Earnings Call Transcript - FLEX Q2 2026

Operator, Operator

Thank you for standing by. Welcome to Flex's Second Quarter Fiscal 2026 Earnings Conference Call. As a reminder, this call is being recorded. I'll now turn the call over to Ms. Michelle Simmons. You may begin. Thank you, Kevin. Good morning, and thank you for joining us today for Flex's Second Quarter Fiscal 2026 Earnings Conference Call. With me today is our Chief Executive Officer, Revathi Advaithi; and Chief Financial Officer, Kevin Krumm. We'll give brief remarks followed by Q&A. Slides for today's call, as well as a copy of the earnings press release, are available on the Investor Relations section at flex.com. This call is being recorded and will be available for replay on our corporate website. Today's call contains forward-looking statements, which are based on our current expectations and assumptions. These statements involve risks and uncertainties that could cause actual results to differ materially. For a full discussion of these risks and uncertainties, please see the cautionary statements in our presentation, press release, or in the Risk Factors section of our most recent filings with the SEC. Note, this information is subject to change, and we undertake no obligation to update these forward-looking statements. Please note, all growth metrics will be on a year-over-year basis unless stated otherwise. Additionally, all results will be on a non-GAAP basis, unless we specifically state it's a GAAP result. The full non-GAAP to GAAP reconciliations can be found in the appendix slides of today's presentation as well as in the summary financials posted on the Investor Relations website. Now I'd like to turn the call over to our CEO. Revathi?

Revathi Advaithi, CEO

Thanks, Michelle. Good morning, and thank you for joining us today. Before we get into the results, I want to start by thanking our Flex team around the world for their disciplined execution and commitment to delivering for our customers. In particular, I want to acknowledge our colleagues in Ukraine. As we shared in August, our Mukachevo facility was damaged during a missile strike. But thanks to our emergency protocols, all team members were safely evacuated. Their strength and resilience in the face of unthinkable circumstances reflect the best of our team in Ukraine and our company as a whole. We remain committed to our colleagues in Ukraine as we focus on rebuilding our operations. Starting on Slide 4. We had an exceptional quarter, delivering great results on all metrics. Revenue came in at $6.8 billion, growing 4% over last year. Operating margin was an impressive 6%, the fourth quarter in a row that we remained at or above this level, and we delivered adjusted EPS of $0.79, up 23% over last year, another record for Flex. This performance reflects the strength of our model, anchored in disciplined execution and a continued shift towards higher-value technology-driven businesses. Now turning to Slide 5. Our data center business continues to deliver outstanding results across both cloud and power. With proprietary products, deep systems expertise, and global manufacturing scale, we provide fully integrated power and IT solutions that help hyperscale colocation and silicon customers deploy faster, operate more efficiently while strengthening our margin profile. We remain bullish in our outlook and continue to expect our data center revenue to grow at least 35% this year. Sustaining this level of growth at our scale validates the value we are delivering to the world's leading technology companies and the strength of our execution in a dynamic market. We are outperforming industry growth rates and continuing to strategically shift our portfolio towards higher-margin critical technology-driven businesses, shaping today's market evolution. As we all know, AI is driving one of the largest infrastructure build-outs in modern history, and Flex is at the forefront of this transformation. We are partnering directly with the world's leading technology companies to design, build, and deliver the power, cooling, and systems infrastructure that enables faster, more reliable data center deployments at scale. Our data center offerings span from the grid to chip, combining our product portfolio with advanced manufacturing capabilities and global scale to meet unprecedented demand for performance and efficiency. Some of this activity is already reflected in our current results while other programs will ramp over the coming quarters and years. The broader trend is clear. AI is shaping industries for the long term, and Flex is positioned to be a driving force in its continuing infrastructure build-out. A couple of weeks ago at the OCP Global Summit, we unveiled Flex's new AI infrastructure platform, a unified approach that brings together power, cooling, and compute in pre-engineered scalable designs. The platform helps data center operators deploy up to 30% faster, reduce execution risk, and scale reliably to meet the pace of AI demand. We partnered with NVIDIA as part of their ecosystem on next-gen 800-volt DC AI factories. These systems improve energy efficiency, lower cooling costs, and eliminate points of failure as data centers grow in size and complexity. Looking ahead, I could not be more excited. The data center opportunity continues to expand, and we are executing remarkably well as we support our customers through this next wave of growth. Beyond our strength in cloud and power, the rest of our diversified portfolio is performing well. In Health Solutions, we see steady medical device demand and anticipate improvement in medical equipment later this year. In communications and enterprise, we see strength in optical switches and SATCOM devices supporting next-generation connectivity requirements. And in automotive, we see the market stabilizing compared to prior quarters. In the first half of FY '26, we added compute deals with new logos, validating our continued investment and focus on software-defined vehicles. As we look back over the first half, we are proud of our teams for their execution and persistence. We started the year with volatility from tariffs and the uncertainty that continues to this day. Despite this backdrop, we've been able to exceed our expectations and raise our guidance. Our customers depend on us for our scale, our technical depth, and our global footprint. That foundation positions us to keep delivering for our customers in any market environment. Now I'll turn the call over to Kevin to walk through the details of our financials. Kevin?

