CLARIVATE PLC

NYSE:CLVT

Earnings Call Transcript 2024-Q1

[Operator]

Good morning, ladies and gentlemen. Welcome to the Clarivate First Quarter 2024 Earnings Call. My name is Jaquita. I will be your moderator for today's call. [Operator Instructions]

I would now like to pass the conference over to your host, Mark Donohue, Vice President of Investor Relations with Clarivate. Mark, please go ahead.

[Mark Donohue, executive]

Good morning, everyone. Thank you for joining us for the Clarivate First Quarter 2024 Earnings Conference Call. As a reminder, this call is being recorded, webcast and is copyrighted property of Clarivate. Any rebroadcast of this information in whole or in part without prior consent of Clarivate is prohibited, and accompanying earnings call presentation is available in the Investor Relations section of the company's website, clarivate.com.

During our call, we may make certain forward-looking statements within the meaning of the applicable securities laws. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the business or developments in Clarivate's industry to differ materially from the anticipated results, performance achievements or developments expressed or implied by such forward-looking statements. Information about the factors that could cause actual results to differ materially from anticipated results or performance can be found in Clarivate's filings with the SEC and on the company's website.

Our discussion will include non-GAAP measures or adjusted numbers. Clarivate believes non-GAAP results are useful in order to enhance an understanding of our ongoing operating performance, they are supplement to and should not be considered in isolation from or as a substitute for GAAP financial measures. Reconciliation of these measures to GAAP measures are available in our earnings release and supplemental presentation on our website.

With me today are Jonathan Gear, Chief Executive Officer; and Jonathan Collins, Chief Financial Officer. Both will be available to take your questions at the conclusion of the prepared remarks.

And with that, it's a pleasure to turn the call over to Jonathan Gear.

[Jonathan Gear, executive]

Great. Thank you, Mark. Good morning, everyone, and thanks for joining us today. On our last earnings call, I talked about how we set the foundation for growth in 2023 with significant operational changes. These changes were required so we could advance the next phase of our growth plan in 2024 and 2025, which is focused on investing and innovating to drive organic growth.

Today, I will update you on some of our accomplishments this year against our plan. This includes progressing on key growth initiatives across the Intellectual Property and Life Sciences & Healthcare segments. These 2 segments are important growth drivers in our pursuit to achieve market growth rates within the next few years. I'll first turn to the quarter's financial performance. Our results were in line with our expectations. Organic revenue growth was slightly better than the more than 2% decline we had anticipated. But we still have work to do.

We are encouraged to see improvements driven by the operational changes from last year as well as investments in innovation to drive accelerated future year growth. Subscription revenue continues to perform well, growing at over 2% in the first quarter. As we progress through the investment phase of our growth plan, we are pleased that we continue to see steady renewal rates of 93% at the end of the first quarter. This is a testament to the value customers place on our products and services.

Jonathan Collins will cover the first quarter results in more detail shortly. This past March, we released a series of webinars covering each of our 3 segments. These presentations, led by our segment presidents, highlighted our product investments, including our GenAI strategy to reach our long-term growth potential. We hope everyone has had the opportunity to view the presentations and product demonstrations, which are available on the Clarivate website.

Within the Academia & Government segment, we are leveraging our best-in-class content and technology to drive innovation while incorporating generative AI. Our strategy is to turn generic GenAI into academic-specific GenAI by leveraging our trusted industry-leading solutions and data to assist researchers in accelerating the pace of innovation and help students learn more effectively every day. We're investing in research and analytics, including delivering more actionable research insights through our new research intelligence solution.

We are looking to further grow our content aggregation business by expanding our content marketplace and aggregation portfolio internationally with non-English content. Lastly, our workflow software business continues to pursue a broader set of customer tiers and expand into new geographies. We are constantly expanding our [ online ] software capabilities, so users can access more advanced decision analytics and maximize their library experience. I am pleased with the progress we are making, and we're currently on track to deliver approximately 4% growth for the A&G segment exiting 2026.

Clarivate is deeply entrenched across the global IP ecosystem, supporting some of the most critical nondiscretionary tasks in the IP process. We are working on several initiatives that are designed to realize our growth opportunity across the IP portfolio. We expect to reaccelerate growth within this segment and return to market growth rates of approximately 5% as we exit 2026.

