus funding. This slowdown caused an unanticipated impact on volume to our HDPE-related products. In addition, the ramp in production of our new facility in Indiana was behind our expectations, which led to slightly lower levels of shipment than we had anticipated. This being said, we are working through these production challenges, and we expect sales for solar-related products to double in FY '24. This projected growth in our solar-related products is a key driver in our low double-digit growth expectation for the total enterprise in FY '24. This will be a large step-up, and we expect the capital investments that we've been making in Indiana and other parts of our organization to deliver for our business in FY '24. In addition, our metal framing, cable management, and construction services businesses are very well positioned to support the continued growth of global mega projects. This part of our business grew double-digits in FY '23, and we expect continued high-single-digit growth this year. This team has done a tremendous job growing Atkore's presence with some of the most recognized companies in the world. Turning now to our outlook on Page 9. We anticipate net sales to grow in FY '24, led by the low double-digit volume gains. Partially offsetting this growth will be continued pricing normalization, which will lead to lower levels of adjusted EBITDA and adjusted EPS. In FY '24, we will use the GGAM method of accounting related to the solar credit, which will bring our tax rate back toward our historical range in the mid-20s. We continue to see upside potential in our company, and we're committed to returning at least $200 million in cash to shareholders through repurchases. Moving to Slide 10. We recognize there are a lot of moving parts between our performance in FY '23 and our outlook for FY '24. Therefore, we've outlined some of the critical components that impact both net sales and adjusted EBITDA. For example, we expect price versus cost to be a headwind of approximately $225 million to $275 million on an adjusted EBITDA basis. Of that amount, we would estimate that nearly $175 million has already occurred when you look at lower margin levels exiting FY '23 versus the start of the year. At the midpoint, this amounts to approximately $500 million of the $585 million that we outlined last year as total price outperformance. Turning to Slide 11. Despite these anticipated declines in FY '24, we're extremely pleased with the structural transformation and improvements that we've achieved in the business since our IPO. Last year at this time, we shared a historical bridge which broke down the different components in our sales and earnings since 2017. One year later, the sustainable pricing improvements that we discussed are still holding, and our estimates regarding pricing outperformance are in line with our expectations. The diversity and strength of our product portfolio is a true competitive advantage, and we expect our long-term adjusted EBITDA margins to land in the range of 25%. Even at these lower levels compared to our performance in the past three years, these margins would be equal to or slightly better than best-in-class companies in the electrical industry.

Thanks, David. Starting on Slide 13, Atkore is a differentiated company and a great investment opportunity. The financial and portfolio-related achievements we've made since our IPO, as well as the strong secular tailwinds and growth opportunities we have ahead of us, have positioned Atkore well for continued success. Turning to Slide 14, we have provided a view of our strong financial profile. Our balance sheet and cash flow give us a rock-solid foundation from which to grow. In addition, on Slide 15, our products are genuinely all around you, and these are truly essential items for the electrical infrastructure needed in all types of construction. In fact, when you look at our segment sales on Slide 16, we estimate that over 90% of our sales are related to electrical infrastructure. Three-quarters of our sales are in our Electrical segment, but a significant portion of our Safety & Infrastructure products are also directly related to electrical infrastructure. This is especially true when you think about our prefabrication devices and our solar products. Turning to Slide 17, there are strong secular trends related to electrical infrastructure that we trust will support our market for years to come. Underlying many of these trends are also a large government stimulus program, with some of them having a spending profile through the end of the decade. David has said this many times before, and even to several of you, and I could not agree more with him, 'The electrical industry is a great place to be.' Moving to Slide 18, we remain focused on executing the conduits of growth that we've discussed at this time last year, which emphasized M&A, category expansion initiatives, and product innovation. Today, we wanted to provide an update on our key category expansion initiatives, which are an important aspect of executing our conduits of growth for years to come. In FY '24, we anticipate the investments that we made in Indiana will start to demonstrate considerable financial benefits. We expect growth and benefits from our investments in our regional service centers and HDPE will start to materialize in FY '25 and beyond. On Slide 19, we wanted to highlight our new facility in Hobart, Indiana. This is a great achievement for all of us, and I could not be more pleased with the team. On Slide 20, as mentioned before, we're expanding our service and distribution capabilities in Texas, and we are now planning to add additional service capabilities outside of the Greater Atlanta region. Moving to Slide 21, we're pleased with the integration and investments we've made in our HDPE-related acquisitions. This business is now operating cohesively as one unit, and we continue to drive the adoption of the Atkore business system throughout the network. Yes, there are challenges, as you've heard about the industry and inventory, timing of stimulus funding, and so on. However, I'm confident in our team and the long-term value this business will drive for our company. We estimate that we're number two in the power and telecom part of the market, which is probably less than 20% of the overall HDPE market when you think about other applications like oil and gas and water. Atkore is an outstanding company and a compelling investment opportunity. With our exceptionally strong balance sheet and diverse product portfolio, we are well-positioned to deliver long-term value for all of our stakeholders. With that, I'll turn it over to David to give some exciting updates about our capital deployment plan.

