Kabro Linen achieves record Q2 revenue of $113 million, boosted by Stellar Mayan acquisition, with positive outlook for continued growth and margin stability.

OPERATOR - (00:00:57)

Good morning ladies and gentlemen and welcome to the K-Bro Linen Systems Inc. Second Quarter 2025 Results Conference. @ this time, all lines in listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press 0 for the operator. This call is scheduled for August 14, 2025. I would now like to turn the conference over to Christy Plaquin. Please go ahead.

Christy Plaquin - (00:01:24)

Thank you operator and good morning everyone. Thank you for joining us today and welcome to our second Quarter Results conference call. On the line with me today is Linda McCurdy, President and Chief Executive Officer. Before we begin, I'd like to remind everyone that statements made during our prepared remarks of the conference call with reference to management's expectations or our predictions of the future are forward looking statements. All statements made today which are not statements of historical fact are considered to be forward looking. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward looking statements Statement. Investors are also cautioned not to place undue reliance on these statements. Actual results could differ materially from those anticipated risk factors that could affect the results are detailed in the corporation's public filings. I'll now turn the call over to our CEO Linda McCurdy who will provide her insights and remarks on the quarter.

Linda McCurdy - President and Chief Executive Officer - (00:02:24)

Linda thank you Christy and good morning to everyone and thank you for joining us today to review our 2025 second quarter results. I will focus on the main highlights of the second quarter and Christy will provide more details on our financial performance as well as our balance sheet. We're delighted to have reported record results for Q2 with revenue of 113 million and adjusted EBITDA of 23.7 million for the quarter. Our record second quarter results reflect early contributions of our recent acquisitions and we're continuing for early integration of Stellar Mayan. Both of KBRO's healthcare and hospitality segments continue to experience steady volume trends. Overall consolidated revenue in our second quarter increased by 21% compared to Q2 2024, with healthcare and hospitality revenue each increasing by 21% respectively. Healthcare represented approximately 51% of consolidated revenue, which was consistent with Q2.20. On June 11, we were delighted to complete the acquisition of Stellar Mayan, the largest in our history and we welcomed the Stellar team to the K-Bro family. We initially entered the UK market through the acquisition of Fishers in 2017. Our complementary acquisitions of Shortridge in 2024 and Stellar Mayan in 2025 have helped achieve our vision of building a national platform in the uk, enhancing our scale, reach and diversification. Together, we're excited to support our existing and new healthcare and hospitality customers. Strategic acquisitions of high quality operators with leading market positions in key regions continue to be an important contributor to K-Bro's overall growth profile and as we actively pursue these growth opportunities, we'll continue to incur certain transaction, transition and financing costs. In this context, we believe adjusted EBITDA before adjusting items will assist investors to assess our performance on a consistent basis as it's an indication of our capacity to generate income from operations. As always, we're focused on delivering industry leading service and we're proud of our growing diverse workforce that operates with our customers in mind. I'll now turn the call over to Christy to discuss our detailed financial results for the quarter and which I'll return to talk about, after which I'll return to talk about our outlook as well. Of course the Q and A Kristi, over to you.

Christy Plaquin - (00:05:09)

