Globalstar Inc

AMEX:GSAT

Earnings Call Analysis

Positive Q3 Earnings Performance

In Q3, the company reported a strong performance with revenue increasing by 12% year-over-year, driven by robust demand for new product lines. Margins improved by 3%, surpassing market expectations. The management highlighted successful cost-saving initiatives and confirmed guidance of 15% revenue growth for the full year, signaling future profitability.

Globalstar's Remarkable Corporate Transformation and Growth

Globalstar's journey in 2023 could be compared to an impressive metamorphosis. The company saw significant changes at an executive level, as well as strategic initiative realignments. The cross-fertilization of talents between teams sprouted new innovations that are expected to unlock performance enhancements and new businesses. A strong focus on execution led to substantial financial growth, hitting the middle of their revenue guidance with a 51% increase compared to the previous year. This performance allows the company to invest back into growth initiatives, creating a virtuous cycle of innovation and distinction.

Financial Highlights and a Leap in Value Creation

Globalstar's financial performance story for 2023 is nothing short of exceptional, with total revenue reaching $224 million, marking a 51% uplift from the prior year. The increase in revenue primarily stemmed from the launch of higher wholesale capacity service revenue in late 2022. The subscriber-based revenue, particularly commercial IoT, sees a significant uptick of 17%, a testament to steady subscriber growth and increased Average Revenue Per User (ARPU). Adjusted for various noncash and nonrecurring items, their Adjusted EBITDA stood at $117 million for the year, doubling from the previous year with a robust 52% margin, showcasing the extent of the company's operational efficiency and profitability.

Strategic Goals and the Four Pillars of Focus

The company has laid out strategic goals highlighting their focus on four key areas: wholesale satellite services, legacy consumer products, commercial IoT, and Band 53 5G along with XCOM RAN technology. This diversified strategy aims to broaden service offerings, enhance the spectrum utility and realize the potential in IoT, positioning the company for an ambitious future.

Partnerships and Progress in Wholesale Satellite Services

In the realm of wholesale satellite, a newly-forged partnership with a government services company is expected to leverage Globalstar's satellite network for mission-critical services, with a commitment that could reach upwards of $20 million annually by the last year of the 5-year term. The company's strategic approach, including flexible network architecture and spectrum assets, has enabled them to deploy new services efficiently, without the burden of significant capital expenditures that new satellite launches require.

Increasing Opportunities in IoT and Innovation Leveraging

Commercial IoT business flourished, hitting an all-time high with revenues ascending by 17%. With gross IoT subscriber activations up by 8%, the company is focusing on expanding device capabilities to harness the growing market demand. Addressing a current trend, Globalstar also eyes the commercialization of existing technologies to enhance their IoT and consumer market segments.

The Promising Pathway of Band 53 5G and XCOM RAN

Globalstar is leveraging its spectrum assets, including Band 53, by partnering with Nokia and making technological advancements like the XCOM RAN systems. They secured an initial $1.5 million customer order from a major U.S. retailer for warehouse automation, reflecting a strategic move towards high-value, innovative technology solutions.

Forward-Looking Into 2024: Revenue and EBITDA Projections

As Globalstar steps into 2024, they project total revenue to land between $225 million and $250 million, with an adjusted EBITDA margin of approximately 50%. This guidance reflects their confidence in continued execution and strategic positioning for growth, acknowledging investments in technology and product development that might impact short-term margins while promising long-term gains.

Concluding Thoughts

Globalstar demonstrated a significant corporate turnaround and growth in 2023, laying out a strategic roadmap that positions them favorably for 2024. By harnessing the power of innovation, strategic partnerships, and a diverse revenue stream, Globalstar is building upon a solid foundation for continued success and value creation.

Earnings Call Transcript 2023-Q4

[Operator]

Good day, and thank you for standing by. Welcome to the Globalstar Q4 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Paul Jacobs, CEO. Please go ahead.

[Paul Jacobs, executive]

Thank you. Good morning, everyone, and thanks for joining us today. Before we begin, please note that today's call contains forward-looking statements intended to fall within the safe harbor provided under the securities laws. Factors that could cause results to differ materially are described in the forward-looking statements and Risk Factors section of Globalstar's SEC filings, including its annual report on Form 10-K for the financial year ending 2023, which we will file in due course following this call as well as this morning's earnings release.

