Limbach Holdings, Inc. (NASDAQ:LMB) Q1 2025 Earnings Call Transcript

Limbach Holdings, Inc. (NASDAQ:LMB) Q1 2025 Earnings Call Transcript May 6, 2025

Operator: Good morning and welcome to the First Quarter 2025 Limbach Holdings, Inc. Earnings Conference Call and Webcast. All participants will be in a listen only mode. [Operator Instructions] I will now turn the conference over to your host, Julie Kegley of Financial Profiles. You may begin.

Julie Kegley: Good morning and thank you for joining us today to discuss Limbach Holdings financial results for the first quarter 2025. Yesterday, Limbach issued its earnings release and filed its Form 10-Q for the period ended March 31, 2025. Both documents as well as an updated investor presentation are available on the Investor Relations section of the company’s website at limbachinc.com. Management may refer to select slides during today’s call and encourages investors to review the presentation in its entirety. On today’s call are Michael McCann, President and Chief Executive Officer; and Jayme Brooks, Executive Vice President and Chief Financial Officer. We will begin with prepared remarks and then open the call to questions.

Before we begin, I would like to remind you that today’s comments will include forward-looking statements under federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate or other comparable words and phrases. Statements that are not historical facts, such as statements about expected financial performance, are also forward-looking statements. Actual results may differ materially from those contemplated by such forward-looking statements. A discussion of the factors that could cause a material difference in the company’s results compared to these forward-looking statements is contained in Limbach’s SEC filings, including reports on Form 10-K and 10-Q. Please note that on today’s call, we will be referring to non-GAAP measures.

You can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in our first quarter 2025 earnings release and in our investor presentation, both of which can be found on Limbach’s Investor Relations website and have been furnished in the Form 8-K filed with the SEC. With that, I will now turn the call over to President and CEO, Mike McCann.

Michael McCann: Good morning, and welcome to our stockholders, analysts and all interested investors. Thank you for joining us today. Limbach’s a trusted partner for delivering mission critical services that supported building’s most important systems. We specialize in existing facilities by revitalizing and maintaining building systems to ensure these systems are formed when it matters most. When these systems don’t function or don’t function as intended, our customers are shut down or unable to meet commitments made to their own customers. We provide cost effective, innovative and dependable services to keep our customers in business. Our unique ODR model is designed to withstand macroeconomic cycles and headwinds allows us to focus on executing our growth strategy.

Working directly for building owners allows us to build longstanding relationships as we strive to be an indispensable partner by providing on-demand repair work and long-term solutions to keep facilities up and running. Since we implemented the owner direct strategy five years ago, revenue from the ODR segment has increased from less than 21% of total revenue in 2019 to 66.6% of total revenue for 2024. 67.9% in the first quarter of 2025. We project to be between 70% and 80% for full year 2025. This strategy is responsible for improving the company’s risk profile, driving margin expansion and growing earnings. The progress we’ve made towards this shift continues to be reflected in our results. Compared to Q1 of 2024, Q1 2025 total revenue grew 11.9%, ODR revenue rose 21.7%.

Gross profit expanded by 18.1% and adjusted EBITDA increase 26.5%. Jayme will go into more detail on these numbers shortly, but we’re proud of the continued momentum we’ve built. This strong performance reflects more than just financial success. This an indication of our business strategy is repeatable with geographic expansion, sustainable through different economic environments and gaining momentum. To support continued ODR growth, in the past year, we’ve added approximately 40 new professionals to our sales organization, accounting for approximately one-third of the sales team. This investment is an important step in the continued evolution of our relationship with our customers. It’s important that we understand our customers’ facilities and anticipate the work needed to keep their critical facilities running to support their business.

And that requires us to be present and in front of decision-makers consistently so that we can develop and maintain long-term reoccurring partnerships across operations, maintenance and capital projects. In fact, the majority of our sales activity is focused on existing customers with large established facilities that require ongoing maintenance upgrades and system optimization. We believe we currently hold only a small share of the total work needed to keep these complex operations running efficiently. Importantly, our growth is not dependent on the construction of new facilities instead is driven by the continuous needs of our long-standing clients. These relationships represent the most fertile ground for organic expansion, and our dedicated account teams are focusing on deepening them through exceptional service, responsiveness and practical high-impact solutions.

