Caci International Inc /De/ Q1 FY2023 Earnings Call

Ladies and gentlemen, thank you for being here. Welcome to the CACI International Fiscal 2023 First Quarter Conference Call. This call is being recorded and all lines are currently muted for listening only. We will provide an opportunity for questions later on with instructions given at that time. Now, I'll hand the call over to Dan Leckburg, Senior Vice President of Investor Relations for CACI International. Please go ahead.

Well, thank you and good morning, everyone. I'm Dan Leckburg, Senior Vice President of Investor Relations for CACI International. Thank you for joining us this morning. We are providing presentation slides. So let's move to Slide Number 2. There will be statements in this call that do not address historical facts and, as such, constitute forward-looking statements under current law. These statements reflect our views as of today and are subject to important factors that could cause our actual results to differ materially from anticipated. Those factors are listed at the bottom of last night's press release and are described in the company's SEC filings. Our Safe Harbor statement is included on this exhibit and should be incorporated as part of any transcript of this call. I would also like to point out that our presentation will include a discussion of non-GAAP financial measures. These should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. Let's turn to Slide three, please, to open our discussion this morning. Here's John Mengucci, President and Chief Executive Officer of CACI International. John?

Thanks, Dan. Good morning, everyone. Thank you for joining us to discuss our first quarter fiscal year 2023 results. With me this morning is Tom Mutryn, our Chief Financial Officer, and Jeff MacLauchlan, Senior Vice President of Finance, who will assume the CFO role on November 1. As you all know, after 16 years of dedicated service to CACI, Tom has announced his plans to retire in January. For the last 10 years, I have had the great pleasure to depend on Tom's financial acumen, his leadership, and his uncompromising commitment to always do what's right. Tom, we've accomplished quite a lot together, and I thank you for your unwavering dedication to CACI, our employees, our customers, and our communities. Jeff, welcome. I look forward to the contributions you'll make as we continue to execute our strategy and deliver ongoing shareholder value.

Thanks, John. I'm very happy to join the team. Over the years, I've watched CACI's success with great admiration and respect. I look forward to helping us deliver continued profitable growth and strong cash flow.

Thanks, Jeff. And now on to my commentary, and then I'll turn the call over to Tom to cover the financials. Slide 4, please. Last night, we released our first quarter results for fiscal year 2023. I am pleased with our performance and the strong start to our fiscal year. We grew revenue 8% with growth in both expertise and technology. Profitability and cash flow were also strong, and we won $3.2 billion of contract awards, with more than 80% being new business to CACI. That represents a two times book-to-bill for the quarter and 1.3 times on a trailing 12-month basis. Tom will provide additional financial details shortly. Slide 5, please. Turning to the external environment, as we look out over the next several years, prospects remain positive. In the immediate term, we are operating under a CR through mid-December, while the timing of the government fiscal year 2023 appropriations is not clear. What is clear is that we continue to see strong demand and bipartisan support for national security and modernization priorities. From a customer perspective, there are favorable budget indications for sustained spending in defense, intelligence, and Homeland Security. We see compelling opportunities in areas like digital solutions, enterprise IT, C4ISR, cyber, and space. This strong backdrop gives us confidence in our ability to drive long-term growth, margin expansion, robust cash flow, and shareholder value. Slide 6, please. As you've heard us say in the past, we are focused on investing ahead of customer need to differentiate our technology offerings. Some of our most recent examples and successes include those in the space domain, where we are investing in photonics capabilities acquired through LGS and SA Photonics. The long-term growth opportunity for photonics is compelling, with space-based capabilities being a high priority for many customers. We are already delivering these capabilities directly to our government customers, as a supplier to OEMs on other programs. We also continue to invest in other space-based technology like Assured Precision Navigation and Timing and laser remote sensing or LiDAR. These technology investments are already seeing demand from major government R&D agencies and prime contractors for space payloads. Turning to C4ISR, we continue to invest in a broad range of capabilities, with software-defined offerings being a priority. Leveraging these investments, CACI was recently selected to provide advanced technology capabilities to the U.S. Space Force. This award is a prime example of our ability to deliver software-defined innovation in a fast, agile manner to support critical national priorities. Evidence that our software-defined everything strategy continues to pay off. The enterprise IT modernization is a key requirement. Agencies need to improve cyber defense, support an increasingly dispersed workforce, consolidate and modernize legacy applications and networks for efficiency, and realize the value of available data. Here, we are investing in repeatable processes, automation, infrastructure as code, and key partnerships with commercial technology providers such as AWS, ServiceNow, UiPath, and Juniper. A great example of CACI differentiation is the recent $5.7 billion enterprise IT-as-a-Service Wave 1 contract award by the United States Air Force. Under this program, CACI will deliver enterprise IT service management systems and processes across the entire Department of the Air Force, as well as provide the foundation for future waves. This program will leverage all of the IT investments I mentioned earlier. In addition to investing ahead of customer need, we also invest in technology to provide better value to our expertise customers. A recent example was a contract award within the intelligence community, where the customer was buying mission expertise to support their intelligence collections and analysis efforts. Through investments we've made in AI-based computer vision software, we differentiated CACI's offering and demonstrated how we can make our offering more efficient, effective, and valuable to the customer by leveraging our technology. This benefits both sides: our customer realizes enhanced capabilities and repeatable solutions with a reduced dependency on people, resulting in overall reduced costs. We realize benefits from differentiating our bids, reducing labor requirements in a constrained labor market, and earning better margins. All of these examples are proof positive that our technology strategy is working not only to grow our business, but also to enhance margins. In summary, we delivered strong first quarter results and remain on track for the full year. Demand and the budget environment are positive. We continue to enjoy bipartisan support for national security and modernization priorities. We are successfully executing our strategy to invest ahead of need and leverage the synergy between expertise and technology to win in the marketplace. With that, I'll turn the call over to Tom.