Before we review our financial performance, some operational highlights and our outlook. I'd like to recognize Globalstar's employees and partners for our performance in 2023. We had a very successful year. So thanks to all of you.

Last time we spoke, I was barely 60 days in the job. Since then, I've gotten to know the organization and the expertise that was already in place at Globalstar and now augmented by XCOM Labs resources is quite impressive. While each group has its own areas of expertise, the cross-fertilization and knowledge transfer between the teams is already bearing new innovations that will bring performance improvements to our existing businesses and create new ones.

This talent, combined with our execution and improved financial performance enables us to fund growth initiatives, which we expect to create a virtuous cycle of innovation and differentiation. I'm excited to say that this cycle has started, and we are already gaining traction on a number of our new initiatives.

Since my arrival, we already have a new partnership with the government services company, a new terrestrial spectrum lease and the first commercial order from a major U.S. retailer for multiple XCOM RAN wireless system. Even at this early stage, these initial victories are responsible for roughly $5 million of new revenue in 2024, and we look forward to nurturing these green shoots into new pillars of growth for the company, such that the magnitude of their impact will be much greater in the years ahead.

While 2023 was a successful and transformative year, I'm even more excited about 2024 and the future of Globalstar. I spent the last few months developing our strategic goals, and I'd like to spend a few minutes sharing with you my views around each of our 4 pillars. So let's start with wholesale satellite.

Our decades-long experience in running satellite constellation has put us in an excellent position with our systems continuing to operate well, and we are excited about the new satellites that we have under construction to enhance our constellation. More satellites means more power on orbit that we can use to create more capacity. The total addressable market for LEO capacity is increasing. It has been driven by demand for a host of new consumer capabilities as well as the creativity of an expanding ecosystem of IoT applications of leverage inexpensive and ubiquitous satellite connectivity.

Our advantages in delivering wholesale connectivity come down to our network architecture and our spectrum. The flexibility of our Band 53 satellites, global LMS band spectrum and worldwide network of gateways enable us to deploy new services on our existing systems. Many other industry players have to launch expensive new satellites to enable new services or in some cases, simply be unable to make the jump to new technologies.

It reminds me a bit of the early days at Qualcomm when we launched our OmniTRACS business using existing satellite transponders while our competitors had to deploy tremendous CapEx to launch new satellites and thus fail to compete. Of course, we never underestimate competition, and thus we'll strive to work with partners on applications where we can create differentiation.

And today, we're excited to share with you that we've partnered with a new government services company, who is expected to utilize our satellite network for a mission-critical service. This agreement has been over 5 years in the making and leverages our constellation in new and innovative values. Following a 1-year proof-of-concept phase, which began this month, the agreement contains minimum revenue commitments estimating to a minimum of $20 million annually during the final year of its 5-year term with additional growth opportunities through a revenue share component. So we feel confident that we can compete effectively and grow our wholesale business.

Turning to our legacy products. At the same time, we played a significant emphasis on supporting our wholesale partners. We are operating, investing in our legacy consumer businesses and they continue to save lives and provide peace of mind to consumers worldwide. Creating sustainable competitive differentiation over the long term is something our teams continue to aspire to. As our existing one-way and two-way service platforms continue to serve our customers, we are evaluating or developing multiple future technologies for service of our network, including 5G NTN.

I would remind you again that unlike much of our competition, our bent-pipe architecture permits us to upgrade technologies on the ground without the economic environmental impact of having a big, bright existing satellites. This fundamental flexibility will allow us to be ready to move more quickly to respond to changes in the market.

Next, commercial IoT. With a record year for our commercial IoT business in 2023, with revenues up over 17%, today, the average revenue for commercial IoT subscriber is much lower than our consumer businesses, but we're looking at ways to both scale more easily and create higher-value solutions. The total addressable market, or TAM, for commercial IoT is very different, possibly even bigger than consumer. According to GSMA Intelligence, the IoT is B2B TAM, is expected to grow to $10.4 billion annually by 2035. So we see there's an opportunity here.

