Good afternoon. My name is Kelly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Knight Transportation Third Quarter 2015 Earnings Call. All lines have been placed on mute to prevent any background noise. After the prepared remarks, there will be a question-and-answer session. [Operator Instructions]. The speakers for today's call will be Dave Jackson, President and CEO; and Adam Miller, CFO. Mr. Miller, the meeting is now yours.

Thank you, Kelly, and good afternoon everyone and thank you to those who have joined the call. We have slides to accompany this call posted on our website at investor.knighttrans.com/events. Our call is scheduled to go until 5:30 PM Eastern Time. Following our commentary, we hope to answer as many questions as time will allow. If we're not able to get to your question due to time restrictions, you may call 602-606-6315 following the call, and we will return your call. Again, that number is 602-606-6315. And the rules for questions remain the same as in the past. One question per participant, and if we did not clearly answer that question a follow-up question may be asked. More often than not, we end up with a few people in the queue that are not able to ask questions. So we ask again to keep it to one question per participant. Thank you. To begin, we will move on to Slide 2, I will first read [ph] the disclosure on page 2 of the presentation, also read the following. This conference call and presentation may contain forward-looking statements made by the company that involve risks, assumptions and uncertainties that are difficult to predict. Investors are directed to the information contained in Item 1A, Risk Factors, or Part 1 of the company's Annual Report on Form 10-K filed with the United States SEC for a discussion of the risks that may affect the company's future operating results. Actual results may differ. Now I’ll begin by covering some of the numbers in detail, including a brief recap of the third quarter results, starting with Slide 3. For the third quarter of 2015, our diluted earnings per share grew at $0.37 versus $0.31 from the previous year. Our net income increased 20.6% year over…

Thanks, Adam. Good afternoon everybody. Now on to Slide 8. In the third quarter, our asset-based trucking businesses operated at a 79.8% operating ratio despite less of a tailwind from fuel expense, a less robust freight market, less gain on sale of used equipment, and higher driver wages, we were able to maintain or to again perform with a sub 80 OR. We continue to see positive results from our internal initiatives centered around improving yield, increasing productivity, providing a high level of service and managing our cost per mile. Our non-asset based logistics business continues to grow revenue despite much lower fuel surcharge, which is included in the logistics revenue number and the shortening length of haul in the brokerage portion of logistics. Declining commodity prices negatively impacted income growth for logistics and was the primary reason for the 13.1% decline in logistics operating income. However brokerage operating income improved 8.8% and intermodal improved 20.5% on a year-over-year basis. Load volumes increased 64.8% in the brokerage business on a year-over-year basis in the third quarter. In terms of profitability, our logistics segment operated at a 93.6 operating ratio. Our logistics performance continues to confirm the opportunities for growth as well as the value provided to our customers through our offering of brokerage intermodal services in addition to our truckload services. On to Slide 9. This graph demonstrates our progress in incrementally improving returns on invested capital or ROIC when comparing third quarters over the last five years. We have been sharing this graph for some time and we continue to update it and we continue to see positive results there. Each of our business segments is designed in a way to yield double-digit returns on invested capital and that is our expectation for each of our businesses. These current…

Thank you, Dave. Slide 13 is our final slide, we will discuss our guidance. Based on the current truckload market and recent trends we are reducing our previously announced fourth quarter 2015 guidance range of $0.37 to $0.39 per diluted share to $0.36 to $0.38 per diluted share. Our expected range for the first quarter of 2015 is $0.32 to $0.35. Our guidance is conservative with regards to fuel, we do not expect it to create [ph] the same benefits of declining fuel prices we experienced in the fourth quarter of 2014 as well as in the first quarter of 2015. We remind you that last year in the fourth quarter and this year in the first quarter we estimated a $0.03 per share benefit from the rapidly falling fuel prices. Some of the additional assumptions made by management include minimal organic growth from our current tractor count as Dave mentioned. We expect total rate per mile for the next two quarters to be slightly positive. We also expect slightly positive miles per tractor compared to last year. Long term we expect to continue to grow our logistics segment in the 25% plus range while operating with a low to mid 90s operating ratio. In the fourth quarter and first quarter we expect load count to continue to grow at a pace similar to third quarter. However we expect headwinds that include a lower fuel surcharge and a shorter length of haul will have an impact on the revenue growth year-over-year and may result in growth below that 25% pace in the near term. We expect driver wages and hire related costs to continue to be inflationary. We also expect our fourth quarter and first quarter gain on sale to be modestly lower than the prior year. And as far as our tax rate, we expect that to normalize in the fourth quarter and first quarter in the mid 39% range, again excluding any unusual items. These estimates represent management's best estimate based on current information available. Actual results may differ materially from these estimates. We would refer you to the risk factors section in the company’s annual report for a discussion of the risks that may affect results. So this concludes our prepared remarks. We like to remind you this call will end at 5:30 Eastern. We will answer as many questions as time allows. Again please keep it to one question. If we’re not able to get to your question due to time constraints, please call 602-606-6315 and we will do our best to follow up promptly. And Kelley, we will now entertain questions.

