Earnings Call Transcript - MOG-A Q1 2025

Operator, Operator

Good morning, everyone, and welcome to Moog Inc.'s First Quarter Fiscal 2025 Earnings Conference Call. I will now hand it over to Aaron Astrachan, Director of Investor Relations. Please proceed.

Aaron Astrachan, Director of Investor Relations

Good morning, and thank you for joining Moog's First Quarter 2025 Earnings Release Conference Call. I am Aaron Astrachan. With me today is Pat Roche, our Chief Executive Officer; and Jennifer Walter, our Chief Financial Officer. Earlier this morning, we released our results and our supplemental slides, both of which are available on our website. Our earnings press release, our supplemental slides and remarks made during our call today contain adjusted non-GAAP results. Reconciliations for these adjusted results to GAAP results are contained within the provided materials. Lastly, our comments today may include statements related to expected future results and other forward-looking statements, which are not guarantees. Our actual results may differ materially from those described in our forward-looking statements and are subject to a variety of risks and uncertainties that are described in our earnings press release and in our other SEC filings. Now I'm happy to turn the call over to Pat.

Patrick Roche, CEO

Good morning, and welcome to the call. Today, we will share an update on the first quarter financial and operational performance and an updated outlook for the year. We've delivered a great quarter with strong sales growth, impressive bookings and solid margin enhancement. We're delivering value for our customers, and we're being rewarded with significant program wins. Our operational initiatives will deliver continued margin enhancement and strong free cash flow in the second half of fiscal '25. Now let me provide further detail on our operational initiatives that are driving this strong performance. Firstly, our customer focus. Our performance in delivering for our customers has put us in a great position to pursue and capture significant opportunities arising from broad-based defense demand. We secured record quarterly bookings of over $450 million in our Space and Defense segment. These wins cover a range of applications and leverage our technical leadership and our operational performance. Close to half of the bookings were within our missiles business with the largest single award being a production order for over $100 million from Lockheed for the control actuation system on the PAC-3 program. We also captured initial bookings on collaborative combat aircraft platforms, demonstrating the relevance of our technology in this fast-moving segment. Bookings were also very impressive in Commercial Aircraft with close to $400 million in orders with almost 60% aftermarket content. We continue to grow our customer base for Moog total support with additional long-term agreements with airlines around the world. In December, the German government delivered to the Ukrainian Armed Forces the first of 54 self-propelled RCH 155 howitzers produced by KNDS. In support of our growing Defense business in Europe, we've recently added manufacturing space to our Böblingen site in Germany. Next, turning to people, community and planet. I want to return to the impact of extreme weather with an update on Tewkesbury. As you may recall, we experienced severe damage to our Tewkesbury Commercial Aircraft facility in September. I'm pleased to report that we have regained production capacity within 8 weeks of the event. This is a remarkable achievement. It's a credit to the dedication of our staff who continue to drive the recovery so that we can deliver on our customers' commitments. Reinstatement of our production facility will continue through fiscal '25. It is heartbreaking to see the loss of life and the destruction brought by the wildfires in Los Angeles. We are concerned for all those impacted, including our staff at our Torrance and Chatsworth operations. To date, there has been no impact on our facilities. We published a second sustainability report in December 2024. In its broadest sense, sustainability is about adapting to the evolving needs of our stakeholders, and we've made significant strides. Some highlights include CO2 emission reduction through HVAC upgrades and the deployment of solar arrays, installation of water purification projects in our communities in India and the Philippines and progress in tackling hazardous wastes. In addition, we made a commitment to cut water consumption by 20% relative to a fiscal '22 baseline in areas that are designated water-stressed and to better manage our water resources across our footprint. In relation to