© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning, everyone. And Welcome to Hillenbrand's Earnings Teleconference for the First Quarter of Fiscal 2018. A replay of this call will be available until midnight Eastern Time, February 15, 2018 by dialing, 1800-585-8367 toll free in the United States and Canada or 1-416-621-4642 internationally and using the conference ID number 5275987. This webcast will be archived on the company's website at http://ir.hillenbrand.com through March 2, 2018.
If you ask a question during today's call, it will be included in any future use of this recording. Also, note that any recording, transcript or other transmission of the text or audio is not permitted without Hillenbrand's written consent.
At this time, it's my pleasure to turn the conference over to Joe Raver, President and Chief Executive Officer of Hillenbrand. Mr. Raver, please go ahead.
Thank you, operator. Good morning, everyone. Thanks for joining us this morning to discuss our first quarter fiscal 2018 results and updated outlook for our full fiscal year. Joining me today is Kristina Cerniglia, our Chief Financial Officer.
On today's call, I'll begin by discussing some highlights for the quarter and then I'll review progress on our strategic priorities before turning the call over to Kristina for additional details on our results and guidance. After that, we'll open up the call for Q&A.
As a reminder, our comments may contain certain forward-looking statements that are subject to the Safe Harbor provisions of the securities laws. These statements are not guarantees of future performance and our actual results could differ materially.
Also, during the course of this call, we will be discussing certain non-GAAP operating performance measures. I encourage you to take a look at our 10-K and our most recent 10-Q, which can be found at our website, for a deeper discussion of forward-looking statements and the risk factors that could impact our actual results. For more information on the use of non-GAAP operating measures and their reconciliation to GAAP financial measures, please refer to our 10-Q and the slides presented with this call.
With that, let's turn to the business.
We continue our opposite transform Hillenbrand into a world class global diversified industrial company. Team remains focused on delivering our 2018 financial guidance and executing on the initiatives outlined at our Investor Day meeting in December to achieve our 2020 targets. We're off to a very good start in fiscal 2018, strong first quarter revenue growth of 12%, including a robust 19% increase in the Process Equipment Group.
This was the fourth consecutive quarter we have delivered year-over-year consolidated organic revenue growth. Order volume in backlog were up again sequentially, reaching new highs for first-quarter results.
The benefits of operating leverage and productivity initiatives enabled us to expand EBITDA margin, our cash flow performance remains solid as well, as we generated cash flow in excess of 100% of net income. These results were due in part to the proliferation of the Hillenbrand operating model throughout the organization.
On a GAAP basis, earnings per share decreased 18% to $0.28. However, including the impact of tax reform on the quarter, we delivered solid earnings growth. On an adjusted basis, we generated record first-quarter EPS of $0.54 up 29% over last year. Christina will talk more about the implications of tax reform on our business later in the call.
Let me turn to our segment performance, beginning with the Process Equipment Group. Our Process Equipment Group businesses produced highly engineered products for mission-critical applications. We provide applications expertise and innovative solutions to solve our customers' biggest challenges. Historically, we have leveraged the Hillenbrand operating model to drive efficiency and reduce costs, while we continue to execute on those initiatives, we have recently placed added emphasis on leveraging the operating model to accelerate profitable growth.
December, at our Investor Day, we discussed four areas that represent our top priorities for profitable growth in the business. We are focused on strengthening our existing platform in plastics and growing our food and pharmaceuticals, separation and flow control businesses.
We believe we can grow these businesses to achieve market-leading positions that enjoy scale benefits both operationally and in the marketplace. We are pleased to report, growth in each of these four areas this quarter.
In plastics, we began the fiscal year with a strong backlog position. That contributed to continued revenue growth in the first quarter, the sustained strength and large extrusion systems and material handling project. Additionally, strong order volume drove sequential backlog growth. Our outlook remains bullish, based on a robust pipeline of polyolefin projects.
Polyolefin production capacity continues to expand, ongoing investment in North America and additional capacity expected to go online in Asia and the Middle East. Demand for smaller extruders and equipment used in the production of engineered plastics, benefiting from broad global macroeconomic strength, with global PMI at its highest level in about seven years.