Thank you, John, and good morning, everyone. Before I turn to our results, I want to thank John for his kind remarks and the support he has provided over the many years we have worked together. I take pride in our many accomplishments and successes: not only the strong financial performance and shareholder value creation, but also safeguarding and strengthening our culture of integrity and innovation. We are truly a great place for our employees to come to build their careers, and we deliver value and operational excellence to our customers and our country. I am grateful to have been part of this dynamic team. I retire from CACI knowing that the best for the company is yet to come. And I wish John, Jeff, and the rest of the CACI team every success. With that, let's turn to our results. Slide 7, please. Our first quarter is a strong start to the fiscal year. We generated revenue of $1.6 billion in the quarter, representing overall growth of 7.7% and organic growth of 4.3%. First quarter adjusted EBITDA margin was 10.6%. Adjusted diluted earnings per share was up 3% from a year ago, driven by our higher revenue and associated profits. Slide 8, please. First quarter operating cash flow, excluding our accounts receivable and purchase facility, was $143 million, reflecting healthy profitability and strong cash collection. We recorded DSO of 48 days, a record low, which represents hard work and diligence across our company. Free cash flow was $130 million for the quarter. We ended the quarter with a net debt to trailing 12 months adjusted EBITDA at 2.3 times. Given our strong cash flow profile, modest leverage, and access to capital, we continue to have significant optionality to deploy capital in a flexible and opportunistic manner. Slide 9, we are reaffirming our fiscal year 2023 guidance. We expect revenue to grow between 4.5% and 7.5% with growth in both expertise and technology. We expect acquired revenue of about $180 million, and our full year EBITDA margin will be in the mid to high 10% range. As a result of higher interest rates, we now expect interest expense in fiscal year 2023 to be around $75 million, approximately $14 million higher than our original forecast. Given the underlying strength of our business, we are maintaining our adjusted net income and free cash flow guidance. As a reminder, we will make a final payment of $47 million in the second quarter to repay deferred payroll taxes under the CARES Act. In addition, as we've previously discussed, we are assuming the repeal or deferral of Section 174 of the tax code relating to R&D expense. If this does not occur, our operating cash flow would be around $95 million lower for the year. Recognize that Section 174 only impacts timing of cash taxes, not the absolute amount. Slide 10, please. Continuing to our forward indicators, prospects remain strong. We won $3.2 billion of contract awards during the quarter, driving backlog growth of 4% compared to last year. This includes approximately $2 billion from our large Air Force enterprise IT-as-a-Service award based on currently known scope. The difference between this and the headline value represents additional opportunity to drive even more innovation and modernization to the Air Force over the 10-year period. For fiscal year 2023, we now expect 90% of our revenue to come from existing programs, 5% from recompetes, and 5% from new business. We have nearly $11 billion of submitted bids under evaluation, over 70% of which is for new business with CACI. We expect to submit another $16 billion of bids over the next two quarters, with over 90% of that for new business. With that, I'll turn the call back over to John.

