Earnings Call Transcript - FIX Q3 2025

Operator, Operator

Good day, and welcome to the Third Quarter 2025 Comfort Systems USA Earnings Conference Call. As a reminder, this call may be recorded. I would now like to turn the call over to Julie Shaeff, Chief Accounting Officer. Please go ahead.

Julie Shaeff, Chief Accounting Officer

Thanks, Michelle. Good morning. Welcome to Comfort Systems USA's Third Quarter 2025 Earnings Call. Our comments today as well as our press releases contain forward-looking statements within the meaning of the applicable securities laws and regulations. What we will say today is based upon the current plans and expectations of Comfort Systems USA. Those plans and expectations include risks and uncertainties that might cause actual future activities and results of our operations to be materially different from those set forth in our comments. You can read a detailed listing and commentary concerning our specific risk factors in our most recent Form 10-K and Form 10-Q as well as in our press release covering these earnings. A slide presentation is provided as a companion to our remarks and is posted on the Investor Relations section of the company's website found at comfortsystemsusa.com. Joining me on the call today are Brian Lane, President and Chief Executive Officer; Trent McKenna, Chief Operating Officer; and Bill George, Chief Financial Officer. Brian will open our remarks.

Brian Lane, President and CEO

All right. Thanks, Julie. Good morning, and thank you for joining us on the call today. Our amazing teams across the country continue to deliver excellent results for our customers, and they have delivered financial results that far exceed even our recent outcomes. We earned $8.25 per share this quarter, which is double what we earned in the same quarter last year. Our mechanical business had a sharp increase in profitability, and our electrical segment was higher as well. We also had favorable developments in some late-stage projects that contributed to our great results. Construction is driving most of our results, but service revenue and profit also grew by double-digit percentages. Our bookings were strong, and our backlog at the end of the quarter grew to a new high of $9.4 billion. As a result of exceptional demand for our services, we achieved a second consecutive same-store backlog increase of more than $1 billion despite significant third quarter burn. We continue to book work with good margins and good working conditions for our valuable people. We entered the fourth quarter of 2025 with $3.7 billion more in backlog than last year at this time. I'm happy to announce the acquisition of two companies on October 1. FZ Electrical, a contractor with strong industrial capabilities located in Grand Rapids, Michigan; and Meisner Electric, a contractor based in Boca Raton, Florida, with strong capabilities in health care and other attractive markets. We are thrilled to have these two companies join the Comfort Systems USA family of companies, and we welcome them. Today, we increased our quarterly dividend by 20% to $0.60 per share, and we have actively purchased shares during 2025. With solid bookings and great demand, we expect continuing growth and strong results in 2025 and 2026. Trent will discuss our operations and outlook in a few minutes, and I will make closing comments after our Q&A. But first, I will turn the call over to Bill to review our financial performance. Bill?