supporting sustainable aviation industry, we are pleased to be collaborating with JetZero on their blended wing body demonstrator, which promises a half fuel burn and emissions as a step towards net zero carbon emissions by 2050. Moog is providing the flight control actuation on this aircraft. Finally, turning to financial strength. We continue to make excellent progress on driving margin enhancement through pricing and simplification. Our execution is in line with our Investor Day commitments. We continue to simplify our operations. The transfer of all production from our Radford, Virginia motors manufacturing site is complete, and we will soon exit that facility. This completes the consolidation of our Industrial electric motors in the U.S. to our focused factory in Murphy, North Carolina. In addition, in November, we entered a collective consultation process with staff on the proposed closure of our slip ring manufacturing site in Reading in the United Kingdom. The consultation process will conclude by end of January. We expanded 80/20 deployment to cover 75% of our business by sales and trained more than 60 leaders, bringing the total to over 900. We're on a plan to deploy to all manufacturing locations by the end of fiscal '26. We continue to develop our capabilities and are using insights gained to drive productivity and reduce complexity in the business. We're building momentum by using our own success stories to educate the wider organization and to show what is possible through 80/20. As part of 80/20, we've continued to expand voice of the customer interviews, and we're using that feedback to drive improvement, further building customer loyalty. Finally, during a recent visit to our German Industrial manufacturing facilities, I saw firsthand the strong commitment to driving production efficiency achieved through innovation within our manufacturing process and the integration of robotics and automation. Now turning to the macroeconomic and end market conditions. With a change of administration in Washington this week, let me start with a few comments on our Defense business. The geopolitical environment remains extremely challenging. While the recent ceasefire in Gaza is an extremely welcome development, there is still an ongoing war in Ukraine and tensions over Taiwan. The threat from growing military capability of near peers is undiminished. Consequently, there is no lessening of the need to replenish arsenals over the next few years, to modernize and upgrade existing platforms and to develop new strategic capabilities. For these reasons, we believe that our FY '25 guidance is solid, and we foresee continued expansion in our Defense business based on our significant bookings. While the new administration will certainly define its own Department of Defense priorities, we believe that our broad-based exposure across all defense domains positions us well. In addition, we expect to see continuing growth in international demand. The new administration will likely introduce tariffs, although it is not clear how widely they will be applied nor at what level. We've experienced the impact of tariffs in the past, and we will work with our customers and suppliers to mitigate any impact. On the Commercial side, we remain optimistic that wide-body platforms will ramp in fiscal '26, given the feedback received from our customers and their actions. The fact that Boeing recently announced a $1 billion investment into its Charleston facility is a strong commitment to the 787 ramp plan. Airbus also reaffirmed their A350 ramp plan. We're well positioned to support this, and we look forward to that increased demand flowing through our business. Finally, the Industrial business has stabilized despite the soft market conditions. In fact, our book-to-bill ratio was greater than 1 for the first time in 2 years. Now let's turn to the guidance for fiscal '25. We had a good start to the fiscal year, and we're maintaining our full year guidance. This means solid revenue growth, strong adjusted operating margin improvement in line with our investor plan and a significant improvement in free cash flow relative to fiscal '24. Our revenue guidance is unchanged with just minor updates by segment to reflect what was achieved in quarter 1 and the impact of unfavorable exchange rates within the Industrial business. Our margin guidance also remains unchanged. Finally, our free cash flow guidance is unchanged for the year. While our use of cash in the quarter was high, we have a clear line of sight to its improvement in quarter 3 and strong cash flows for the back half of the year. Now let me hand over to Jennifer with a more detailed breakdown on the quarter and our guidance.