Thanks Linda. The information we are discussing is also highlighted in our 2025 second quarter earnings press release issued yesterday and detailed supplemental financial information can be found on our Investor Relations website under the heading Financials. As a result of the Stellar Mayan acquisition in June of 2025 and the acquisitions of Shortridge and CM during Q2 of 2024, consolidated hospitality revenue for Q2 25 increased by 21.2% over the comparable period of 2024 and the Corporation saw a 20.7% increase in consolidated healthcare revenue for an overall increase in consolidated revenue of 2021%. As we discussed in previous quarters when reporting adjusted EBITDA, we've revised our adjusting items to reflect certain amounts which are not indicative of ongoing operating performance. This includes transaction costs, structural finance costs, transition and integration costs, restructuring costs, gains and losses on settlement of contingent consideration in any other non reoccurring transactions as defined within our mda, we believe adjusted EBITDA will assist investors to assess our performance on a consistent basis. Details of the calculations and adjustments can be found in our MD&A under terminology, consolidated adjusted EBITDA increased in Q2 of 25 to 23.7 million or by 30% compared to 18.2 million in 2024. Adjusted EBITDA margin increased to 21% in 2025 compared to 19.5% in 2024. Adjusting items in the quarter included transaction costs, structural financing costs and non reoccurring gains. Consolidated EBITDA increased in Q2.25 to 21.4 million or by compared to 16.6 million in 2024. On a consolidated basis, EBITDA margin increased to 18.9% in 25 compared to 17.7% in 2024. For the Canadian division, the adjusted EBITDA margin in the second quarter increased to 21.1% for 2025 compared to 18.9% in 2024. The increase in adjusted EBITDA margin was largely due to labor efficiencies and the elimination of the Canadian carbon tax in Q2 2025. EBITDA margin increased to 20.6% in 2Q25 from 17% in 2024. For the UK division, the adjusted EBITDA margin in the second quarter remained constant at 20.8% in both 2025 and 2024. The EBITDA margin for the UK division decreased to 16.3% in 2Q25 compared to 19.4% in 24. The decrease in EBITDA margin was due to adjusting items in the quarter related to the Stellar Mayan transaction costs. Net earnings increased by 0.9 million in 2Q25, or 19.5% from 4.5 million in 24 to 5.4 million in 25, and net earnings as a percentage of revenue remained relatively consistent at 4.8% in 2025 compared to 4.9% in 2024. Wages and benefits in 2Q25 increased by $7.1 million to $42.3 million compared to $35.2 million in the comparative period of 24, and as a percentage of revenue decreased by 0.2 percentage points to 37.4%. The decrease as a percentage of revenue is primarily related to labor efficiencies. Linen in 2Q25 increased by 2.1 million to $11.2 million compared to 9.1 million in the comparative period of 2024, and as a percentage of revenue increased by 0.2 percentage points to 9.9%. Utilities in 2Q25 decreased by 0.5 million to 6.5 million comp in the comparative period of 2024 and as a percentage of revenue decreased by 1.7 percentage points to 5.8%. The decrease as a percentage of revenue is primarily related to lower gas costs in the UK market and the elimination of the carbon tax in Canada in Q2 2025. Delivery in the second quarter of 2025 increased by 2.4 million to $13.3 million compared to 10.9 million in the comparative period of 2024 and as a percentage of revenue increased by 0.1 percentage points to 11.7%. Occupancy costs in 2Q25 increased by 0.7 million to 2.4 million compared to 1.7 million in the comparative period of 2024and as a percentage of revenue increased by0.4 percentage points to 2.2%. The increase as a percentage of revenue is primarily related to higher facility operating costs. Materials and supplies in 2Q25 increased by 0.2 million to 4 million compared to 3.8 million in the comparative period of 2024 and as a percentage of revenue decreased by 0.4 percentage points to 3.6%. Repairs and maintenance in the second quarter of 2025 increased by 0.4 million to 4.5 million compared to 4.2 in the comparative period of 2024 and As a percentage of revenue decreased by 0Point4 percentage points to 4%. Corporate costs in 2Q25 increased by 3.8 million to 9 million compared to 5.2 million in the comparative period of 2024and as a percentage of revenue increased by 2.3 percentage points to 7.9%. The increase as a percentage of revenue is related to higher transaction costs including legal, professional and consulting fee expenditures related to the acquisition of Stellar Mayan as well as structural financing costs partially offset by non recurring gains. These items are further defined within our MD and A we had a recovery in the second quarter of 2025 of $1.5 million compared to nothing in the comparative period of 2024 resulting in a 1.5 million million dollar gain in the quarter. This increase is related to the sale of the granby facility during Q2 of 2025 and the gain is an adjusting item for the purposes of calculating adjusted ebitda, adjusted net income and adjusted earnings as is further detailed in our mda. Now looking at our capital resources distributable cash flow for 2Q25 was 8.5 million and our payout ratio was 40.1%. The company paid out 0.3 per share in dividends during the quarter for total consideration of 3.4 million. The Corporation had net working capital of 90.5 million at June 30, 2025 compared to its working capital position of 54.1 million at December 31, 2024. The increase in working capital is primarily attributable to the acquisition of Stellar Mayan in June of 2025 with regards to credit and liquidity. We have a strong balance sheet and ample undrawn capacity on our syndicated revolving credit facility which has an operating line of $175 million and an amortizing term loan of $134.3 million as well as a further $50 million accordion for growth purposes. At June 30th we had an undrawn balance of close to 46 million on our operating line without taking into account the accordion reinforcing our strong liquidity. This represents a debt to EBITDA ratio on a pro forma basis excluding leases of about 2.9 times. On June 11, K Bro amended its existing three year committed syndicated credit facility agreement to include the $134.3 million year amortizing term loan and extended the term of the facility to June 10th of 2029. In addition, K-Bro issued 2.3 million common shares to finance the Stellar Mayan acquisition. Debt to total capitalization for the period ended June 30, 2025 was 50.6%. Total debt net of cash increased in the quarter from 105 million in December of 2024 to $228.3 million due to the amortizing turn loan to finance the Stellar Mayan acquisition. I'll now turn things back over to Linda for additional commentary.

