RF Industries (RFIL) Q2 2025 Earnings Transcript

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DATE

• Monday, June 16, 2025 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Rob Dawson
• Chief Financial Officer — Peter Yin

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TAKEAWAYS

• Net Sales: $18.9 million for Q2 FY2025, representing a 17.4% year-over-year increase and a 1.6% sequential decline from the previous quarter.
• Gross Profit Margin: 31.5%, up from 29.9% year over year, surpassing the company's 30% margin target.
• Operating Income: $106,000 operating income for Q2 FY2025, a turnaround from the operating loss of $415,000 reported for Q2 FY2024.
• Adjusted EBITDA: Second quarter adjusted EBITDA was $1.1 million with a 6% margin, compared to $572,000 in Q2 2024, and moving toward a 10% adjusted EBITDA margin goal.
• Backlog: $15 million as of April 30 and $18.4 million as of the call date.
• Cash and Equivalents: $3.6 million as of April 30.
• Working Capital: $12.1 million working capital as of April 30, 2025; current ratio approximately 1.6-to-1, with $32.7 million in current assets and $20.6 million in current liabilities as of April 30, 2025.
• Revolving Credit Facility Borrowings: $8 million outstanding as of April 30, 2025, with active efforts underway to secure lower-cost financing.
• Non-GAAP Net Income: Second quarter non-GAAP net income was $701,000, or $0.07 per diluted share, compared to $132,000, or $0.01 per share, in Q2 FY2024.
• Reported Net Loss: $245,000, or $0.02 per diluted share (GAAP) for Q2 FY2025; last year’s comparable period was a net loss of $4.3 million, or $0.41 per share (GAAP).
• Inventory: $12.6 million inventory at quarter-end, a reduction from $14,700,000 in the prior year quarter, reflecting continued efficiency in procurement and supply chain management.
• Customer Concentration: Largest customer made up approximately 11% of revenue in Q2 FY2025, but the top customer changed from previous quarters, reducing concentration risk.
• Sales Pipeline: Over 100 distributed antenna systems (DAS) and related venue opportunities remain active, spanning a variety of project types and end markets.
• Segment Performance: Growth cited across custom cabling for aerospace, wireless, public safety, industrial OEM, energy, transportation, and data center applications, with repeat and new orders noted from key customers.
• Direct Air Cooling (DAC) Systems: Launched a next-generation system with NEMA 4 certification, expanding addressable markets in wireline telecom, edge data centers, and transportation.
• Tariff Exposure: Limited exposure to Asian-sourced components and products; majority of production is U.S.-sourced and managed through supply chain and pricing adjustments.
• Q3 Sales Outlook: Management expects Q3 FY2025 net sales to be "roughly in line" with Q2 FY2025, which would mark a significant gain over the $16.8 million recorded in Q3 FY2024.
• Cost Initiatives: SG&A and manufacturing efficiencies, ongoing efforts to reduce borrowing costs, and improvements to product mix are cited as levers to reach the 10% adjusted EBITDA margin target.
• Backlog Composition: Backlog sourced from varied product lines and customers; includes both short- and longer-duration projects, without concentration in one large order.
• Non-CapEx Revenue Streams: DAC systems often funded by customer operating and maintenance budgets, providing some insulation from capital expenditure cycles.

SUMMARY

RF Industries (NASDAQ:RFIL) management reported a 17% year-over-year increase in net sales for Q2 FY2025, accompanied by margin expansion and a shift to operating profitability in the second quarter, signaling tangible progress from earlier repositioning efforts. The company cited a backlog boosted by diversified orders across multiple segments, which management described as evidence of "more diverse both by product and customer than ever before." Executives confirmed momentum in new market segments -- including aerospace, wireless DAS, and DAC systems -- along with over 100 opportunities in the sales pipeline, highlighting a broadening customer base and product reach.

• CEO Dawson said, "We expect our fiscal 2025 third quarter sales to be roughly in line with second quarter sales. Which would be a significant increase over the $16.8 million that we reported in the third quarter last year."
• Management stated that recent backlog growth in Q2 FY2025 reflects widespread order activity rather than a single large contract, reducing risk of volatility from project concentration.
• The CFO indicated active discussions to lower borrowing costs, with expectations of finalizing a new credit facility in Q3 FY2025 or by fiscal year-end, potentially yielding "meaningful" interest expense savings.
• Operational streamlining, improved product mix, and targeted cost savings were emphasized as central to attaining the long-term 10% adjusted EBITDA margin goal.
• DAC and small cell product groups are now material contributors to sales as of Q2 FY2025, with continued momentum expected into the second half of FY2025, according to management remarks.

