Good day, ladies and gentlemen, and welcome to the Keysight Technologies Fiscal Fourth Quarter 2023 Earnings Conference Call. My name is Sarah, and I'll be your lead operator today. [Operator Instructions] This call is being recorded today, Monday, November 20th, 2023 at 1:30 P.M. Pacific Time. I would now like to hand the call over to Jason Kary, Vice President, Treasurer and Investor Relations. Please go ahead.

Thank you, and welcome everyone to Keysight's Fourth Quarter Earnings Conference Call for Fiscal Year 2023. Joining me are Keysight's President and CEO, Satish Dhanasekaran; and our CFO, Neil Dougherty. In the Q&A session, we'll be joined by Chief Customer Officer, Mark Wallace. The press release and information that supplement today's discussion are on our website at investor.keysight.com under the financial information and quarterly reports. Today's comments will refer to non-GAAP financial measures. We will also make reference to core growth, which excludes the impact of currency movements and acquisitions or divestitures completed within the last 12 months. The most directly-comparable GAAP financial metrics and reconciliations are on our website and all comparisons are on a year-over-year basis, unless otherwise noted. We will make forward-looking statements about the financial performance of the company on today's call. These statements are subject to risks and uncertainties and are only valid as of today. We assume no obligation to update them and encourage you to review our recent SEC filings for a more complete view of these risks and other factors. Lastly, management is scheduled to participate in upcoming investor conferences hosted by Wells Fargo and UBS. And now I will turn the call over to Satish.

Good afternoon, everyone, and thank you for joining us. My comments today will focus on three key headlines. First, Keysight reported solid fourth quarter results and finished the year with record revenue, gross margins and operating margin, in what remains a challenging macro environment. Fourth quarter revenue and earnings per share exceeded the high end of our guidance, as orders came in slightly ahead of expectations. For the full year, revenue grew 2% on a core basis and earnings per share increased 9%, while we generated $1.2 billion in free cash flow. Second, our customer engagement on next-generation technology teams remain strong and we continue to action opportunities, across a broad and diverse set of end markets. Despite the mixed demand environment, as end markets normalize from post-COVID supply demand imbalances over the last two years. Third, we're investing both organically and inorganically, to expand our addressable markets and differentiated solutions portfolio, which took other step forward this quarter with the addition of ESI. We remain confident in the long-term secular growth drivers of our business and our ability to address our customers' most challenging and diverse innovation needs. Now let's begin with a brief overview of Keysight's fourth quarter and full year performance. We're pleased with our results and execution. Fourth quarter orders were $1.3 billion, and we delivered $1.3 billion in revenue and $1.99 in earnings per share. We also generated $340 million in free cash flow and repurchased $426 million of our shares this quarter. Full year results were strong in a year of normalizing demand. Orders of $5.2 billion were in line with our original expectations of approximately $1.3 billion per quarter this year. We delivered an all-time high of $5.5 billion in revenue and achieved record profitability with gross margins of 66% and operating margins…

Thank you, Satish, and hello, everyone. Fourth quarter revenue of $1.311 billion was just above the high end of our guidance range and down 9% or 10%, on a core basis. Orders of $1.327 billion declined 16% on both a reported and core basis. Similar to the third quarter, demand in China was muted and accounted for roughly 1/3 of the year-over-year order decline. We ended the quarter with $2.3 billion in backlog. Looking at our operational results for Q4, we reported gross margin of 65%, an increase of 130 basis points, year-over-year and operating expenses of $474 million, resulting in operating margin of 29%. We achieved net income of $352 million and delivered earnings of $1.99 per share. Our weighted average share count for the quarter was 177 million shares. Moving to the performance of our segments. Our Communications Solutions Group generated revenue of $891 million, down 10% on a reported and core basis. Commercial Communications revenue of $568 million, declined 17%, while Aerospace, Defense and Government revenue of $323 million was up 4%, driven by increasing defense budgets and investments in technology modernization. Altogether, CSG delivered gross margin of 68% and operating margin of 29%. The Electronic Industrial Solutions Group generated revenue of $420 million, down 7%, as reported or 8% on a core basis. EISG reported gross margin of 61% and operating margin of 30%. Turning to our full year financial performance. Keysight delivered strong results, despite demand and foreign exchange headwinds. Full year 2023 revenue grew 1% as reported or 2% on a core basis to a record $5.464 billion. Gross margin of 66% expanded 80 basis points. We invested $842 million in R&D, while operating margin improved 90 basis points to 30%. The flexibility of our cost structure and actions that we've taken to further…

Thank you, Neil. Sarah, will you please give the instructions for the Q&A?