Jennifer Walter, CFO

Thanks, Pat. I'll begin with our first quarter financial performance. I'll then provide an update on our guidance for FY '25. We had a great start to the year from an earnings perspective. Sales were up nicely over last year's first quarter, and adjusted operating margin and earnings per share were strong. We continue to simplify our business. As a result, we took $6 million of charges largely associated with our footprint rationalization activities in the first quarter. I'll now talk through our first quarter adjusted results, which exclude these charges. Sales in the first quarter of $910 million were 6% higher than last year's first quarter. Military Aircraft, Commercial Aircraft and Space and Defense sales were up considerably while Industrial sales were down due to our simplification efforts. The most significant increases in segment sales were in Military Aircraft and Commercial Aircraft. In Military Aircraft, sales of $213 million were up 15% over the first quarter of last year. Activity on the FLRAA program began to ramp midway through FY '23 and has steadily increased since that time, accounting for half of the sales increase this quarter. In addition, over the past couple of years, certain other development work was shifted into production, and we're seeing a ramp in that production that will continue for the next few years. Commercial Aircraft sales of $221 million increased 14% over the same quarter a year ago. Aftermarket sales were particularly strong. It was a good quarter for repair activity. In addition, we're partnering with airlines to ensure they can meet early demand on their fleet, and this resulted in strong provisioning for spares. In addition, OE sales were up due to the timing of orders. In the second half of FY '24, we saw a short-term delay in sales, and we're now seeing those orders catch up, thereby increasing our sales. Space and Defense sales of $248 million increased 8% over the first quarter last year. We're seeing broad-based defense demand that's driving the growth within this segment. This quarter, the growth is most notable for European defense needs and satellite and launch vehicle activity. Industrial sales were $228 million in the first quarter. That's down 7% from the same quarter a year ago. Half of the decrease relates to the divestitures we completed at the beginning of the first quarter. Otherwise, sales in our Industrial automation business has stabilized, consistent with the fourth quarter last year and down from the strong level a year ago. Strength in our medical pumps business, which reached a record high this quarter, helped to offset this decline as we benefited from a competitor's challenges. We'll now shift to operating margins. Adjusted operating margin of 11.8% in the first quarter was up from 11.3% in the first quarter last year. Adjusted operating margins increased over the first quarter of last year in each of our segments. We achieved this margin expansion despite 80 basis points of pressure from recording an out-of-period warranty expense this quarter. The most impactful increase was in Space and Defense, where operating margin increased 90 basis points to 11.9%. This increase is associated with our strong growth partially offset by a less favorable program mix and investments to prepare for upcoming major programs. The Industrial operating margin was 13.2% in the first quarter, up 60 basis points. This increase is attributable to benefits from simplification initiatives, including the divestitures we completed at the beginning of the first quarter. Military Aircraft operating margin was 11.0% in the first quarter, 50 basis points higher than in the first quarter last year. We benefited from efficiencies associated with higher volume on the FLRAA program and lower research and development expense. These benefits were partially offset by a less favorable sales mix. Commercial Aircraft operating margin was 11.0%, up 40 basis points from the first quarter last year. Underlying operational performance was robust, reflecting very strong aftermarket sales. This strength was largely offset by 340 basis points of pressure related to recording the out-of-period warranty expense. Putting it all together, adjusted earnings per share came in at $1.78, up 16% compared to last year's first quarter despite $0.18 of pressure associated with the out-of-period expense. The increase is attributable to higher operating margins and additional operating profit associated with higher sales. Let's shift over to cash flow. In the first quarter, we used $165 million of free cash flow. The use of cash was driven by working capital requirements. We used cash for physical inventories to support future sales growth. We also used cash for receivables as our strong collections in the fourth quarter last year left less to collect this quarter. In addition, timing of compensation payments impacted us in the first quarter. Capital expenditures at $33 million were relatively light compared to recent quarters. We're continuing to invest in facilities and equipment to support longer-term growth opportunities. The lower level of capital expenditures this quarter simply reflects timing, and we're expecting spend to pick up next quarter. Capital expenditures represent a key opportunity for us to invest for organic growth, and this continues to be a priority within our capital allocation strategy. Over time, we strive to have a balanced approach to capital allocation. In that regard, we repurchased roughly 220,000 shares of our stock in the first quarter, spending just over $40 million. In addition, we remain committed to our dividend policy, and as announced, we're increasing our quarterly dividend by 4% to $0.29 per share. Our leverage ratio was 2.4x as of the end of the first quarter, nicely within our target range of 2 to 3x. We'll now shift over to our updated guidance for this year, which is unchanged from 90 days ago at a company level. Fiscal year 2025 is shaping up to be another strong year with growth in sales, continued operating margin expansion and enhanced free cash flow generation. Both pricing and simplification will drive our operating margin expansion this year while our focus on optimizing our planning and sourcing activities will contribute to our significant cash generation in the back half of this year. We're projecting sales of $3.7 billion in fiscal year '25, a 3% increase compared to fiscal year '24. We're projecting sales growth in Space and Defense, Commercial Aircraft and Military Aircraft and expecting a decrease in sales in Industrial. We're maintaining the sales guidance for FY '25 that we shared a quarter ago with a modest shift between segments to reflect what we've seen in the first quarter. We're increasing our sales guidance in Commercial Aircraft by $20 million to reflect the strong first quarter aftermarket activity. We're increasing sales guidance for Military Aircraft by $10 million to reflect our current run rate. And we're decreasing sales guidance by $30 million in Industrial to reflect the weakening of foreign currencies against the U.S. dollar that we saw in the first quarter. We're holding our adjusted operating margin for FY '25 at 13.0%, a 60 basis point increase over FY '24 or 120 basis points after factoring out FY '24 employee retention credit and FY '25 out-of-period warranty expense. Operating margins will be 14.2% in Space and Defense, 13.1% in Military Aircraft, 11.0% in Commercial Aircraft and 13.4% in Industrial, all the same as our previous guidance. We're affirming our FY '25 adjusted earnings per share guidance at $8.20 plus or minus $0.20. That's up 5% over FY '24 or 14% normalizing for this year's out-of-period expense and last year's benefits that are not reflective of operational performance. For the second quarter, we're forecasting earnings per share to be $1.75, plus or minus $0.10. This reflects a similar operating margin in Q2 relative to Q1 with neither the out-of-period warranty expense nor the extraordinary Commercial aftermarket strength repeating in Q2. Finally, turning to cash. We're still projecting free cash flow conversion in FY '25 to be in the 50% to 75% range, a solid improvement from the modest level of cash we generated in FY '24. Free cash flow in the second quarter will improve markedly from the first quarter as we are projecting no cash usage in the second quarter. The real improvement, though, will be in the back half of the year as we reduce inventories from our planning and sourcing activities and collect on receivables. Overall, FY '25 is shaping up to be another great year. And now I'll turn it over to Pat.