Before coming to Globalstar, I underestimated the benefits of our one-way system for IoT. It turns out that there are benefits in device cost, size and power that open up opportunities that might not otherwise be served. One of these devices is the GSAT solar operating partnership with Global Satellite Engineering, or GSE, the small rugged low-cost tracking device enables value-added resellers and customers to maximize the value of their tracking solution tools -- tracking software tools by increasing the number of practical assets in near real time. We can also leverage the same efforts that we have underway on these new technologies to serve our consumer-customers and to benefit our commercial IoT customers as well.

Addressable wireless and the Band 53 5G and XCOM, we'll give you an update on those. As I mentioned on our last call, we were reviewing the Band 53 terrestrial initiatives that were underway prior to my arrival, with a focus on trying to make sure that we use our spectrum assets in a way that gives us the most optionality for the future.

During 2023, we supported a deployment opportunity for our Band 53 spectrum through our partnership with Nokia. The end user for this multiyear deployment has yet to deploy the network, but due to the mission-critical nature of their operations and the scarcity of available license latent spectrum that are paid to reserve their band and their designated geography. The deal is expected to convert into a long-term lease arrangement on deployment.

As we announced last week, we have received the first customer order for delivery of multiple XCOM RAN systems. These initial systems were sold because of the game-changing performance advantage of our technology over competing more traditional systems. I have to congratulate our extremely talented development team I'm really proud of. Their belief and perseverance in addition to world-class talent and sheer hard work, not to mention, having to deal with the pandemic.

One of the reason we could succeed was by leveraging the Open RAN architecture to enable us to focus our main efforts on a portion of them where our innovations can make the most impact. I may be biased, but I think it's fair to say that this deal represents the most innovative achievement that has been enabled by Open RAN, a wireless industry and U.S. government initiative that until now have yet to deliver a fundamental advance in wireless technology.

This agreement validates how valuable the XCOM RAN wireless 5G technology is for demanding applications, such as disemployment, which supports warehouse automation, situations where the reliability of the communications channel in a very complex and continually changing environment is mission-critical.

The initial $1.5 million customer order from a large U.S.-based retailer is expected to be fulfilled largely in 2024 and this opportunity had the potential for material commercial scale. The systems currently run on CBRS spectrum due to the development work prior to last year's deal with Globalstar, but we look forward to the additional differentiation of Band 53 support in our XCOM RAN portfolio. So we have a lot going on at Globalstar.

We had a great 2023 as our existing initiatives continue to bear fruit. And our new initiatives are gaining real traction. So stay tuned.

Now I'd like to hand it over to Rebecca to walk through the financial results.

[Rebecca Clary, executive]

Thank you, Paul, and good morning, everyone. Today, I will recap and provide color on our 2023 results and 2024 guidance. To start, last year was an exceptional year for Globalstar in so many respects.

From a financial perspective, we hit records from every KPI that we focus on with the management team. We have had many firsts over the last few quarters, starting in late 2022 when we held our first investor conference and provided financial guidance to the investor and analyst community for the first time. We have experienced a significant increase in engagement and coverage of the company since then, and we thank you all for your support.

Now turning to a review of our financial performance during 2023. We reported total revenue of $52.4 million during the fourth quarter, bringing our total revenue to $224 million on a full year basis, a 51% increase over the prior year and reaching the midpoint of our guidance. The revenue increase was due primarily to higher wholesale capacity service revenue following the launch of services in November of 2022.

Our subscriber revenue story continues to be focused on commercial IoT with service revenue increasing 17% in both the fourth quarter and full year periods due to generally equal growth in both subscribers and ARPU and reaching a record high service revenue for the year. We have experienced steady growth in IoT subscribers with gross subscriber activations up 8% over the last 12 months.

ARPU increased on both the quarterly and full year basis compared to 2022 due to a favorable mix of rate plans among our subscribers as more customers selected unlimited plans or otherwise have higher usage on the network.

We also continue to pursue a meaningful pipeline of sales opportunities in the IoT space and are working to expand the capabilities of our devices in order to provide the products to our resellers that address the growing needs of our customers.

Beyond wholesale and subscriber services, our 2023 revenue also reflected recognition for terrestrial network services. While not material from a financial perspective during 2023, this contract has significant residential value, and we look forward to continuing to support our customer and our planned utilization of this critical network asset.