William George, Chief Financial Officer

Thanks, Brian. Our third quarter results were outstanding in every respect with 33% same-store revenue growth, significantly improved margins, EPS rising by over 100% compared to the prior year, and over $500 million in quarterly free cash flow. We reached more than $400 million in quarterly EBITDA for the first time, a 74% increase from the same quarter last year. Starting with revenue, the third quarter of 2025 saw revenue of $2.5 billion, up $639 million or 35% from last year. The electric segment revenue increased by 71%, while mechanical revenue rose by 26%. Year to date, same-store revenue grew by 23%, and we currently estimate that fourth quarter same-store revenue will grow in the high-teens compared to the same quarter last year. For the full year 2026, we expect same-store revenue growth to likely continue in the low to mid-teens, with stronger performance in the first half of the year. Gross profit for the third quarter of 2025 was $608 million, an increase of $226 million year-over-year. Our gross profit margin improved to 24.8% this quarter from 21.1% in the third quarter of 2024. The gross profit margin in our mechanical segment rose significantly to 24.3% this year from 20.3% last year, while margins in our electrical segment grew to 26.2% compared to 23.9% in the third quarter of 2024. Strong execution along with favorable developments in certain late-stage projects contributed to higher margins in both segments. A significant project led to the recognition of $16 million in previously deferred revenue as a customer emerged from bankruptcy. We anticipate that profit margins in 2026 will likely remain strong. SG&A expenses for the quarter were $230 million, or 9.4% of revenue, compared to $180 million, or 9.9% of revenue for the third quarter of 2024, primarily due to investments in personnel to support increased activity levels. Operating income increased by over 86% from last year, rising from $203 million in the third quarter of 2024 to $379 million in the third quarter of 2025. Our operating income percentage increased to 5.5% this quarter from 11.2% in the prior year. Our year-to-date tax rate was 20.9%, with the effective tax rate in the first quarter being lower due to interest on a delayed refund related to our 2022 federal tax return. We expect our tax rate to continue around 23% for the remainder of 2025 and into 2026. After accounting for all these factors, net income for the third quarter of 2025 was $292 million, or $8.25 per share, compared to net income of $146 million, or $4.09 per share in the third quarter of 2024. Thanks to excellent execution by our team, EBITDA surged by 74% to $414 million this quarter, up from $238 million in the third quarter of 2024. Our trailing 12-month EBITDA is now $1.25 billion. Free cash flow for the third quarter of 2025 was $519 million, bringing our year-to-date total to $632 million. We repurchased additional shares this quarter and have spent about $125 million year-to-date, buying approximately 345,000 shares at an average price of $363.13 each. By the end of September, our net cash position stood at $725 million. As Brian mentioned, we acquired two excellent companies on October 1, Feyen Zylstra and Meisner Electric, funding approximately $170 million in purchase consideration in the fourth quarter. These acquisitions are expected to generate over $200 million in additional annual revenue and $15 million to $20 million of annual EBITDA. In August, we finalized an amendment to our senior credit facility, raising our borrowing capacity from $850 million to $1.1 billion on very favorable terms, with a new maturity date in October 2030. Our strong balance sheet and cash flow position us well to continue investing, growing, and rewarding our shareholders. That's all I have. Trent?

Trent McKenna, Chief Operating Officer

Thanks, Bill. I'm going to discuss our operations and outlook. Our backlog at the end of the third quarter was a record $9.4 billion, a large sequential and large year-over-year increase. Since last year at this time, our backlog has increased by $3.7 billion or 65% and $3.5 billion of the increase was same-store. On a sequential basis, backlog increased by $1.3 billion or 15%, all of which was same-store. Third quarter bookings were especially strong in the technology sector, both in our traditional construction business as well as the modular part of our business. We are entering the final quarter of 2025 with same-store backlog 62% higher than at this time last year, and our project pipelines remain at historically high levels. Industrial customers accounted for 65% of total revenue in the first nine months of 2025, and they are major drivers of pipeline and backlog. Technology, which is included in Industrial, was 42% of our revenue, a substantial increase from 32% in the prior year. While our manufacturing revenues declined on a percentage basis, we continue to see good demand for manufacturing, but in many cases, data center opportunities are more compelling. Institutional markets, which include education, health care and government, remain strong and represent 22% of our revenue. The commercial sector provided about 13% of revenue. Most of our service revenue is for commercial customers. Construction accounted for 86% of our revenue, with projects for new buildings representing 61% and existing building construction 25%. We include modular in new building construction, and year-to-date, modular was 17% of our revenue. We remain on track to have 3 million square feet of space in our modular businesses by early 2026, and we will prudently consider additional investments next year based on the strong demand we are seeing in modular. Service revenue was up 11%, but with faster growth in construction, it is now 14% of total revenue. Service profitability was strong this quarter, and service continues to be a growing and reliable source of profit and cash flow. I cannot say enough about the amazing team of craft professionals that we have working hard for our customers every single day. Thanks to the teams that are working across the country, we are optimistic about our future. I want to close by joining Brian and Bill in thanking our over 21,000 employees for their hard work and dedication. I will now turn it back over to Michelle for questions. Thank you.

Operator, Operator

Our first question comes from Adam Thalhimer with Thompson, Davis.

Adam Thalhimer, Analyst

Congrats on another wave of record results. I wanted to ask high level on the technology side. Does the bidding activity match the bookings and the revenue growth that you saw in Q3?

Brian Lane, President and CEO

Yes, Adam, the opportunities, the pipeline is still robust, matching quarter 3. There's still more opportunities than probably can be handled out there in the market at the moment. So we've seen no let up at all in the opportunities.

Adam Thalhimer, Analyst

I'm interested in your approach to capital allocation. Your free cash flow and net cash reached an all-time high in Q3. I'm wondering how you view this and whether just accumulating cash going forward could be a good strategy.