Thanks, Bill. Yes, I'm excited to announce on Slide 23 that our Board has added plans for a regular quarterly dividend in our capital deployment model. The introduction of this dividend is supported by our strong performance over the past several years and our confidence in the future. Turning to Slide 24, our updated capital deployment plans reflect our intention to invest and grow our business while consistently returning cash to shareholders. We're being quite selective in our approach to M&A as we continue to have a high level of confidence in our current business, as demonstrated through the nearly $1 billion we've deployed to share repurchases over the past 24 months. Moving to Slide 25, we anticipate elevated levels of capital expenses in FY '24, similar to FY '23, as we build out our RSC network that Bill mentioned and continue to invest in our digital tools and capabilities. Next, on Slide 26, looking back on the version of the slide we presented a year ago, some things have changed for the positive and negative. Despite these changes, we believe our growth investments and our capital deployment model support our ability to deliver over $18 per share of adjusted EPS in FY '25. With that, I'll turn it back to Bill for Slide 27.

Thanks, David. And we are very pleased with what we've achieved over the past several years, and we're even more excited about the opportunities ahead. With our outstanding financial profile and differentiated product portfolios supported by strong secular trends, we are a compelling investment opportunity for anyone looking for a company with strong growth initiatives and a commitment to returning cash to shareholders. I'm confident in the team, the strategy, and processes we put in place to continue Atkore's strong trajectory. With that, we'll turn it over to the operator to open the line for questions.

Operator instructions. Your first question comes from the line of Alex Rygiel from B. Riley. Please go ahead. Your line is open.

Thank you. Good morning, gentlemen, and for a nice quarter and lots of helpful slides here. So, thank you very much for that.

Thanks, Alex.

Yeah. Good morning.

My first question here is, kind of your visibility as it relates to both the solar market and the HDPE market or the telecom market. How confident are you that you feel like you've got pretty good visibility as it relates to either existing inventory and how that's getting worked through the channel and then customer demand over the next, call it, 12 to 18 months?

So, Alex, this is David. I'll take the solar question, and I just want to remind you, as part of the Inflation Reduction Act, with the incentives made for domestic manufacturing of torque tubes, that market essentially doubled domestically even if the amount of solar being deployed was the same. So, I think for that one we're very comfortable. We have really good relationships with some of the large tracker OEMs; that volume is going to be there and continues to be there. Now our challenge is probably more on production on that side of the business.

Yeah. So, just one other thought on David's, because of the IRA, moving volume from China to the U.S. doubles the size of the market. So, the market is exceptionally healthy. It's all about us just getting factories up. And then, for HDPE, that's a little bit more triangulation, but I think everybody from fiber optic corporations, I won't call out individuals, but that are out there, have announced their earnings and their estimates on when the funding will get deployed to our competitors that have announced to the fiber optic BEAD Association and so forth, have all estimated their second half of next year. So from that, we are pretty optimistic. Again, it's $65 billion of what's called BEAD part of the IIJA. So, it's a huge amount of funding. It's just a question of getting that 'shovel ready,' which is taking longer than expected. But we're ready, and it's really what's going to help carry us in full-year '25 and beyond.

Very helpful. And as some of maybe your smaller competitors figure out ways to digest the weaker pricing environment that you've worked through very, very well, do you see even more attractive M&A targets developing from a pricing standpoint from those private entities that are having trouble accessing capital?