Patrick Roche, CEO

Thank you, Jennifer. Our first quarter was a strong start to the fiscal year. It provides us with increased confidence in our guidance for the year, and we will continue to see our performance improvements reflected in those results. Now let's turn it over to your questions.

Operator, Operator

And your first question is from Jon Tanwanteng from CJS Securities.

Jonathan Tanwanteng, Analyst

My first one, Pat, is I was wondering if you could talk about your CCA involvement. It's nice to hear you're having some activity there. How much of an opportunity is that relative to other large programs, such as FLRAA or F-35? And kind of when do you see that layering in?

Patrick Roche, CEO

Jon, welcome to the call. Thanks for the question. Yes, I think the reason for indicating our work on CCA is to say that we have relevant technologies that we can offer in this space. We have been engaged in conversations on several of the CCA programs, and we have development activity underway to prove out our concepts. So it's early stages, I would describe. But as a mechanical component supplier into these, we feel that we have a valuable role that we can provide on the flight control side.

Jonathan Tanwanteng, Analyst

Understood. And are you involved with all the players who are competing there? Or is it just 1 or 2 of those platforms?

Patrick Roche, CEO

Yes. It's in the 1 or 2. It's less than a handful at this point.

Jonathan Tanwanteng, Analyst

Got it. Okay. And then I was wondering if you could talk about the Boeing investment in the 787 production line. I was wondering, how much capacity does that enable for them? Or is that more just catching back up to where they were producing before COVID? A little more detail on that and kind of what that kind of forecast of their production rates in the future, if you have that kind of detail.

Patrick Roche, CEO

Boeing is aiming to achieve a production rate of 10 for the 787 wide-body aircraft by the end of fiscal '26. This goal drives their investment, which is intended to help them reach it through the Charleston facility.

Jonathan Tanwanteng, Analyst

Okay. Understood. And then finally, I was wondering how you drove some of the aftermarket orders in the Commercial space with Tewkesbury down. Is that just a testament to how quickly you're getting it back up? Or is there other capacity or those orders for future dates?

Patrick Roche, CEO

Our repair work is handled not only at Tewkesbury but also at various facilities globally. We have a significant backlog of aftermarket work, which we managed to process through our production setup, contributing to the sales increase. Additionally, we supplied airlines directly with spare parts to maintain fleet readiness, representing further work in the quarter. Overall, we have a robust business in the aftermarket sector, enhanced by the extra work we could accommodate during this period. At the Tewkesbury site, we resumed our interim production operations fairly quickly, which has allowed us to restart production and fulfill customer commitments. However, there is still a considerable amount of work required to fully restore the production environment to its full capacity, as we currently face limitations. Nevertheless, we are making progress and successfully getting products through the plant.

Operator, Operator

Our next question is from Michael Ciarmoli from Truist Securities.

