Workhorse Group Inc. (WKHS) Earnings Call Transcript & Summary

Ladies and gentlemen, greetings, and welcome to Workhorse Group Third Quarter 2023 Investor Call. As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Workhorse Group's Vice President of Corporate Development and Communications, Stan March. Sir, you may begin.

Thank you, Sherry. Good morning, and welcome to all of you joining us on today's third quarter 2023 results call. Before we begin, I'd like to note that we have posted our results for the third quarter ended September 30, 2023, via press release and have also filed our latest 10-Q and a separate 8-K. You can find this release as well as the accompanying presentation as well as the SEC filings in the Investor Relations section of our website. We will be tracking with the posted presentation during the call, so please follow along either through the link in the press release or through the website directly. Joining me on today's call are Rick Dauch, our CEO; and Bob Ginnan, our CFO. The agenda for today can be found on Slide 3. Following my opening remarks, I'll hand it over to Rick, who will give you an update on the success that we've made on our strategic and operational priorities during the third quarter. Bob will then walk us through our financial results for the quarter and our revised 2023 full year guidance. Rick will then wrap up before we open the call for questions. Our disclaimer can be found on Slide 5 -- excuse me, Slide 4. Some of the comments that we made today are forward-looking and are, therefore, subject to certain provisions as well as to risks and uncertainties. You can find the full disclaimer statement in our periodic filings with the SEC as well as in today's press release. I'll now turn the call over to Rick Dauch. Rick?

Thanks, Stan. Good morning, everyone. Thank you all for taking the time to join us today and your continued support of Workhorse. We're here to talk about our achievements and results for the third quarter and the actions we are taking to position workhorse for both near-term and long-term success. And speaking about the third quarter, what we're talking about is a tale of 2 cities. On the one hand, we made important steps forward across our product road map and will set the stage for us to drive significant profitable growth in 2024 and beyond in all areas within our control. On the other hand, our results this quarter and our outlook for the remainder of 2023 were significantly impacted by our inability to secure HVIP vouchers in the third quarter. I'm pleased to report that we have recently resolved this voucher availability issue with help from the CARB leadership team in just the past week. I'm proud of our team's dedication and hard work here at Workhorse. And just over the 2 years since taking over the company, we have final vehicle assembly up and running for not 1 but 3 new product lines: the W4 C Cab chassis, the W750 and W56 step vans. Anyone who understands the automotive industry realizes how tough and costly it is to design, test and launch new products, and it typically takes at least 3 to 5 years. The Workhorse team did it in less than 22 months. At the same time, we now have 2 sellable drones in the market and are speaking to a greater number of prospective customers on the Aero side of the business. Workhorse is now poised to begin our growth phase, and it's a testament to the incredibly talented and again, dedicated team we have here today. With that, let me go into some of our key accomplishments for the quarter. On Slide 5. Our most significant update across our commercial vehicles in the third quarter was launching production after completing FMVSS durability and validation testing for the W56, our third product vehicle line of the year and the lifeblood of the company. I won't be the first CEO of an EV OEM to say this since Elon Musk has already made the observation, but manufacturing truly is somewhere between 100 to 1,000x harder than making a prototype or trade show vehicle. Like Elon, we cannot emphasize enough how hard production is relative to design. And at Workhorse, we have now launched full manufacturing of the W56 from start to finish in 22 months again. We also increased our production rate to forward W750 step vans a week and shipped multiple configured demonstration W4 CC vehicles to potential customers. We made continued progress expanding our dealer network and commercial footprint, signing up 2 new certified dealers, which include stocking orders to be filled over the next 12 months. During Q3, we received IRS approval as a qualified manufacturer for the commercial clean vehicle credit, which provides our Workhorse customers eligibility to receive up to $40,000 in federal tax credit per vehicle for deliveries of all Workhorse vehicles in 2023 and beyond. We added talented sales staff with experience in commercial fleet and governmental sales, custom body building, and updating experience as well as beefed up our regional depth out in California. Our corporate support and IT systems are working across all functions with the completion of our Phase 1 ERP project, a key back-office enabler as we move from engineering and testing into production and sales. Our lean manufacturing practices at the plant have been reinforced, and we are working across our extended supply chain. The bottom line is that we now have the people, products, processes, support systems and business partners in place to grow into a viable commercial EV OEM. At Stables, we continue to transition and grow the EV fleet and expand our customer delivery responsibilities. Peak season starts later this week on November 18, and we are ready to meet