INDUSTRY GLOSSARY

• DAS (Distributed Antenna System): A network of separated antenna nodes connected to a common source to provide wireless service within a geographic area or structure.
• DAC (Direct Air Cooling): A cooling system that uses filtered outside air, as opposed to traditional HVAC, to manage equipment temperature, often reducing energy and maintenance costs.
• NEMA 4 Certification: A U.S. electrical standard indicating that an enclosure provides protection against windblown dust, rain, splashing water, and hose-directed water; suitable for outdoor or harsh environments.

Full Conference Call Transcript

Rob Dawson: Great. Thank you, Donni, and welcome to our second quarter fiscal 2025 conference call. I'll start with our second-quarter highlights and some thoughts on the current environment. Our CFO, Peter Yin, will cover our financials before opening the call up to your questions. Ray Bibisi, our President and COO, won't be joining us today as he's proudly attending his son's graduation. Now let's talk about the quarter. We followed our exceptionally strong first quarter with a very successful second quarter. Fiscal second quarter net sales grew 17% to $18,900,000 year over year. And gross profit was 31.5%, exceeding our target goal of 30%. For the third consecutive quarter, we delivered an operating profit.

Which was $106,000 versus an operating loss of $415,000 in the second quarter of 2024, and adjusted EBITDA was more than $1,100,000 with a 6% margin moving us closer to our 10% adjusted EBITDA margin goal. We ended the quarter with a backlog of $15,000,000 and as of today, it stands at $18,400,000, a big increase from six weeks ago. To us, this seems like night and day compared to our results in the first half fiscal 2024. I believe we have reached the inflection point where RFI's repositioning from a products company to an integrated solutions provider for diversified end markets is printing through in our financial results.

Our results are now more diverse both by product and customer than ever before. We're driving growth in wireless, aerospace, public safety, industrial OEM customers. While we are also identifying applications in markets like energy, transportation, wireline, telecom, data centers, and new industrial use cases. We are seeing repeat and new customer wins across the board in our various product categories. Our expanded portfolio of innovative solutions has further diversified our end markets. As I mentioned on our last call, we won a large custom cabling project from a leading aerospace company. Since then, we've received multiple significant additional orders from this customer.

This repeat business builds our credibility and reputation in an industry that demands the highest degree of precision. Our small cell solutions are gaining momentum as we finally start to see some larger deployments moving forward. Wireless DAS build-outs in stadiums and venues continue to be a growth opportunity. And we currently have over 100 opportunities in our sales pipeline. At our core, custom and standard interconnect offer remains stable and strong. Our direct air cooling or DAC systems are also gaining momentum in the market. In this category, we are continuing to push the boundaries with new innovations to enhance efficient, cost-effective cooling solutions, that can cut energy consumption, reducing repair and replacement costs versus traditional HVAC systems.

We recently launched a next-gen system that features advanced control capabilities and a NEMA four certification for more rugged environments. These new developments expand our opportunity set into wireline telecom, edge data centers, as well as energy and transportation applications. To elaborate on one example application that I've mentioned in recent calls, AI is driving the overall demand for data centers and more equipment is being pushed to the edges of the network into the small buildings, cabinets, and enclosures that house equipment there. This equipment must be cooled to operate effectively and consistently. And our DAC systems offer high-efficient climate durable cooling that is both eco-friendly and at a lower cost than traditional systems.

Our patented systems are built to stand the rigor of outdoor plus they have state-of-the-art technology that can reduce operating expenses by up to 70% over conventional HVAC as well as helping companies achieve their green initiatives. Importantly, DAC systems are often funded by operating and maintenance budgets, that are not correlated to CapEx spending. Further diversifying our revenue sources. As I mentioned earlier, wireless build-outs in stadiums and venues are regaining the momentum that was lost during the COVID pandemic. And coming back in both greater size and numbers. Today, who doesn't know a pro or college team looking for a new venue or to modernize their existing venue?