William George, Chief Financial Officer

That's not the worst situation we could be in; there are certainly worse options than having cash. Our approach to capital allocation has remained consistent since 2007. We plan to invest most of our cash in acquisitions when we find the right opportunities. We'll also continue to buy back our shares using some of our free cash flow, increasing our efforts if we believe the stock price has dipped compared to our outlook. For instance, when the stock fell earlier this year, we invested $100 million in shares over a few weeks. You might be wondering about the feasibility of using our current cash for acquisitions. We've encountered this issue during various stages of our cash growth in recent years. Fortunately, our reputation as a buyer and our focus on positive outcomes for those we acquire have helped us discover valuable opportunities. It's worth noting that while we are growing, the companies we are acquiring are also experiencing growth. Many of these firms are achieving results that are double what they were just a few years ago. Consequently, the prospects for companies with a skilled workforce, such as pipe fitters and electricians, are impressive. These companies have increased in value over the past five years due to their ongoing investments. We remain positive and will continue our current strategies. If we find ourselves with excess cash, we will explore other ways to reward our shareholders.

Operator, Operator

Our next question comes from Sangita Jain with KeyBanc Capital Markets.

Sangita Jain, Analyst

So a couple that I have. One is on the cash flow in third quarter, your free cash flow was especially strong. So I'm just trying to think how we should think about it for the whole year and if there were any material advance payments included in 3Q that we should be aware of?

William George, Chief Financial Officer

So for one thing, there wasn't an extraordinary event like there has been a few times over the last few years where we get way ahead due to some specific event or we have a turnaround where that event is sort of recalibrated. I will say that you can always expect our cash flow to be roughly equal to our net income. We are a cash business. We pay our taxes in cash. So when you see a quarter where we have cash flow above our net income, at some point, we're going to give that back. When it's below our net income, then we have cash we'll collect in the future. Through six months, we were behind our net income. There were some specific reasons for that, that we've discussed. In the third quarter, we had a big catch-up. We're getting fantastic payment terms. As we can negotiate good pricing and good conditions for our workers, we can also negotiate good payment terms. So we just had a great cash flow quarter, but nothing fundamental has changed. We're going to cash flow our net income.

Sangita Jain, Analyst

Got it. And then if I can ask one on backlog growth. Obviously, your backlog suggests that you're booking out further than a year. Can you speak a little bit to that? And if it's primarily on the modular side or also on the traditional construction side? If it's just data center or also life sciences pharma work that you feel like you're booking out earlier and earlier?

Trent McKenna, Chief Operating Officer

Our bookings for the quarter were distributed across all our businesses. However, the bookings we had in modular are delayed, so they are not entirely relevant to what I'm about to say. For the remainder of our bookings, all are set to begin sometime within the next year. They may be longer-term projects due to their size, but they are all scheduled to commence in 2026. When we discuss bookings that extend further out, that pertains primarily to the modular side of the business.

Operator, Operator

Our next question comes from Julio Romero with Sidoti & Company.

Julio Romero, Analyst

Just following up on the last question about the order acceleration. Historically, you guys are very prudent at kind of not taking on additional backlog and not getting out over your skis. I know, Trent, you mentioned a piece of the backlog growth was modular orders that were further out. But just help us think about the step-up in orders here for the last several quarters. Part of it is booking yourselves further out, but some of it is also, I guess, securing enough pricing in your bid margins to compensate for that additional risk of additional orders?

Brian Lane, President and CEO

Yes. So Julio, we still have the same philosophy we've always had. We'll take on work we know we can do that we can handle with the skilled workforce that we have. So we look at each opportunity, particularly on the modular side, to make sure the timing is right, work for us that we can achieve a good product for our customers. So if you look at the timing of what we're winning, when it's coming in and can we handle it, we feel very comfortable with the workload that we have today.

Trent McKenna, Chief Operating Officer

And I want to add too, Julio, the collaboration between our companies is really permitting a lot of this additional booking that you're seeing. It's the companies working together to share workforces so that they can tackle projects that would otherwise have been kind of outside of their ability scope previously.

Brian Lane, President and CEO

And Julio, one thing that we do have going for us is that we have folks that will travel and you see some of this work, maybe get all the way to West Texas, Abilene, Amarillo that we can handle because we have people that will travel to these sites.