Our outlook in processed food and pharma remains positive, as demand for safe convenient processed food increases along with the growing middle class globally. We had double-digit growth in this space this past year and that trend continued in the first quarter. Our portfolio is well-positioned to address trends towards continuous production processes, with equipment engineered to be highly accurate and easy to clean inventory [ph] applications. We believe there is lots of runway for value creation in this business.
As expected, proppants remain the primary driver of growth in separation equipment sales. As we discussed last quarter, the rate of new capital equipment orders through proppants has slowed considerably from its peak a couple of quarters back. We expect revenue growth to be lower in our fiscal second quarter and to be down in the second half of the year as we work through the backlog, come up against more challenging comps.
The demand for equipment process proppants has been highly cyclical. However despite those ups and downs in this cycle, we believe it remains an attractive market over the long run. Additionally, as our installed rate base grows, we are capitalizing on the recurring revenue opportunity that follows, by supplying high quality replacement screen, other wear products.
Flow control, growth in the quarter was driven by pumps for power projects in India. We are currently seeing strength in industrial markets in the U.S. and Europe. Going forward, we anticipate continued demand in the areas of municipal water and wastewater to be supported by spending on aging infrastructure in the U.S. and modernization project and developing markets to protect water quality and safety.
Parts and service revenue grew about 7% in the first quarter. And as you know, we've delivered solid growth in this area over the last few years. One of our growth initiatives across all the Process Equipment Group is to maximize the value for the product lifecycle by leveraging the Hillenbrand operating model to help expand our parts and service business. This is an important and profitable part of our business. We've segmented each of our businesses so that there is a dedicated leader for parts and service.
We provide a wide range of post-sale products and services to our customers ranging from ware parts, fabricated components, the modernization projects where we upgrade entire machines and systems to produce newly formulated products and improved quality and efficiency. Demand from modernization projects has been strong globally. We expect that to continue in the current macroeconomic environment.
Let me move to the Batesville segment. Batesville's revenue declined 1% year-over-year on lower burial sales in line with our expectation. Margins were negatively impacted by increased input costs and higher than usual healthcare expenses. Many of you are familiar with the industry dynamics facing burial caskets.
We experienced lower demand in the quarter due to the estimated increase in the cremation rate. In addition, we faced continued pressure from product mix as consumer spending on cash gives us not kept pace with inflation. Despite these challenges, Batesville continues to generate strong free cash flow to fuel strategic investments for Hillenbrand.
Batesville continues to leverage the Hillenbrand operating model to drive the business forward. Voice of customer resources is helping us to develop new and innovative products for our customers. Batesville has a broad array of options for burial caskets and we recently launched a suite of new products to enhance a family's ability to make their experience more personal. In addition, we provide digital merchandising solutions to funeral homes, help families to create personalized product that we can build and deliver rapidly. These personalized products are important, not only because they provide higher margins for us, but they also help funeral homes improve profitability serve their families better.
When we think about at the longer-term trends for Batesville, although the annual number of burials is declining, we expect a long predictable demand for burial caskets. Batesville is very well-positioned to benefit from that long-term demand, industry leader and quality services and innovation.
Moving on to M&A. we continue to evaluate strategic acquisitions, we believe can accelerate our profitable growth strategies. We have a pipeline with targets that are focused on strengthening our large core plastics business, continue to build out our processed food and pharma separation and flow control businesses.
We look for opportunities where one customers pay the high value on applications engineering, two there is an opportunity to grow our base of recurring revenue and three, where we believe the Hillenbrand operating model can make a company more profitable.
Environment for M&A remains challenging as valuations continue to be elevated. And expect us to follow a disciplined approach to ensure that when we execute our next acquisition, it will be a good fit strategically for Hillenbrand and will create value for our shareholders.
Let me briefly comment on tax reform before handing the call to Kristina. We are encouraged by the recent U.S. tax legislation and the potential impact it will have on our business and for the economy in general. The lower effective tax rate will drive improved profitability and we anticipate a positive earnings and cash impact from tax reform going forward.
Our priorities for capital deployment remain the same. First reinvesting in the business to drive innovation and market expansion. Second, making strategic acquisitions to accelerate profitable growth, and third, continuing to return capital to shareholders in the form of dividends and share repurchases.