Absolutely. [Operator Instructions] Our first question today comes from Meta Marshall with Morgan Stanley. Please proceed.

Great. Thank you. Maybe first question, you guys talked about kind of an over-performance of EISG or how well that business had done over the last couple of years. Just trying to get a sense of, is there a period, where you think kind of represents, the run rate of that business just as we think of the growth of that business going forward? And then -- maybe just the second question, just on the Communications business. You guys have mentioned kind of seeing stabilization in that business. So I just wanted to kind of clarify that none of the weakness that you are seeing has kind of spread to more of the lab testing that it's largely kind of stayed on the production side. Thank you.

Thank you, Meta. Absolutely. The EISG business, as we have said, the long-term market growth rates 4% to 6% and our goal is to beat it. And the business, obviously, has been performing significantly above that for a prolonged period of time. And that's really a function of the differentiated positions, we have, almost unique positions in some -- with some customers across these end markets that they serve. And it's also been a focus for us to continue to diversify the company. And with regard to the Commercial comps business, we saw sequential order improvement between Q4 relative to Q3. And again, that's stability in Wireless, continued stability now for a few quarters in Wireless, especially with 5G. And again, that is a function of the R&D holding up much better, and we're still awaiting a recovery in manufacturing. And then we saw some signs of recovery in our wired part of the ecosystem, again, driven by, what appears to be a sustained push to invest in AI ML/data center infrastructure by the cloud/hyperscalers.

Great. Thank you.

Thank you.

Our next question comes from Samik Chatterjee with JPMorgan. Please proceed.

Hi. Thanks for taking my question. I guess for my first one, so just to clarify the comments around seasonality that you had, particularly now including the acquisition. I think what you're, I guess, guiding to is a sequential decline into the April quarter and that is the trough in terms of revenues. And when you think about the sort of back half of the year, how do you think about seasonality from 2Q onwards? Should we be thinking about sort of the typical seasonal increases that you see? Just any clarification in terms of, if I put in those comments correctly? And I have a follow-up. Thank you.

Yes. So I do think you interpreted the comments correctly. I think as we move from Q1 to Q2, we do expect a low single-digit increase in core Keysight. But ESI, as we mentioned, because of the timing of their contract renewals, recognized as a disproportionate portion of their revenue in Keysight's first quarter, 40% to 45% with the balance 55% to 60%, spread roughly evenly over the subsequent three quarters. So there is a significant drop off on the ESI side of things, just given the timing of those contractual renewals. I think, obviously, we're taking this one quarter at a time, given the normalization that we're seeing in the marketplace. I do think that over time, we expect the seasonality of the Keysight business to return more towards historic norms, than what we've seen over the last couple of years, as a result of the supply chain disruptions, but we'll have to wait and see how that develops as we move forward.

Okay. And just in terms of the -- how to think about margins for this year, just a lot of puts and takes. I know you had some comments earlier about, I think last quarter, it was about sort of a 10% revenue decline is where we should expect 200 to 250 basis points of margin deterioration in the operating margin side, but you now have the acquisition, which is probably a bit diluted, but you also have taken cost actions. So can you just give us an updated framework on how to think about margins for the year, particularly given all the puts and takes? Thank you.

Yes. So we've shared the same essentially, model describing kind of demand normalization here, really since our spin. And that's a model that says, if our revenues are down 10%, that we would expect operating margins to be down 300 to 400 basis points in that scenario. That's obviously pre any acquisition activity. So when you think about layering in ESI, obviously, it's a public company, you can look at their results. At this point, we only own half the shares. It's going to take us a while to get to full ownership. So I think you can layer in ESI in the short run, much as they were -- as they were running as an independent company. And once we get to full ownership, we'll be able to really set our minds on cost reduction within that space, synergy realization.

Good. Thank you.

Our next question comes from Rob Mason with Baird. Please proceed.

Yes, good afternoon. Last quarter, we talked about a surge in some of these longer-dated orders year-to-date. I'm just curious as you wrapped up the year where the total sum of those came in relative to last year? And then do you have any perspective on how those would start to be converted to revenue? Are those 2024 revenue events? Or are we looking more out into 2025?