[Operator Instructions] Your first question comes from the line of Rob Salmon from Deutsche Bank.

Dave, could you perhaps elaborate a little bit in terms of the acquisition opportunity that, that was something you'd called out, what sort of ranges of opportunities are you guys currently seeing and how willingness -- how much willingness and capability do you guys have in the balance sheet to potentially expand the credit revolver, if there is a bigger opportunity out there?

Well, we basically look at any company that is in our space or somehow could be – close to our space, or close enough to our space, we like to look at those and evaluate whether there is maybe a good fit or something we don't know that we could learn and may be a corollary to our industry. Most of the effort we look at is with folks that are moving full truckloads asset based businesses. And I would say that we have a lot of friends in the industry. We have ongoing dialogue of various forms that are constant. Kevin Knight still works full time and works as much as he ever has and he has little more time to have those kind of conversations and kind of explore that area a little bit more than certainly what our company has ever had doing that. And Kevin is very insightful on how – who to look at and what to talk about. So those efforts sometimes go on for a while before you have a whole lot to show for it. Our acquisition last year was one that materialized over a period of time and with a lot of dialogues. So we don't know how to – you can’t force an egg to hatch or bean to sprout before it’s time. And so we’re just fostering the right kind of environment there. Now as far as the balance sheet goes, I think we certainly have the capability to borrow a lot more. There are several others in the space who have been able to borrow several times, it seems their EBITDA, were a fraction of our EBITDA and so there's a lot of opportunity there, if we ever wanted to do it. We are a conservative bunch. We’re very deliberate when it comes to investments and we seek a double-digit return ideally right away and if we can’t get a double-digit return, by the way we have to have a lot of confidence that we could get there relatively quickly. So we’re careful in what we do and -- but if the time came or the right opportunity was there, we’ve got plenty of banking partners that would love for us to lever up a bit more.

I am sure of that, Dave, I guess, kind of my quick follow up would be, what is the maximum leverage threshold where you guys would be comfortable in the current environment?

It depends on who you ask. I mean there is – we’re not necessarily all of one mind and sometimes we feel like conservative would be a little bit, some would favor more conservatism, others might be willing to do little bit more and we talk through it and look at opportunities. I mean, Rob, you know as you look at our history, we've never called out very far out on the branch and we play things pretty conservatively. When we look at borrowing money, I mean our belief would be that if we had one times EBITDA, it wouldn’t impair the value of our stock at all, maybe than one and a half somewhere in that range, you guys would know better than us. And so if you are buying a good asset that’s going to bring some EBITDA with it, you kind of look and evaluate that. We’ve really enjoyed being in a position where we are not beholden to banks and got a lot of flexibility or even dry powder if you will. But at the same time we feel like and we spend a lot of time trying to understand this industry, anticipate where it’s going, anticipate what would be a strategic move and if we found the right opportunity we’re not -- we don't have any hard fast rules or parameters that we’ve kind of boxed ourselves in with. So if you saw us do a bigger deal it would be not because we felt like we just needed the revenue or it was a reactionary decision, it would be because we see a lot of strategic -- a lot of strategy and value creation in such a deal.

Makes sense, appreciate the color and good luck in terms of cultivating those M&A opportunities.

Yeah, if you got any leads, Rob, just give us a buzz.

And your next question comes from the line of Ben Hartford of Baird.