Michael Ciarmoli, Analyst

Pat, maybe just to stay on that aftermarket a bit, and I don't know how you want to take this. But you called out in the release the warranty expense, excluding that 14.4% margins, that looks to be a multiyear high. I guess 2 questions. Why didn't you opt to just adjust out that warranty expense? I can't recall, and I checked my notes, I don't know when the last time you had one of those charges were. And I guess should we think about that level being sustainable? It sounds like you got a lot of aftermarket through some provisioning. But just trying to get some color on that 14.4% as it relates to kind of longer-term targets and you're going to get some volume increases. So how should we think about that?

Patrick Roche, CEO

I think we had a really good quarter, obviously. And if you back it out, back out that one-time expense, it was very strong, and it is a record margin quarter for the Commercial Aircraft group. So all that is correct, Michael. We anticipate continuing strength on the aftermarket side, but we had the extra boost coming through from that provisioning and getting some of our Tewkesbury output back out again. So there's some gain coming from those things, and we're just not banking on that repeating in the subsequent quarters. But we do still have a really solid level of aftermarket business planned in for the rest of the year. I think it is a positive story, Michael, about that strength in the aftermarket and the operational improvements on the Commercial side.

Michael Ciarmoli, Analyst

Got it. So fair to say, more skewed towards aftermarket versus OE? There wasn't any additional pricing, maybe just kind of ongoing operational excellence and improvements on the OE side.

Jennifer Walter, CFO

The aftermarket was a significant driver to the underlying performance that we saw in the operating margin performance. And to your question as far as the out-of-period adjustment, yes, you can think of this as it's not an ongoing type of thing. It doesn't change our warranty expense going forward or anything like that. That's why we try to give you a trail to say how much was included in our numbers. Typically, in our adjustments, we only keep things like restructuring and those types of activities in there.

Michael Ciarmoli, Analyst

Yes, fair. Jennifer, do you have the Commercial OE revenue growth and aftermarket growth in the quarter handy?

Jennifer Walter, CFO

Yes, both segments experienced growth. The aftermarket saw slightly more growth, accounting for just over half of the total growth in that segment.

Michael Ciarmoli, Analyst

Okay. And then moving on to Industrial, you mentioned that the bookings exceeded a book-to-bill ratio of 1. Can you provide some insights into what contributed to this and what you're observing in those markets? It appears you have better visibility here, and I'm curious if this trend in bookings is expected to continue.

Patrick Roche, CEO

Yes, I think this is an ongoing situation where we've discussed the softening economy in Germany and its impact on our orders. This primarily affects the Industrial automation segment, though we've seen some offsetting strength from our medical business, which achieved record sales in our medical pumps this quarter. In previous quarters, there was also strength in our simulation and testing segments helping us. However, if I focus solely on the Industrial automation segment, I believe it is relatively stable at this point, as I noted in the fourth quarter. Looking ahead, I maintain the view that we will continue to operate at roughly the same level of activity in Industrial automation through fiscal '25. The overall message is stability, and having a book-to-bill ratio above one is a positive indicator. We hope to see this trend continue for a few more quarters before we can be confident that business is improving. Nonetheless, this aligns with our expectations for stability in our plans for '25.

Michael Ciarmoli, Analyst

Got it. Okay. And then just one last one for me. The second quarter earnings guidance at the midpoint, sequentially down versus first quarter. I think that's kind of an anomaly for you guys. Can you give any color as to why we should expect earnings to be down at the midpoint versus the first quarter here?

Jennifer Walter, CFO

Yes, it's largely the same. When we consider the out-of-period items and warranties, we think about the possibility of either of those impacting the next quarter. Overall, it's quite flat, with just a slight decrease in EPS.

Operator, Operator

Your next question is from Jack Ayers from TD Cowen.

Jack Ayers, Analyst

Quick question on cash, Jennifer. You burned $165 million this quarter. Moving forward, could you discuss working capital, specifically inventory or unbilled amounts, and how we can gain confidence in the free cash flow conversion guidance you reiterated?