Yes. So first of all, as we said last quarter, they were about 8% of orders to date, and that's where they finished. So Q4 was on par with the first three quarters of the year, and that compared to we're like 2% as a historic run rate. The majority of that revenue will be in '24, although there is a portion, a sizable portion that pushes out into '25.

And is -- just for clarification, is that likely to show up in the EISG segment or in the CSG segment?

It's a mix. I think earlier in the year, those orders skewed towards EISG, not surprising with the strength in Aerospace, Defense and Government fiscal year-end. In the fourth quarter, they were more skewed towards Aerospace, Defense end market. So it really is a mix.

Very good. And just as a final question, if I could. Just do you have any sense as to what a reasonable time line should be to come complete the entirety of the ESI acquisition, the squeeze-out process?

Yes. It really depends on what happens during this tender offer process, which again, we expect to complete the tender in the calendar first quarter. I think if we do that, then we'll move immediately and that goes as expected, we'll move immediately to a squeeze out that I think would have us complete mid-year. There are scenarios, where if less than the required number of people get to tender, where it will take us a little bit longer to meet the appropriate thresholds to essentially do the squeeze-out process.

Very good. Thank you.

Thank you.

Our next question comes from Aaron Rakers with Wells Fargo. Please proceed.

Yes. Thanks for taking the questions. I want to go back to the prior question on kind of the longer backlog metric. I think last quarter, you talked about that being $200 million. Is that -- I know you said 8% of orders, but is that still that -- roughly that number, which should be on top of the $2.3 billion or so total backlog you came out of exiting this last quarter?

Well, the numbers are included in the backlog, right? And so if you take our order rate for the year about 8%. So you get to somewhere around $400 million of longer-dated backlog, orders with longer-dated backlog that we took within the year. Obviously, some of that -- if we took a 10-month order in Q1, it would have shipped here at the tail end of '23, but you can that view that most of that $400 million is sitting in our backlog, as we enter fiscal '24.

And to be clear, that will, typically, your backlog was a six-month forward number. It sounds like a majority of that would be recognized in the back half of the fiscal year. That's a fair assessment?

I'm just thinking, as we've received those orders all throughout the year. And so again, there is -- there are a couple of large-scale projects that pushed out into '25, where we'll get kind of lump sum revenue recognition. It probably has a back half skew though for the portion that's in '24, I would say there's a back half skew for sure.

Okay. Perfect. And then the real quick follow-up is, could you talk a little bit about what you're seeing on Wireline with regard to AI? Just maybe flesh out exactly where you're involved? Because it seems like that is -- clearly, as we move towards possibly Ethernet and 800 gig, it seems like that would be inflecting. I'm just curious to how Keysight's involved in that?

Yes. Thank you. I think as we talked about, our Commercial Comms business is diversified with exposure into both Wireless and Wireline parts of the ecosystem. For the Wireline parts of the ecosystem, we're obviously tethered to computing, networking, being the core end markets. And what we're starting to see is some signs to the compute markets are starting to stabilize after a period of inventory digestion that was underway. But equally, there is some incremental spend that's occurring driven by cloud and hyperscalers, who are pretty serious about upgrading that infrastructure. And so that's manifesting itself in manufacturing test for our transceiver test business. It's also manifesting itself in increased spend that we saw this quarter for 800 gig and also terabit Ethernet solutions. And so we're quite pleased with the sequential uptick we've seen. Again, one quarter doesn't make a trend, but I think we're encouraged by the progression that we've seen on the Wireline side.

Thank you, guys.

Thank you.

Our next question comes from Chris Snyder with UBS. Please proceed.

Thank you. So orders came in up about 7% sequentially. I think it was the best order quarter number for fiscal '23. And I understand there's seasonality involved, but can you maybe just talk about, where orders have improved versus three to six months ago, versus maybe where you've seen continued softening in orders versus three to six months ago? And then specifically for the AI ML and the data center infrastructure, could you size how big that AI ML related businesses today, whether it's on orders or revenue? Thank you.