With that, let me turn the call over to Kristina for more detail on the financial results for the quarter.
Thanks, Joe, and good morning, everyone. Let me begin by providing a little more color on the effects of the new U.S. tax legislation, calling your attention to slide five of the presentation.
Our effective tax rate for the quarter was 55.4%, compared to 23.4% for the first quarter of 2017. The first quarter of 2018 reflects net tax expense of approximately $13 million or $0.20 per share attributable to tax reform. That expense includes a provisional amount of $29 million for unremitted foreign earnings, which was partially offset by the provisional revaluation of domestic net deferred tax liabilities and the lower U.S. tax rate on earnings. These provisions represent our best estimates based on currently available information.
Hillenbrand as of September 30th fiscal year end and as a result our statutory tax rate for the full fiscal year 2018 is a blended rate of 24.5% reflecting one quarter at the former rate of 35% and three quarters at the new rate 21%.
The lower statutory rate was the primary driver of the 440-basis points reduction in the adjusted effective tax rate of 22.1% for the quarter and resulted in a benefit of $0.03 just the first quarter adjusted EPS. Looking forward, we now anticipate our full year fiscal 2018 adjusted effective tax rate to be approximately 26% to 28% compared to our previous estimate of 31%.
Moving along as you heard from Joe we delivered strong first quarter results, and we remain on track to achieve our full year growth target. We reported total revenue of $397 million in the first quarter representing growth of 12% year-over-year, excluding favorable foreign currency translation revenue was up 8%. That growth was driven by the Process Equipment Group, where we grew 19% or 14% excluding foreign currency and Batesville revenues decreased 1%.
Adjusted EBITDA increased 16% year-over-year to $65 million and adjusted EBITDA margin increased 60 basis points to 16.4% driven by strong operating leverage in the Process Equipment Group, which was partially offset by lower margins in the Batesville business.
GAAP net income decreased 17% to $18 million or $0.28 per share. The decrease in net income was primarily due to a higher effective tax rate on an adjusted basis the effective tax rate decreased and contributed to an increase in net income of 28% to $35 million or $0.54 per share.
Our free cash flow conversion exceeded a 100% of our net income once again this quarter. We generated operating cash flow of $27 million in the first quarter, which was an increase of $76 million primarily due to the $80 million pension contribution reflected in the prior year number.
We invested cash in working capital to fund progress in large projects in the backlog and we expect to see that to continue in the second quarter. However, our working capital metrics continue to improve, and we believe the Hillenbrand operating model is driving sustainable benefits in our management of working capital as we focus on strengthening the balance sheet and driving free cash flow.
During the quarter, we returned $13 million to our shareholders in the form of cash dividends and repurchased $15 million of common stock help offset solutions.
Turning to the next slide, let me cover segment performance beginning with the Process Equipment Group. Revenue grew 19% to $264 million with growth driven by screening and separating equipment including machines used to process proppants for hydraulic crushing, and continued strength in our plastics.
We also benefited from foreign currency translations, excluding FX, Process Equipment Group grew 14%. We continue to see positive momentum across the Process Equipment Group. As was the case last quarter, every business showed year-over-year growth in order volume and backlog. That growth resulted in our fifth consecutive quarter of backlog expansion growing $79 million or 12% sequentially over the fourth quarter of 2017 to $711 million.
That represents growth of 37% over last year's first quarter. Excluding the foreign currency impact backlog grew 26% year-over-year. We are experiencing customers bringing orders to us earlier in the process relative to a planned delivery date to ensure they are placed in line for equipment and systems. As a result, the backlog includes more projects scheduled beyond the current fiscal year than we would typically see at the end of the first quarter.
In fact, backlog scheduled for the next fiscal year is about a$100 million higher than it was this time last year. The strengthened backlog is a good indication that capital spending trends may have some endurance and we expect to be at the higher end of our annual revenue guidance. Gross margin improved 30 basis points as operating leverage from higher volume with partially offset by unfavorable product mix.
We are encouraged by the healthy flow of large compounding systems and material handling projects, but they tend to have lower margins compare to other product line.