Yeah. So two things, Alex. I'm going to answer your specific question and then go a little bit broader on M&A. Absolutely, yes. And we just had our Board meeting, and they had the same exact thought as you. Classically, this is a perfect time to potentially acquire and so forth. So, we are out, we are working deals. To the one chart that David did with capital deployment, the good news also with Atkore is we give our estimates for this year and reaffirm the $18-plus for next year is there's so many organic opportunities where we're spending over $200 million on capital. Even without M&A, you're comfortable with the $18 EPS for next year. And our management is so focused on that, that we're not going to opportunistically just grab acquisitions for the sake of acquisitions. But I think we've always been disciplined and will continue to be disciplined as we, quite frankly, absorb all the stuff of startup of factories, deploying capital for technology, the regional service centers, and so forth.

Thank you very much. Nice quarter, nice year.

Thank you, Alex.

Thanks, Alex.

Your next question comes from the line of Deane Dray from RBC. Please go ahead. Your line is open.

Thank you. Good morning, everyone.

Hey, good morning, Deane.

Good morning, Deane.

Can we go through pricing dynamics in the quarter and then the implications on the path to normalization that you talked about in the prepared remarks? So, for the quarter, pricing ended up being not down as much as we thought it would be, so better on pricing. And just that, how does that factor in lead times? What you're seeing in terms of competition, input costs, and so forth?

Certainly. Deane, I believe Q4 performed slightly better than our expectations, and the entire year exceeded our projections as well. At the beginning of the year, we estimated around $850 million for EBITDA. Overall, this has been a robust year that surpassed both our expectations and those of analysts. The outlook we just completed for this quarter aligns with analyst guidance for EPS and EBITDA. Our pricing remains strong, better than we initially predicted, but I want to highlight that, as David discussed in the prepared remarks, we continue to see PVC prices gradually decline, which will affect our forecasts moving forward. The information we shared last November is materializing, and while we anticipate maintaining some pricing due to our service, regional service centers, and streamlined processes, we will also have to concede some pricing. PVC is a focus for us since it is our largest product by price, but similar dynamics are occurring across our other products. While some products may see price reductions, others are experiencing their highest prices in recent years. We just implemented a price increase on metal conduit due to rising steel costs. It's not simply business as usual, as we face challenges, but the situation is unfolding mostly as we projected.

And Deane, remember, we always said that the volume in the PVC business, obviously, has the component of what drives some pricing element. And in Q4, our PVC volumes were flat year-over-year, which was certainly better. We were trending better throughout the year, but we started pretty significantly down year over year. So, I think that's a positive. Going into Q1, we have seasonality. That business probably has more seasonality than anybody given that it does go into the ground and so on and so forth. So I think, as Bill mentioned, pretty much in line, maybe slightly better than what we expected.

And the other thing, Deane, not part of your question, but what I'm excited about that shareholders should be is the chart that we walked through where we're forecasting double-digit organic growth, which was that and the dividend were two things that should be very positively received by our shareholders as we go forward. That's the two things. In fairness, de-stocking happened last year, so we don't have that happening again in the market. And then, the fact that we are the self-help of all these different initiatives are starting to pay off here. So that's really when we make the statement about we're excited about the future of Atkore, these are some of the reasons for that.

That's all good to hear, and that's great color. I mean, just a quick clarification on Alex's question regarding volume. If we were looking for mid-single-digit volume this quarter, you came in low-single, how much of that, if you were to size the shortfall there, was the timing of the government stimulus and the telecom choppiness there? Does that account for all of it?

Do you want to go, David?

Yeah, I can. I would say maybe half to maybe a little bit more than half was due to the HDPE environment. And then, the other portion would be our slower-than-anticipated startup for our solar plant.

Good. Okay. So that's...

One of the two within our control, and the other one, as we mentioned, is probably in our market that's going to take a little bit to get back to where we expect it to be.

All right. That clarification is helpful. And then just last question for me is on cash flow; was seasonally for your fiscal fourth quarter a bit light. Just kind of take us through the dynamics there. And I also just want to give a shout out, great to see you initiate the dividend.

Thank you very much. Overall, for the full year, our operating cash flow exceeded last year's results despite being $300 million below last year's EBITDA, which I view as very positive. The timing issue this year is related to the startup in Indiana, which is progressing slower than anticipated. We have the steel prepared, resulting in slightly elevated inventory levels, particularly in solar. I would say the same goes for HDPE.