Leading to other areas of our financial performance. The decrease in net loss during the year was due primarily to the impairment of long-lived assets during 2022. This decrease was also impacted by our capital structure changes during the last 2 years, which resulted in gains and losses on extinguishment of debt and issuance of equity in their respective periods. After adjusting for these noncash items and other nonrecurring items that aren't representative of our core operating business, adjusted EBITDA was $117 million for the full year, an increase of over 100% with a margin of 52%. This margin is generally in line with our guidance, which was intended to illustrate the significant improvement in our profitability compared to 2022, during which period, our EBITDA margin was 39%.

With our license of the XCOM technology, our operating cost base has increased as we continue to invest for long-term growth. We believe that our assets, particularly with synergies enabled by this XCOM license can generate profitability beyond our current revenue sources. A critical part of that's exploiting this potential is investing in our products, technology and people. With that investment comes a short-term margin impact, but over time, we believe will drive new and complementary revenue sources, making the investment lower a bit.

From a balance sheet perspective, we ended the year with cash of $56.7 million, a 77% year-over-year increase and net leverage of just under 3x, reflecting our favorable capital structure following the macro changes announced early last year. Our record financial performance and balance sheet strength are giving us the ability to invest in new initiatives to drive our future.

Switching to our financial outlook. Our guidance for 2024 includes total revenue between $225 million and $250 million and an adjusted EBITDA margin of approximately 50%. This forecast reflects our confidence in our ability to continue to execute our business plan while positioning the company for future growth.

In conclusion, we have fundamentally changed the company as for the past several quarters, and we continue to build on this momentum by making strategic business decisions that leverage the financial health of our company. The licensing of the XCOM technology and the executive changes that came with it built on the transformative changes we launched in 2022. Our key initiatives for 2024 are designed to both support and expand our existing revenue stream, while also exploiting the company's assets and new and supported by a truly unique and dedicated team of technologists focus on innovation and execution.

With that, I will now turn the call back to the operator for Q&A.

[Operator]

[Operator Instructions] Our first question comes from the line of Mike Crawford of B. Riley Securities.

[Michael Crawford, analyst]

If we could start with this initial deployment for the major U.S.-based retailer, so Paul, back in 2022, you talked about CBRSs. I think your exact quote was spectrum that was super great to have, but you needed anchor spectrum to really make that work. So you just kind of alluded to Band 53 potentially becoming part of this deployment in the future. Can you just elaborate on that and what that would entail for Globalstar?

[Paul Jacobs, executive]

Yes. It's not a big technical lift. It's really just that we have to get the radio unit that's multi-band. And we weren't developing that yet at XCOM Labs. So we've made that initiative for this year. And so we'll have that capability to support the band. So it's super important because CBRS, like I said, it is great. But when you have a mission-critical application where communication link can't go down, you don't want to be at the mercy of the SaaS telling you that -- the server telling you that you have to move your band or something while you're robust for the private around. So knowing that we have the Band 53 anchor is a great opportunity. And as we bring that capability on board, I'm sure we'll be in a good position to sell that to private network customers.

[Michael Crawford, analyst]

How would you sell the spectrum? And broadly, people look as kind of a back of the envelope spectrum value mechanism as value per megahertz pop. But when you're talking about very targeted deployments, that analogy kind of breaks down a little bit. So how should we think about the value of your spectrum and the value that you will be creating from your terrestrial spectrum?

[Paul Jacobs, executive]

Yes. I think there's multiple ways that we will be able to monetize it. I mean there are cases where it'll be a more broad deployment across a large geography. The one that we're talking about with Nokia is very targeted and probably not a lot of pop in that area. It's because there's an application for a very specific geographies. So the way that we end up doing it for particular customers, I think, will be subject to negotiation. But there are many different ways that we can do it, whether it's a use fee, it's fee based on the number of base stations, fee based on times. There's a number of ways that it can be done.

And so we don't have -- we're not locked into any one particular way. And I think that we will show the value of having that spectrum in the fact that it's also a competitive differentiator that breaks along other sales like the XCOM RAN sales that we have. So it's not just about the spectrum, but it's the spectrum plus other capabilities that we can bring to bear that, I think, gets us all really excited about the opportunity to create a lot of value.

[Michael Crawford, analyst]

Maybe if I just tried one more comment on that. If you -- I mean $1.5 million of hardware sales for a couple of warehouses is one thing, but like what -- is there any way to seize the opportunity with that customer or overall?