Julio Romero, Analyst

That's very helpful. And then I know a big emphasis is being selective with regards to the specific partners you work with. And I think you guys mentioned earlier, your partners are getting bigger. They're taking on additional work. But just throwing that question back at you guys, has the pool of partners that you work with increased? Or is this just more a function of you doing more with your existing partners?

William George, Chief Financial Officer

So what Trent was referring to was our companies working together. We do work sometimes with various companies. We collaborated with a company we acquired, called Ivey, before we completed the acquisition. We have chosen specific situations like that. However, I think the majority of what we're discussing involves Comfort Systems USA companies that are located 10 to 100 miles apart.

Brian Lane, President and CEO

And it's really a great point for people to come and join us. They have the opportunity to work with a lot of other companies in the same industry, under the same overall structure that we have.

Operator, Operator

Our next question comes from Brent Thielman with D.A. Davidson & Company.

Brent Thielman, Analyst

Congrats again, another great quarter. I guess, Brian, Trent or Bill, one of the questions that seems to come up often is just your ability to sustain the growth you're seeing outside of modular, just given sort of the industry labor constraints out there. You've grown same-store, call it, 20% or more for what looks to be a fourth year in a row here. And I know there's a lot of factors to the growth over the last few years. But maybe you could talk about just sort of how critical have your sort of internal recruiting, hiring efforts been in recent years in support of that growth versus job values getting bigger? And then also, I guess, is there any sort of slowdown or change you've seen in terms of your ability to bring in people to support the growth, I guess, outside of acquisitions?

Brian Lane, President and CEO

Yes. So I'll go first, Brent. First and foremost, this is a good place to work, right? We treat people fairly and with respect. We pay them well, and there's a good benefit package. So we're constantly recruiting. But as you can tell by our numbers, we're up over 21,000 with access to another probably 35,000, 34,000 contract laborers that we have. So all in all, we're constantly recruiting, but we do get people to come here and work. We also have a lot of work, which makes us a good place to work as well. So how much can we grow? We continue to train. We're improving productivity constantly. We're trying to pick the right jobs that we're good at and planning them using BIM, prefab and modular help us. But the enhancement that we are achieving with the skilled workforce is the best I've ever seen in my career today.

Brent Thielman, Analyst

Okay. All right. And then the 3 million square footage of space in modular that, I guess, becomes available early 2026, I think you said Trent. Is that capacity or space already effectively sold out? Or do you expect it to be soon?

Trent McKenna, Chief Operating Officer

Yes. The answer is yes.

Brent Thielman, Analyst

Okay. Just one last technicality, if I could. The $15.5 million write-up that you called out, I think, in the filing, is that all reflected in the mechanical segment? Or I'm just trying to level set what kind of normalized margin looks like.

William George, Chief Financial Officer

The electrical segment experienced notable activity this quarter. We frequently receive inquiries about whether there were any standout events during the period. While we generally have many ongoing projects, we did experience some particularly successful job completions this quarter that significantly benefited our results. These included a major example detailed in our MD&A, with successful projects in both electrical and mechanical sectors. Although some jobs are delayed, they are progressing well, and the systems are functioning effectively. This allowed us to reduce our contingency. Even without these exceptional factors, this quarter would have been outstanding and set a record, but those additional successes helped enhance our results, which we wanted to highlight.

Brent Thielman, Analyst

Okay. Sorry. And Bill, theoretically, you have these every quarter. It just varies. So even if we compare year-on-year, you might have had them last year?

William George, Chief Financial Officer

In the last three or four quarters, we were often asked if there were any special closeouts, and we mentioned there was nothing unusual. This time, we can say there were a few more than we typically expect. Overall, we had some really positive developments this quarter.

Operator, Operator

Our next question comes from Josh Chan with UBS.

Joshua Chan, Analyst

Congrats on a really great quarter. I wanted to ask about the backlog question, but especially within the last six months because obviously, you've had a strong demand environment, you have labor constraints, you have labor sharing for a while now. But really over the last two quarters, you had these two consecutive $1 billion step-up in the backlog. And I was just wondering if anything is different in this last six months versus the longer period, I guess.