Yeah, that clarifies. Thank you.

You're welcome. Thanks, Deane.

Your next question comes from the line of Andy Kaplowitz from Citigroup. Please go ahead. Your line is open.

Hey, good morning, everyone.

Hey, good morning, Andy.

Bill, maybe just a little more color into your markets. Just inventory of your products. I mean, I think you've talked about it being reasonably low in PVC and metal conduit; is it still the case? Are you seeing any impact on larger projects, either non-residential or residential, from the higher rates? I know you talked about stimulus and HDPE, but anything sort of more macro that you could talk about? And I think last quarter you mentioned you were having a strong July. Did you see any change in the cadence of your businesses as you went through Q4 and now here into Q1?

I’ll begin, and David might need to assist me. It feels like quite some time since the last quarter. The large projects overall are really robust. If you look at any macro indicators like ABI or Dodge, the number of large projects starting, spurred by some stimulus, is notable—whether that involves new factories, chip production, or data centers driven by artificial intelligence, especially in the United States. We have a global presence which contributes to the optimism reflected in our forecast for double-digit growth. Overall, we are positive about the market outlook, particularly with these large projects we are engaged in. I don’t specifically recall differences between July and August.

No, I don't think it's a pretty consistent. But I would also say, Andy, the other thing that we're really encouraged about is other players in our industry have announced quite a bit of capital investment, not for our products, but for other products that we would argue is slowing down just the volumes in the whole industry. But the fact that they're investing hundreds of millions of dollars in capacity in the U.S. to help expand the electrical capacity, I think that's a very big positive for us.

David, just to be clear...

You're not calling for some sort of big inflection in PVC conduit volume; it's more easy comps, or is there more of an inflection that you're calling for when you get the changing growth here in '24? No, I think it is more just one. We don't have the de-stocking year-over-year, and so we see some positive sequential lines there. I think you are starting to see continued investment in grid hardening, which I think is another positive. I mean, if we happen to have any slight increase in single-family housing or anything like that, that would be helpful, but we're certainly not counting on that. And then, we do have some new products, which we think our customers will like, and so I think there's a little bit of opportunity there.

Sure. Andy, I’ll address the question from a positive to a negative perspective, but overall, it's a positive trend. The construction backlog is currently at one of its highest levels, within 0.2 months of the peak. The Architectural Billings Index saw a slight decline, but architects still have a robust backlog. The volume is definitely present, especially with further infrastructure support from the IRA on the horizon. The key limiting factor has been labor. A softer labor market could potentially allow more individuals to enter the construction field, which would be beneficial. Additionally, as other companies manage their backlogs, it will help our products flow more efficiently. As David pointed out, we’re in a better position compared to last year since there’s no de-stocking occurring. With our factory operational, projects advancing, and our growth initiatives in place, we feel optimistic about the future.

Great. And then I just wanted to focus on your guide for the '24 of 25% to 26% EBITDA margin. It's obviously up significantly as you've showed us from mid- to high-teens pre-pandemic. Maybe a little more color on sort of it seems like you're saying, okay, that's basically the trough. I want to sort of clarify that, or at least that's sort of new run rate going forward. And then, if I look at that chart that you have, you did say there's a down arrow regarding potential future pricing normalization versus what you gave us last year around that bridge to $18-plus. So, is pricing normalization still you're going to retain $400 million or did something change there?

That's a very good question. Those arrows going from where we are to the $18 wasn't necessarily vis-a-vis what we said last time. It's more or less what we think the actual bridge will be. So, but with that, I mean, I think the only thing that that arrow recognizes is we did say $585 million in total. And if you midpoint our current guide plus last year's actuals, it'd be around $500 million. So, we're giving ourselves a little bit of an area saying there could be some continuation in that last year, FY '25, to get that $85 million or so. Obviously, Andy, we'll see as the year progresses.

Got it. And then, I just want to ask you about conduits of growth in the context of, you mentioned the solar facility doubling. Are you past the sort of startup issues that you had there? And is it possible to size when you look at '24 how much the conduits of growth are helping you sort of make your forecast on revenue or EBITDA?