Linda McCurdy - President and Chief Executive Officer - (00:14:47)

Linda thank you Christy. Our acquisition of Stellar Mayan represents the start of a new and exciting chapter for K-Bro's next leg of growth. Stellar Mayan is highly complementary to Fishers and Shortridge and creates a top three commercial laundry in the UK with a strategic national presence. Our combined platform serves existing and new healthcare and hospitality customers from coast to coast. Pardon me, Stellar Mayan and Kabro have shared values in putting people first, being dependable partners and environmental stewardship. Our UK Managing Director, who is an experienced K Bro veteran, is overseeing the combined UK operations, including the Stellar Mayan Business Integration Plan. We anticipate the integration will take 12 to 18 months and our transition team is executing on our plan on a consolidated basis. We're excited about the future potential of our combined business and see a positive outlook going forward. We've been market leaders in Canadian healthcare for over half a century. We're excited to expand the scale of our UK healthcare business and we believe the UK market shares similarities to the Canadian market. Both of Kabro's healthcare and hospitality segments continue to experience steady growth trends. In the healthcare segment, we expect activity levels to remain strong from continued focus on reducing wait times and enhancing patient care. In the hospitality segment, we expect solid activity levels from both business and leisure travel reflecting historical seasonal trends. Going forward, we expect combined adjusted EBITDA margins will remain at similar levels to seasonally adjusted combined historical margins. We continue to monitor evolving global and Canadian foreign policies, geopolitical events and economic conditions which could have a direct or indirect impact on kpro. We're not currently expecting meaningful impacts on the business as key customers and suppliers are not US based. We're committed to a sustainable future and we're proud of our seven decades of responsible innovative growth. We collaborate with our stakeholders to appreciate their priorities, solicit and receive feedback, and align around common goals. Our services are essential to the continuity of our customers operations and we're embodying sustainable practices to support them for the long term. Now I'll turn it over to the Q and A with regards to any questions you may have on the second quarter results of 2025.

OPERATOR - (00:17:32)

Thank you, ladies and gentlemen. We now begin the question and answer session. Should you have a question, please press star followed by one. On your touchstone phone you will hear a prompt that your hand has been raised. Should you wish to decline in the polling process, please press star followed by two. If you're using a speakerphone, please lift the hands up before pressing any keys. One moment please, for your first question. Your first question comes from Derek Lasar, with Cowan. Please. Go ahead.

Derek Lasar - Equity Analyst - (00:17:56)

Yeah, good morning Linda and Christy and belated congrats on the Stellar Mayan deal and great quarter.

Linda McCurdy - President and Chief Executive Officer - (00:18:04)

Thank you. Derek, Good morning.

Derek Lasar - Equity Analyst - (00:18:07)

Maybe I just want to focus a little bit on the margin side to begin. And in your prepared remarks and in the MD&A, you did say that you expected the adjusted EBITDA margins to remain at similar levels to the combined adjusted historical margins. I was just wondering if maybe you could add some context around that, particularly as it, I guess it relates to capturing the stellar Mayan synergies.

Linda McCurdy - President and Chief Executive Officer - (00:18:34)

Sure, Derek. So what we've said is that they will be consistent with historical margins and I think there are things that go both ways. So obviously as we've seen, there is the pickup from reduced carbon tax and reduced energy prices. Those are offset by a lower margin profile out of the gate for stellar. We expect over the next 18 to 24 months that synergies will. We've certainly guided that there are synergies that we expect to harvest, but those will take some time. Christy, do you have anything to add? Yeah. Oh, sorry. Sorry, Derek. Christy, did you have anything further to add?