Process Equipment Group adjusted EBITDA margin increased 250 basis points to 17.3% with significant operating leverage. As operating expense as a percentage of revenue was 190 basis points lower in the quarter compared to a year ago.
Moving to the Batesville business, revenue of $133 million decreased 1% compare to the prior year. The decline was primarily the results of lower demand for burial caskets, which continues to track quickly with our predicted decline based on the rising cremation rate.
Adjusted EBITDA margin of 21% was 200 basis points lower than the prior year. Batesville's margins were adversely affected by higher commodity cost especially wood and steel and higher fuel costs. We also experienced unusually high expenses related to healthcare of this quarter. These reasons along with lower volume and continued product mix pressure resulted in a margin decline.
We expect year-over-year EBITDA margins to decrease about a 100 basis points on average for the balance of the fiscal year ending slightly below our previous full year estimates. The Batesville team is highly experienced and familiar with these headwinds and they continue to leverage the Hillenbrand operating model to manage the business as efficiently as possible to protect profitability.
Looking ahead to the second quarter, we are seeing increased demand and connection with the severe flu season. We expect revenue in the second quarter to be slightly higher than the prior year and for the full year we should be at a higher end of our revenue guidance for Batesville.
With that, let me turn to our outlook for the rest of fiscal 2018.
As a reminder, we forecasted revenue growth of 5% to 7% in the Process Equipment Group with growth and all of our industrial businesses. The majority of that growth is expected to come in the first half of the year, driven by our strong first quarter results. We believe the second half of the year will be relatively flat as we come up against some tough comps.
We projected Batesville sales to be down 1% to 3% for the year due to lower burial volume. On a consolidated basis, we forecasted revenue growth of 2% to 4% and adjusted EPS from the range of $216 to $228. We now expect to be at the higher end of our guidance range for both revenue and EPS based on strengthen order backlog and the severity of the flu season.
As a result of the tax reform legislation, we are decreasing guidance for GAAP EPS from $2.11 to $2.23 to $1.98 to $2.10 driven primarily by the total charge. Based on the decrease in the estimated effective tax rate from 31% to a range 26% to 28%, we are increasing adjusted EPS by $0.12 to $2.28 to $2.40.
At this time, I will turn the call back to Joe for his concluding remarks.
Thanks, Kristina.
We continue to make solid progress in transforming Hillenbrand into a world class diversified industrial company in the eyes of our customers, employees and shareholders. We're off to a good start in 2018 with continued momentum in the Process Equipment Group as evidenced by the revenue growth and strong operating leverage and solid order backlog reported in the quarter.
We remain closely align with our customers by providing applications expertise and highly engineered product solutions to solve their most challenging business needs. In addition, we are leveraging and deepening our culture of continuous improvement driven by the Hillenbrand operating model and its commitment to driving sustainable profitable growth.
That concludes our prepared remarks for today. We are ready to take your questions. Operator, would you please open the lines?
[Operator Instructions] And we will take our first question from Daniel Moore of CJS Securities. Your line is open.
Good morning. Thanks for taking the question.
Good morning Dan.
Good morning Dan.
I wanted to maybe Joe, just ask a little bit - you gave a lot of color obviously but in terms of the backlog and process equipment any growth and orders that you are seeing or maybe just drill down a little bit more in terms of larger polyolefin and plastics projects geographically where you are seeing strength, that's one and then, any other areas outside of proppants that you're seeing incremental strength relative to your expectations a couple of months ago.
Okay, yes. So, I think first I would just start out and say, as we commented in the prepared remarks, we're seeing pretty good demand across the business and so, we saw improved orders and backlog really across the board this quarter in the Process Equipment Group. So, the momentum is really decent and pretty nice across the businesses. We did see a big increase on the large plastics projects and those as you know relate to polyolefin projects and sometimes some of the larger compounding the engineered plastics projects.
And as we mentioned, we saw this really big increase over the last couple quarters, and good momentum in the backlog, and as Kristina mentioned, a good chunk of that is in 2019 and even a little bit into 2020.
So, what's a little bit different about our backlog sort of today compared to say a couple of quarters ago, is that there is a pretty good chunk of it that out a little bit farther, because it is driven to a large extent by those large projects. But again, with that being said, it's pretty good, pretty good across the board.