I guess let’s keep on that vein, Dave, in terms of thinking about the business strategically. You talked about some of the expanded logistics and the management transportation offerings in the quarter, I guess what stands out is, is your gross margin expansion only up 70 basis points this quarter. So I am curious to what degree was that muted relative to some of the competitors that have already reported 3Q results? Is that pace of expansion, has it been muted by some products that you’re rolling out? Obviously you are growing that logistics unit very rapidly, so maybe there is a strategic element to that as well. But can you talk a little bit about some of those investments in new products that you are rolling out at the moment which might be blunting the gross margin expansion in an otherwise soft truckload market? And then as we think about ’16, what is your view on how we should think about gross margins relative to load growth in that segment in ’16 and going forward?

Okay. I'm trying to write down all of those questions, Ben, so I don’t miss them, okay. You might have to remind me. So I think, first off, talking about our gross margin expansion 70 basis point and how that compares. I think that just about every broker goes about it a little bit differently, at least they approach the market in a different way. Our brokerage approaches the market very much on a -- maybe more of a transactional basis than a deep long making a bet on where rates are going to be and we lock in a lot of commitment. So when we look at how committed if you will we would be with that freight that we find third-party carrier capacity, a minority of those loads would be under some sort of a commitment. So that’s not necessarily the case with other folks and I think some of the other folks might have -- those that have assets, it might be more of an overflow for an abundance of commitments they’ve already made on their trucks and so by its nature it naturally has a high level of commitment than you have something on asset based brokers that are just very savvy and move very quickly and they commit and then they move to more of a transactional and then they move back. And so as we’ve been growing and building this business, it’s largely been transactional. So I think you've seen that, you've seen some of the rates that we’re moving those loads for have been under some pressure, but we've been able to buy in the market commensurately and in many cases a little bit better even than the kind of pressure we’re seeing on the market side. So as that business grows and…

And your next question comes from Matt Brooklier of Longbow Research.

So you talked to next year in terms of yields and I think it was – it’s either next year or the next two quarters, a low single-digit number but I was just curious to hear if you had or maybe were able to quantify a range in terms of yield growth in ‘16 and then I guess a follow up question would be, what kind of demand environment would that range be assuming?

Well, we don't know what we’re going to see in rates next year and I don't think anybody does. I think everybody is trying to understand where the market is. I can tell you this. We’re going to -- we expect to continue to raise our driver pay into 2016 and probably in ‘17 and ‘18 and beyond and that’s not going away. And so we can’t afford -- we can’t afford to do what it takes to attract and recruit and retain drivers to provide good service to our customers if we are not continuing to get a little bit more. And so I would expect that we would see an increase not to the degree that we saw in 2015 right now based on how we look at it. When we – as I somewhat alluded to, I think, it was Ben’s question, the peak season will have a factor in how we all think about this and tell us kind of where the market is. We -- each of the last two years we've seen the trend pickup somewhere between the first and second week of November is when peak hit and then it’s off to the races until the end of the year. And interesting enough if we look at last year, for example, the first three weeks of December were the highest volume weeks that we had if we looked at miles per truck. So the first three weeks of December were the strongest of the fourth quarter and that is not usual, that’s not typical of trucking in the 35 years post de-regulation. And so e-commerce is one of the few legitimate explanations we would have for that and kind of truncating the timing of purchases and movement of goods. And so it will…

Your next question comes from Chris Wetherbee of Citi.

Maybe wanted to catch up a little bit on sort of how you’re seeing the market in October, so little bit shorter term and then when you think about the modest trim to the fourth quarter numbers, specifically sort of what were the drivers of that, the puts and takes and whether it be partially from logistics and then some from truck. I just want to get a little bit more context around that would be great. Thank you.

Okay, so I will maybe talk October and then I will hand it to Adam to talk more about kind of the guidance. I think that -- things are still good, not as – or not strong across the board, we do see some bright points throughout the country. We’re not entirely convinced that we didn't have a few more goods that moved a little earlier in the year ahead of schedule, maybe as some have said with the West Coast port shutdown looming and it’s not shutting down as long as some had feared and then really the cleanup getting worked out a little faster than maybe many expected, has -- maybe some of the reason why we've seen inventory to sales ratio is below the way that they have. It feels like maybe that’s starting to – and when I say it feels like I am talking about just very recent data here over the last few business days but it feels like maybe some of that slack in the chain might be leaving, in most regions of the country we feel pretty good right now, and if there was the weakest part, I would say the Northeast at the moment feels that way. And so I don't think that there's anything we’re seeing right now in the third week of October that would have us abandoned the anticipation of a significant volume pickup somewhere in between that first and second week of November. So feels like we’re on track for that and so there's some October commentary.