Yes, maybe at the highest level, I would just say, we got a sequential improvement, I would say, in orders from our Aerospace, Defense business, which was strong. Obviously, the year-end is typically what we expect. We saw that for Commercial Communications, sequential growth, stability in Wireless/5G and a sequential uptick in our Wired part of the ecosystem. And what we anticipated also was, we would see some softness in the EISG business, particularly with Asia and China, and we did experience that. Now again, to put it in context, the EISG business is just later in undergoing this demand normalization. And so that was what we had sort of forecasted, and so it behaved as we expected. With regard to the Wireline Ecosystem, I just go back to our long-term growth rate expectations for the Communications business in general and say that we see a business that is diversified, where multiple technology waves are overlapping. And that gives us inherent stability and resilience, and we're pleased by some of the progression we're seeing in the AI ML spend, because we've been working with customers on this for some time now. And we expect that as more of the network traffic is driven by applications that are coming out for AI ML, this will become a bigger part of our business. I'll just maybe hand it off to Mark to make some comments on orders.

Yes. Thanks, Satish. Chris, I'll just add a few color comments to what Satish did here. And then it really begins with all of our customers, still remaining very active in their R&D projects. And we see that in our funnel in terms of new funnel intake, which has been very positive. And our ability to convert that remains high, although as we've said for the last several quarters, some of this long-dated backlog and then customers taking a bit more time to make these decisions as have been a factor as well. I'm also seeing stabilization in the indirect businesses, some of the inventories in our distributors normalize, and I'm very pleased with our e-commerce business, which continues to be strongly adopted. We saw about a doubling of business through that -- through that channel. And in total, we continue to add new customers, more than 2,000 during the course of the last year, and about 300 of those came through e-commerce. So there's some positive elements of what we've seen in the fourth quarter.

I appreciate that. And then for my follow-up, I guess maybe more of a modeling question. For the revenue, Q1 revenue guide, the $1.245 billion at the midpoint, does that include $60 million from ESI implying about $1.285 billion at the midpoint for organic Keysight. It seems to be a pretty sharp fall off versus the 1327 orders we just got. Thank you.

Yes. $1.185 billion, not $1.285 billion, but your math is correct. $1.245 billion, less $60 million gets you to $1.185 billion for Core Keysight. And what we've typically seen is on the order side is a high single-digit sequential decline as we move from Q4 into Q1. And I think given the normalization, that we're currently seeing, particularly in EISG, we expect a sequential decline this year to be a little bit larger than historical average. And so that's -- and again, with orders and revenue converging, that's how you can think about getting to that $1.185 billion for Core Keysight.

Thank you.

Thank you.

Our next question comes from Mark Delaney with Goldman Sachs. Please proceed.

Good afternoon. Thanks for taking my question. A question on Commercial Comms. And do you think the company can get back to the historical highs in the Commercial Comms segment, in terms of revenue from a resumption in 5G alone? Or do you think you would need some contribution from things like 800 gig and 6G in order to get there?

Yes. Thank you, Mark. Absolutely, we are confident in the long-term outlook for the business, I outlined at Investor Day several overlapping themes of technology waves that are playing out across end markets. And our view remains solid with that. In fact, as we engage with customers even through this time, where the spend has been lower, customers are intensely focused on higher priority R&D programs. And so that strategic view has not changed for us. Obviously, there is this current demand normalization that's occurring after fiscal '21 and '22, where we had outsized order growth in the business. And so post normalization, we remain confident in our ability to continue to grow the business, because of these multiple ways of technology across both wired and wireless ecosystem.

That's helpful. And other question on the competitive landscape with one of your competitors having recently been acquired. Have you seen any change in any opportunities in terms of new business wins or any changes on the competitive front that you would point out? Thanks.

Yes. No, we remain active in all of the markets that we serve. The automotive market, in particular, continues to be quite robust with many customers investing in long-term EV projects, which we continue to engage with. So no, we've not seen any change since any recent announcements.

Thank you.

Our next question comes from Adam Thalhimer with Thompson Davis. Please proceed.

Hey, good afternoon, guys. Congrats on the strong Q4. Can you give a little more color into what is going on in China and whether you're seeing any green shoots there?

Yes. Thank you. I'll have Mark make some comments, but thank you. We're pleased with the execution and the operational performance of the business in fiscal '23. Our engagements in China with customers remain strong, but I'll have Mark make some comments by end market.