Jennifer Walter, CFO

I can go through it. I'll start with the second quarter and then discuss the rest of the year. We expect to see improvements in Q2, and I mentioned we won't have cash usage during this quarter. There are several factors contributing to this. Compared to Q1, our physical inventories will improve, as we have stronger shipments expected and milestones that will support our physical inventories. In Q1, we had compensation payments that typically occur in that quarter, which won't happen in Q2, providing another benefit. Additionally, we anticipate defense advances in customer receipts for the second quarter. While receivables will still be a use of cash, it won't be at the same level as in Q1, where we faced excess pressure due to strong collections in the previous quarter. Several factors will drive our improvement in Q2. However, the significant cash generation will occur in the third and fourth quarters, driven by various elements, particularly physical inventories. We expect strong operational performance, and there are milestones in play. We're increasing OE shipments while also managing our incoming inventory levels. We're optimizing our buffer stock to reduce it where possible, maintaining enough to meet customer demands without holding excess inventory. We are also limiting production to necessary levels in areas where we can do so without affecting deliveries. The Tewkesbury output is recovering and helping to reduce inventory. We're initiating actions to push out demand and delay receipts in our supply chain. While we won't see significant releases in Q2, we expect these improvements to reflect in our financial results later in the year. We also foresee better outcomes in receivables in the back half of the year from strong collections and milestones. Thus, with these activities and the visibility we have on customer advances and collections, we remain confident in our goal of achieving 50% to 75% free cash flow conversion for the year.

Jack Ayers, Analyst

Okay. That's all for me. Yes, go ahead, sorry.

Patrick Roche, CEO

Sorry. Jack, I was just going to say where we've been working to drive increased profitability with defined initiatives, we have a similar approach now internally on cash flow. And we know what we're trying to drive within each of the businesses, and we're tracking that as we go through each of our internal reviews to make sure we are delivering.

Jack Ayers, Analyst

Okay. That's good insight. And I guess just switching gears back to Commercial, and I'm not sure if you covered it, Pat. Just maybe an update on OE rate just kind of assumptions, maybe 787, A350, because it looks like Commercial OE was actually up pretty strongly sequentially from Q4 to Q1, which is kind of surprising. Just any update on OE assumptions, where you were and where you're kind of looking to go to through '25 would be helpful.

Patrick Roche, CEO

So I think both of us are going to come in on this one, Jack. So just the first high-level comment. I mean when we built up the FY '25 plan, we had lots of conversations back and forth with the customers on the wide-body programs, which are really important to our numbers. And we have strong alignment now between their plans and our plans and are very confident in those levels that we have loaded into our plan. That's the first comment. And we've seen no change in that over the last 90 days. So I would describe that as very stable for us at the moment. And Jennifer, you had comments as well?

Jennifer Walter, CFO

In the latter half of last year and this quarter's strong operational experience, it's primarily a timing issue. In the third quarter of last year, we noticed a short-term delay that impacted both Q3 and Q4 due to some customer ordering patterns. That situation has normalized, and we've essentially caught up with those orders. Therefore, the timing of orders, which has generally been stable and normalized, is what we're observing. There was a slight downturn in the latter half of last year when we reduced our sales guidance, but now we have seen a catch-up of those orders, allowing us to achieve the higher levels we are seeing now. So, we've experienced a bit of a boost from that catch-up.

Operator, Operator

Your next question is from Jon Tanwanteng from CJS Securities.

Jonathan Tanwanteng, Analyst

I was just curious about the medical device business. You've mentioned to me that you achieved a record based on a competitor having challenges. I'm wondering how long that window might be open for. And do you expect a reversal or just stabilization if your competitor catches up?

Patrick Roche, CEO

Think about the time frame around those types of events in the 6- to 9-months' period. It takes a little bit of time to work through issues when they do arise, and that's what our competitor is experiencing. We have been gaining from this over the prior quarter, and we will continue to for the rest of the year. So we're up mid-single digits to high single digits relative to the prior year in that product line.

Jonathan Tanwanteng, Analyst

Okay. Would you expect to return some of the share you gained from your competitor?

Patrick Roche, CEO

At least we would expect to hold, Jon, because once you get that fleet out into the field, it continues actually to draw down consumables from us as well. So people don't like slipping or moving around too much. So I think it's relatively sticky.

Operator, Operator

Thank you. There are no further questions at this time. I will now hand the call back to Pat Roche for the closing remarks.

Patrick Roche, CEO

Thank you. Thanks very much for the questions, everyone. That closes out our first quarter call. It's been a good quarter for us and a good start to the year, strong sales, record orders, impressive margin performance. We have had heavy use of cash in the quarter, but we can see a line of sight to improving that in the back half of the year. So we remain confident in our full year guidance. So thank you for your time and attention, and look forward to talking to you again on the next call.

Operator, Operator

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.