From a geographic perspective, it's really North America we're seeing a good demand in North America. We continue to see demand in Asia as well as the Middle East though that's been relatively consistent here in the last few quarters, and so that's kind of how it's playing out from a geographic perspective.
Got it. And Kristina, maybe just, how much color you are willing to give but proppants has been strong for couple of quarters now. In terms of both revenue and EBITDA contribution, can you give us a sense for the percentages that proppants are contributing to the PEG business over the last quarter or two?
Yeah, I think as we, think about the proppant cycle, I think it was last quarter we said, the cycle is going to be a little smaller than it was historically, so we were thinking roughly about $40 million and we said, we're going to see half of that in 2017 and half of that in 2018. What we're starting to see as that cycle is a little larger than the $40 million and last year we did see about half of that that $40 million in 2017, so about 420 million in 2017.
We expect to see a little more of that in 2018, that continues to have legs. So, we definitely see the orders handling down, but the proppants that we have this year will be greater than last year.
Got it, very helpful.
My perspective.
Okay. One more, I'll jump back in queue. You gave a lot of color on tax, do you that 26 to 28%, do you expect that to be a good run rate beyond fiscal 2018 or is there still some work to be done there?
There is still some work to be done, but we would expect that to be slightly lower in 2019 and forward primarily because this year we still have three quarters - we have a quarter of the 35% tax rate. So, we have a blended statutory tax rate this year of 24.5%. Next year, the statutory rate will be 21%. So, we expect 2019 and forward to be probably around that 25%, it's far too early to call that at this point, but it depends on where our, where we settle out on our provisions, what happens with our geographical mix, but we would expect it to be slightly lower in 2019 and forward.
Very helpful. Thank you.
Your next question comes from the line of John Franzreb with Sidoti and company, your line is open.
Good morning, everybody. Just on the proppant side, on the third quarter of last year similar revenue portfolio, much higher EBITDA margin, what's different in the mix in Q1 versus Q3 of last year?
So, well I need to think about that comparison, John. We do have a higher number I believe of large projects, is probably a big driver so there is a mix portion of that compared to the third quarter is my - I don't have the analysis right in front of me to tell you the truth. But I think that would probably be the driver as we execute on these large projects they tend to be lower margin project, the polyolefin projects, of course and then they follow-on with spare parts, so we do like the projects, but they do tend to be lower margin from a capital perspective.
Okay. And the expectation what are your thoughts about revenue profile and process given that the backlog is the highest number since 2014 is that just a customer base is actually becoming more active than it was two, three quarters ago?
Yeah, if I understand your question I think we do see continued strength in our markets and with initiatives than we saw just a few quarters ago. So, some years we'll have a drawdown of our backlog as we sort of move through the fourth quarter as you know we saw continued momentum this year and so yeah, I think we're seeing a lot more activity really across the board from customers and as we mentioned earlier even the large projects and there are seeming to be sort of - brought forward a little bit in terms of concrete planning, a little bit more strongly than we saw say the middle of last year.
Okay. And in Batesville, the hospitalization rates literally to the flu season and the recent spike in mortality rates certainly suggest - I know you support the higher end of the guidance but how severe this flu season are you prepared for and what your customers are talking about given some of the rise and some of the rates to level they are seeing 2014, 2015 flu season?
Yeah, so we are seeing a pretty strong flu season right now and we're feeling that on the Batesville side of the business. When we think about the Batesville side of the business, we have many, many years of historical data and have a pretty good notion of what the extremes are in terms of a flu season and so we schedule and plan both our production capacity, which is different in the winter months than it is in the summer months.
We have a standard - our standard capacity goes up in the winter months, we run the plans at a faster rate in the winter knowing that there is more demand. And then we model what the flu has looked like over the past number of decades to get a sense of no confidence interval through the upper limit where demand might be.
And so, we have flexibility to go ahead and increase production and through our distribution system to ensure that we can meet demand probably at 95% or 97% of - with confidence in the flu season and so we're well within those bands right now of course the plans are running strongly right now but we use overtime we use Saturdays and weekends sometimes to make sure hit that demand.
So, we feel confident our ability to deliver given the flu season that we've seen this year.