Christy Plaquin - (00:19:26)

No, no, sorry, I didn't. I think. I think you. I think you captured it at all. Thanks, Linda.

Derek Lasar - Equity Analyst - (00:19:32)

Yeah, all good. That makes sense on the cadence there. And just maybe one last one for me before I recue. Let's talk about some of the. You talked about the labor efficiencies in your prepared remarks. Just curious, you know, what are you seeing on that side of the efficiency?

Linda McCurdy - President and Chief Executive Officer - (00:19:54)

We have certainly seen a stabilization of our workforce both in Canada and the uk the benefit of some of our capital investments, the optimization of the integration of our Quebec. Quebec acquisitions. So I would say it's a combination of all of those factors where we've been able to, you know, reduce and optimize efficiencies in most of our plants.

Derek Lasar - Equity Analyst - (00:20:29)

Okay, thank you both. I'll requeue.

Linda McCurdy - President and Chief Executive Officer - (00:20:33)

You bet.

OPERATOR - (00:20:35)

Thank you. Your next question comes from Michael Glenn with Raymond James. Michael, please go ahead. Hey, good morning.

Michael Glenn - Equity Analyst - (00:20:43)

Maybe just to start, in terms of the business and revenue being acquired, are you happy with what, what you see for the margin profile or pricing on this work? Is this something where you potentially see some opportunity?

Linda McCurdy - President and Chief Executive Officer - (00:21:03)

Thank you, Michael, and good morning. We're certainly happy with the acquisition and the fact that it is predominantly healthcare in the uk. We have acquired very solid plants, good operations. I think as we go forward, there are efficiencies that we will harvest through different operating practices. And I think as we continue to work with the customers, there are opportunities to expand the product line, which will mean ultimately margin expansion in the uk. Our observations, and we knew this going in from a product line perspective, they use more disposables and not just in the operating room, but in just general rooms, linen, where we think we can introduce, like we have in Canada, new products that will, you know, increase volumes to existing customers, increase sales and improve operating leverage over time. That's not going to happen overnight. As we know, selling clinical products takes time. But we have met with, I'd say 12 of the NHS trusts and they're all very excited about the innovation and the fact that a strategic from out of market has acquired stellar.

Michael Glenn - Equity Analyst - (00:22:45)

And in Canada, I guess we're familiar with how the regional healthcare authorities or hospitals go about their process with RFPs being issued when pieces of business come up for opportunity. Is it a similar process in the uk? Can you describe how that works and maybe describe how that bidding pipeline looks like over in the uk?

Linda McCurdy - President and Chief Executive Officer - (00:23:16)

Sure, you bet. It's quite similar. When we compare an RFP in Canada to an RFP in the uk, I would say the questions are similar. The weightings tend to be similar for cost. Corporate profile or sorry, price. Corporate profile. Innovation, corporate strength. That tends to be quite similar. I Think the most significant difference is their contracts tend to be three to five years in length, where our healthcare contracts tend to be longer term in nature. That to me would be the largest differentiator in terms of pipeline. In the uk we're quite excited about growth opportunities. And I'd say over the next eight months, we are aware of about £10 million of business that will come up outside of our existing business. Our existing business. We don't have anything material coming up until next summer. And even then it's not overly material.

Michael Glenn - Equity Analyst - (00:24:33)

When you say existing business, you're talking about the Canadian and the UK business combined. Or is that specific to the uk?

Linda McCurdy - President and Chief Executive Officer - (00:24:40)

No, that was uk, Michael. Sorry, I thought we were referring to the uk.

Michael Glenn - Equity Analyst - (00:24:46)

Yeah. Yes, we were. And maybe just on Canada Healthcare, can you update us on two parts? Number one, your contract renewals overall for the next, say, 12 months or 18 months. And then number two, what the bidding pipeline in Canada looks like for healthcare business.

Linda McCurdy - President and Chief Executive Officer - (00:25:14)

Sure. I'd say we have locked down over 40% of the contracts that come up this year. And while we are into August and 40 may seem low, we just have to remember that a lot of it comes due in Q3 and Q4 or a December expiry. We're feeling confident in our ability to renew those contracts. In terms of Canadian health care, I would say that we expect in 26, probably, you know, tens of millions of dollars of business to come to the market in a variety of different geographies. Our major contract, our first major contract that comes due would be in 2027.