We’ve experienced typical seasonality in Q1, primarily from weather and annual budget cycles, but we’ve gained meaningful momentum in March, which is carried into the second quarter. We’re capitalizing on the momentum as customers approve budgets in our key markets, especially health care, begin to ramp up investment for overdue infrastructure upgrades. The second pillar of our transformation strategy is to expand customer offerings to meet customer demand and pursue high-margin opportunities. In Q1, we added an additional $2 million to our climate control rental equipment fleet to position ourselves to meet increased demand as temperatures rise. This is a key growth lever, which was not completely operational in Q1 of last year and just one example of how we’re innovating beyond traditional offerings.

Big initiative for 2025 is to transition our strategic customer relationships from a reactive to a proactive approach with the goal to help influence and co-author customer budgets by the end of the year. This will allow us to strengthen our relationships and create more predictability for our sales pipeline. In order to achieve this objective, we are focused on collecting data from asset repair history, utility bills and facility assessments, which we can analyze and present back of solutions to our customers. To undertake this endeavor, each branch has identified their top customers based on specific criteria and has started the assessment process. Each one is at a different stage based on the customer relationship, but we’ve already started to see how these assessments can drive our relationships with our customers and impact our business.

After completing assessment for a New England-based hospital, we provided them with a compelling case to replace both the HVAC system and equipment that feeds their operating rooms. Once we presented the customer with the energy and asset repair savings, they proceeded with the replacement. Looking ahead, the opportunity to collect and analyze this data at scale represents a major inflection point for our business. As our data set grows, so do their ability to surface patterns, benchmark performance and identify opportunities that would otherwise remain hidden. This capability not only positions us as a more strategic partner to our customers, but also has the potential to create a powerful competitive advantage that compounds over time. I’d also like to quickly address the uncertainty around tariffs.

Tariffs have been a topic of conversation in the broader market, but their effect on our business has been so far neutral. What we are seeing is customers accelerating their purchasing decisions to lock in pricing due to ongoing tariff uncertainty. Our model, especially our ODR segment work, is built to respond quickly to market dynamics and avoid macroeconomic volatility. We perform quick hitting work with most projects completed on a three- or four-month time line, giving us the ability to deliver consistent value even in times of uncertainty. This nimbleness and agility enables us to focus on the best solutions for our customers and gives us an advantage over traditional contracting models that focus on new construction that lock in pricing at time of bid.

Contractors often wait months or even years to recover cost increases for materials. We’ve also seen interesting developments in the M&A market over the past nine months. For several years now there’s been significant consolidation in the broader mechanical services industry much of which has been driven by private equity investors. That activity has been concentrated in less sophisticated, less technical complex and markets. Those aren’t general areas in which we’re interested but the increased activity overall has repercussions and has positively impacted our competitive position. We’ve been patient and disciplined have remained focused on acquiring great businesses with great cultures. They are aligned with our focus on owner direct mission critical customers.

We believe we’ve been rewarded for that patience and discipline. We’ve also been working to further build out our brand and reputation as fair, transparent and dependable acquires of world-class contractors. We strive to become the preferred home for outstanding family owned and operated businesses. In recent months, we’ve seen evidence that our approach is delivering results and believe that we’re developing and assessing opportunities that are unavailable to other potential buyers. We see this trend continuing. We are excited about the pipeline we’ve built. We’re making solid progress on recent acquisition integrations and are exploring additional opportunities aligned with our core capabilities and expand our geographic footprint. We consistently work on our M&A pipeline to ensure ample time for due diligence and are well positioned from a capital perspective.

We’re patient, we’re going to be able to execute the right deals at the right time. We currently operate in approximately 20 metropolitan statistical areas, MSAs, with a well established presence across core markets. Looking ahead, we have identified an additional 20 to 30 MSAs, primarily along the east coast and throughout the Midwest that represent attractive expansion opportunities. Given our improvement model and operational capabilities, we are well positioned to capitalize on these markets. We remain confident based on our current visibility to deliver our full year guidance targets of $610 million to $630 million in revenue and adjusted even in the range of $78 million to $82 million. We’re confident in our team’s ability to deliver.

In closing, we’re off to a strong start this year, driven by our discipline strategy, operational execution and our relentless focus on serving our customers. Thank you for your continued support and confidence in Limbach Holdings. Now I’ll turn over to Jayme to walk through the financials.