Kevin Krumm, CFO

Thank you, Revathi, and good morning, everyone. I'll start with our key financials on Slide 8. Second quarter revenue came in at $6.8 billion, up 4%, driven by strong data center growth across both Power and cloud. Gross profit totaled $632 million and gross margin improved to 9.3%, up 80 basis points. Operating profit was $409 million, with operating margins at 6%, up 55 basis points. Finally, earnings per share for the quarter increased 23% to $0.79 per share. Turning to our quarterly segment results on the next slide. In Reliability, revenue was $3 billion, up 3% year-over-year as strong growth in Power and moderate growth in Health Solutions and Core Industrial was slightly offset by continued pressure in auto. Operating income improved to $197 million and segment margin expanded by 105 basis points to 6.5%, driven by favorable mix impacts from Power and strong execution and cost management across the entire segment. Agility revenue totaled $3.8 billion, an increase of 4% year-over-year, driven by robust cloud demand that more than offset softness in communications and consumer end markets. Operating income was $227 million, with operating margin down 5 basis points to 6%. This is comparing against a very strong quarter last year. Moving to cash flow on Slide 10. Free cash flow in the quarter increased to $305 million despite sequential investments in CapEx to support organic growth. Net inventory was up 1% sequentially and down 4% year-over-year. Inventory, net of working capital advances was 55 days, a reduction of 3 days versus the prior year. Net CapEx totaled $148 million or approximately 2% of revenue, and we repurchased $297 million of stock, which was approximately 5.6 million shares. Our capital allocation priorities remain unchanged. We're committed to maintaining our investment-grade balance sheet, funding strategic investments to support organic growth and pursuing accretive M&A opportunities while returning capital to shareholders through opportunistic share repurchases. Looking at full year guidance on Slide 11. As our customers navigate a dynamic tariff landscape, our teams are partnering closely with them to deliver resilient forward-looking solutions. Our global scale and capacity enable their regionalization strategies, bringing manufacturing closer to end markets to improve agility, reduce risk, and meet the evolving trade requirements. As of last quarter, we incorporated the direct impact of tariffs into our revenue guidance and are doing the same this quarter. The situation remains fluid, but as a reminder, tariffs are largely a pass-through for us. We will continue to monitor and adjust as needed. As we conclude our first half of the year with 4% revenue growth, we are confident in our ability to continue our strong top-line momentum in the second half of FY '26 with an acceleration in Q4 driven by demand in Power and cloud. This confidence in revenue, coupled with our favorable mix and disciplined cost execution, has allowed us to improve our full year expectations across all key metrics while overcoming headwinds in Lifestyle due to our facility shutdown in Ukraine and unfavorable FX impacts across the business versus our Q1 guide. Despite these challenges, we are raising our FY '26 expectations to the following: revenue between $26.7 billion and $27.3 billion, a $500 million improvement from the midpoint of our prior guide. Adjusted operating margin between 6.2% and 6.3%, demonstrating consistency above 6%; adjusted EPS between $3.09 and $3.17 per share, increasing our midpoint by $0.17 per share, and we continue to expect strong cash generation and maintain our 80% plus free cash flow conversion target for FY '26. Moving on to our segment outlook for the year. For Reliability Solutions, we expect revenue to be up low to mid-single digits, driven by strong demand in data center power and medical devices, offset by a soft but stabilizing environment in renewables and auto. For Agility Solutions, we expect revenue to be up mid- to high single digits, driven by continued strength in cloud, offset by a weakening trend in consumer devices and lifestyle and a temporary loss of operations at our Mukachevo facility in Ukraine. Finishing off with our guidance for the third quarter. We expect Reliability Solutions revenue to be up mid- to high single digits, driven by continued robust power demand and increased growth in Medical Devices. We expect Agility Solutions revenue to be down to up low single digits as cloud growth is offset by weakening trends in consumer devices and reduced expectations in Lifestyle for the reasons previously mentioned. For Total Flex, we expect revenue in the range of $6.65 billion to $6.95 billion, with adjusted operating income between $405 million and $435 million. We expect an adjusted tax rate of $0.21 or 21%. And lastly, we anticipate adjusted EPS to be between $0.74 and $0.80 per share based on approximately 377 million weighted average shares outstanding. As Revathi mentioned, we remain a partner of choice for our customers as they navigate a rapidly evolving business environment shaped by AI acceleration and dynamic supply chains. We're constantly exploring new ways to collaborate with our partners to meet their evolving needs and see strong opportunities to support their growth as we exit FY '26 and move towards FY 2027.

