Title

Presentation

Operator: Greetings and welcome to the Harte Hanks’ Fourth Quarter and Full Year 2022 Earnings Conference Call. Please note this conference is being recorded. And I will now turn the conference over to your host, Tom Baumann of FNK IR, you may begin.

Tom Baumann: Thank you. Hosting the call today are Brian Linscott, Chief Executive Officer; and Lauri Kearnes, Chief Financial Officer. Before we begin, I want to remind participants that during the call management’s prepared remarks may contain forward-looking statements that are subject to risks and uncertainties. Management may also make additional forward-looking statements in response to your questions today. Therefore, the company claims protection under the Safe Harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from results discussed today and therefore we refer you to a more detailed discussion of these risks and uncertainties in the company’s filings with the SEC.

In addition any projections as to the company’s future performance represented by management include estimates as of today, March 7, 2023, and the company assumes no obligation to update these projections in the future as market conditions change. This webcast and certain financial information provided on the call, including reconciliations of non-GAAP financial measures to comparable GAAP financial measures are available in the earnings press release that was issued shortly after the market closed. A copy of that press release and other corporate disclosure is available on the Investor Relations section of Harte Hanks website at hartehanks.com. With that, I would now like to turn the call over to Brian. Brian, the call is yours.

Brian Linscott: Thank you, Tom. And good afternoon. 2022 was a milestone year for Harte Hanks and this year we’ll be celebrating our company’s 100th anniversary. After years of cost cutting to mitigate declining revenue, we have successfully stabilized the business, established sustainable profitability across our entire enterprise and created a platform for profitable growth. We enter our 101st year stronger than we’ve been for more than a decade, and I couldn’t be prouder of our team. For 2023, we expect continued growth in our top and bottom line, even though we’re facing a tough year-over-year comparison in the first quarter. Historically, Q1 is our seasonally lowest quarter of the year. However, last year we had multiple non-recurring projects in Q1, including a significant recall project that led to an abnormally strong first quarter in 2022.

Based on the visibility we have with the first quarter more than two thirds complete, we expect modest year-over-year revenue growth and we expect a drop in year-over-year quarterly EBITDA, due in large part to our revenue mix changes. Nevertheless, as we move through 2023, we expect to generate high-single digit revenue and EBITDA growth on an annual basis. We continue to expand existing client revenues and add new logos. The recent wins have more than offset the customer care pandemic-related projects reaching end of life and the reduced revenue from our legacy direct mail campaigns and marketing services. While most of our growth has been in our Fulfillment & Logistics segment, which has resulted in modest margin compression, we continue to generate significant profitability and free cash flow, enabling us to strengthen our balance sheet.

The financial improvements are due in large part to the systemic changes we have made at Harte Hanks most notably a strategic shift to an asset-light business model. We have eliminated unprofitable contracts and we are well positioned for long-term sustainable operating income and EBITDA. Our past and expected future profitable performance is reflected in our fourth quarter results as we recorded a non-recurring $19.8 million tax benefit due to the release of the valuation allowance. Revenue increased 5.4% for the quarter and 6% for the full year. Our Fulfillment & Logistics segment grew 34.4% in the quarter, largely driven by a large logistics client. Our Customer Care segment had revenue decline 12.9%, but EBITDA increased 24.4%, demonstrating the improved operating efficiency in the quarter.

Our Marketing Services segment revenue decreased 6.8% and EBITDA decreased 18.4%, but we entered 2023 with optimism to deliver improved results based on a growing pipeline and refocused operational discipline. We believe we have ample opportunities to derive growth in all three business segments in 2023. Our offerings are aligned with the needs of our customers and we are having success in cross-selling our services and expanding our client relationships. We remain focused on selling our differentiated solutions that leverage more than one of our operating segments to maximize value for our customers and ultimately our shareholders. Importantly, as we move into 2023, our focus is on growth, specifically adding new logos and moving beyond cross selling.

Since the beginning of the third quarter, we have added four new sellers to our team and we are leveraging our talented team members from our InsideOut acquisition to drive our inside sales function. In addition, we are aggressively marketing our services in the B2B tech, DPG, retail, pharma, healthcare, streaming, and QSR verticals. We expect strong new logo performance in 2023 as we convert our growing pipeline. In addition to our sales and marketing investments, we are investing in technology to create opportunities within our current, former and prospective client base. Our investments in tech-enabled solutions including CRM Software, Self-Service, Help Desk, Audience Finder, Data View and Telephony, provide improved data capture, actionable insights and digital delivery opportunities for our marketing services and Customer Care business segments, as our customers seek to optimize results, improve the customer experience, and reduce marketing spend in a tough economic environment.