Jayme Brooks: Thank you, Mike. Our Form 10-Q and earnings press release filed yesterday provide comprehensive details of our financial results, so I will focus on the highlights of the first quarter. All comparisons are first quarter 2025 versus first quarter 2024, unless otherwise noted. In the first quarter, we generated total revenue of $133.1 million compared to $119 million in 2024. Total revenue growth was 11.9%, while ODR revenue grew 21.7% and GCR revenue declined 4.5%. As we have said, the GCR revenue decline is intentional as we execute our mix shift strategy towards ODR. ODR revenue accounted for 67.9% of total revenue for the first quarter, up from 62.4% in Q1 2024. Total gross profit for the quarter increased 18.1% from $31.1 million to $36.7 million, reflecting our focus on growing our ODR segment.

Total gross margin on a consolidated basis for the quarter was 27.6%, up from 26.1% in 2024, driven by the combination of higher-margin ODR revenue, higher quality GCR work and contribution from acquisitions. ODR gross profit comprised 71.2% of the total gross profit dollars or $26.2 million. ODR gross profit increased $4 million or 18%, driven by higher revenue with ODR gross margins of 28.9%, slightly down from 29.8% in Q1 2024. The lower ODR gross margin percentage in Q1 2025 was primarily because of $2 million of gross profit write-ups in the ODR segment during Q1 2024. GCR gross profit increased $1.6 million or 18.3% due to our more selective approach to projects. Our focus on higher-quality projects increased our GCR gross margins to 24.7% from 20% in the first quarter of last year.

SG&A expense for the first quarter was $26.5 million, an increase of approximately $3.6 million from $22.9 million. As a percentage of revenue, SG&A expense was 19.9%, up from 19.2% in the same period last year. This increase includes SG&A associated with Kent Island and Consolidated Mechanical, which were not acquired entities of the company during the three months ended March 31, 2024. We expect SG&A for 2025 to be in the target range of 18% to 19% of total revenue due to our ongoing investment in the growing of our ODR business. Adjusted EBITDA for the quarter was $14.9 million, up 26.5% from $11.8 million in Q1 2024. Adjusted EBITDA margin was 11.2% compared to 9.9% in Q1 of last year. Net income for the quarter grew 34.6% from $7.6 million to a record of $10.2 million and earnings per diluted share grew 32.8% from $0.64 to $0.85.

Adjusted net income grew 38.9% from $9.7 million to $13.5 million, and adjusted earnings per diluted share grew 36.6% from $0.82 to $1.12. Turning to cash flow. Our operating cash inflow during the first quarter was $2.2 million compared to a $3.9 million operating cash outflow during the first quarter of last year, representing a $6.2 million improvement. Free cash flow, defined as cash flow from operating activities, less changes in working capital and capital expenditures, excluding our investment in additional rental equipment for the first quarter was $15 million compared to $11.8 million in Q1 last year, representing a $3.3 million improvement. The free cash flow conversion of adjusted EBITDA for the quarter was 101.1% versus 100.3% last year.

For full year 2025, we are targeting a free cash flow conversion rate of at least 75% and expect CapEx to have a run rate of approximately $4 million, primarily due to the acceleration of our ODR strategy. This amount excludes an additional investment of $3.5 million in rental equipment for 2025 of which $2 million occurred in the first quarter. Turning to our balance sheet as of March 31, we had $38.1 million in cash and cash equivalents and total debt of $27.5 million which includes $10 million borrowed on our revolving credit facility at a hedge rate of 5.72%. Our balance sheet remains strong and we are well-positioned to support our strategy of generating ODR growth and margin expansion to drive significant long-term value for our stockholders.

In addition, we will continue to utilize our balance sheet to support our strategy by providing the capital needed for opportunistic acquisitions and other growth initiatives. That concludes our prepared remarks. I’ll now turn the call back to the operator to begin Q&A.

Q&A Session

Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Rob Brown with Lake Street Capital. Please proceed with your question.

Rob Brown: Good morning. Congratulations on the nice quarter.

Michael McCann: Good morning, Rob.

Jayme Brooks: Good morning, Rob.