Not to mention major upcoming events like the 2026 FIFA World Cup, where The U.S. is scheduled to host games in cities like L.A., New York, Dallas, and Miami. And the 2028 Summer Olympics in L.A. As I mentioned, we have over 100 venues in our sales pipeline, and an experienced sales team dedicated to further penetrating this market. We're a technology leader developing new solutions for distributed antenna systems or DAS, that are needed to enhance wireless capabilities in stadiums as well as airports and other high-traffic venues. On the business development front, we bolstered our sales team with seasoned and connected leaders.

Through their efforts, we've migrated up the food chain with key customers and are now getting a larger share of their total purchases. And as previously mentioned, we're breaking into new markets with new customers. This diversity is huge for us. It's also important to note that our prior acquisitions have been transformative in creating new opportunities with high-value solutions. Well-established brands like Microlab, have market currency and the talented teams who joined us in product engineering and sales are leading the charge to untapped potential.

While we are certainly set up to have a breakout year, a looming question is what to expect in the back half of the fiscal year given the uncertainty around the tariff situation and its impact on the supply chain. I think the summary is that so far we've handled it with usual calm and pragmatic approach. In a bit more detail, for quite some time we've been actively working to drive even greater diversification across our supply chain. And the majority of what we produce and deliver is domestically sourced. We do have some exposure to tariffs from certain products and components through certain suppliers in Asia but it is limited.

By all measures, RFI should be the poster child of what I think the tariffs are meant to accomplish. The majority of our products are produced in The United States. By an entirely American workforce. We're very proud of our team, and I believe in the integrity and quality of what we make how we make it. That said, what's happening with tariffs is beyond our control. We continue to tweak our supply chain, and pricing policies to anticipate and manage any potential new cost pressures. And the RFI team has done a great job navigating this challenging and dynamic situation I really appreciate their flexibility, resilience, and positive attitude.

We see plenty of opportunity ahead and are prepared to seize it. RFI has fought through some tough and confusing times in the past and emerged as a stronger and smarter organization. Right now, we have a far greater set of opportunities than ever before. And we're focused on making steady progress in penetrating new end markets and winning more opportunities with key customers. So in summary, our results are now more diverse by product, market, and customer than ever before. This evolution has also made our results more stable and more predictable. We have standing agreements and contracts with the who's who in our various markets. RFI has a marquee list of customers it's growing.

Our distribution channel is growing stronger as our reputation for quality products and dependable delivery also grows. We've redeveloped product lines and launched new products, with a keen focus on managing R and D and CapEx spend. Our portfolio of innovative solutions is growing and making an impact both in the marketplace and in our results. Operationally, we consolidated our footprint. Streamlined the company and are continuing to identify other pockets of efficiency. We are driving profit growth through our strong operating leverage and through market execution. Our financial position has greatly improved. And will continue to benefit from our intense focus on profitability. We're managing the impact of tariffs, and our ability to execute is our strength.

With what we know today, we expect our fiscal 2025 third quarter sales to be roughly in line with second quarter sales. Which would be a significant increase over the $16,800,000 that we reported in the third quarter last year. We're executing well. And doing what we said we would do with enthusiasm and optimism. We've never had a greater team or platform for growth to realize RFI's full potential. With that, I'll turn the call over to Peter.

Peter Yin: Thank you, Rob, and good afternoon, everyone. As Rob mentioned, we're pleased with our second quarter performance. Second quarter sales increased 17.4% to $18,900,000 year over year and slightly decreased 1.6% on a sequential basis. Second quarter gross profit margin increased to 31.5% from 29.9% year over year. The 160 basis point improvement was driven by an overall increase in sales and also reflected a better product mix and our continued efforts to drive cost savings and operating efficiencies. Second quarter operating income was $106,000 a significant improvement from the operating loss of $415,000 we reported last year.

Consolidated net loss was $245,000 or $0.02 per diluted share and our non-GAAP net income was $701,000 or $0.07 per diluted share versus the comparable period's net loss of $4,300,000 or $0.41 per diluted share and non-GAAP net income of $132,000 or $0.01 per diluted share. Second quarter adjusted EBITDA was $1,100,000 a significant improvement compared to adjusted EBITDA of $572,000 in Q2 2024. Moving to the balance sheet. We continue to manage our working capital to strengthen our liquidity and overall cash capital structure. As of April 30, we had a total of $3,600,000 of cash and equivalents and we had working capital of $12,100,000 and a current ratio of approximately 1.6 to one.