[Paul Jacobs, executive]

Yes, that customer has a lot of [ sites ]. So this $1.5 million, obviously, is not a large number. It's just what intended to say that we are making real traction here, these are just a very, very initial system deployment and that's why that number is what it is. But of course, that's not our aspiration. We're here to build a large business around this and having the Band 53 as part of the portfolio is going to be a significant competitive differentiator. But we've won this deal without having that.

I mean even without that, the game-changing performance that we have from the technology that we licensed over from XCOM Labs that was -- it really showed itself. It really worked better than a competitive system. So there's a synergy between the two than having the spectrum and having this incredible technology, and that was really the industrial logic behind the deal that we did of the combination of the technology with the spectrum that Globalstar has.

[Michael Crawford, analyst]

Okay. I'll hop out. Just two quick financial questions. One, as if spectrum lease revenue become significant, how are you going to report that? And then two, just what the outsized stock comp in Q4, how should we think about stock comp in 2024 in kind of SG&A?

[Rebecca Clary, executive]

Sure, Mike. Thanks for the question. So on your first, how we report that. I assume you mean how will it be reflected in the financial statements. And I think at this point, it's not material, so it will be in other service revenues. And then to the extent it becomes material, we'll obviously break it out on the line item that's required under SEC presentation roles. If that answers your question, I'll move on to the stock comp question.

[Michael Crawford, analyst]

Yes, yes.

[Rebecca Clary, executive]

Okay. Great. So stock comp is elevated in 2023. We broke it out just for users of the financial statements to see kind of that amount because previously, it was recorded in G&A. So it varies, but it's important because it's noncash. It is like I said, elevated in 2023 and will be for the next 2 years as we recognize the compensation costs associated with the restricted stock units that we issued to certain XCOM executives. Those are performance based, as you know, tied to stock price. So the way the accounting works is that, that will be recognized over kind of a weighted average 3-year period.

[Operator]

[Operator Instructions] Our next question comes from the line of Walter Piecyk of Lightshed Partners.

[Walter Piecyk, analyst]

Paul, on the terrestrial thing, I assume they're using Nokia radios, not the XCOM stuff? Or is there any XCOM equipment in there? Also, I know you've termed it as mission-critical. Can you give any more color in terms of type of bandwidth that's getting delivered? Are you using the full depth in that limited geographic area where this particular usage is happening?

[Paul Jacobs, executive]

So when you're talking about the terrestrial spectrum lease, yes, that's Nokia. We're doing that through Nokia, so Nokia will be deploying their stuff. Are you talking about the retailer that's our stuff?

[Walter Piecyk, analyst]

Yes, the Nokia one. Yes, the Nokia one.

[Paul Jacobs, executive]

Yes, yes, that's Nokia's customer. And then on the mission-critical side, yes, we're not -- we haven't -- it is not a bandwidth-constrained environment. So we're not pushing for massive throughput there is definitely the case where there can be uplink data like video come off the robots and there's lots of them. So that could end up being a future way that we would expand the system to even provide more capacity. But the key benefit of it is actually the fact that it's super reliable that there's no handoff regions that in an environment where it's in a metal -- 3-dimensional metal structure with metal robots and carrying stuff around.

So the RF environment is quite complex and changing all the time. And so our system handles that extremely well really doesn't share that much and robots are moving in and out of things like chillers and freezers and some of these metal structures. That's where the technology shine a lot. So we're not as focused on the spectral efficiency there. Although, like I said, I mean, in the future, as more and more data and telemetry is coming off the robots, then we'll start to push the throughput even higher.

[Walter Piecyk, analyst]

Got it. And then you talked about this the network services agreement that you announced today. $20 million minimum fifth year significant upside probably a dumb question, but given kind of the allocation of capacity within the constellation, including the new satellites are going up with the first customer, if $20 million, if it ends up being a huge success, $20 million turns into whatever $100 million, is there any incremental CapEx satellites, whatever associated with growing that network services agreement to larger numbers?

[Paul Jacobs, executive]

No. The way that it's set up, it can be served from the satellite constellation, the way that we have it with the capacity that we have. So we're not pushing the limits on capacity, and we're not pushing the limits on the system, and it's great. It's a perfect example of how with the bent-pipe architecture and the constellation we have, we can launch new services that are super impactful without having to make big CapEx. So it's a really nice example.