Yes. And then to your question about guidance, Chris, with our focus on improving our miles per tractor and then the difficult driver market that our industry faces, we trimmed up maybe the tractor growth that we expected to see in the fourth quarter, so reduced that count slightly and then in terms of our pricing, Dave commented that the volume seemed to be there but probably seeing less, maybe spot market opportunities, I guess, what you call spot market opportunities thus far in the fourth quarter, so we just trimmed up maybe our expectations on the pricing side. It really doesn’t take much to move a penny when you’re dealing with – when you’re looking our trucking business. So it’s more trucking related and more of the strategy of increasing our productivity, not foreseeing equipment in when it may not make sense for us.

Your next question comes from the line of Tom Wadewitz of UBS.

Let’s see, so on the logistics piece – I am not – I think I understand your comments on brokerage but it sounds like it was outside of the truck brokerage that caused some of the pressure on the margin. Could you explain that a little bit more, if you referred to commodity and then is that something which – how long does that recur, is that a factor in the fourth quarter that could cause the decline in the logistics operating income and would that go into 2016 as well?

Okay, you bet Tom. The piece that I was alluding to, we talked about commodity prices, it’s an agricultural sourcing business that we have and that we operate. And we’re just on the wrong side of where market is at the moment. I would expect that, that will continue here in the fourth quarter and possibly as well in the first quarter. We will be clear to pull out what's going on in brokerage just like we did this quarter. We will continue to do that. So you have good visibility of that. It’s not -- it's really not a very large piece of what we do. It's just the logistics piece isn’t all that big in and of itself. So this was a quarter where we did see positive revenue growth out of our intermodal business which was overdue and we saw a good operating income growth out of there again and then of course you saw the positive numbers out of the brokerage.

So that headwind continues for maybe a couple more quarters but it’s not – whatever, it just doesn’t sound like a big concern. If I can – just on other income was a little stronger than I expected, does that also continue in the fourth quarter like that, kind of 2 million to 3 million, then I’ll let it go at that, thanks for the follow on or the second one.

Yes, we would expect that other income to be probably similar to what we've experienced by the first three quarters of this year.

Your next question comes from the line of Thom Albrecht of BB&T Capital Markets.

Couple of my questions were just answered but on that other income, Adam, is that primarily USA truck stock or the TRP stuff that you mentioned in the Q?

Yes, it would be a combination of those two. Would be driving that number primarily.

And then Dave, I guess just kind of a bigger question, you're going to go into the next couple of quarters, the market’s been more challenging, you know who knows what. But your organization has enjoyed such success over the last couple of years, how you keep morale up during a period where earnings are likely to be down a little bit and your business mix gets maybe hit a little bit more, I mean what do you do to keep the spirits riding thinking ahead to the next time when you get to be back in the saddle so to speak?

Yes, well, if you asked me a tough question, then I am going to ask you about the Cardinals and what happened. So I am a cup stands [ph] the problem, so I know where they stand right now. But I think the first thing I would say is, if some of our employees are listening right now, they just heard the word morale maybe for the first time. We just don't talk about that, we’re not of that -- maybe we’re not traditional with that mindset of the beatings will continue until morale improves kind of mentality. We don't try and do things that are aimed at -- that helping people feel better than themselves and that maybe more of a superficial like, where we try to go at is the core, where we have people who can expect from us clarity and what is expected, what they get from us is a number of people who are willing to help them be successful. What they get from us is on at least a weekly basis the opportunity to evaluate a very small limited subset of all the measurements we measure in our business but how we measure them to be successful so that your top performers regardless of what’s going on with the stock price, regardless of even what’s going on EPS way beyond them but in what they are responsible for, they have visibility and even recognition or the proper coaching and help to be able to achieve their full potential. And so it's not hidden and there's something empowering that happens when people understand what's expected and are given things that are within their control, and then they go off and execute at a high level. And so we just have simply built a company around…

Your next question comes from the line of Brad Delco of Stephens, Inc.