William George, Chief Financial Officer

It's an interesting question you raised. Each quarter varies from the others. We secured some significant bookings, which can come from different sectors like pharma, and they are never exactly the same due to their unpredictable nature. This quarter, we had many excellent opportunities reach the point of being documented and added to our backlog. Year-to-date, we’re talking about the companies you’re familiar with. There were some noteworthy additions this quarter, primarily from companies that are consistent in their work. We're confident about the situation. The market is robust, and the opportunities are abundant. Our customers are eager for us to commit early, and they respond in kind. It's a fantastic market, and we are aligned with some outstanding companies.

Joshua Chan, Analyst

Yes. That makes a lot of sense. I appreciate the color there. And then on modular capacity, if you were to expand kind of incrementally from here, would there be a preference to serving existing customer or I guess, demand for that? Or would there be a preference to kind of grow with other types of customers within modular?

William George, Chief Financial Officer

We always prefer to meet the needs of our long-standing partners. In fact, this applies to those we've worked with for over a decade. Our focus remains on our loyal customers rather than pursuing new ones. However, we do engage with new clients and there are opportunities; we recently added a new customer. Still, if you ask our team whether they would prefer to work with established relationships or explore new potential, they would choose the secure option.

Operator, Operator

Our next question comes from Tim Mulrooney with William Blair.

Timothy Mulrooney, Analyst

I hate to go back to this backlog question and beat it to death, but I'm newer to the company here. So I just want to make sure I understand how this works. How much of your backlog, excluding that modular piece, would you expect to start at some point over the next 12 months? I'm just trying to understand how much of this backlog is actually being pushed out versus just elongated due to the larger projects?

William George, Chief Financial Officer

I'm really glad you asked. Most of the backlog consists of jobs that are already in progress. It's the remaining work on these ongoing projects. When Trent mentions that everything will start within a year, he is referring to all the new bookings. Currently, we do not have any new bookings. Many of the new bookings are already at some preliminary stage, such as underground work and engineering for which we are billing. However, this situation is complicated because the definition of backlog, particularly concerning remaining performance obligations under GAAP, is quite stringent. We only include something in our reported backlog once we have an agreed price, a defined scope, and a legally binding obligation that can be verified. Most projects we add to our backlog were awarded to us one, two, or three quarters ago. We typically get an earlier confirmation that this is our work well before it appears in the backlog. I hope this clarifies things because we operate differently from a manufacturing company that sells products to be produced in the future. The pricing of a building cannot be established until it has been designed, and you can only design a building when you are ready to start it.

Timothy Mulrooney, Analyst

Yes, that's really helpful, Bill. I guess a clearer picture for a more solid backlog is beneficial. My other quick question is actually about the service revenue aspect. It's up 11%, and you mentioned it represents about 14% to 15% of your revenue, which is not insignificant. I don’t hear this discussed much on these calls. I'm interested in understanding what is driving the strength in revenue growth and profitability. Is there a connection where stronger new construction leads to increased service revenue, or are they not really related? Any insights on that part of the business would be appreciated.

Trent McKenna, Chief Operating Officer

The service business continues to perform well, with significant investment in sales force collaboration to target the right segments of the market. Overall, we are seeing widespread strength in this area, driven by effective execution. Our service business operates on a day-to-day basis, focusing on small maintenance contracts and incremental work rather than accumulating large backlogs like the construction sector. The growth in service contracts occurs gradually as new work transitions into service agreements over time. This model naturally leads to steadier growth compared to the more sporadic nature of construction business. However, there is notable strength coming from our teams in the field who are driving these results.

Operator, Operator

Our next question comes from Brian Brophy with Stifel.

Brian Brophy, Analyst

Congrats on a nice quarter. Just wanted to follow up on some of this headcount discussion. I think the over 21,000 employees implies a little bit over 15% headcount growth since the end of 2024. It obviously seems to be an important enabler of some of the organic growth we've seen here this quarter. Just could you help us understand how sustainable that pace of hiring could be, assuming demand remains healthy here?

William George, Chief Financial Officer

That number does include some acquisitions. However, I would say that the majority of the 15 points were added by our companies. We wouldn't claim that we can regularly add 12% to our workforce of craft workers. We had a really strong nine months and are confident in our efforts, as we have apprenticeship programs running at any given time, and we aim to get as many people as possible legally involved in them. There are state-mandated ratios limiting the number of apprentices per journey person, so we are trying to grow as quickly as we can. Achieving high single digits growth over a long period is something we take pride in, as it means we are helping individuals become electricians and pipe fitters, which benefits them, us, and the U.S. overall.