With current assets of $32,700,000 and current liabilities of $20,600,000. As of April 30, we had borrowed $8,000,000 from our revolving credit facility. We continue to keep a close eye on our borrowing costs and see opportunities in the near term to move to a more advantageous financing structure. For us as our overall performance has been improving. We're pleased with the interest we have received from various lenders to explore more favorable terms that will reduce our cost of capital and enhance our liquidity. The strong demand to engage in discussions on our credit facility is a testament to the strength of our company and our position in the market. Our inventory was $12,600,000 down from $14,700,000 last year.

The continued decrease in inventory reflects our ongoing improvements to streamline our procurement and supply chain processes. As we close our second quarter, some shipments of inventory were delayed as we worked through the tariff impact with our customers. During our Q2, it is important to note that we did not experience a material impact related to the tariffs, or delayed shipments from our vendors. The majority of the delays were for inventory items where we had sufficient inventory quantities on hand to meet our current delivery dates to our customers.

We continue to work with our customers and to diversify our supply chain, and we believe our efforts will help to minimize our exposure to the additional tariffs that were introduced. We believe our current inventory level supports our strategic business model of inventory availability and we continue to manage this closely as we expect to see continued demand in the second half of 2025 as discussed earlier in the call. Moving on to our backlog, As of April 30, our backlog stood at $15,000,000 on bookings of $18,700,000. And as of today, our backlog currently stands at $18,400,000.

In closing, our team delivered a strong first half of fiscal 2025 and we are eager to capitalize on the opportunities before us to drive increasing value for our shareholders. With that, we'll open up the call for your questions.

Operator: Thank you. At this time, we'll be conducting a question-and-answer session. You may press 2 if you would like to remove your question from the queue. Once again, that's 1 if you wish to ask a question today. And please hold while we poll for questions. And the first question today is coming from Matt Mouse from B. Riley. Matt, your line is live.

Matthew Boss: Hi. This is Matthew on for Josh.

Rob Dawson: Thank you.

Matthew Boss: Sure. Hey, Matt.

Matthew Boss: So, just start, was wondering what would you credit a lot of that backlog growth that you've been paying for again. How that think, was business travel, How much of that is this that you will get recognized over the next year? And just, like, what would you credit for that growth?

Rob Dawson: Thanks for the question, Matt. I think the increased backlog is really spread out across several different product areas. So I think that's the best news for us is there's not a concentration challenge in there. It's not one large order. It's several orders across several product lines, of varying sizes. So we're encouraged by that. I think at any time, our backlog when people ask questions about it, we say, look, it's a good health indicator. But when it was $25,000,000 14,000,000 I wasn't worried about it being too low. At, you know, 18 or 19,000,000 kinda where it stands now.

I think it's a good indication that we've got a lot of good things going, and we got a lot of business ahead of us. How much of that goes out in a short window of time really depends on the product line. Some of these things come and go in a six-week window. Other things maybe are projects that will be spread out over, you know, a few different quarters. So, most of our backlog is really made up of those projects. What doesn't get reflected there is our book and ship business that can come and go in a day or two days. Which is a material amount of our sales come in that way.

So I think the healthy thing for us is to my earlier point, we've got a mix of short and long-term opportunities in there across a lot of customers and a lot of product areas.

Matthew Boss: Great. Thanks. Yeah. It's great to hear about the areas. So I be Fresh. Between you know, bottom, like, cell tower, cell cells, and just in terms of revenue. We're not getting, not getting any of you. You're getting cutting in and out there. So maybe I don't know. Can you repeat that?

Matthew Boss: Can you hear me now?

Rob Dawson: Think so. Let's give it a try.

Matthew Boss: Yeah. So thanks for the for the color on the wins being spread out across different areas of the business. I was wondering if you give a quick refresher on the split between things like products for, like, the cell tower side. Small cells, and DAS systems in terms of their new contribution.

Rob Dawson: Yeah. Sure. So we don't report specifically how much of those contribute. I think that the easier way for us to look at look at that is that the markets where we've been able to build I mean, the applications we've been able to build a full bill of materials things like small cell and things like distributed antenna systems We do very well in the wireless space. On the macro tower site, it's a pretty competitive side of things. We do have an offer there. You know, our very innovative hybrid fiber solution which we've had a lot of success with, performs well in that space. Our basic coax jumpers and fiber jumpers also perform there.