Our improved financial and operational performance has strengthened our balance sheet, given comfort and confidence to both our loyal employees and our large customers. We ended the year with over $10 million in cash and no debt. In addition, our outstanding long-term pension liability has decreased by nearly $15 million from December 31, 2021 due in part to higher interest rates. As a result, we’ve initiated the process to fully fund and transfer one of our qualified pension plans to a third party. Another benefit of our improved profitability was the ability to redeem and repurchase our preferred shares from Wipro. We completed this transaction in December, which eliminated the diluted impact of the preferred shares on earnings and eliminated restrictions on our use of capital and our ability to borrow funds.

Finally, we completed the acquisition of InsideOut in December and benefited from one month of revenue from this bolt-on acquisition. As a reminder, InsideOut is a data-driven, inside sales optimization firm. InsideOut specializes in building, scaling, and optimizing inside sales initiatives. We paid $7.5 million in cash and stock for InsideOut and we added a seventh lease location in North America with the acquisition of InsideOut 7,500 square foot headquarter facility based in St. Petersburg, Florida. The acquisition will provide short-term revenue growth opportunities as well as being immediately accretive to our earnings. We anticipate cost synergies alone will drive the post-acquisition valuation to the three to four times EBITDA range.

We look forward to additional acquisitions to augment our existing business with new capabilities, enhanced technology offerings, data analytics, new customers, and in some cases new geographies. However, I stress that we’ll remain disciplined in our acquisition evaluations and proceed with caution. Simultaneously, we continue and invest in our business to drive growth, maximize profitability, and increase shareholder value. Hiring and retaining talented people is a key area of focus. We are simultaneously improving our technology platforms to enhance market opportunities and sell our fully integrated service offerings. Now on to our results. Revenues increased 5.4% in the quarter to $54.8 million. Operating income increased approximately $500,000 or 19.8% compared to the fourth quarter last year.

Our EBITDA increased to $4.4 million from $3.5 million in the fourth quarter last year. The net income for the quarter was $21.8 million compared to $1.8 million in last year, fourth quarter. Harte Hanks is now solidly profitable on a GAAP basis. We expect profitability both in terms of EBITDA and GAAP net income for each quarter in 2023. Now turning it to our operating segments, Customer Care revenue decreased 12.9% from the previous year-over-year quarter. EBITDA increased 24.4% to $3.2 million from €“ $2.6 million in the prior year quarter. The revenue decrease was due to the anticipated rolling off of COVID-related project work, but the EBITDA improved due to customer mix and certain better operating efficiency in the business. The Customer Care pipeline remains healthy with current, new and former customers, including but not limited to outbound generation in inside sales services.

And the pipeline is strong for inbound services including entertainment, streaming, pharma, healthcare and technology verticals. Customer Care continues to invest in sales and marketing campaigns, conferences and partnerships, and the segment recently hired another salesperson to drive growth in 2023. New business wins for the quarter included a community-based health plan, selected Heart Hanks to support its members with plan related customer support. The company selected Heart Hanks to provide extended support hours for its members while maintaining its CMS five-star rating. Harte Hanks has consistently delivered high CMS ratings for its clients through its rigorous training and certification process for employees and systems. Second, a global beverage company expanded services with Harte Hanks by extending its Customer Care solution to additional markets.

The expansion allows our client to benefit from our lower cost facilities in the Philippines, while improving its customer experience with faster and easier access for support. Fulfillment & Logistics revenue increased $6.3 million or 34.4%, compared to the fourth quarter last year; and EBITDA increased 5.9% to $2.3 million. We are realizing the benefits of consolidating our operations into the Kansas City facility and further integrating our supply chain and logistic segments into our fulfillment process. We continue to win new contracts in both Fulfillment & Logistics and our revenue opportunities remain strong. New business wins for the quarter included a growing international investment firm with approximately $30 billion of assets under management selected Harte Hanks to provide digital print and premium item fulfillment to its brokers.