Rob Brown: On the healthcare market you talked about some kind of rebound there and recovery and activity. Could you just give us a sense of where that market’s been and how you see it trending?

Michael McCann: Yeah. So the healthcare vertical market’s definitely been our key vertical market that we’ve really focused on I would say not just this year, but the past few years. What we like about it is the relative stability from that perspective. There’s been lots of deferred maintenance that’s really happened over the last four years or five years I think coming out of 2020 and 2021. So a lot of times the hospital gets to the point where that deferred maintenance needs to be dealt with and they no longer in the quick repair mode and they need to make plans on their long-term capital planning from that perspective. So I think going to this year we’ve definitely start to see some of our key customers realize like I really need to start planning in the future because I’m building up a short term expense. So we expect it to be. A slow ramp up but we like the stability and we’ve really embedded ourselves in our strategy really works well in that vertical market.

Rob Brown: Okay. Great. Thank you. And then you talked a little bit about some pull forward on projects as customers looked at maybe tariff risk but how do you see that or how much of it do you think was pulled forward and I guess what’s the risk on kind of equipment prices with their?

Michael McCann: Yeah. So I think the one thing we definitely appreciate this year is going it’s a lot tougher to sell on our model like every there’s not like a location has one or two projects that make up all of their revenue for the year. So a lot tougher from that perspective but I think the thing that really helps us is we do have things that pop-up that are tariffs or even I think of other items that are macroeconomic related our ability to be nimble and quick. And pass costs along with something that I think is beneficial even though tariffs essentially been neutral to us. What I think we’ve seen from customers is the need to make the decision. They can’t wait two or three months later because first off our price won’t be valid at that point but secondly.

You know things could change in the dynamics could change the pricing could change so I think that’s one thing that we’ve really tried to stress to our customers is I’m giving you some I’m giving you a proposal you need to act quickly on it. You need to make sure that, you’re ready to get funded or not, and I think that’s the real conversation we’ve had a lot of our customers and I think it’s a good conversation because it allows us to be as proactive as possible and to make sure that there’s no surprises between either but definitely the quick hitting nature of our work I think. Allows us to have those conversations with our customers and not be caught up in super long term projects where it’s tough to deal with drastic material increases.

Rob Brown: Great. Thank you I’ll turn it over.

Operator: Thank you. Our next question comes Chris Moore with CJS Securities. Please proceed with your question.

Chris Moore: Hey, good morning, guys. Thanks for taking a couple. So maybe I’ll focus on ODR to begin with. So obviously, the goals generate more and more revenue from an ODR client. Only a portion of the ODR clients evolved to the point, where they’re kind of more of that partner their relationship. Evolves from just OpEx to include things like CapEx. So maybe a few questions here. I’m just trying to understand, when does an account manager get placed at an ODR client when you’re still trying to determine if the customer could be a long term partner or after you come to the conclusion that that long term opportunity is actually there.

Michael McCann: Yeah. So we’ve learned a lot, I would say, the last few years just because it’s a building with a lot of square footage at the hospital doesn’t necessarily mean that that account is positioned to — to accept that onsite account manager. So we definitely research. The facility what’s the spending patterns, what’s the opportunity, not just what we’ve done short term but we’ve done long term. We have a sales rep that makes sure that we have traction, so we’re not putting an onsite account manager where we haven’t seen revenue of gross profit ultimately fall through. So it’s a combination of getting traction and also doing our homework and realizing that that account can accept that type of attention. So those are really two things that we’ve learned, that have been important for success.

Chris Moore: Got it. And, is there any way to kind of put some kind of percentage around just trying to understand. How many ODR clients you work with now and you know what percentage of those are — are you know at that stage where you have realistically said this is you know kind of partnership material?

Michael McCann: Yeah. So each branch we really asked them to focus on really five core strategic customers, so you know, some branches have five set up some of them have two or three so usually they’re in some pattern about that as well too. I think the other thing too that we had in our deck, was kind of this relationship between a local and national perspective. So our goal over time is to connect the dots and that’s where I really feel like it’s a big opportunity. So one of the — just as an example one of our customers is a national healthcare provider. We work with them at three locations Ohio, Philadelphia, and in — and in South Florida. We’ve been working from an OpEx perspective somewhat from a CapEx perspective but we’re now starting to connect the dots together.