Thank you, Tom. Let's go to Slide 11, please. To wrap up, Q1 was a great start to our fiscal year. We delivered strong revenue growth, profitability, cash flow, and contract awards. We have a robust pipeline of additional opportunities. Looking forward, we remain committed to delivering long-term growth and margin expansion while compounding those returns with a flexible and opportunistic capital deployment strategy. All of this is driven by a commitment to grow free cash flow per share over the long term. As is always the case, our success is driven by our employees' talent, innovation, and commitment. To everyone on the CACI team, I'm extremely proud of what you do each and every day for our company and our nation. And to our shareholders, I thank you for your continued support of CACI. With that, Alex, let's open the call for questions.

Thank you. Our first question for today comes from Tobey Sommer from Truist Securities. Tobey, your line is now open.

Thank you. I was wondering if you could dig into and frame a little bit the opportunity in your photonics and laser business that you garnered via recent acquisitions, what the size and level of profitability is today versus what it may look like over some sort of medium term, if successful? Thank you.

Yes, Tobey, thanks. Look, we're really happy with the position that we've created for ourselves and our shareholders in the photonics market as well as within laser communications. We have production units that are in space and are involved in several missions. A couple of different types: one are the bespoke GEO in our planetary ones. We have laser terminals on satellites that are going to be headed to the moon as part of the Artemis mission. And on the higher volume side are those proliferated LEO satellite constellations that everybody has heard a lot about. We're starting to build manufacturing scale and capability to produce high-volume small form factor devices. Just to give you an idea of what we're talking about here, we're looking at laser comp terminals, modems, and optics that are anywhere from 46 pounds down to something the size of a grapefruit that is able to complete satellite optical cross-links. We are partnered with most, if not all, of the satellite OEMs today, whether you're talking DARPA or larger-scale production programs. We're also involved, Tobey, in a number of imaging contracts and CRAD activities. Why that's important is those CRAD activities help support the investments that we're making to extend our capabilities into new markets. As I mentioned when we purchased LGS and SA Photonics, we're looking at this market taking off to more material growth in the fiscal year 2024 to 2025 timeframe. We still have some additional capital investments that we are making there. We've opened up a second production facility in the state of Florida. So overall, I like the positioning of where we are in photonics, and the work in LGS and SA Photonics is right in line with our plans.

And for my follow-up, I'd like to ask a question about the M&A market and higher interest expense, clearly that will influence the trajectory of bottom line growth as rates seem higher for a period of time. How is it that the changes in interest and available leverage and financing influenced valuations, if at all? If it hasn't yet, do you expect it to? How is it kind of influencing your capital allocation? Thanks.

Yes, yes, Tobey, thanks. Look, we've always talked about the fact that M&A is a very important use of our capital, but as we've discussed over the number of years, it's not our only one. We continue to evaluate all capital deployment options based on the dynamics at this current time. Our M&A strategy will always be strategically focused. We will look to find areas that give us additional capabilities or different customer relationships that allow us to continue driving long-term growth. We're a disciplined acquirer, always looking for the right target at the right price and, of course, with the right culture. On the M&A side, the pipeline really hasn't materially changed from what we've been discussing over the last few quarters. It's not as robust, but we continue to pursue our preemptive M&A strategy, looking for ways to fill gaps. Tom, do you want to talk a little bit about rates and how it positions us?

Yes, yes, thanks, Tobey. I would say that the higher interest rates do not have a material impact on the way we look at acquisitions. In our first quarter, our average interest expense was around 3.5%. Now that's higher than where it was a year ago, but in any long-term historical period, that is still an acceptable borrowing cost, and a slightly higher weighted average cost of capital is associated with it. But again, I don't think that's going to materially alter the economics of proposed deals. We're still present value decision-makers with slightly higher hurdle rates, but not meaningfully at this point in time.

Thank you very much.

Thanks, Tobey.

Thank you. Our next question for today comes from Gavin Parsons from Goldman Sachs. Gavin, your line is now open.

Hi, good morning.

Good morning, Gavin.

And congrats to Tom and Jeff.

Thank you.

Thank you.