Our financial services sector experience and streamlined on-boarding to support a rapid pivot from a competitor were key differentiators in the selection process. Second, a leading branding company selected Harte Hanks to manage the production, kitting and distribution of 250,000 makeup kits for a Fortune 200 retailer. This partnership continues to lead to new value-added product fulfillment opportunities unlocked by our investment in flexible, automated production lines. Marketing Services revenue decreased 6.8% to $13.6 million, and EBITDA decreased to $2.1 million in the quarter. The largest driver of the year-over-year revenue declines relate to direct mail campaigns not continuing. We also had project work conclude last year, but growth in hospitality, financial services and CPG clients have replaced this revenue.

This was another quarter of sequential improvement in profitability from Marketing Services segment as we realigned our resources, reduce our expenses and invest in technology to better serve our customers. We remain focused on attracting new clients within prioritized market categories with near-term opportunities in healthcare, pharma, retail, B2B tech and consumer products. We are experiencing increased opportunities with our demand generation, Data View and Audience Finder offerings, and we see increased opportunities with InsideOut clients and prospects. To further drive growth we have increased our marketing campaign and leveraged new sellers to expand our opportunities. New business wins for the quarter included a leading premium retailer of Kitchen, Bath, Outdoor products selected Harte Hanks to design and execute a series of lead generation programs chosen based on our extensive experience in retail strategy and ability to deliver a full suite of creative, data analytics and campaign execution.

And second, a leading global technology manufacturer expanded our successful B2B demand generation program into another geography in South America by utilizing Harte Hanks Audience Finder product to identify buyers with intent. In conclusion, as we celebrate our 100th year, Harte Hanks is stronger today than it has been in years with a sustainable, profitable business model and multiple pathways for growth. We expect continued positive net income and a significant year-over-year improvement in full year EBITDA, driving higher free cash flows during 2023 as we target revenue and EBITDA growth for the full year, even when considering a challenging first quarter comparison. With that I turn it over to Lauri.

Lauri Kearnes: Thank you, Brian. The fourth quarter was another positive quarter and a strong end-to-the-year for us with solid results on both the top and bottom line and with each of our three segments delivering positive operating income. I’d now like to walk through the results in more detail. Fourth quarter revenue was $54.8 million, up 5.4% from $52 million in the same period last year. Revenue growth was led by our Fulfillment & Logistics segment, which was up $6.3 million or 34.4% year-over-year. Customer Care was down $2.5 million or 12.9% year-over-year, and Marketing Services was down $987,000 or 6.8% from the prior year quarter. From a contribution margin perspective, our Customer Care segment delivered $3.2 million in EBITDA, up 24.5%.

Our Fulfillment & Logistics services segment delivered $2.3 million in EBITDA, up slightly year-over-year, and marketing services EBITDA declined by approximately $485,000 or 18.4%. We believe each of our three operating segments are operating efficiently and should generate positive EBITDA levels for the foreseeable future. Our operating expenses for the fourth quarter were $51.3 million, up 4.5% from $49.1 million in the year-ago quarter due to the increased revenue and change in the revenue mix resulting in higher transportation costs in our Fulfillment & Logistics segment. Operating income was $3.4 million, up $567,000 compared to operating income of $2.9 million in the year-ago quarter. During the fourth quarter we recorded a non-recurring $19.8 million tax benefit due to the release of valuation allowance.

This accounting reversal and associated tax benefit is due to our improved performance and the expectation of continued profitability. We also recorded $1.3 million in other expenses mainly related to pension expense and foreign currency loss. Inclusive of these non-recurring charges, we posted net income of $21.8 million compared to net income of $1.8 million in the fourth quarter last year. We recognized a one-time loss on redemption of the preferred stock of $1.4 million; that reduced our income attributable to common stockholders resulting in $2.81 per basic share and $2.70 per diluted share for the fourth quarter compared to $0.20 per basic and diluted share in the fourth quarter last year. EBITDA for the fourth quarter was $4.4 million compared to EBITDA of $3.5 million in the year-ago quarter.