Ruplu Bhattacharya, Analyst

Revathi, you took up revenues for the full year by $500 million at the midpoint. You beat 2Q by $150 million. So there is about $350 million upside in the second half. But interestingly, you didn't raise the guide for data center revenues, although the commentary seemed like there's still a lot of strength in cloud and power. So just curious why there was no upside to that part of the business? And I have a follow-up.

Revathi Advaithi, CEO

Yes, Ruplu, I'll start by saying that we said that we are going to do our full year guide for data centers. We said that at the beginning of the year and not update that through the quarter. I'll just remind you, data center is not a reporting segment for us. We've given you extra information at the beginning of the year, considering that it's meaningful growth for us. And so we're just not updating the quarterly guidance, but it is obvious that it's at least 35%. I will remind you that 35% is a very strong number compared to the industry and the end market itself. So we feel very good about that. So your math is directionally correct. So there's at least 35%. Obviously, we'll be better than that, and we'll update that in our full year guide when we do it at the end of the year. Kevin, anything to add?

Kevin Krumm, CFO

No, nothing to add on that.

Revathi Advaithi, CEO

Okay.

Ruplu Bhattacharya, Analyst

Okay. That makes sense. Revathi, can I also ask you for the cloud business. Can you comment on the mix as it relates to custom silicon versus merchant silicon? I'm curious because AMD is going to launch a whole set of new GPUs next year; would that be a business that Flex would bid for? And how do you see this mix of custom versus merchant silicon evolving as things like OpenAI and projects from Broadcom and AMD are coming up? So how do you see your data center business benefiting from these large projects?

Revathi Advaithi, CEO

Yes. Ruplu, I'll start by saying that given our growth of at least 35% year-over-year, we are benefiting significantly from both hyperscale growth and the emergence of new cloud players, which is contributing to our overall growth rate. As we update our forward-looking guidance for cloud in May during our Investor Day, it will reflect all the new projects being announced that are set to develop over the next 2 to 5 years. You should look forward to our updated guidance. Regarding custom versus merchant silicon, I would say that in areas where custom silicon involves more specialization, Flex tends to excel because it requires customization for the specific hyperscaler we are collaborating with, leading to more complex products that we generally perform better in. We do participate in both custom and merchant silicon, although we may have a preference for one. Ultimately, the key takeaway is that with all the announcements being made and our strong forward-looking pipeline for cloud, we are very optimistic about our involvement in this sector at the growth rates we are achieving this year. We look forward to providing you with updated guidance in May, and we believe you will see continued strong growth in our cloud business, driven by all the investments you are hearing about.

Tim Long, Analyst

Thank you for the questions. I have two as well. First, regarding operating margins, it seems like we can expect some solid increases in the second half. Could you discuss at a high level what is influencing the improvement in operating margins from the first half to the second half? Secondly, concerning the cloud data center aspect, could you elaborate on the 35% figure? I'm interested in how you foresee the economics of that business evolving. Are you identifying opportunities for more specialization? Do you think this business will shift towards new programs that might have better margins? Any insights on how you perceive your role in that ecosystem changing from a value perspective would be appreciated.