We don't make that a priority. I think as far as developing further into that bill of materials, we do heavily focus on venues where DAS is a big play. Small cell continues to be a big play for us. Last year it was a minimal contributor to sales. It's become something this year that is more of a growth engine you start to see some of the delta year over year, that's certainly a contributor there. The other place that we're seeing nice growth, as we mentioned, is in what we've historically kind of called the OEM or industrial markets We're starting to be able to break those out a little better into things like aerospace and defense.

In addition to transportation, energy, heavy manufacturing, some of these other markets. But I think the aerospace world we've always serviced nice key customers there. We're continuing to add blue chip customers and we talked to them about some meaningful orders that we've received from one in particular over the last handful of quarters. We're hopeful those continue. I think the team is performing really well. Part of that, I think the thesis behind your question is we're getting pretty diverse in the applications we're addressing, and they're all starting to produce some meaningful contributions to total sales, in addition to kind of our core run rate that goes through distribution that we don't always know.

Where that's going to end up. Sometimes we can tell, a lot of times it's we're relying upon our great distribution channel to drive market positioning for themselves and for us and we don't always know where that ends up. But it's getting pretty spread out across several applications and markets and customers.

Matthew Boss: Great. And then business on the desk point, know you've over a 100 opportunities online. What is the expected rate and how soon do we expect that to contribute meaningfully?

Rob Dawson: Yeah. So on the on the distributed antenna side, which, again, when we look that, it's it's all different kinds of venues. So it's what we talk a lot about stadiums because those are usually the big ticket items. But you're also looking at you know, office and education campuses, you've got medical campuses, you have regular facilities that require things like public safety DAS to go in. In addition to several other different kind of size you know, multi-tenant living opportunity kinda buildings as well. So we're always tracking a pretty healthy number of those. I think we've done a good job of adding to that. They're contributing all the time.

So you could say that some of our backlog increase certainly is driven by an increase in success in that market. Our expectation of how we in the second half of the year and going forward is certainly rooted in the fact that we feel confident in how we're performing in that application. We have the right integrators as, you know, influencer customers. Many of them buy through our distribution channel, which is great. We've gotten approvals the right kinds of products with the carriers and the neutral host companies. So I think for us it's always contributing which is a, you know, a helpful piece of it.

And that 100 is you know, has it always been at that level? It's kinda ebb and flow, but I think we feel like there's certainly an increase of opportunities there. And the bill of materials for us can, you know, it can be a small venue that's $50,000 or it could be a huge stadium build from scratch that's over a million bucks. Those are the kinds of things that we appreciate kind of the diversity of those different opportunities and how they're structured.

Matthew Boss: Awesome. Thank you for that. And I guess last one for me. I was hoping you could expand on the wireless provider A making up about 11% of revenue for the quarter. What is that been like? How much more runway do you see there? Looks like last at that level of work. About this time last year.

Rob Dawson: Yes. So I think that when you look at our disclosures in the Q around concentration, I think the interesting thing to note is that the top customer in Q2 was different from the top customer in Q1, was different from who it would have been at the end of last year. You know, this is the sort of project-based nature of certain applications where we get a nice win. That application or that deployment may happen during one quarter, maybe spread out over a few quarters.

But as we start to see better execution, I think within our sales team and our technology team we're getting into more of these kinds of you know, mid to long-term deployments that have large dollars attached to them. So the growth that we're seeing in our business is certainly attributed to some of these larger wins. And the great thing I think is in the past we've had great wins and high sales numbers. And when you looked at it, our concentration was with one customer maybe and a bigger chunk of total sales than what we're talking here at this 11%. That same customer in, you know, Q1 was a was a much smaller number.

And we do expect repeat purchases from that customer. I think we're also starting to see a list of several customers every quarter put up a million bucks in kinds of sales with us, which is that's new world for us. To have that many customers in addition to our distributors performing as a big piece of the total sales mix.

So yeah, look, it's a it's something to take note of, but I think if you look at the you know, if we were disclosing the list of all the customers that we're selling to, for a company our size, it's a who's who list of who you want to do business with and it's really a testament to how great our team is at building products, designing them, building them, getting them out the door and the relationships that we've built to bring us up market into a different world.