the surge in demand with a proven capable EV fleet, which our drivers find to be much more reliable and much more cost effective than the old ICE fleet we acquired back in 2022. The Aero business continued to generate revenue and has now sold units to both UPS Flight Forward and Valqari. Two more USDA grants were received in the quarter, and just to put those grants in perspective, that revenue impact is akin to selling more than 60 drones. So it's meaningful and important business for us here at Aero. We completed the administration of the class action lawsuit and received approval from the shareholder base for an increase in share authorization by 200 million shares. At Union City, we completed installation and placed into service an in-house paint system, representing the last major near-term capital investment required for the facility until sometime in second half '24. Finally, while there is strong demand for their vehicles, the team at Tropos ran some significant operational and financial headwinds during Q3. As a result, we are working with the management team, their creditors and partners to find a successful path forward recapitalization of the business. We expect Tropos to find a path forward during Q4. Moving to Slide 6, let me talk a bit more about HVIP. Our ability to deliver W4 CCs and W750s during 2023 was severely impacted by the lack of HVIP voucher availability in California. This was especially impactful during Q3 and a large portion of Q4. As I mentioned earlier, I am happy to report that we have successfully resolved this issue, and as of November 8, CARB established a first-of-its-kind program for intermediate vehicle manufacturers with Workhorse. As a result, we now have our own voucher pool here at Workhorse, a huge enabler for commercial EV sales. Based on our months of efforts with them and thanks to the problem-solving efforts of the CARB Air Resources Board team, we broke through a major regulatory obstacle Workhorse was facing in the #1 EV market in the United States called California. As further evidence of the importance of this breakthrough, we added a new certified dealer in California during the last week, whilst awaiting the CARB voucher decision. This dealer committed to a stocking order and is working to secure a large fleet order using the family of Workhorse vehicles we can provide them. Turning to Slide 7. Let me provide a few updates on our Class 4 vehicle programs. For the W4 CC and W750, we have seen several positive market signals. First, we have our first repeat orders from dealers in both New York and California, which indicates increasing market demand for these products. Importantly, we shipped multiple demonstration vehicles to potential customers, including both box and reefer trucks in these 2 states. These are important opportunities for us out in the market. We also completed a demonstration test with the city government of the agencies in California and on 2 30-day delivery routes for a major office supply company on the East Coast. All 3 demos were successful, and we await customer decisions on future orders. We have W4 CC trucks with box bodies out for further demonstration testing with a previous Workhorse customer, which plans to convert 100% of their fleet to EV vehicles by 2025 to 2026. We are now capable of producing one W750 per day or 4 per week out of the plant. In addition to the demos, I mentioned and those in service as Stables, we have several other demo and fleet opportunities we are pursuing with large last-mile parcel customers in both Q4 this year and early Q1 next year. I also want to make clear that all of our vehicles across our commercial vehicle product road map are profitable at the contribution margin level which stands in stark contrast to legacy Workhorse vehicles. As we continue to scale production and grow the sales of our trucks, we expect to do so profitably. Moving to Slide 8. As I mentioned during the quarter, we began production of both the W56 stripped chassis and step vans after successfully completing all FMVSS durability and validation testing as well as supplier part PPAP certification. We anticipate final HVIP certification through CARB to be completed in Q4 2023 for the W56. Drilling down a bit. We completed over 250,000 miles on the Navistar test track, which I have mentioned previously is a real, real hard test. Again, we have PPAP all of the individual parts on this vehicle. What this means in practical terms is that we can now deliver automotive OEM-level quality products to our customers, something we think will differentiate us in the marketplace against other start-ups. We can provide either a stripped chassis or a complete step van vehicle. We can paint them on site. We will be able to produce up to 2 step vans per day by the end of Q4 and ramp up to 5 to 8 units per day in the first quarter of 2024. Put another way, our lead times for complete step van vehicles is basically 120 days compared to 9 to 12 months that source from other parties based on what we're hearing from fleets we're calling on. I believe that is a real competitive differentiator for Workhorse in the step van segment, a huge paradigm shift from what has been traditionally a capacity-restricted duopoly situation for more than 3 decades. As 17 U.S. states move to adopt the new CARB Clean Fleet mandates, Workhorse is well positioned to earn market share in the step van segment. On Slide 9, I wanted to share a picture of one of our first production step vans out in the field. We have initial production demonstration units already operating in California with multiple partners, and we have received extremely positive feedback on the performance on