Kevin Krumm, CFO

Tim, this is Kevin. I'll take the first question on margins in the back half of the year. As we said, Q2 was another quarter at or above 6%. So 4 quarters there at or above 6%. We feel good about that. As we move from Q2 to Q3 and Q4 in the back half of the year, we do expect continued margin improvement. And you see that when you look at the midpoint of our guide for Q3 and obviously, sort of do your own math to get to where we think Q4 is going to be to get to our full year guide. The primary drivers there are going to be mix. We have two businesses that continue to grow and grow well as we move through the year, and that's our products and services business. We're expecting both those businesses to perform well from a top line standpoint. And we've talked in the past about the margin performance of those businesses; both those businesses perform above the Flex average. So really, it's just the continued growth in those businesses, Q2 to Q3, and Q4 becoming a bigger piece of revenue and pulling margins up with them as we move forward.

Revathi Advaithi, CEO

Yes. Regarding the economics of our cloud and power business, as indicated by our margin guidance for the second half, it's a highly beneficial area for us. The evolution of these economics looks very promising, and this is due to several factors. It's important to note that we are one of the few companies that integrate compute, power, and cooling in this market. Our compute segment not only handles contract manufacturing and assembly of compute products but also involves vertical integration through the manufacturing of racks and metal enclosures, contributing positively to our margins. We have our own products in the cooling and power sectors, which means we own the IP and design, leading to favorable margins as it operates more like an OEM business overall. As we see a shift in our mix between cloud computing and power in the data center space, we anticipate significant margin progression for that business. We expect it to perform similarly to a product business across the board. I'm confident about the 35% growth rate we've mentioned for this year, and I feel even stronger about the growth rate update we will provide in May concerning this business and its margin improvements driven by the composition of compute, power, and cooling. Overall, I am very optimistic about the business's economics and its evolution.

Samik Chatterjee, Analyst

Maybe for the first one, if I can sort of go back to the question on guidance and just tackle it more on the end market front. You're raising your guidance for the full year by about $500 million or so. I mean, it seems like from an end market perspective, data centers are doing better, but also maybe medical is a bit better. Can you just parse out if most of the increase in the guide is because of the data center market? Or are there other end markets that are tracking better than you expected at this time? And how much of a headwind is the Ukraine facility shutdown to the sort of raise in the guide that you're issuing today? And I have a follow-up.

Revathi Advaithi, CEO

Yes. I would say, Samik, is that, obviously, you guys have done the math. You can tell, right? Full year, we have raised the guide by $500 million. We've beat 2Q. And so you can see that the second half is going to be strong the way we have raised our guide. It will come from the spaces you have talked about, which is data center and health solutions. And we have been very clear about both of those spaces being directionally good for us. We also have said that there is stabilizing trends in areas like automotive, which also is a good thing for us. So if you look at the forward-looking guide, while we're not updating our data center growth rates, it's obvious that it's going to be better in the second half, and you will see that reflected in our full year number.

Kevin Krumm, CFO

Yes. Samik, I'll add to your question about Ukraine. When we faced the issue in August, we released information indicating that the business was about 1% of Flex revenue. This is how you should consider the impact in the second half of the year, essentially decreasing from that figure to 0%. This results in just over $100 million in revenue headwind for us in the latter part of the year.

Revathi Advaithi, CEO

Yes. So overall, raising our guide with the impact of that, I think we think is very strong results.

Samik Chatterjee, Analyst

For my follow-up, I wanted to get an idea of what to expect from the Amazon partnership, to the extent you are able to share. You seem positive about what you will announce regarding the cloud data center business. Is the Amazon partnership related to that optimism as you prepare for the May Investor Day?

Revathi Advaithi, CEO

Yes. Samik, I will just step back and say that I feel very bullish about kind of where things are in the data center cloud space for us. Combination of the partnership that we announced with Amazon, but continued growth in other hyperscalers and colo businesses and Neo clouds that we mentioned earlier in the call. So I think it's important to reflect on the fact that a lot of these announcements and CapEx announcements that you're seeing from our customers are all going to play out in the next 1, 2, 3, and 5-year cycles. So I think that's really important to reflect on, that these are all kind of long-term plays, whether it's our partnership with Amazon or the growth rate that we're seeing with all our other customers. You'll see that reflected as we move forward in our CapEx numbers and the investments we continue to make in this space. So as you wait for our updated guide coming out in May and you see our long-term growth rates, you would see the bullishness reflected in that coming from the growth rate in this space. So I view this as a long-term play, feel very good about kind of what we're delivering this year and the investments we are making for forward-looking growth, and we'll give you an updated kind of long-term guide when we see you in May, and that will reflect these partnerships and other investments we are making.