Dave, a lot of questions have been asked, just kind of want to take a step back, strategically what sort of decisions may change and how you maybe think about capital deployment or growth in brokerage or adding trucks or acquisitions, if we do see any ELD mandate in the near term versus the chance that we see further delay, will it change your -- the way that you think about the business strategically?

Good question, Brad, I think we’re going to proceed on the logistics side the same way regardless. We have so – we feel like we have so far to go and that there is so much efficiency that we could provide to a customer. And so that's going to continue to grow. Our decision on when to organically add trucks is inseparably connected to our feel in the market and to the degree that the market is such that justifies with price that and we feel like we have the relationships and volumes to have -- the volumes to have more trucks at other improving prices than we add trucks organically. I think that an ELD, the final rule in the ELDs would be constructive there and possibly would be constructive there sooner than we might think, sooner than the actual drop set final compliance date. And so I think the ELD mandate may have some impact on what supply looks and feels like which consequently has an impact on organic truck growth. In terms of our desire to acquire businesses, we spin-off a lot of free cash flow. We’ve got a very good track record with acquisitions so far in our history and we – as I said in my remarks earlier, we feel like we’re very sensitive to how important the driver culture is, how important the customer's view of maybe the niche or the kind of service that’s provided, that we don't damage or impair in anyway what's working well, the culture inside the company, those are all things that we’re highly sensitive to and we feel like that, with the experience of truckload business and the visibility we get with our own business, that gives us confidence to make acquisitions. And so I don't – ELD final rule the end of this month or not that’s -- that really – I don't see that changing our outlook there. So was there another question you asked on top, or did I –

I think you covered all of it.

And your next question comes from the line of Brandon Oglenski of Barclays.

Dave, [indiscernible] in the near term and I don’t want to be too negative here. But can you talk about your normal visibility at this time of year into what you would expect for the fourth quarter, do you just not know until mid-November, early December what it's going to be like?

Sometimes and sometimes not. I think in the fourth quarter of 2013 which was a very good quarter, we did not have a lot more visibility that I would say if any than we have today. Last year was different. Last year we had customers that had reserved capacity, if you will, were willing to pay for it regardless of whether they had enough volume to keep them busy, some did that all the way through Labor Day, which I don't think we had ever seen before through the summer. And so of course in the fall you had many that were very much positioning themselves to make sure that they had trucks, probably paying for trucks to be underproductive a little bit in the build up to what ended being a very strong peak season. And so I would say that where we sit right now feels a little bit more like fourth quarter of ‘13 and – but that's okay and that's an okay place to be. I think, volume wise it will be strong and pricing environment just may not be – or we don't expect it to be what it was last year when you look at kind of what -- the jam may be that some shippers found themselves in and meeting the somewhat last-minute without commitments find capacity and the rails are working more efficiently than it did a year ago. And so you’ve got some factors at play there. To the degree that e-commerce grows more than it did last year which I know in the Jackson household that will, then there's a good chance that a lot of us do like I did last night which was buy my kids Halloween costumes online and do so without a whole lot of time to go. And so if we see that kind of behavior from the broader consumer base, then that probably again leads to a lot of freight volume in late mid-November and throughout all of December. And so if we see it again this year which we expect to see it, it would be hard not to draw that parallel to the e-commerce space and hey, when there are shifts in consumer behavior they make a big difference. And there have been shifts in consumer behavior obviously over the years and Walmart created one of those a few decades ago that that was very very powerful. And so we’ll just kind of have to see what all that means for truckloads, so we’re all kind of watching and looking closely.

Appreciate that, I mean, is there any volatility now – we were pretty dismissive as an industry of where spot rates went earlier in the year, because obviously we were comping all these issues and still are to some extent. But I mean is there more volatility now that spot rates actually are more indicative of where the market is clearing and if we don't get this uptick in activity like you suggest, I mean is it possible we could give back some run rates in 2016 or that’s just not given in the realm of opportunity here or possibilities?