Michael Glenn - Equity Analyst - (00:26:15)

Okay, and that's. Is that Western Canada? I guess that's Western Canada, more than likely.

Linda McCurdy - President and Chief Executive Officer - (00:26:20)

Yeah.

Michael Glenn - Equity Analyst - (00:26:21)

Okay.

Linda McCurdy - President and Chief Executive Officer - (00:26:21)

Yes.

Michael Glenn - Equity Analyst - (00:26:24)

Okay. Thank you for taking the questions.

Linda McCurdy - President and Chief Executive Officer - (00:26:28)

Thanks, Mike.

OPERATOR - (00:26:31)

Thank you. Ladies and gentlemen, as a reminder, if you have any questions, please press Star one. Your next question comes from Justin Keywood with Stifel. Please go ahead.

Justin Keywood - Equity Analyst - (00:26:42)

Good morning. Thanks for taking my call. Nice to see the results.

Linda McCurdy - President and Chief Executive Officer - (00:26:47)

Thank you, Justin.

Justin Keywood - Equity Analyst - (00:26:49)

So as we enter in Q3, historically it's been the seasonally strongest quarter for K bro. The most EBITDA contribution Q3 of last year, the adjusted EBITDA margin was 22%. Realize there's several moving parts with this Q3, but should we expect a margin to be in a similar range or how should we be looking at that?

Linda McCurdy - President and Chief Executive Officer - (00:27:17)

I think that's within the ballpark, consistent with my earlier comment. You know, the stellar profile does have a lower margin profile, but overall, I think it should be in the ballpark, Justin.

Justin Keywood - Equity Analyst - (00:27:36)

Okay, great. And then I just wanted to clarify a Few points on the contracts. So for the remaining 60% that is coming up for renewal for the balance of the year, are you able to quantify that as far as a dollar impact.

Linda McCurdy - President and Chief Executive Officer - (00:27:58)

Christy, can you weigh in here?

Christy Plaquin - (00:28:05)

Yes, that would be roughly 40, 45 million, Justin.

Justin Keywood - Equity Analyst - (00:28:15)

Okay. And are these just as far as the composition? Is that like in the 3 to 4 contract range or just to help to illustrate that.

Linda McCurdy - President and Chief Executive Officer - (00:28:33)

Sorry, can you clarify that again.

Justin Keywood - Equity Analyst - (00:28:36)

How many RFPs are within that 40 million.

Linda McCurdy - President and Chief Executive Officer - (00:28:42)

Oh, okay. So none of them are really like a material contract, Justin. Most of them would be smaller contracts where we would just go through a normal renewal process. There would be a few RFPs potentially, but for the most part they would just be a negotiation.

Justin Keywood - Equity Analyst - (00:29:05)

Okay, that's very helpful.

Linda McCurdy - President and Chief Executive Officer - (00:29:06)

So very diversified.

Justin Keywood - Equity Analyst - (00:29:08)

Yeah, yeah, very diversified, Justin. And I would. What percent of that is the UK, Christy?

Christy Plaquin - (00:29:16)

It's probably about 50. 50. Linda.

Justin Keywood - Equity Analyst - (00:29:19)

Okay, okay, very helpful. And then just on the opportunity for Canadian RFPs in 2026 and beyond, I think I heard there's tens of millions of dollars. Is that accurate?

Linda McCurdy - President and Chief Executive Officer - (00:29:34)

Yes.

Justin Keywood - Equity Analyst - (00:29:35)

Yeah.

Linda McCurdy - President and Chief Executive Officer - (00:29:36)

And I assume that's related to one of the main competitors in Ontario and GTA hospitals where the RFPs are coming up for renewal.

Justin Keywood - Equity Analyst - (00:29:49)

I'd say it's, you know, across the country, but we would expect business to come up in Ontario.

Linda McCurdy - President and Chief Executive Officer - (00:30:01)

Yes.

Justin Keywood - Equity Analyst - (00:30:02)

And is it just to get a bit more precise, is that like happening early in 2026 later or a bit unclear?