Steven Fox, Analyst

I have a couple of questions. First, regarding the guidance, it appears that some people have mentioned it suggests some accelerating growth in the fourth quarter of the fiscal year. Can we consider this as a basis for ongoing and different growth in the next fiscal year, without delving into next year's numbers? If so, what factors would you attribute to this? Then, I have a follow-up.

Kevin Krumm, CFO

Thanks, Steven, this is Kevin. I'll take the first part of the question. So you are right. As you look at our guide for the full year, we gave you Q3, you can start to back into an accelerating Q4 or Q3 to Q4 environment and expectation from us. The drivers of that are going to be some of the things we've talked about already on the call. Obviously, data center underlying, we've talked about our power business this year with data center being made up of cloud and power. Our power business, especially in the back half of the year, we expect that to grow above the data center average. So that's driving some of the margin performance we talked about, but also our overall top line expectations. Also seeing good growth in the back half of the year as we exit the year in medical device and some other areas like capital equipment. So yes, that growth rate in the back half of the year that we're exiting with, we feel good about it, and we expect that momentum to continue into the first half of FY 2027.

Steven Fox, Analyst

Great. That's super helpful. And then Revathi, it wasn't that long ago where the auto markets were a pretty attractive growth market for you guys. You mentioned some new compute wins and the business and, I guess, production kind of stabilizing. So do you see a path now for like that segment returning to growth? And if there's any color you can provide on the new compute wins, that would be helpful, too.

Revathi Advaithi, CEO

Yes. I would say, Steve, is that we're being very thoughtful in terms of giving the right projections for our automotive business. We feel good about stabilizing what we're hearing from our customers on which platforms they're going to grow with. I have mentioned this before that we're being platform agnostic is helpful for us because even as you shift powertrains within automotive and there's a shift from EV to ICE vehicles, it still helps us because even in ICE vehicles, we are seeing continued investment in terms of power electronics. So being agnostic to the platform is really important to us. So as I look moving forward, compute wins happen in ICE, hybrid, and EV in all platforms. So that is the good part about it is that we continue to win agnostic to the platform, and that is helpful in terms of how we think about growth rates. All that being said, I would say our view on continuing to grow in the automotive space is that it has to show the returns that we expect. And if it shows the returns we expect, then we will continue to invest and grow in that business. As you can tell, we have enough growth coming from other vectors, and it's a balance in terms of the decision we make. So we look for good growth, healthy growth, long-term commitments. And if that works for us, we'll take that business and grow with it.

Jacob Moore, Analyst

This is Jacob Moore on for Steve Barger. First, I just wanted to ask about the value add from engineering and services in terms of penetration and margin impact. I think you've emphasized those as margin levers outside of data center and power. Could you share the revenue size of those programs? And what do you see the broader opportunity size to be? And then maybe could you frame up the margin they contribute compared to the overall portfolio and if there are any barriers to further penetration?

Revathi Advaithi, CEO

Yes, Jacob. In the past, we mentioned that this space is roughly valued at around $1 billion. We haven't updated that figure recently. Overall, I believe that value-added services, which encompass vertical integration and all the markets we are involved in, are crucial for us as they enhance our margins. This focus is particularly significant in the data center sector because we have products that we deploy, making serviceability essential. We are pleased with the growth rates, but I can’t provide specific numbers as we don’t disclose those. However, we view our work in value-added services as extremely important, both within and outside of data centers, and we are optimistic about its growth and the margins it generates.

Jacob Moore, Analyst

Understood. That's helpful. And then second one for me is on operating margin, but maybe a little more specifically on the fiscal fourth quarter. The math suggested a pretty decent-sized step-up from Q3 to Q4. Could you just walk us through the puts and takes assumed in that sequential step-up? And then similar to the question on the growth acceleration in the back half, is the sort of mid- to high 6% margin level sustainable moving forward from Q4?