Got it. Thanks Joe.
Okay. Thanks, John.
Your next question comes from the line of Liam Burke with B. Riley FBR. Your line is open.
Thank you. Good morning, Joe. Good morning, Kristina.
Hi, Liam.
Hi, Liam.
Joe, you touched on the Batesville side of the business on employed cost but on the PEG side of the business how much flexibility you have been pricing if input cost begins to rise?
Yeah, so it's very different than the Batesville business where we have long-term contracts and where we price typically price once a year or once your price adjustment on the casket side.
On the process equipment side, we have the ability to on these projects and pieces of equipment we quote every time we also have the ability to update our price book if we see something really out of the ordinary during the course of the year. So, we have a much better ability to accommodate big increases or adjust even big decreases in input cost, so this is not as big an issue on the process equipment side of the business.
And then we can also lock in prices for raw materials, if it's a big amount we can lock in prices. So, we're pretty assured of our standard margin when we sign the contract.
And your aftermarket business grew nicely this quarter, how much of that is just your active redeployment of resources to grow that business and how much of it were growth of the end markets like proppants in the screening side of the business?
That's not an easy question to answer. So, it takes a little bit longer time to understand whether we're gaining share or whether it's just the market. We do have some pretty sophisticated algorithms where we do understand what a machine should produce in spare parts based on demand in the marketplace. But it takes us a little while to figure out, do we really grow share or not.
I would tell you, we focus in few places. We've had success in some of our larger projects that are difficult for competitors to undertake, and they tend to more highly technical and sophisticated project we will go out and modernize our update a big piece of equipment like an extruder or the whole system that sometime even includes a material handling system.
So, we've seen success there, that's an area of focus I mentioned it in my prepared remarks. But that is an area of focus where we're working to grow faster than the market by being the preferred provider on those larger modernization projects that come up over the longer term.
The other thing is it helps reduce risk for our customers, when they're looking increased demand, when they can modernize there, their equipment improved output and efficiency. And so, it's a good space right now for us and we've been growing there quite well.
Thank you, Joe.
Thanks, Liam.
[Operator Instructions] And our next question comes from the line of Daniel Moore with CJS Securities. Your line is open.
Thank you, again. Just two more one or two more. In terms of the process equipment group margins nice expansion on incremental revenue. How much of that was just pure volume and how much of the 250-basis points expansion was mixed and or efficiency gains?
Yeah. It was a combination and we don't break it out in the detailed manner. But we did see good operating leverage with increased volumes across the business. As you can imagine we see that especially strong related to - that is nice margin business for us as we get the benefits of leverage.
And then of course, we continue to focus Hillenbrand operating model a big part of that is lean. We continue to drive lean projects across the organization constantly working for efficiencies. So that's been - that effort is ongoing. We haven't had any big restructurings that you're seeing. But you're seeing those sorts of the ongoing increased efficiencies that we'd expect year-over-year-over-year.
Yeah. And I would just add to that Dan, that. Our mix frankly most of our improvement is because of volume and frankly price. Our mix as we alluded to in the script earlier. We do have the larger projects, so mix is not working in our favor, that we're able to offset that with our productivity; as Joe indicated price, and certainly the volume.
Very helpful. Lastly, Batesville, is the mix getting tougher in other words are the folks opting for lower ASP on an accelerated basis? Or would you just say that trend is just the continuation of what we seen for several years?
Yeah Dan. It's a continuation of the trend that we've seen for more than several years. It's a long-term trend in the industry. And so, we didn't see anything unusual in the quarter, but it sort of like volume is kind of a constant pressure that is pushing against that business all time. And that team understands that.
And we've had some really good success with the new product introduction that helped to improve our mix. And then we're constantly trying to run the operations more cost effectively to offset some of the challenges with mix. But nothing unusual during the quarter.
Got it thanks. And congrats on a nice start to the year.
Thanks, Dan.
Thanks, Dan.
We have no more questions. And now I'd like to turn the call back over to Joe Raver for final comments.
Thank you, operator. And once again, I'd like to thank everyone for participating on the call today. We look forward to speaking with you again in May, as we report our fiscal second quarter results. Have a great day.
This concludes today's conference call. You may now disconnect.