Well, I think Brandon, the question is in the definition of spot rates. If we want to call spot rates, the rates that are provided by load boards or aggravated – or an aggregation of several load boards and call that spot rates, I think by doing that we’re looking at the least valuable truckload transportation, that is the most supplied with capacity and that has the most frothiness for topline growth. You’ve got brokers who are all trying to grow toplines, buying capacity from small carriers who largely were the ones that added trucks sometime, I don’t know in the last year or a year and a half when things started to get good and fuel got cheap. And that's where -- that's the exchange where those people meet each other and so shippers, our customers did a very good job I think through the bid season and remedying a lot of the challenges that they had in ‘14 and they committed up I should say, not over committed but they committed up their business little more solidly perhaps and they were willing to pay for that. And so to try and think that live unload freight where you don't have -- you don't have extra trailers, you don't have some of the value-add that comes from the larger national fleet to draw that with a broad brush, I think would be misleading. Now what goes on in that, what I'm going to guess is 6% or 7% of the total market that we see on that load board cannot be indicative of what’s going on, on the broader market. Yes, it is; the problem is I think it’s late. I don't think by the time you see it, by the time you start to see it’s there, it’s…

And your next question comes from the line of Todd Fowler of KeyBanc Capital Markets.

I guess I wanted to ask a little bit on the pressure on the earnings growth. I think I understand some of the moving parts with the fourth quarter guidance especially given the environment last year in the fourth quarter, but thinking about the first quarter, even if I adjust for the $0.03 on the fuel side, I am basically coming up with earnings at the midpoint of the guidance being about flat again adjusting for that $0.03 of the fuel. I guess I was wondering if you could talk a little bit about the first quarter environment and the comparisons and kind of why we’re not seeing more of the earnings growth given the fact that you’re expecting base rates to be up little bit of a larger fleet than kind of some of the moving parts into the first part of next year?

Yes, that’s a good question. I think you're calling us conservative a little bit there and that's probably built to these charts. And I think – why we've been called worse -- so I think that when we look at – when we look at the first quarter, there is a lot – there is a lot that we are going to learn in the next three weeks let alone over the next – by the end of this quarter. So I would say you’ve just got to look at that, take it for what it is. There was a $0.03 benefit on fuel last year first quarter. We’re assuming that it’s going to – that the $0.03 is gone but you know what the reality is, it could go the other way on us. So there is a piece there we are not sure of. We are -- if you would look at organic truck growth we’re not going to go into the year with a lot of momentum in terms of adding trucks, we just typically don't. And so that's a key factor that we’ve got in there. So the best I could tell you is that’s a range that we can give at the moment, that we would be comfortable with and we will revise and update after the end of the fourth quarter.

Are there share buybacks in the fourth quarter or the first quarter guidance?

Yes, we would assume some buyback probably at a pace that you saw in the third quarter, would be what we’d expect. But again we may adjust that based on where we see the market.

Your last question comes from the line of Kelly Dougherty of Macquarie.

Just wanted to follow up on something you talked about earlier. Assuming that 2% to 4% price range next year and what you're thinking about from the driver pay side of things, I mean is there room to improve the trucking OR, you guys have already efficiently run but I know there's productivity and cost per mile things you are working on. So can you help just think about what might happen on the trucking OR side?

Kelly, I will be brief. The answer is yes. There's a lot we can do -- we closed the gap a little bit on miles per truck. We had been leaking a little more on a year-over-year basis. We closed the gap a little in the third quarter. We think that there are things we can do to improve that. One of the things that is I guess a blessing and a curse at the same time is how frequent we see bids from customers. And so we have a very diversified group of customers more than thousand customers and we’re using some new technology, we’re better utilizing existing technology we have to help us figure out where can we be more productive, where can we provide higher levels of service, where can we find more efficiency with our trailers? And the belief is that efficiency is always what wins and so if that is where we are trying to continue to improve, where the customer benefits and we benefit, it ends up being better for our cost structure, better for our OR. And so we will have probably 450 to 500 opportunities between now and the next six or seven months to retool, tighten up, make adjustments in our freight network with the exposure and visibility that we will have to beat. So our goal is to figure out if the market is going to give us 2% to 4%, if that's where the market goes, then our job is to amplify that with running more miles and doing so in a more efficient manner. And so it is there. It’s in the front, it's right in the front for us. I wish that this was not the case but we do -- we are towards the bottom half when you look at how many company miles we’re running on our trucks. And so we think that there are ways that we can -- there are things within our power that we can do to improve that. And so my answer is yes.

Perfect guys, thanks very much. End of Q&A

Well, we appreciate everybody who’s jumped on our call and who stayed till the end. Appreciate it. Take care.

This concludes today’s conference call. You may now disconnect.