Pretty good start in terms of revenue and bookings. I just wanted to get an update on the customer labor environments and budget funding environment, if you would?

Yes, Gavin, let's take hiring first. Look, the market, and you all have heard me say this many, many times, has always been very challenging for the past few years, and it remains so. As we look at how we handle hiring, and I'm going to refer to it as the cost of labor because that's really how this plays out. We are paying for top talent with specialized technology skills, with the right certifications and the right clearances. And I hate to say it, but I'm very happy to pay for top talent, as any CEO would. We are tracking the market and making sure that we are compensating talent appropriately, and that helps not only in attracting folks to CACI, but also in the way we've been able to retain a fair amount of our workforce. Now those additional labor costs have two different avenues for us. 60% of our revenue was cost-plus. Therefore, higher wages do pass along to the customer. However, our customers ask us to find the best and brightest, and that's what the best and brightest cost. The other 40% is susceptible to higher labor costs, but we have many avenues to keep those costs in check and still generate the right margins we need. The first thing is that revenue is not necessarily linear to headcount in our business. Half of our revenue is in the expertise area, where it's nearly 100% focused on labor. The other portion is on the technology side, where we get to write the labor categories, reserve full rates, and determine who to hire and how to pay them. We are looking for efficiencies as well. I've said many times, software is a superpower. It allows us to deliver so much more capability out there, with much higher productivity and potentially reduces supply chain issues. As for hiring, you also asked about the budget. What I see out there is very supportive budgets. We're fortunate; we're in the national security space. I continually say the world is a dangerous place. We see that with what I call the Ukraine wake-up call, but we also have China, and other near peers are present, and counter-terrorism challenges are still at the forefront. We are moving into another fiscal year under a continuing resolution so we don't have FY '23 appropriations yet, but having said that, we're heading into one of the largest defense budgets we've ever seen. We're going to see increased spending in the intelligence community, within DHS, IT modernization, and space. We're spending considerable time evaluating the role that INDOPACOM will play in our future. A very solid immediate near peer defensive posture is critical. That's great for us, as it requires anything from providing intel analysts to SIGINT and cyber detection and defeat technology. Overall, we have a very supportive budget and a reasonably good outlook for addressing hiring pressures.

Got it. If you marry the two of those for your customer, has the contracting officer labor environment improved? Have they been moving more quickly on getting stuff awarded?

Yes, I mean, it really varies by customer, right? I think I've mentioned over the last couple of calls that every customer has their own award and funding timelines. Funding awards in the first quarter came through as expected, and we believe that will continue to support our FY '23 plan. On the contracting officer side, it’s known across the government that this is a challenge, and they’re all working extremely hard. But at the end of the day, there is a limit to how much work those agencies can manage. We're seeing awards come in pretty much in line with our expectations, although some customers tend to deliver the award 100 days after we believe they should. So we factor that into our plan. The contracting officer situation will continue to be tough, and it might not improve until mid-'23 when more people are available to help manage that workload. I also hope that the impacts of COVID will have receded by that time, allowing us to return to some sense of normalcy. Thanks, Gavin.

Thank you.

Thank you. Our next question comes from Matt Akers from Wells Fargo. Matt, your line is now open.

Yes, good morning, thanks, and yes, congrats. I wanted to ask, Jeff, if I could, maybe just your initial thoughts as you step into the CFO role—your biggest priority as you step into the season, and maybe some opportunities as you take over?

Thanks for the question, Matt. Not to repeat myself, but again, I'm really excited to be here, and I look forward to working with John and the team. To your question, I would say that you really shouldn't expect major changes with this transition. I think the company is in a great spot, delivering growth and margin expansion. Tom has done a great job over the years, making significant improvements to the capital structure, in particular. We're in a great place given the current situation, and I think you ought to look for kind of refinement and evolution. Thanks.

Okay, great, thanks. And then I guess if I could ask about the IT-as-a-Service win, could you talk about how fast that kind of ramps up and what kind of revenue contribution we should expect from that?

Yes, thank you. That's a very large headline number. There are some small businesses involved that will get a portion of that work, which will not flow to CACI as a prime contractor. After a careful review, we arrived at a $2 billion number, which is appropriate for us to include in our awards. The ramp-up is going to take some time. The award is under protest, and it is unclear how long it will take to be adjudicated, resulting in minimal contribution in FY '23. When we crafted our plans, we knew this award was pending and made sure to factor new business into our plan. One reason we have ranges in our guidance is because of the variability of new business and timing. I would expect the significant ramp-up role to materialize in FY '24.