Turning to full year results, 2022 revenue was $206.3 million, up 6% from $194.6 million last year. Our operating income was $15.1 million compared to operating income of $7.6 million last year. We posted net income of $36.8 million compared to net income of $15 million last year. Again, the current year net income includes the $19.8 million tax benefit and the prior year period reflects the one-time gain of $10 million related to the forgiveness of our PPP loan. Income attributable to common stockholders was $35.4 million or $4.98 per basic and $4.75 per diluted share in 2022 compared to income attributable to common stock holders of $12.6 million or $1.85 per basic and $1.76 per diluted share last year. Full year EBITDA was $17.8 million compared to EBITDA of $10.2 million last year, an increase of 75%.

Now turning to our balance sheet; as of December 31, 2022 we had cash, cash equivalent and restricted cash of $10.4 million compared to $15.1 million at December 31, 2021. During 2022, we paid down $5 million on our line of credit and spent $9.9 million to redeem our preferred shares. As of December 31, we have $4.3 million in net income tax receivable. This is due mostly to our remaining net operating loss carryback for 2020 of $5.3 million, which is partially offset with other tax payables. We received $2.3 million of our net operating loss carryback in the fourth quarter of 2022. As noted previously, we recorded a non-recurring tax benefit of $19.8 million in the quarter due to the release of evaluation allowance on our deferred tax assets, which are now recorded in other long-term assets on our balance sheet.

This is the results of our greatly improved performance and expected sustained profitability. Our combined long-term pension liability on the balance sheet as of December 31 was $37.8 million. As a reminder, we have both qualified and non-qualified pension plans. Our pension liability decreased $14.7 million compared to December 31, 2021. We continue to monitor the impacts of rising interest rates and changes in asset values that are impacting our pension liability. As Brian mentioned, we have begun the process to fully fund and transfer one of our qualified pension plans to a third party. We expect this process to take approximately 18 months to complete and expect to make a $7 million contribution to the plan prior to the transfer. As of December 31, 2022 we had nothing drawn on our line of credit and maintain a $25 million credit facility.

With that I will turn it back over to the operator to take your questions. Thank you.

Operator: Thank you. Thank you. Our first question is coming from Julio Romero with Sidoti & Company. Please go ahead.

Julio Romero: Thanks. Hey, good afternoon, Brian and Lauri.

Brian Linscott: Good afternoon.

Julio Romero: Maybe to start on the quarter, if you could maybe talk to what drove the strong margin and Customer Care and how much was the improved operational efficiencies versus maybe some other factors? And then secondly, how much of that good performance is sustainable into 2023?

Brian Linscott: So I’ll start and pass it over to Lauri, but yes, so I think some of it is certainly revenue mix driven, right? We ran out some pandemic related projects that were lower margin. In the past we made that choice. So with those lower margin pandemic projects specifically relating to a couple of states that were in the 2021 numbers that were not in the 2022 numbers, that obviously helped a little bit. And the other €“ the other kind of change in the business model is when we had the pandemic kind of related revenues, we ended up leveraging a lot of third-party consultants a lot, but certainly a portion and we’ve kind of pivoted to more full-time Harte Hanks employees, which has improved the margin profile as well as improved the turnover, right?

So reduce the turnover, reduce the attrition, that’s actually helped carry forward in some of the operational improvements in that segment. As I look going forward, this is a real strong number. I don’t know if that is forever sustainable, but I know the way we operate. We should be on the margins generally within a percentage or 2 of the way we’re performing currently. Lauri, any other things to add there?

Lauri Kearnes: No, I mean, I agree. I think Q4 was unusually very strong for them. We’ve certainly seen operating margin improvement and we expect to continue with that going forward, but Q4 was usually strong.

Julio Romero: Got it. Very helpful there. Maybe turning to the guidance and the commentary you gave there, just any sense on how much EBITDA should be expected to be down in the first quarter? Any more you have on the mix changes expected in the first quarter? And then secondly, if you could talk about the full year cadence of revenue and EBITDA as we progressed throughout the year?

Brian Linscott: Yes. So I think the big driver, if you look at a couple of big projects that were in Q1 of 2022 they were very high margin kind of one-time projects. When you look at kind of the revenue mix we have in Q1 this year, we’re going to have a higher concentration of Fulfillment & Logistics revenue, noting some strong performance in logistics, which is our lower margin segment. So when we look at year-over-year, we’ll be down double-digits in EBITDA for the quarter but we fully expect to, as we mentioned with guidance to ramp-up and actually improve both the new business growth as well as the bottom line EBITDA as we continue into Q2 through Q4. Lauri, you want to give a little more color on Q1?