Yes. Our business in China remains very diverse. We did see softer demand in Q4 and in the second half. And actually, our business in China held up relatively strong in the first half, especially from the EISG standpoint. But there is incremental weakness in manufacturing and in semiconductor, and we expect that to continue for the next couple of quarters. Where I see the activity is around the areas that, we have remained focused on high-speed digital, optical, auto and EV and AE and opportunities for mature semiconductor technologies continue there as well. I also think we've de-risked quite a bit of the trade impact that we've been experiencing for the last several years. We'll watch that carefully. It's been fairly status quo, I would say, for the last couple of quarters. And if we do see some moderation to the demand normalization on the manufacturing side, I think we'll be very well positioned when that happens.

Okay. Thank you, Mark.

Yes.

Our next question comes from Atif Malik with Citi. Please proceed.

Hi. Thank you for taking my question. The first one for Satish, you guys are seeing stability in 5G market maybe restocking in China smartphones. And it sounds like you're optimistic about second half of next year. Is it possible for you to provide us a few milestones on the next 5G standards and maybe earlier rollout of 60 that we should be looking forward to for next year?

Yes. Thank you. I think at the highest level, the things, that I watch for are the continued progression, the smartphone industry is making in inventory reductions, right, that's been talked about for chips and final device form factors. So that's one thing we watch. Obviously, when we think about the 5G standards progression, what we're seeing so far is increased interest from customers in Open RAN, even in our 5G business this year, Mark and team have added new customers to our already strong mix of installed base customers. So our leadership position continues to remain strong and we're continuing to remain differentiated with our portfolio, which is very broad and cares to the need of the entire ecosystem. The area that has also gained a lot of importance, as we went through the last year, has been the non-terrestrial networks so the satellite cases with 5G. And we're also seeing some interesting new use cases associated with Release 17 and the research interest across the globe to build organic IP in what comes beyond 5G has already kicked off and Keysight continues to play an early role in partnering with these customers. So when we look at our investment priorities. Yes, we're investing in R&D, but and we're focused on that -- focusing that investment around these next-generation themes, which will continue to enable us to be strong and grow the business over the long run at the rates that we've put out at the Investor Day.

Great. And then a follow-up for Neil. Neil, you talked about orders down high single-digits, in the January quarter because of EISG being down more than historical average. And you're pointing to an April quarter revenue trough because of ESI seasonality. Should we be thinking about orders recovering in the April quarter or coming down with that revenue decline?

On Core Keysight, we would typically see a sequential increase, as you move from Q1 to Q2. I think we'll need to wait for some time to pass, but to give you a sense of how that increase is going to compare to historic norms. But typically, you would see a Q1 to Q2 increase. And I think based on everything we see at this point, that's what we expect.

Great. Thank you.

Thank you.

Our next question comes from Matthew Niknam with Deutsche Bank. Please proceed.

Hey, guys. Thank you for taking the questions. I have one follow-up to a prior question and one other one for Neil. In terms of the follow-up. So we're talking about a softer than seasonal outlook for Core Keys, stripping out that 60-ish million from ESI in fiscal 1Q. Is that primarily EISG i.e. are their expectations for more relative stability to sustain in comms and some of the strength to persist in ADG? So more just sort of unpacking that outlook for fiscal 1Q, across the segments? And then maybe for Neil, you're talking about CapEx of about $150 million. I think at the Analyst Day, it was around a $225 million mark for fiscal '24. I'm just wondering what's changed?

Yes. So on the first question regarding the seasonality, I think you have it mostly right. I think we're experiencing incremental softness in EISG and then a lot of that is in China and Asia. And that's what we're attributing to the slightly expected higher seasonal decrease for Q1. And then the second.

Yes. On the CapEx, I mean, obviously, the business has been softer this year than we expected. And so when you think about investments in capacity and those types of things, we have either canceled in many cases or delayed other programs in response to the current macro environment, which is resulting in the reduced expectations for CapEx going forward.

Great. Thank you, both.

In '24. You're welcome. Thank you.

Our next question comes from Tim Long with Barclays. Please proceed.

Thank you. Two, if I could. First, on the Wireline side, could you talk a little bit more specifically about optical kind of what you're seeing there? Where are we in cycle, it's been a little bit more challenged with some of the companies in the ecosystem. So if you could just talk about what you're kind of seeing on the physical test side, as well as Ixia. And then, just the second one on the Defense Automation business. It seems to be continuing rolling along really strong. Could you talk a little bit about sustainability of that kind of defense line, over the next multiple quarters? Thank you.