Linda McCurdy - President and Chief Executive Officer - (00:30:10)

I think it's the. Yeah, the back half.

Justin Keywood - Equity Analyst - (00:30:14)

Okay.

Linda McCurdy - President and Chief Executive Officer - (00:30:15)

Of 2026.

Justin Keywood - Equity Analyst - (00:30:16)

Yeah.

Linda McCurdy - President and Chief Executive Officer - (00:30:17)

Thank you for taking my questions.

Justin Keywood - Equity Analyst - (00:30:20)

Thank you.

OPERATOR - (00:30:23)

Thank you. Michael has a follow up. Michael, please go ahead.

Michael Glenn - Equity Analyst - (00:30:28)

Yep, Just working capital. I know there was even. There was about a $9 million AR build, it looks like, in the quarter. Christy, would you expect to get that back in the back half of the year?

Christy Plaquin - (00:30:43)

Yeah, yeah. It's fairly seasonal just because Q2 is stronger than Q1. But if we just look historically, there's usually an investment in Q2 that gets recovered over the balance of the quarters.

Michael Glenn - Equity Analyst - (00:30:59)

And then the capex was reiterated at 10 to 12 million plus the amount associated with stellar Mayan. Now, the allocation for the stellar Mayan portion, would that happen this year or next year?

Christy Plaquin - (00:31:20)

Predominantly this year, Michael. We would expect it to be spent relatively evenly over the next two quarters. Some may trickle into 2026, just depending on timing. But it would be early Q1 if it did.

Michael Glenn - Equity Analyst - (00:31:38)

Okay. And then if we're looking then at 2026 would with it with the acquisition like you have 10 to 12 on the legacy operation. And now with Stellar Mayan. So would that number go to on a normal run rate basis? Where would it go to?

Christy Plaquin - (00:32:03)

I would say they'll definitely be an increase with the stellar acquisition, probably closer to the, you know, 15 to 18 range.

Michael Glenn - Equity Analyst - (00:32:18)

Okay, thank you. Thank you for taking the question.

OPERATOR - (00:32:25)

Thank you. Your follow up question comes from. Derek, please go ahead.

Derek Lasar - Equity Analyst - (00:32:30)

Yeah, maybe just on the hospitality side. Excuse me. Just curious what you're seeing in terms of the activity so far, maybe in Q3 and if you're seeing any benefits from domestic travel or traveling to Europe in light of the trade uncertainties.

Linda McCurdy - President and Chief Executive Officer - (00:32:47)

Thank you for the question, Derek. Yes, we are seeing solid performance on the hospitality side of the business. I think being driven by fewer trips to the US By Canadians as well as to your point, increased European travel to Canada. So we are definitely seeing that. And if anyone stayed in a hotel room in Canada, it's evidenced by room rates. But we're feeling quite positive about volumes for Q3 on the hospitality segment. Okay.

Derek Lasar - Equity Analyst - (00:33:25)

And maybe just on the utility costs, do you have a sense of the, I guess the rough breakdown between the carbon tax in Canada and sort of the lower gas costs in the UK and then on the UK gas hedges? If I remember correctly, those hedges are rolling off by the end of 2026 and should we start seeing the benefit in 2027 or are we starting to see that earlier on?

Christy Plaquin - (00:33:55)

I can take that, Linda. Just maybe suggest the UK first. So the original hedge actually rolled off at the end of 24. So we are seeing the impact of the new hedge in UK margins. So the new hedge fund is a two year hedge and it does roll off at the end of 2026. So the, the impact of the positive gas prices are already reflected in the 2025 margin profile. And then in terms of the breakdown of the, of the, the carbon tax versus the pricing, I would say that around it probably split roughly half and half, but a little bit more highly weighted to the carbon tax impact versus the UK gas hedge impact.

Derek Lasar - Equity Analyst - (00:34:49)

Okay, perfect. Thanks for taking my questions and congrats again.

OPERATOR - (00:34:57)

Thank you. There are no further questions on the phone line. I will now turn the call Back to Linda McCurdy for some closing remarks.

Linda McCurdy - President and Chief Executive Officer - (00:35:06)

Thank you everyone for joining this morning. If there's any follow up questions, please feel free to reach out and if not, we will hear from everyone in Q3. Thank you and have a great day.

OPERATOR - (00:35:20)

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.