Hey Matt, I'd also add—this is John—when we talk about investments, this has been about a two- to three-year effort to demonstrate to this customer the art of the possible and to take them to new levels. They have quite large goals across the United States Air Force. We are extremely proud to have been selected and awarded this contract. It's consistent with our long-established goal of winning longer-duration, larger, and higher-value contracts. So it's another example, just like BEAGLE and the Army network build-out program, that our strategy is working: bid less, win more, and pursue larger programs. This not only keeps us from the recompete stage as often as we may have been but also allows us to bring technological advancements that enable us to step into other service-wide projects at this size. Thank you for the question.

Yes, that's helpful. Thank you.

Thank you. Our next question comes from Scott Forbes from Jefferies. Scott, your line is now open.

Good morning, guys. Tom, congrats.

Good morning, Scott.

Good morning, Scott.

You've talked a lot about the space portfolio today, and I just wanted to get a little deeper into that. How do you think about moving up the investment curve there? Is there any color you can provide about the return profile and timing of investments being made today? And if we consider the recent acquisitions in space, when do you anticipate reaching that kind of inflection point in the domain? Thanks.

Yes, Scott, thanks. I don't want to be repetitive, but we have invested a significant amount of capital in CapEx during fiscal year 2022 upon the acquisition of SA Photonics, and even back to fiscal year '19 and '20 when we purchased LGS. Beyond optics, we're looking at APNT within space. We're focused on space situational awareness; so there's a broad scope of work that we're planning to undertake. This is a prime example of investing ahead of customer needs. We're doing this because it requires time. With the acquisition of LGS and SA Photonics, we are the largest U.S. provider of space-based photonics, optics, and related technologies. We will continue to invest heavily in fiscal year '23 and into 2024. When we see volumes pick up, Scott. We have heard a lot about commercial proliferated LEOs, whether it's OneWeb or Amazon, and we're involved in all of their SDA work in this area. You'll see us focusing more on the manufacturing side. We've done incredible work on the algorithmic side. We've been in photonics for at least 10 to 15 years, so we fully understand what's required to take commercial wireless technologies and adapt them for space qualifications. A lot of investment is going into this area. As for margins, we've been specifically focused on growing both the top line and the bottom line. These businesses will considerably enhance margins when we get to FY '24 and beyond.

That's very helpful. Thank you.

Yes, thanks Scott.

Thank you. Our next question for today comes from Colin Canfield from Barclays. Colin, your line is now open.

Hi, good morning. Thanks for the questions. Congratulations, Tom. Circling back on the capital deployment aspect, how do you guys think about the stock attractiveness for an ASR versus the potential for a secondary offering? Recognizing the rate environment is not as material for capital deployment, but working capital management in the quarter and debt pay down looks somewhat similar to what you've done in previous quarters ahead of ASRs. I just want to hear your perspective on the stock.

Look, let me start with where we're at: 2.3x leverage. We are extremely proud of that. We have been able to invest in internal needs, increase our CapEx spending, and boost spending around inventory levels for our mission tech businesses. Overall, we like where we're at and appreciate the options available. Frankly, all options are on the table to drive shareholder value. And as we've said many times, our approach is flexible and opportunistic. We purposely don't use the word balanced. M&A will remain a key area of focus. We will be looking at M&A, repurchases, and internal investments, evaluating all options based on current dynamics. You mention valuation; we consistently monitor where our valuation stands in the market. We are evaluating investments in key technology areas while also considering long-term growth and success to maximize capital effectiveness. We've dedicated many resources to Agile software development, which won us the BEAGLE contract, a multibillion-dollar award, showcasing our success in both top and bottom-line growth. Our investments in AI-based computer vision and Counter-UAS technologies continue as well. Again, all options are under consideration.

Yes, and Colin, I'll emphasize that there's asymmetry of information here. People looking at CACI may focus solely on our leverage levels and how they think we should deploy our capital. We constantly have an acquisition pipeline with various potential opportunities. Some may be highly probable, while others might be less certain, but they are always part of the equation to inform our capital deployment strategy. Thus, this is a key focus, and the absence of action does not imply a lack of careful attention to this crucial matter.