Lauri Kearnes: Yes. I mean, I think as Brian stated, Q1 is really driven by a mix of specific customers, so we’ve got some of that higher logistics revenue coming in and some lower revenue and some of the other segments and it’s really specifically just that customer mix that’s driving that performance in Q1.

Julio Romero: Understood. And then you mentioned looking at potential M&A, but obviously in a disciplined manner. If you could just speak to the pipeline of deals you’re looking at and should we expect something above, you’re looking at things of similar size to InsideOut or maybe would you be considering something on the larger side?

Brian Linscott: Yes. I think, directionally those type of size, tuck-in acquisitions certainly would be easier to digest. Now that said, if there’s the right compliment of capabilities and tech profile are something that we think can really more aggressively bolster, will certainly evaluate larger size acquisitions as well. I think the key that I’m really trying to lean into is opportunities that further kind of tighten the fabric between our segments whereby they fit nicely in between maybe two of our three segments. And certainly there’s a few opportunities like that, that are out there whether or not we can buy something at the right price and structure it the right way we’ll have to find out.

Julio Romero: Very good. I’ll pass it on. Thanks very much.

Lauri Kearnes: Thanks Julio.

Brian Linscott: Thanks.

Operator: Thank you. Our next question is coming from Michael Kupinski with Noble Capital Markets. Please go ahead.

Michael Kupinski: Thank you and good afternoon everyone. First of all, I have a comment that 2022 in my view was kind of like a watershed year for you guys because coming off of a strong 2021, you showed growth which was great and I think of it to that degree, I look at your confidence in 2023 and looking at growth obviously is, I just love the confidence that you’re exhibiting there. Was just wondering if you can just talk a little bit about what is baked into your expectations, whether they be macroeconomic view or whether it be specific business trends that you’re seeing that you can, that adds the confidence to show not only revenue growth, but adjusted EBITDA growth and even earnings growth for 2023?

Brian Linscott: Yes. So, hey Michael thanks for the question. So I guess it goes without saying we do have inorganic growth that helps kind of get some of some of what we’re speaking towards, right, for 2023. That said, I do think that there’s some compelling opportunities as we see in our pipeline as it relates to certain products such as demand generation, such as inside sales, certainly we’re finding some nice opportunities that leverage Audience Finder and Data View with our marketing services business. And we’ve certainly got some RFPs in the pipeline and hopefully our batting average continues to increase as we gain some confidence and gain some additional capabilities with certainly the acquisition of InsideOut. And I think their inside sales function for us is starting to put a nice structure in place that’ll will allow us to more aggressively pursue opportunities.

So that’s what I would say generically largely as it relates to marketing services and customer care. On the Fulfillment & Logistics side, we continue to see some nice demand in the marketplace for our logistics supply chain products including our all link pricing software. And then we also have some really nice partnerships and are experiencing some value-added fulfilment opportunities that we’re pretty excited about. So, all of this is a little more microeconomic rather than macroeconomic, obviously the headwinds with the macro economy always gives me some pause. But I do fully expect that we’re going to grow the business this year.

Michael Kupinski: And do you think that you’ll have growth in each of your segments?

Brian Linscott: So, we certainly would expect probably a little heavier growth in Fulfillment & Logistics, but with the acquisition, we do expect growth in Customer Care and we are cautiously optimistic about our marketing services pipeline and opportunities to get us some growth.

Michael Kupinski: Got you. And then of course not just a year or two ago, investors were concerned about the unfunded pension liabilities, and now it seems like you are addressing that even further. I was just wondering if you can talk a little bit about what might be the unfunded pension liability as of first quarter. And then given the fact that we’re probably looking at another interest rate increase, do you have thoughts about where the unfunded pension liabilities might be at the end of this year?

Lauri Kearnes: Hi, Michael. I’ll take that one. So, in Q1 obviously we’re not going to do €“ we only do the restatement, really the full restatement of the pension liability at year end. With what we’re working on the one part of our qualified pension plan and transferring that to a third party, we’ve really gone through a process now of matching those assets with the liability so that those should move in, in conjunction with interest rates as that moves. So we don’t expect a lot of change on that one. As interest rates increase, the other two, the other qualified plan and certainly our non-qualified plan that doesn’t have assets against it, we would expect to see some decrease. I don’t have a specific number as to where we think that will be at year end, but we would certainly expect to see some additional decrease, maybe not quite as drastic as we saw in 2022.