Matthew Boss: Got it. That was very helpful. Thank you. I'll I'll jump back into the queue.

Rob Dawson: Thanks, Matt.

Operator: Thank you. And once again, if the next question is coming from Steven Cole from Mangrove. Steven, your line is live.

Steven Kohl: Thank you. Good evening, I guess, from here, but good afternoon there. Rob and Peter.

Rob Dawson: Thank you. Couple of quick questions.

Steven Kohl: I guess I wanted to talk throw Peter in for a second just on the credit facility because I suspect, as you alluded to, that things are getting better. Can you kind of wrap a little bit more color around that in terms of when could we expect another agreement in place and what kind of what kind of savings on the bottom line we might

Peter Yin: Yeah. So I think that is you know, we expect to have that here in the current Q3, if not definitely by our year end. I think that we'll share more detail there as we finalize, but we expect obviously an interest rate decrease there and savings there where we think will be meaningful.

Steven Kohl: Okay. And let me turn to another question, if I could. So you guys have a 10% on EBITDA target, but your gross margin, think, was 31% and change. I'm just curious if you could maybe tie out how do we get from the six to the 10? Because I would imagine 31 and a half is pretty decent. You know, and you've been making some cuts in SG and A. So how do we reconcile that much is absorption versus continued improvements in mix? And is there room to actually exceed what would have to happen to beat the 10% EBITDA target?

Rob Dawson: Yes, good question. So I think I mean, look, you hit on the key levers in this, which one is mix. We do think there's room for mix to get a little better. The bigger thing for us there is also continuing to take out cost and be more efficient in the way we do our production and manufacturing. The tariff changes make that a little funky and making sure that we can manage through the drama around those items. It's been important to us. I think we've done it, but it's something that has to be noted. The last piece is just, you know, we're absorbing all labor now.

And we're putting up the numbers that we're putting up with the existing cost infrastructure, which you'll notice our SG and A relief and going up commensurate with the way sales are going up. We're managing that very well. And doing a good job. So I think if we have room to push sales higher, as we continue to perform in these product lines with the great customers that we've managed to line up good relationships with and do a good job of managing those kinda ongoing projects. We think sort of a combination of those three things will help, push that up.

Know, Peter mentioned working on a credit facility to take some additional cost out there's other levers that we're working on as well to try to try to bolster that profitability both the gross profit line, but then below the line, which will at this point, all fall straight through.

Steven Kohl: Right. And another one just, Tom, I know you've gotta be happy with DAC and small cell and are we seeing I know you talked about even broader coverage there. But what is the up as we look out to this year or the back half of this year, is the comfort I don't know. Obviously, I know you don't break out in the backlog. Percentage areas, but I presume we've seen pretty good growth in both of those areas. Is that the case? And again, is that being facilitated by multiple end customers?

Or could you give them a little bit more color there it sounds like you're a lot more comfortable than you have been or at least you're seeing it pull through better.

Rob Dawson: Yeah. So I think both those product lines, back end small cell are meaningful contributors to sales. To the earlier question around, you know, customer concentration, we don't have any concerns there. These are happening across several different customers and several regions. And as we've talked about in the past, these larger customers, in particular, in many cases have regional budgets that deployed by more localized management. Who are overseeing deployment of hundreds or thousands of sites, whether that's small cell or DAC. So we feel good about the diversity not just across multiple customers, but even within the customers where there's several regions that operate somewhat independently when it comes to budget.

We have to get wins in each of those markets once we've gotten the overall corporate technology approval. So both product lines are contributing which is, you know, at a at a material level, which is now helpful to us. And I think we expect those to continue being some of the drivers of our growth into the back half of the year and we are hopeful that kind of momentum can continue into fiscal 2026.

Steven Kohl: Sounds good. Thank you very much, guys.

Rob Dawson: Thanks, Steve.

Operator: Thank you. Were no other questions in queue at this time. I will now hand the call back to Rob Dawson for closing remarks.

Rob Dawson: Great. Thank you, Paul, and thanks, everyone, for participating in today's call. We truly appreciate your support. Have a fantastic and safe summer, and we look forward to talking with you in the fall. Have a good day.

Operator: Thank you. This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

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