Got it. And then if you can maybe just talk about, John, some of your lessons learned from Lockheed with respect to kind of managing production costs and transitioning to a more scaled hardware strategy?

Yes, no problem. It's far more important than me to highlight the team we have in our NSS organization as we began this journey. It's one thing to strategically assess where I think the market is headed, but I'm focused on necessary strategic decisions that will drive long-term growth as we transition the company further into technology and within tech, where the government is inclined to spend its new dollars in areas where CACI can compete effectively. We brought in talent from most major primes and hired individuals with 30 to 40 years of manufacturing and production experience. This has allowed us to build a second line in optics. You don't accomplish that with our company's size without good input from people with expertise in this field. The investment thesis is crucial; determining how much we need to invest—and someone asked earlier—about the timing of these investments. Our involvement in numerous new start imaging contracts with primes is another indicator of our success in acquiring contracts in these areas. Overall, I'm confident in our team and will emphasize that it's a collective effort that enables us to scale effectively when the moment arrives.

Thank you for answering my question.

Thanks, Colin.

Thank you. Our final question for today comes from Bert Subin from Stifel. Bert, your line is now open.

Yes, thanks for the question. I'll echo my congratulations to both Tom and Jeff.

Thank you.

Thank you.

So maybe just thinking about the revenue environment. Outlays improved steadily through 3Q, with strong growth in O&M in September. Did you guys note a significant change in your revenue traction as you progressed through the quarter? Do you think that should continue in the current CR environment?

Yes. I think there are two issues: one is revenue, and one is your funding level. A significant portion of our revenue is steady and dependable. Our expertise business relies on employees being present to work, which we pay for, and we charge the government accordingly. This is somewhat independent of fluctuations in government outlays. We have stable funding for those types of programs. Last year, we encountered challenges mainly tied to some of the shorter-cycle mission technology work, where the government may purchase $5 million to $20 million in mission technology hardware. Some of that got stuck in the contracting officer's process. At this moment in time, as John mentioned, funding levels in our first quarter are generally at normalized levels. That does not appear to be a headwind regarding our guidance. Again, we will watch this carefully, but at present, it's not a major concern.

Tom, maybe just to clarify there. I appreciate that the expertise business remains steadier. But with outlays rising, I expect to see some on-contract growth that I imagine you guys will be a part of. So I guess I'm just trying to understand whether CACI's results in July versus September were trending positively and if that has continued into October, notwithstanding the current CR.

Yes, I would say that we're a growing company, expecting continued growth quarter after quarter. We acknowledge the potential for seasonality and fluctuations. The trends regarding both on-contract growth and funding support indicate steady growth going forward.

Yes, Bert, I'd add—our guidance reflects various assumptions, some of which you're outlining. Many factors contribute to our projections. We are in another CR, and we lack FY '23 appropriations at this time. We have upcoming elections and the KO situation to navigate. However, at every point along our guidance range, we expect organic growth. Recent meetings give me confidence that everyone on the government side understands the numerous threats out there. Many would prefer not to face another year under an extended CR. I believe that the FY '23 budget will emerge with funding outlays that will support us to close the year within our guidance.

Okay. I appreciate the color. Maybe just to follow up with some space-related questions. For context, I know the optics have been a key growth area, but several products pertain to the space domain. Can you provide any high-level overview of how much of your business you think is space-related—perhaps 20% of sales or less or something along those lines?

Yes, I prefer not to specify a percentage. I like where we stand. Part of our success in certain areas comes from keeping the broader scope of our activities somewhat confidential until after we have executed them. I can confidently say that we are the leading U.S. provider of space-based optics. We cannot disclose everything we are involved in within our line of business openly, but we are engaged in areas that are producing outstanding results. Our CRAD efforts are being recognized and we have solid connections with most satellite primes. We handle a great deal of processing of satellite feeds, all the way to individual analysts. So, I hesitate to provide that percentage, but I want to assure our investors that we are involved in the right spaces where funds are being currently allocated and projected to continue in the future. We possess the right partnerships with larger primes when it comes to these assets. Most of our technology is aligned for those efforts. So, thank you, Bert.

Yes, thanks very much.

Thank you. We have no further questions for today, so that concludes today's conference call. Thank you all for joining. You may now disconnect.