I'm very excited with the progress of our commercial focus. Under our new operating model, we are winning in the marketplace with our leading solutions, including IPFolio, FoundationIP management systems and Unycom IPMS. The commercial and competitive success we have realized the last few quarters will be a key contributor to growth as we onboard these customers over the remainder of the year.

While AI has always been a part of our IP business, we now have a dedicated and concerted effort to develop AI-based solutions. We have integrated data science expertise into the IP business to be more agile and deliver use case-specific intelligence that is embedded in decision-making processes to help customers gain competitive advantage. We are expanding patent and trademark management by creating a connected ecosystem of data, workflow solutions and expertise. The IP collaboration hub will enable IP professionals to collaborate with external agents and service providers in a structured environment, which will improve productivity, simplify operations and reduce cost and risk.

We are also making great progress to further deepen the connections with our customers and strengthen our position as a trusted adviser and partner. [ With lean ] patent and trademark maintenance solutions, we are well positioned to build an IP consulting practice to create a strong link between our customers' challenges and all that Clarivate has to offer.

Turning to the Life Sciences & Healthcare segment. We are pursuing growth through scalable platforms and AI-driven workflow solutions. Last year, we refined our operational focus and implemented innovative, forward-thinking strategies designed to fuel organic growth acceleration towards the high single digit exit in 2026. To achieve this, we're pursuing 3 key strategies. First, we are modernizing our intelligence platforms, which will enable us to translate our rich market data and analytics into predictive insights and recommended actions. We will focus on a core set of scalable platforms that leverage AI to deliver exceptional user experiences and advanced analytic capabilities. This will enable us to drive higher degrees of cross-product connectivity, such as linking Cortellis Drug Discovery Intelligence with OFF-X drug safety intelligence to accelerate insights for users.

Secondly, we are invigorating product innovation across the organization by leveraging our differentiated assets and broad capability to unlock and expand market white space. We are focusing on increasing our scale in attractive segments and developing new subscription-based products to reach new customers and expand our existing business. For example, OFF-X, Cortellis CMC and Drug Safety Triager have achieved strong footholds in R&D, regulatory and pharmacovigilance departments with plenty of room to grow.

And lastly, we are building enriched, pharma grade, subscription-based real-world data solutions focusing on differentiated therapy areas and indications. We will deliver tailored solutions directly to our core customers across pharma, biotech and medical technology. While a large component of our R&D spend to target towards these key strategies, we recently acquired a couple of start-up companies within the LS&H space to accelerate and enhance our internal investments in innovation. MotionHall serves the life sciences industry with vertical, artificial intelligence solutions. Global QMS is a provider of cloud-based solutions that enable life sciences clients to automate regulatory reporting and compliance management. The combined expertise, data and technologies of Clarivate and these companies will help to address customer needs for connected data to support complex analyses and evidence-based decisions in the life sciences ecosystem.

I mentioned earlier that we have made great progress on reviving a few of our Patent Intelligence and RWD products. We recently launched a beta version of Derwent Innovation search management, which streamlines the patent search process. This new feature, coupled with our strategic road map, has been positively received by our customers and are reflected in the 180 basis point improvement in our product renewal rate year-over-year. We also recently released an alpha version of a new R&D collaboration tool, and later in the quarter, we'll release additional alpha releases in AI-driven search and patent monitoring. Coupled with our leading Patent Intelligence database, these new features will launch Clarivate to the leading solution in patent intelligence and search in the industry. Earlier, I touched on our RWD strategy. We recently released a new data framework, which is positioned around higher quality, comprehensively mastered medical claims data. We are already seeing the benefits of our work, as our team secured commercial success with 2 top 10 global pharmaceutical customers.

In closing, we are making the necessary operational and product progress to revitalize our business and set a clear path to achieve our plans. We are committed to successfully delivering on the growth objectives and driving greater financial performance. Thank you for your time this morning.

With that, let me turn the call over to Jonathan Collins, who'll walk you through our financials.

[Jonathan Collins, executive]

Thank you, Jonathan, and good morning, everyone. Slide 12 provides an overview of our first quarter financial results compared with the same period from the prior year. Q1 revenue was $621 million, a decrease of $8 million compared to the prior year. The decline was largely organic and was partially offset by a small acquisition and favorable foreign exchange. The first quarter net loss was $94 million, $119 million lower than last year's net income of $25 million. The decline was attributed to favorable legal and tax settlements recognized last year that did not recur this year.