Kevin Krumm, CFO

Jacob, this is Kevin. I'll take that question. So first, we talked about the growth rate in 4Q and our expectation there and what was driving it. And in that, we talked about our products business and our services businesses growing in the back half and accelerating into Q4. That acceleration of those businesses and as we've talked about, they're higher-margin businesses for us, both accrue to the P&L at margins north of the Flex average are what's driving our expectation for margins. It sounds like your math is directionally correct there. And so as we move into next year, as we said, we expect that growth momentum in those businesses to carry forward into early FY '27, and our margin expectation would be similar.

Revathi Advaithi, CEO

And then I'd say that I think that it was only a year ago where you guys were pressing me on a 6% sustainable. And when are you going to update that guide because we're a year ahead of the long-term guide we gave you. So I can see you're already taking it north of that, Jacob. And as long as we continue to change our mix, which we're doing and continuing to have growth rates in the right end markets where we have products and services and margin-accretive business, we feel good about continued growth rates and margin performance of what you'll see moving forward.

Mark Delaney, Analyst

I was hoping to better understand where Flex stands with its capacity and ability to support the data center opportunity and if there are any supply constraints that you're starting to encounter in that business given the growth you're seeing? And as you think about that business over the longer term, do you envision needing to make meaningful increases in your CapEx levels in order to support the growth?

Revathi Advaithi, CEO

Yes. I would say, Mark, first is I'll parse this out by region, right? I feel very good about our capacity and capability in the EMEA region. We announced a new asset acquisition in Poland, and we feel really strongly about kind of overall capability on compute power and cooling in EMEA. In North America, which is where you're seeing the largest amount of growth being deployed and CapEx being deployed by our customers, we have incrementally invested pretty significantly in our compute operations in Guadalajara and in the U.S. We have continued to invest pretty significantly in cooling and ramping up that manufacturing capability as we got through the acquisition of JetCool. And then we announced new facilities in Dallas, and we continue to expand our facilities in Fontana, in Colombia in those regions to add to kind of power capability in the U.S. All that being said, I would say that we have a lot more investment to do because you are seeing those big announcements coming from our customers, and you see a meaningful shift within Flex in terms of how we're deploying our CapEx towards those end markets. So as I look towards the next kind of cycle, 2, 3, 5 years, I would say, yes, you will see meaningful deployment in terms of CapEx and growth and investments required and OpEx, both R&D and support required for those businesses that will shift towards those businesses. I think what's important is that despite all those moves we're making, you're seeing kind of overall cash flow improving and you're seeing our overall operating margin improving. So obviously, we're making the right choices as we deploy this, Mark.

Mark Delaney, Analyst

Very helpful context. My other question was around Flex's own operations. You've spoken in the past about utilizing AI and automation to be efficient. Yesterday, you had some news around a pilot with NVIDIA to maybe even try and get better there. And of course, there's a lot of innovation happening with AI and robotics. So as you think about some of the things you're working on to tie to those areas, including with what you announced yesterday, anything meaningful you could point to and what we could expect for where Flex may take its own operating and logistics in the future?

Revathi Advaithi, CEO

The announcement we made with NVIDIA yesterday is truly exciting. It focuses on deploying ready-to-use modular infrastructure for data centers, which includes compute power and cooling, similar to what we showcased at OCP. If you're looking to scale up a data center, this partnership provides a modular and scalable architecture and solution that we believe can be deployed extensively as data center investments grow. This emphasizes the infrastructure investments being made by our customers. Furthermore, if you're aiming to reduce lead time for deploying infrastructure, this partnership will facilitate that. Internally, we still have significant work to do within our own factories regarding the integration of AI and robotics. In the past, we've achieved considerable productivity gains in our factories. Looking ahead, I'm very optimistic about the future, as there’s much to accomplish—not just with hardware robotics but also with AI in software capabilities, which will greatly enhance efficiencies throughout our operations, including back office functions. This applies to various processes like planning and scheduling within our factories. AI will significantly boost our productivity and the efficiency of our interactions with customers. There's a lot to do, but these are exciting times for manufacturing and the ways we can leverage these new tools and capabilities. Thank you. So we look forward to speaking to you again next quarter. On behalf of the entire leadership team, I want to sincerely thank our customers for their trust, our shareholders for your continued support, and the Flex team around the world for your dedication and your contributions. Thank you, everyone.

Operator, Operator

Thank you. This now concludes today's conference call. Thank you for joining. You may now disconnect.