Michael Kupinski: Thanks, Laurie. And Laurie, what is left on the tax refund and if you expect that in the first quarter?

Lauri Kearnes: Yes, I mean, it’s $5.3 million is what’s left. Given where we are in March, I’m not sure it’s going to come in in the first quarter, but we would certainly hope to see that in the second quarter.

Michael Kupinski: Got you. And the InsideOut acquisition, can you give us a sense of what the annual revenue run rate might be and maybe even adjusted EBITDA, if it’s accretive since you’re anticipating some cost synergies there? Any color on that acquisition in terms of revenues and EBITDA?

Brian Linscott: Well, I guess I will start with the baseline. The trailing 12, when we acquired it on December 1, it was about $11 million of top line and $1.5 million of EBITDA, right. So, we fully expect some nice growth off of that $11 million from a top line. And obviously there is a little bit of cost this year to integrate and do some of the hard work, but we certainly think that we’ll get some improvement on the bottom line as well and I fully would expect it to contribute more than the $1.5 million, right. Probably

Michael Kupinski: Yes.

Brian Linscott: Hopefully north somewhere in that range.

Michael Kupinski: And then outside of the non-recurring projects you had talked about in the first quarter, can you talk about maybe if you factored that out, what the underlying revenue trends were in the first quarter? I believe you are talking specifically about Customer Care, right, over there from a year ago?

Lauri Kearnes: Yes.

Brian Linscott: Yes, largely Customer Care, absolutely.

Michael Kupinski: And then if we took the recurring €“ just took the non-recurring business in Customer Care out of the equation, what would the underlying €“ would Customer Care be growing year-over-year? I would assume. So, what would €“ in the first quarter, what would we €“ what would the pace be, so to speak, given the fact that you’re looking at total revenue growth for the company?

Brian Linscott: So I don’t know that I have that Laurie at my fingertips.

Lauri Kearnes: Yes, I was just trying to back into it. I mean, definitely the trend continues that we’ve seen recently with the largest growth is coming from our Fulfillment & Logistics segment. But if I back out the one time in Customer Care, I would still expect them to be growing in 2023. But I think a modest growth rate for them.

Michael Kupinski: Yes, I was just trying to get a sense of what that growth was in the first quarter to get a sense of how to model out the subsequent quarters in terms of just the underlying growth outside of the non-recurring revenue that you had.

Brian Linscott: Yes, so we can take

Lauri Kearnes:

Brian Linscott: See, we’re talking about pandemic related revenues that that largely rolled off from Q2 of last year. So, it’s primarily a first half of this year issue from a comparable perspective. So, we’ll have to kind of take a look at that.

Michael Kupinski: Got you. And then final question, in terms of just capital allocation at this point has the company considered looking at returning to capital to shareholders or other options at this point? Or can you just talk a little bit about capital allocation?

Brian Linscott: Yes, so I mean, I think, when you look at the categories, they are pretty similar, right? We talk about potential bolt-on acquisitions, we clearly are investing in technology, that I think, you kind of see through our CapEx last year and I would expect a pretty nice investment this year as well. And then pension, as we mentioned, we’re going through that process that would be a $7 million cash outlay, but that probably wouldn’t occur until next year sometime. Am I right, Lauri?

Lauri Kearnes: Yes.

Brian Linscott: And then when we meet with the Board on a quarterly basis, obviously we discuss capital allocation and we do at times have discussion about do we explore a stock buyback or other kind of return of capital to shareholders. And while we haven’t made any decisions that will continue to be kind of the four large areas we talk about capital allocations.

Michael Kupinski: Got you. Thank you. That’s all I have. Thank you.

Lauri Kearnes: Thanks, Mike.

Brian Linscott: Great, thanks.

Operator: Thank you. As we have no further questions in queue, I will hand it back to management for any closing remarks.

Brian Linscott: Well, thank you for joining the Q4 year end 2022 earnings call. And I look forward to reconvening in a couple months to talk about our first quarter results. Thank you.

Operator: Thank you. And this does conclude today’s conference call. You may disconnect your lines at this time and have a wonderful day. And we thank you for your participation.