Adjusted diluted EPS, which excludes the impact of onetime items like these settlements, was $0.14 in Q1, a $0.04 reduction over the same period last year due in roughly equal parts to lower adjusted EBITDA and higher depreciation and amortization expenses from our increased investments in product innovation. Operating cash flow was $176 million in the quarter, a decrease of $52 million over the first quarter last year, driven by timing differences in working capital.

Please turn with me now to Page 13 for a closer look at the drivers of the first quarter top and bottom line changes from the prior year. On our Q4 earnings call in late February, we indicated the business would decline organically by more than 2% in the first quarter. However, our results came in slightly above those expectations at a negative 1.7%. The first quarter changes to the top and bottom line were driven by 3 key factors highlighted on this chart. First, revenue was down $10 million organically. While our subscription business grew more than 2%, our nonsubscription products declined 8.5% as we expected. The adjusted EBITDA impact was $6 million more than the top line headwind as we continue to invest to drive future growth. Second, we experienced a very small inorganic benefit to the top line associated with the acquisition of MotionHall. And finally, foreign exchange had a small impact to our top and bottom lines.

Please turn with me now to Page 14 to step through the conversion from adjusted EBITDA to free cash flow at our normal rate in the mid-40s. Free cash flow was $112 million in the first quarter, a decrease of $56 million over the same period of prior year, driven almost entirely by timing differences on working capital. Onetime costs decreased by $14 million, nearly offsetting the adjusted EBITDA decline as the acquisition integrations are behind us. Interest and taxes were generally in line with last year. Working capital was essentially flat compared to a source of cash of more than $50 million in the prior year due to timing differences in both receipts and disbursements.

Capital expenditures increased by $5 million as we continue to invest in product innovation. We used our free cash flow to service our preferred stock with a dividend to prepay nearly $50 million of term debt and to pay fees associated with the refinancing of our Term Loan B.

Please move with me now to Slide 15 for another look at our guidance for the full year, which remains entirely unchanged. Today, we are reaffirming the guidance we provided at our year-end earnings call in February. Beginning at the top of the page, we continue to expect organic growth of about 1% at the midpoint of our range. We now expect Q2 to be a decline of about 1%, representing a sequential improvement of about 0.75%. 1% organic growth for the full year should yield revenue of about $2.62 billion at the midpoint of the range.

Moving down the page. We expect adjusted EBITDA in the range of $1.055 billion to $1.115 billion, resulting in a profit margin of about 41.5% at the midpoint of the range. We continue to anticipate diluted adjusted EPS between $0.70 and $0.80. And finally, at the bottom of the page, we anticipate free cash flow between $420 million and $0.5 billion.

Please turn with me now to Page 16 for a closer look at the full year top and bottom line changes we're expecting compared to last year. As with our first quarter results, the full year expected changes to revenue and adjusted EBITDA will be driven by 3 key factors. First, organic growth at the midpoint of our guidance range will add about $30 million to the top line, but will have no impact on the bottom line, leading to a modestly lower profit margin as we remain committed to investing in product innovation that we believe will accelerate organic growth in the coming years.

Second, the inorganic impact from selling Valipat, which closed on April 1, will deduct about $30 million of revenue and about $15 million of profit this year. As we discussed back in February, pruning the portfolio of small growth dilutive products to improve execution is a priority to accelerating our organic growth, and this is the first step in this direction. And finally, we anticipate a $10 million foreign exchange translation headwind on the top line and a slightly higher headwind of $15 million on the bottom line, as last year's transaction gains are not expected to recur this year.

These changes to adjusted EBITDA account for 3/4 of the change in free cash flow compared to last year. But let's turn to Page 17 to step through some of the other items. Onetime costs are expected to continue to decline this year to $40 million, an improvement of $20 million over last year as the progress iteration is completely behind us. We do expect cash interest to decrease by about $15 million as we continue to deleverage and benefit from refinancing our Term Loan B in the first quarter.

Taxes will increase by approximately $15 million due to timing of payments of jurisdictions. We expect the change in working capital this year will be negligible similar to last year. And we remain committed to investing in product innovation and plan to raise capital spending by about $20 million. The net impact of these changes is free cash flow of $460 million at the midpoint of the range. We intend to use most of this to prepay debt and close in on our long-term net leverage target of about [ 30 ] turns.