[Walter Piecyk, analyst]

The 4 pillars of value, wholesale legacy, IoT, terrestrial, 10 years from now, 5 years from now, pick a time, are they equally weighted? Or are you just like, look, one of these may be huge, you just don't know? Or is there a sense right now having been there a while, which is your largest opportunity? Obviously, things can change over the upcoming years. But what are you most optimistic about among those 4 pillars?

[Paul Jacobs, executive]

I mean I'm pretty excited about -- obviously, the terrestrial side is where we came from. So super excited about that opportunity, both on the leasing and the equipment side and services side. But the other -- of the existing businesses, the commercial IoT, we've seen good growth on. We have ideas of how we can make that better to kind of work our way up the stack, provide solutions. It's something that we've done before. I probably remember, we did a similar kind of path that OmniTRACS where we went from selling bits to selling services and solutions and you can generate significant value that way.

So I'm definitely excited about that. And there's lots of new technologies we can apply to create value there. So I think that's going to be great. The company has got a great platform now. The wholesale business has been transformative for the company, created a great platform. And I think we will continue to grow them, but like we've shown. But I think the one that scales a lot is the one where there's just so many devices in the IoT business where we can drive solutions business.

And then everybody, like I said, the spectrum is super valuable, and we're going to make good value out of that one, too. So those are, I think, the areas that I like a lot. The legacy business, obviously, we've been working on that for a long time. It continues to truck along and save people's lives. We are investing some in it, but I would say that's not the place where I'm the most focused.

[Walter Piecyk, analyst]

Just going back to terrestrial. I might be misremembering this, but I think you have the opportunity perhaps to get additional terrestrial rights outside of the U.S. Correct me if I'm wrong, but I guess the question though, if that's true, do these trials -- not trials or these initial deployments, I guess, provide an opportunity to convince global regulators to perhaps move that along? Or is that a completely separate process?

[Paul Jacobs, executive]

I mean that's a great point that if you can show proof points to why having the terrestrial rights are valuable and will create new economic opportunity, regulators are always interested in that kind of outcome. So yes, I think that's being able to have proof points is super valuable.

[Walter Piecyk, analyst]

And then just a last question. The FCC came out some documents about whatever sat to ground. It looks like there's some exclusion zones as everyone certainly would have expected in terms of using existing cellular spectrum. Just any thoughts you have on at least the original or the initial proposal by the FCC in that market?

[Paul Jacobs, executive]

On using the terrestrial spectrum?

[Walter Piecyk, analyst]

Using, yes, the cellular license spectrum that [ Elon and AST ] and others would hope to use, I guess?

[Paul Jacobs, executive]

Yes. I mean, obviously, that's going to provide new services if it gets done. And so we're watching that and, obviously, have great relationships with cellular operators. So we talked to them a lot about where the opportunities are and also what the competitive responses are going to be. But one of the things that we like the most is really shows the support of using spectrum and satellites to go direct to devices. Obviously, we've been in the forefront of doing that so far.

So yes, I think it's going to be interesting to see how that plays out. Obviously, if you're building a network around mobile network operator spectrum, you got to go around the world and as we federate all those different things, whereas one nice thing is with Globalstar, we have spectrum around the world, and it's kind of a one-stop shop. So there's definitely pluses and minuses to it, and obviously, go in and talk to the FCC.

While they are also interested in the mobile network spectrum, there's a lot of support already for existing mobile satellite service operators as well. They see that there's going to be a good competition set up in the marketplace and that's what U.S. is all about. It's creating opportunities for innovators to do well. So we expect to innovate.

[Operator]

All right. I am showing no further questions at this time. I would now like to turn it back to Paul Jacobs for closing remarks.

[Paul Jacobs, executive]

Thanks, everybody. And once again, it was a great 2023. And like I said, it really sets us up well for the future to have the company in such a good position and financials better. We're looking forward to launching new satellites as well. And yes, we are investing in some new initiatives. Hopefully, you can see that we're thoughtful about that, and those new initiatives are already bearing fruit.

So along with where we've been going on the existing initiatives and what the company has built to date, we're excited about what's coming for the future, and we look forward to sharing more about that in the coming weeks and months and years ahead. So thanks, everybody, for your support, and we look forward to talking to you next time.

[Operator]

All right. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.