So we can take a local relationship and turn that into a national relationship, and I think that’s where we’re going to see again con continue to acceleration. So each branch is focused on their top five or some range to that, but there’s also I think an added opportunity even once we gain some level of penetration from that perspective also we’ll get it from a national perspective as well too. So back to your other question, we really carefully pick these accounts. We’re very we work together to make sure that it’s not just going to be a local impact, but it could be a national impact to be of a greater scale as well too.

Chris Moore: Very helpful. And maybe just the last one for me, the GCR gross margin was certainly higher than I was modeling, 24.7% versus 20% year-over-year. So that was kind of more selective projects. Given the current environment lots of uncertainty, how likely or how difficult is it to keep the gross margin on GCR above 20% say, over the next year or so?

Michael McCann: Yeah. We’re continuing to guide the 28% to 29% blended between the two. So depending on the quarter there may be certain projects that finished or not. It’s just it depends on the mix. Do you have anything you want to add?

Jayme Brooks: Yeah. It’s really going to be mixed within that specific quarter. So really yeah, the target of Mike said is 28% to 29%, blended for both for the full year because, there really can be the ebb and flow of that margin depending on the mix within any quarter.

Chris Moore: Got it, that’s helpful guys. I’ll jump back in line.

Jayme Brooks: Thank you, Chris.

Michael McCann: Thank you.

Operator: Thank you. Our next question comes from the line of Gerry Sweeney with ROTH Capital Partners, LLC. Please proceed with your question.

Gerry Sweeney: Good morning, Jayme and Mike. Thanks for taking my call.

Michael McCann: Good morning.

Jayme Brooks: Good morning.

Gerry Sweeney: And congratulations, on a great quarter, Mike, I think you highlighted 40 new sales people. I apologize, maybe out of over the course of last year or in the last couple quarters. That sounds and I want to double check. It sounded like it was about a 30% increase on the sales side, but secondarily, I was wondering if you could give a little bit more detail on are there salespeople account managers and how do you look at them ramping up and sort of hitting their full stride on the sales opportunity post-hiring?

Michael McCann: Yeah. So this is in is about 40, it’s about a third of our sales staff. So the last couple of years we’ve added somewhere in the ballpark of that number. So you circle back to like 2021 and 2022, we didn’t have a lot of sales people. It was a very different model. So every year and I think in some sense this is why our SG&A hasn’t been leveraged yet is we have to continue to invest. Those sales reps and on-site account manager are critically important to make sure that we grow our owner directly. Back to the other piece of your question, the vast majority of them are the on-site account managers that are working at OpEx. There’s a small smattering of sales reps and then there’s also account execs as well too, which are new that we’ve hired this year and their goal is to really penetrate from a CapEx perspective.

So take that on the relationship that the on-site account manager has built, on the EPIC side. And as well really position and make sure that we’re capturing from a capital cap CapEx perspective as well too. But of course there’s a bit of a ramp up period for each one of these. A lot of it depends on what account they are. Depends on the role that they’re playing, but in some sense it’s a similar pattern that we’ve had the last couple of years.

Gerry Sweeney: Got it. And then speaking about connecting the dots on your sort of I guess your geographic strategy right, following some of your larger accounts to maybe additional MSAs. If you were to go into a new MSA, would you following and say following a larger account would you go in there organically or would you prefer to make a small acquisition to sort of jumpstart things — to jumpstart things in that new area.

Michael McCann: Yeah. So there yeah, just a couple different ways that we would attack it. So we do have some relationships especially on the National Healthcare side. And we will do work outside of a branch location. A lot of times that’s a program management type deal we’re managing a capital program for them, so we don’t necessarily have boots on the ground. But the real opportunity for us is just as what you said, if we really make sure from an account perspective, we look to see, what that kind of overlap there is, these national customers, what’s the breadth and footprint. So if we do buy a company and we have boots on the ground now. Here’s an opportunity not just to buy a great company, but also to leverage these national relationships as well too.

So just from our map perspective, there’s lots of white space on there and then we are always kind of overlapping some of our national customers as well too, so we can buy a company and then we can give them some acceleration from a revenue perspective from a national account as well too. That’s really I think where we get a great benefit out of it.