Please turn with me now to Page 18 for a look at how this year's outlook continues our trajectory towards the financial objectives that we outlined last year. Our primary aim is to accelerate our organic growth, lifting us from last year's level of essentially flat to mid-single-digit growth in a few years. In order to achieve this objective, we've increased capital spending to 10% of revenues in order to fund a new level of product innovation. Our second goal is to maintain durable profit margins as we make the investment to achieve our product innovation. We are committed to providing the resources to drive product innovation in all of our businesses while keeping our margins in the low 40s.

The third objective we outlined was to become an attractive free cash flow engine, which we've progressed by delivering a conversion on adjusted EBITDA well above 40%. And finally, we remain committed to allocate our capital in a disciplined manner. We're now operating at a leverage level of less than 4 turns, providing us the ability to execute bolt-on M&A to catalyze growth as we did last month with the announcement of the Global Q acquisition in our LS&H segment.

I want to thank all of you for listening in this morning. I'm now going to turn the call back over to Jaquita to take your questions. [Operator Instructions] Jaquita, please go ahead.

[Operator]

[Operator Instructions] The first question comes from the line of Toni Kaplan with Morgan Stanley.

[Toni Kaplan, analyst]

I was hoping we could talk about the environment in IP. Are you seeing customers having tighter budgets? Or are budgets being allocated differently than they were before? And just any secular changes happening in IP, maybe particularly related to technology? Or do you view what's going on in IP as cyclical?

[Jonathan Gear, executive]

Sure, Toni. Thanks for the question. I'll go and then give some thoughts on IP. I'm feeling really great about the progress we're seeing. We're making IP, the changes we've made there and what we're seeing. I mean first, to directly answer your question, no, I'm not seeing any -- nothing, any structural change, neither positive nor negative in the IPM market. Maybe a little more positive uptake in the trademark business which, as you know, had been under pressure in last couple of years. We have begun to see some positive indications there. That market is slowly and cautiously returning is what I would say. .

So it's a positive there in general. But anyway, we have a callout really around the market, of course. So what we're seeing with our own business is the competition and our success. This was one area where a couple of years ago, so go back to 2021, 2022 when we flipped to the different operating model, this business was impacted. It was impacted in lost sales. It was impacted and lost to competition and it was kind of a long tail of revenue once that happens. And we were fairly impacted with that last year and even entering into this year.

Under the new model and under Gordon's leadership and aligning and bringing back some of our experts and expertise who knows our customers, we're not doing tremendously well competitively in the marketplace, particularly with our IP management software systems really globally. I think in Japan, I think we won 7 head-to-heads in late '23, entering into 2024. Obviously, a very critical patent market. So we're feeling really good about our progress there. It is one which takes a top -- a while for the sales success there to convert to implementation of the systems and defer to onboarding of annuities. But again, the early indicators are extremely positive.

[Operator]

The next question comes from the line of Heather Balsky with BofA.

[Wahid Amin, analyst]

It's Wahid Amin on for Heather. I just want to touch a little bit on your 2Q guide. Can you just walk us through what you're seeing that's resulting in the decline year-over-year versus a return to growth?

[Jonathan Collins, executive]

Sure. Thanks for the question. In the second quarter, what will be similar to the first quarter is we expect the subscription business to continue to grow at a comparable rate, but we do expect the sequential improvement over Q1 will come from improvements in our nonsubscription business. So our reoccurring revenue type, which is our patent renewal business predominantly will improve on better comps in Q2, and we'll pare that decline year-over-year.

And the same is true with the transactional business as well, too. So we expect the declines that we saw in both of those areas, which were high single digits in Q1 to pare down to a smaller decline in Q2. So that is a trajectory we expect to continue through the balance of the year, but the sequential improvement will be in the nonsubscription order types as we move into Q2.

[Operator]

The next question comes from the line of Greg Tong with Goldman Sachs.

[Keen Fai Tong, analyst]

It's George. Your nonsubscription revenue was down 8.5% in the quarter. When do you expect a positive inflection in your reoccurring and transactional revenue streams? And what are the key drivers?