Yes. Thank you. Sure. I'd say we've always believed that strategically, having both the physical and protocol and having a leadership position across both is an advantage, and we'll see that play out at this point, especially as the challenges migrate between SerDes and the Optical side and the Electrical side and our ability to connect the dots for our customers is an advantage for us, and we're able to monetize the advantage. I would say 400 gig Ethernet still continues to be the predominant investment standard with customers shifting priority to 800 terabit and beyond, from a research perspective or development perspective, and we're able to engage across that entire life cycle. Which has caused the sequential uptick we see. And we also see some of that. I'll have Mark make some comments on the funnel of opportunities as we look ahead. On the Defense side of the business, again, not only in the US but across the globe, the increased spending in technology investments in Aerospace and Defense is a trend that's playing out. In the US, I would say the prime contractors have been referencing growth in backlog and growth in orders. And I think all of that, we've seen a stronger uptick, I should say, in the Aerospace Defense business, in the most recent quarter. But equally, that bodes well for 2024. Obviously, we watch the Defense budget getting passed because that's an important milestone for that business. But I think given the bipartisan support that exists, we can be reasonably confident about the outlook for Aerospace and Defense in fiscal '24. I'll have Mark make some comments.

Yes. There's not much to add. Satish has covered it well. But what we've seen is this pattern of R&D and manufacturing on the wireline side. And we saw an uptick in 800 gigabit manufacturing spend for optical transceivers, feeding into network build-out and data center upgrades. So we saw a sequential improvement and the funnel would support that continuing. We saw AI server and GPU infrastructure testing also on the physical side. So there's some demand growth there. And as you pointed out, our broader portfolio in protocol solutions was reflected in some of our network visibility growth, particularly from enterprise customers. So these are all strengths that we were able to capture during Q4.

Okay. Thank you.

Our next question comes from David Ridley-Lane with Bank of America. Please proceed.

Good evening. Thank you. So just really quick question on the margins. If I'm understanding sort of the seasonality comments on the ESI Group, that actually should be very modest, but it should be a tailwind to margins in the first quarter? So I completely understand the revenue guidance, but is there anything onetime that's implied in the first quarter margin?

You should be able to bridge from the Q4 results that we just put up to the Q1 guide, even if you adjust for the ESI, really with two bridging items. The first is the increase in the tax rate from 12% to 17%. And the second is the implied reduction in revenue, right, which we just talked about, goes from $1,311 million to $1,185 million so about $125 million reduction in revenue should be sufficient to bridge the delta.

Okay. And then for the full year, I know there were several project push-outs in semiconductors and other areas, maybe more broadly in China. But could you size sort of the full year impact of orders in fiscal '23, from those kind of project push-outs. And then look, it's always uncertain, but if the construction time line has stayed intact, should we expect sort of a similar magnitude to show up in fiscal '24?

I'm not sure I follow your question. If people are pushing out and we have confidence that they're ultimately going to take delivery of product, generally speaking, we leave those orders on the books.

Are you speaking about semi specifically with fabs? Is that?

It was revenue and so if it was an order that tied to a semi fab, where the construction itself got pushed, that status orders, and you would just recognize the revenue later.

So you're talking about where deliveries got pushed out of three out of '23 and '24 and beyond?

Yes.

Yes. So on semi specifically, I think there's two factors. One is the forward-looking demand, some of that has been pushed out because of delays in the fabs. And then the second part is delays of backlog. And I think you characterized it right going into late '24 and early '25.

Thank you very much.

Thank you.

Thank you.

Thank you for your question. That concludes our Q&A session for today. I would like to now turn the call back to Jason Kary for any closing remarks.

Thank you, Sarah, and thank you, everyone, for joining us. Just to wrap up the call, I'll turn it over to Satish, and over to you.

Thank you, Jason. I want to thank all our shareholders for your support of Keysight. And I want to let you know, we remain incredibly confident in our future, and we're continuing to invest for growth around next-generation technology teams, which have strong customer validation. While doing so, we're also prudent in our spending and maintaining a strong discipline from an operating perspective in factoring in the current environment. And finally, we're also very confident in the free cash flow position of the business, and you've seen us in the most recent quarter, buy back over 100% of our free cash flow in our own shares, given the valuation at this time. Thank you very much and hope you have a good rest of your day.

That concludes our conference call. You may now disconnect your lines.