Gerry Sweeney: Got it. What about taking aside following new customers looking at those 20 to 30 MSAs that I think I don’t my words not yours targeted. How would you enter into those markets separately? I mean acquisition or would you ever look at going into any market from an organic standpoint?

Michael McCann: We’ve done organic starts before. As an example South Florida was an organic start. A lot of it comes down to making sure that we have the right leader, we have the right team so occasionally we will do that. I would say the majority of what we do will come from an acquisition as well too, so that really accelerates it. So, we’re going to go from a new start perspective, it’s really takes time and we’ve learned from that. So I would say for the majority of those 20 to 30 MSAs that we referenced in the prepared remarks, a lot of those will come from an acquisition perspective. We just get the scale of the resources and it really lets us get going pretty a lot quicker.

Gerry Sweeney: Got it. Alright I appreciate it. I’ll jump back in queue. Thanks guys.

Michael McCann: Thank you.

Operator: Thank you. Our next question comes from the line of Brian Brophy with Stifel. Please proceed with your question.

Brian Brophy: Thanks. Good morning everybody. Congrats on a nice quarter.

Jayme Brooks: Thank you. Good morning.

Michael McCann: Good morning.

Brian Brophy: Good morning. So you called out an acceleration in March in your comments. Can you talk about the significance of that? Was that acceleration more than seasonally normal this year and just any more color on how that continued into April. Thanks.

Michael McCann: Yeah so, as we’ve referenced before, there’s definitely seasonality to it. I think there’s a couple things that kind of results in that. One is every year, we’ve had a greater owner direct mix and this year we continue to have that. So that’s that always leads us to being having revenue built throughout the year. I think March was what really helped us from that perspective and I think part of its seasonality, part of it’s the sales reps that we have and account managers that we brought on. It’s really a combination of those two together, but as always we expect there to be a ramp up throughout the year.

Brian Brophy: Okay. And maybe this is related, there there’s been some discussion from some of the HVAC OEMs and distributors regarding some of the disruption early this year to change out. Here is your perspective on that and if you saw any impact from that at all this year. Thanks.

Michael McCann: Yeah, we have it depends on what the equipment, what the project is. That is a reason I think for somebody to make a decision, so it’s typically been of help to us. So a lot of times too, it just depends from a customer perspective. Are they in this, do they have a reason to make that ultimate equipment repair, so it could be from different refrigerant changes, it could just be in their cycle. A lot of times from a customer perspective, it’s just a matter of when if they racked up a big enough bill from an OpEx perspective along with a number of other factors, which may be things like refrigerant switch out, it says, finally, we need to make a decision. So, it’s a decision point I would say more or less from our customer perspective.

Brian Brophy: Okay. And then one more for me, I wanted to kind of follow up on some of your comments on private equity competition on the M&A side. I think historically, you’ve talked about doing two to three deals tuck deals a year. Is that still a good way to kind of think about the M&A cadence or given the competitiveness on the M&A side maybe you’re thinking something different today.

Michael McCann : Thanks. Yes, no, so we’re looking to buy $8million to $10 million and adjust it. So it’s interesting from a private equity perspective. I think what that does is ultimately really shows people that are selling their business just the differentiation between maybe going down that route versus the Limbach route. So I think the saturation of the market is allowed. Us to differentiate ourselves and what I think what it really comes down to is our approach is just different. We’re going to be patient diligent we’re going to take our time. We’re really focused not on just the deal itself but what the deal is going to look like over the long term and then how can we still fit them into our mold get them on our common strategic platform so I think we’ve just realized over time that it’s a big differentiator for us and we definitely feel like.

Were a unique option and in some sense I think it’s opened up doors where maybe it wouldn’t have if we had more of a common approach from an acquisition perspective.

Brian Brophy: Yes, that’s really helpful. I will pass it on. Thank you.

Michael McCann : Thank you.

Operator: Thank you. And we have reached the end of the question and answer session. I would like to turn the floor back to Mike McCann for closing remarks.

Michael McCann : Thank you for listening today for your continued interest in Limbach. We look forward to seeing many of you at the Oppenheimer Virtual Industrial Conference on May 8, the Bank of America Industrial Conference in New York on May 14, and the Stifel Cross Sector Conference in Boston on June 3 and 4. Have a great rest of your day. Thank you.

Operator: And this concludes this conference. You may disconnect your live at this time. Thank you for your participation.