[Jonathan Collins, executive]

Sure, George. Thanks for the question. Yes, we expect that in the second half of the year. And the key drivers for that are going to be on the reoccurring side, the comps moving into next year, but also the fact that we will have fully onboarded that large win that we highlighted last year. That customer, we started bringing their renewals on in the first half of the year, we'll get a full benefit in the second half of this year.

From a transactional side, we're going to lap the more challenging comps in the first half. And as Jonathan indicated, the trademark business has started to improve modestly, and it will improve on pretty challenging comps from the first half of last year, they got better in the second half. So those are going to be some of the big drivers that are particularly coming from the IP segment that will help return us to growth in the nonsubscription business in the second half.

[Operator]

The next question comes from the line of Surinder Thind with Jefferies.

[Surinder Thind, analyst]

Just taking a step back, as we think about the renewal rates here, I think you mentioned 93%. How should we think about that contextually in terms of historical and where you think you'd like to be as we look forward in your [indiscernible]?

[Jonathan Gear, executive]

Yes. Maybe I'll start off and then I'll let JC answer anything that I missed. I mean it's improving. We're seeing a general improvement of our renewal rates. That's really on the back of everything we've been focused on, including realigning with our customers, make the product innovations, and we're seeing that it has a critical measure for us. We're very pleased with that progression. If I kind of break it up across the businesses, I think we're feeling very good about where we are in A&G, very good in IP.

We have a bit more work to do in Life Science & Healthcare, and that bit more work really on the investments we're making right now in Derwent, Innography, IncoPat, the Patent Intelligence suite of products with those beta and alpha releases that I referred to in my script. So there's still an opportunity to do better than 93% we're doing right now, but it's good to see that improvement.

[Operator]

The next question comes from the line of Andrew Nicholas with William Blair.

[Andrew Nicholas, analyst]

In the press release, you mentioned alongside your guidance reiteration that you expect some, I think, modestly improving market conditions. It doesn't sound like things are notably different in terms of the macro backdrop today versus when we last spoke to you. But if you could just kind of talk about what you're expecting and what's baked into that 1% organic growth midpoint on that front and how we get to that number if things get a little bit worse, that would be helpful.

[Jonathan Gear, executive]

Sure. Maybe I'll comment on market conditions and, Jonathan, I'll have you kind of connect the dots on the number, if you will. I mean in general, Andrew, you are correct that the market conditions kind of entering the year, we thought it as generally neutral. I think that's largely holding up. A&G is generally holding up some weakness as we -- in our transactional business within A&G that we saw in Q4. A little bit weaker than we would have liked in Q1, so we would kind of expect that to continue until we see a turn.

Sub is looking -- no issue with subs at all there. IP, as per the earlier question, it's generally positive with actually some more positive than we expected with trademarks. That's been, I would say, slightly better than we expected. And life science is kind of a push. Life science is really a market made up of the individual -- situation of individual pharma companies and kind of where they are. So I'd say neither good nor bad compared to our incoming expectations.

Jonathan, do you want to connect the dots on the guide?

[Jonathan Collins, executive]

You got it. And Andrew, in the second half of the year, the items that we think will be a slight benefit or the last ones JG touched on a moment ago, which is we do think the trademark business will continue to do a bit better. As we move through the year, we see good indicators there. And then we also see it on our patent renewal book. So the volumes of patent renewals and some of the leading indicators there give us the sense that, that will improve just modestly as we move through the balance of the year.

But other than that, we think the market conditions are generally in line with what we expected when we started the year and gave our original guide just a couple of months ago.

[Operator]

The next question comes from the line of Owen Lau with Oppenheimer.

[Kwun Sum Lau, analyst]

So you highlighted some success in the real-world data framework and signed, I think, 2 top 10 global pharmaceutical clients. It has been a drag to your transactional revenue because of your strategic shift. But could you please add more color on the progress there? Do you expect to sign more clients in the coming quarters?

[Jonathan Gear, executive]

Sure. Yes. And I'm glad you noted that. We're really pleased with those 2 very important milestones because what that shows to us, what we certainly expected with the investments we've been making into the data is that we've now converted the underlying RWD database into pharma-ready data, and it really wasn't there a year ago. So the indications from those first 2 early wins from the, as we mentioned, top 10 pharma, it's a very important proof point, very important for both and we're looking for the team.