We are still working through some of the startups, but we have included that in our forecast for this quarter. We expect to have these issues resolved as we move into the next calendar year. We're receiving weekly metrics, which our leadership and president review daily, while David and I look at these metrics weekly. We are noticing an improvement and progress in the operations, including the onboarding of new employees. Everything is progressing as we anticipated. We might have been overly optimistic back in July about the time required to start up a new factory with a completely new workforce, but we are currently on schedule. Regarding the conduits to growth, I believe we are on track for double-digit organic growth next year, plus a modest increase from market trends. This additional growth, from solar torque tubes, new product development, and our service centers with streamlined order, delivery, and invoicing processes, is what fuels Atkore's outlook and our confidence for future growth beyond market levels.

Exactly. And I would add that the global mega projects are also part of that. And on Slide 10, Andy, you can go through, I think we did a couple other things here I just wanted to mention. We did outline kind of FY '23 solar credits so we can isolate that. Then we gave you what we think the solar credit will add to our bottom line for FY '24. So, we would look at that as more of a normal year-over-year as the solar credits around. You can model that in FY '25 or so on. But we do still have quite a bit of investment this year. And again, that's highlighted in digital and additional two regional service centers, and so on and so forth.

Appreciate all the color, guys.

Thank you, Andy.

Thank you, Andy.

Your next question comes from the line of Chris Dankert from Loop Capital. Please go ahead. Your line is open.

Hey, good morning, guys. Thanks for taking the questions.

Good morning, Chris.

Good morning, Chris.

Just to pull the thread on pricing a little bit more perhaps, thanks for the color. And again, just on what the expectation is on '24 and kind of the lingering impact on '25. Just when we're thinking about the actions taken to reset price cost, to that the $585 million you've talked about in the past, should we assume that those actions are fully complete this year and just kind of the rollover impact that ripples into '25?

I would say no. At our midpoint for price cost guidance this year, we mentioned $250 million, and the calculation showed that about $175 million of that was already accounted for based on the expectation that we would end the year at a lower level than where we started FY '23. This implies there is still some normalization to occur. There isn't really any action needed; it's just how the market fluctuates over time between volume, price, and opportunities. We’ve noticed a general decline, likely slower than we would have anticipated three years ago, but...

Yeah. which is a good thing from extra capital that would be deployed or stock buyback. And then also Chris, if your question was more '25 versus '24, our current thought process is this would mostly normalize in '24. Now, if you think about it, if we gave slightly more price, let's say, in April of '24, from a comp perspective at the beginning of '25, you're still going to have some discussion about it. And that's where I would just go back and say, we've been, in my personal opinion, amazing to be able to look out three years, plug in $18 EPS, explain pricing going down, explain what we're driving, and basically then forecast and/or exceed most things. So, right now, everything looks to be playing out as we expect it to be. But there will be a little bit of price discussion even in next fiscal year.

No, thanks for the color. And again, thank you for just the level of candidness you've kind of approached that whole price cost conversation with. And when I think about growth into '24 here, how do we think about the impact of the large mega projects and kind of what's assumed in the guides? Should we be assuming a stronger than seasonal back half just given the timing of some of these projects?

I'll get right to that. We have numerous projects, and while I won't specify customers, I want to commend our team for building excellent relationships and demonstrating the value we offer to well-known global brands that seek worldwide providers. We're well-connected in regions like Europe, the United States, and the Middle East. Currently, we're very close to securing some significant projects, and while I won’t fixate on a specific figure, we are looking at around $100 million in ongoing global mega projects. Regarding data centers and chip manufacturers, they are, in my view, leaning towards exporting. You can expect a much greater impact in the second half of the upcoming fiscal year compared to the previous year.

Got it. Makes sense. Well, thanks so much for the color and best of luck on '24 here, fellows.

Thanks for that, Chris.

Thank you, Chris.

This concludes the question-and-answer session. I would now like to turn the call back over to Bill Waltz for closing remarks.

Before we conclude, let me summarize my three key takeaways from today's discussion. First, fiscal 2023 was a very good year for Atkore. Second, we are well positioned to build on our positive business momentum and have a strong outlook for fiscal year 2024. Third, our strategy will drive further value creation into the future as we continue to execute on our growth opportunities and deliver on our updated capital deployment model. With that, thank you for your support and interest in our company, and we look forward to speaking with you during our next quarterly call. This concludes the call for today.

This concludes today's conference call. Thank you for your participation, and you may now disconnect.