Brian Brophy, Analyst

Okay. Yes, that's helpful. And then wondering if you could give an update on some of the automation investments you've made on the modular side. And just to what extent you're seeing some productivity benefits? Any color you can provide there would be interesting.

William George, Chief Financial Officer

As we implement more buildings, we are seeing an increase in expenses related to the robots we are purchasing. We have added turn tables, and while it's a gradual process, there is significant automation being introduced. We are also seeing enhancements in welding skills due to improved software, particularly AI-driven software. There are numerous small improvements happening.

Brian Lane, President and CEO

I'll also tell you, Brian, in terms of the history of construction, the amount of innovation and technology that's being developed and applied today leaps and bounds over what it's ever been. And it's going to be a huge help into helping us build stuff as we go forward safer, more productively and the quality is getting better every day.

Trent McKenna, Chief Operating Officer

Yes. And one of the benefits Comfort Systems has is we have 48 different test beds where we can try new things and then move them throughout the enterprise if they work. And so it's a really excellent way to be able to test and innovate and then be able to do it in a controlled way and then move it out if it's effective in one operating unit, then it will be effective across. And it's a way for us to be able to innovate inside of a construction environment without significant risk. So it's a real benefit to our structure.

Brian Brophy, Analyst

Yes, that's really helpful. Last one for me. Pharma was mentioned very briefly. Just would you give us an update on kind of what you're seeing on the project pipeline side, particularly some of the onshoring opportunities that may be coming. Obviously, we've had a little bit more tariff discussion on pharma products. I'm just curious if you've seen any movement in that market.

William George, Chief Financial Officer

Our largest booking in the last couple of quarters was in pharma, but most of our current bookings are within technology. This isn't due to a lack of opportunities in pharma; rather, technology is actively competing for our resources and making a strong case for them. Additionally, our highly experienced pharma team, who have decades of experience in the Mid-Atlantic, have noted significant planning for construction projects with code names along the Eastern Seaboard, particularly in the Mid-Atlantic region, including the research triangle. There is a substantial amount of work on the horizon. Pharma typically operates on long lead times and plans years ahead. There are exceptions, like the rapid development we saw with the GLP-1 treatments and the COVID vaccines, but regular pharma projects progress more slowly. Our most knowledgeable team members believe the pipeline in pharma is quite promising. However, the right moment for us to engage with those opportunities may not align with our current focus. Nevertheless, the potential in that sector is evident.

Operator, Operator

Our next question is a follow-up from Sangita Jain with KeyBanc Capital Markets.

Sangita Jain, Analyst

I just wanted to follow up on the large data centers that are starting to be commissioned. I'm curious if you're seeing any changes in the type of electrical or mechanical work required because we've heard that developers are now considering DC power instead of AC power. Does this affect your operations, or is it something that remains outside your wall?

William George, Chief Financial Officer

So for us, electrons traveling through a wire are extremely generic for an electrician. They don't care if those electrons are being used to produce medicine or data. What matters is that you need electricians. That's the advantage of our position. Whatever you need to accomplish, you need us. I haven't heard anyone indicate that there is a significant change. What people do notice is the scale, such as the amount of copper, the quantity of switchgear, and the density of cooling; even very experienced individuals are impressed by that in our organization. But regarding those kinds of adjustments, I'm not hearing anything. Trent?

Trent McKenna, Chief Operating Officer

No.

Operator, Operator

There are no further questions at this time. I'd like to turn the call back over to Brian Lane for closing remarks.

Brian Lane, President and CEO

Okay. I just want to reiterate my gratitude for the amazing dedication and excellence of the teams we have across our nation, serving our customers every day. Demand is strong, and our people are rising to the challenge of addressing the unprecedented need for their unique skills. As Trent mentioned, we feel that conditions are good for us to continue to perform. And as Bill indicated, we have the resources and the commitment to lean into delivering for our employees, our customers and for you, our shareholders. As we embark upon the holidays that are coming up, we won't have another call. I wish everyone the best for the rest of the year and enjoy your time with your families as the holidays come upon us. Thank you for your confidence. Have a great weekend.

Operator, Operator

Thank you for your participation. This does conclude the program. You may now disconnect. Good day.