We were hoping to get 2 in the quarter. We've ended up getting kind of 2 entry in the quarter. So it's a good place to be. We're certainly not top of there, my guess, and it's really 2 levels is we are -- we do expect to make progress with other pharma companies, harder because you need that timing on that. We are in discussions with others kind of at the data level. And then the other element is Henry and the team are building analytical solutions on top of data to sell therapeutic solutions as we discussed, which will help in another way to monetize that database going forward.

So again, the way I would view it is a very critical and important market affirmation of our progress with that product. Thank you.

[Operator]

The next question comes from the line of Shlomo Rosenbaum with Stifel.

[Shlomo Rosenbaum, analyst]

First, I had a question, just Academia & Government growth is only about 1%. And this is one of the areas that we've been pointing to in terms of evidence and prior investments gaining traction. Can you talk about the context of the growth this quarter vis-à-vis what the investments in the 3%-plus growth we had seen before then? And then just actually a housekeeping kind of question. I saw deferred revenue down about 14 days year-over-year. And with subscription growing 2%, I'm just wondering, are you changing the terms -- contracting terms at all that you're not paying -- you're paying more frequently in advance as opposed to maybe annually in advance? If you can just talk about those two items, I appreciate it.

[Jonathan Collins, executive]

Sure. So Shlomo, I'll cover the first one on A&G's performance in Q1. We do continue to see traction in our subscription business in A&G. So we had strong subscription growth, improvement in Web of Science continues to come through, and we're getting a nice return on investment. As Jonathan highlighted, we've seen our second quarter now where the transactional sales has been a bit softer. It's on a smaller base. So Q1 is not a big transactional quarter for us in the A&G business. .

The second quarter, as we've highlighted before, is much larger as we get to the academic spending year-end for many of our customers in North America and in Western Europe. So that's really what's happening on the A&G side. Nice subscription growth, a bit of a headwind on the transactional. But the important quarter for A&G transaction or the larger quarter this year will be the second quarter.

As it relates to deferred revenue, there's a little bit of your point on the contracting terms of multiyear deals, but we also see some of the business that was flowing through last year related to real-world data that was running through deferred revenue. And as we enter our new business model for selling real-world data and some of the declines we saw last year, we've seen a bit of a decline there. So it's really in those two areas that are driving deferred revenue. But we do believe our subscription growth this year will be stable at 2%.

And as Jonathan indicated previously, we do expect improvement in our renewal rate and in our subscription business as we move into next year and we start to monetize some of the investments on the Patent Intelligence area within IP and then the real-world data within life sciences as we start to get traction.

[Operator]

[Operator Instructions] The next question comes from the line of Ashish Sabadra with RBC Capital Markets.

[Ashish Sabadra, analyst]

I wanted to focus on the ACV that moderated a bit. I was just wondering, as we think about that 1.8% ACV growth in the quarter, how should we think about any implications for subscription growth going forward?

[Jonathan Collins, executive]

Yes. Thank you, Ashish. We did see a nearly 2% growth in ACV in Q1. We think that's a pretty good indicator of being able to deliver subscription growth, as we move through the year around 2%. The two key areas that we still need to see improvement in as we move through this year and into next year, the ones I just highlighted before, we continue to have higher attrition within Patent Intelligence as the new Derwent search and watch features are in market this year. And as we bring the corporate and the R&D use cases to market later this year, we think that will help to bolster the ACV growth within IP, particularly in the Patent Intelligence area.

And then the investments that we're making this year and the early indicators, Jonathan touched on those 2 seminal wins with large pharma companies. We think that projects well for the progress that we'll make in ACV within the life sciences segment. So continued focus in those areas to improve the ACV and drive subscription growth over the next few years.

[Mark Donohue, executive]

Thank you for your question. That's our final question. I'm going to turn it over to Jonathan Gear for closing remarks.

[Jonathan Gear, executive]

Okay. Great. Thanks, Mark. And everyone, first, thank you so much for joining our call this morning. We've enjoyed being able to share our Q1 results and outlook for the rest of the year. And I think most importantly, we're excited on the impact we're seeing now on investments, of innovation, the proof points we're seeing from new products and the commercial reaction in our 3 marketplaces to the investments which we've had to make. So look forward to updating all of you on future progress as we go forward. Thanks so much, and have a great day.

[Operator]

That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.