real-world test last-mile routes up to 125 miles. We're able to put that truck together, including custom upfit packages literally in 6 weeks from the time we discussed the concept to delivery with this potential California, out in California. We don't think there's any other customer who can do such a job. Importantly, we have strong customer interest in the W56, and we are confident in our ability to secure firm purchase orders in the fourth quarter and beyond. The W56 will be a major driver of our growth and success moving forward as we capitalize on the transition to commercial EVs. As a reminder, we have the capacity to build up to 5,000 W56 units per year at our Union City, Indiana plant on 1 shift, which would generate more than $1 billion of revenue. On Slide 10, we continue to successfully deliver last mile packages for FedEx Ground and incrementally grow route assignments in our Stables operations. We electrified about 70% of the Lebanon, Ohio-based fleet and are continuing to review options to partner with operators in incentive-based states. We're also looking at several other approaches to get more trucks in the field. We have plans to add 2 W56 vehicles to our Ohio-based fleet in Q4 of 2023. And we are in the first stages of data analysis on our ICE-to-EV transition white paper. I will say that through this initiative, we are gaining tremendous real-world experience and more importantly, credibility with our future customers to better serve independent contractor fleet operators as they make the transition to EVs. On Slide 11, our aerospace team achieved notable milestones during the third quarter. We began drone assembly in our Mason, Ohio facility and sold and delivered 3 additional drone aircraft to customers. Workhorse also advanced our efforts to receive FAA certificate approval for the HorseFly. We entered the FAA process on the UPS Flight Forward's FAA Part 135 drone airline certificate. Our Aero business is working closely with the team at UPS Flight Forward and the FAA and plans to have everything necessary to have the HorseFly approved for FAA Part 135 operations by the end of 2023. This is an important next step in bringing the HorseFly to market and reflects UPS Flight Forward's recognition that our drones are safe, reliable and capable. We also received 2 additional USDA grants in the third quarter, totaling about $1.1 million in additional funding. We are also exploring additional applications for both the HorseFly and Falcon Jones with the USDA leadership team. That being said, as you likely saw in our press release this morning, in connection with our earnings announcement, the company has initiated a review of strategic alternatives for the Aero business. We are proud of the advancements we've made across our Aero business. We've built and begun operating our manufacturing facilities and our market-leading safe and reliable drones are drawing customer interest, both commercially and through government agencies, both here in the United States and overseas. With this foundation now in place, we determined at the beginning this strategic view now is prudent to ensure we are unlocking the most value for Workhorse shareholders while best positioning our Aero business to capture and fund future growth opportunities. Looking ahead, we will evaluate a broad range of options for the Aero business, including the potential sale of the business, strategic partnerships or the continued execution of our strategic plans for Aero within Workhorse. We are still in the very early stages of this review process, and we will provide updates if and when we have news to share. With that, I'll now turn the call over to Bob to discuss our financial results for the quarter.

Thanks, Rick. Let's turn to Slide 12 to discuss our third quarter financial results. Sales net of returns and allowances for the third quarter of 2023 recorded a $3 million compared to $1.5 million in the same period last year. The increase in sales was primarily a result of the reversal of a sales allowance in the current period related to the sale of W4 CC vehicles in the second quarter of 2023. Cost of sales decreased to $6.6 million for the third quarter of 2023 compared to $9.5 million in the same period last year. The decrease was primarily due to a $2.9 million reduction in inventory reserves and adjustments in the same period a year ago as a result of the disposition of C-Series inventory. Lower sales volume in the current period reduced cost by $1 million, which was offset by a $1.2 million increase in employee compensation and related expenses as the company continued to expand its Union City, Indiana workforce to support future vehicle production. Selling, general, and administrative expenses for the third quarter of 2023 decreased to $11.8 million compared to $34.8 million in the same period last year. The decrease was primarily driven by a $23.9 million reduction in expenses associated with the settlement of securities and shareholder derivative litigation. This was $20 million in a noncash stock settlement and about $3.9 million in legal fees. Employee compensation related expenses including noncash stock-based compensation expense decreased by $0.4 million compared to the prior period, which was offset by a $0.8 million increase in professional services and other IT-related expenses. Research and development expenses for the third quarter of 2023 decreased to $5.8 million compared to $6.1 million in the same period last year. The decrease was driven by a $0.9 million reduction in consolidated expenses partially offset by a $0.5 million increase in employee compensation related expenses as we move to production of the W56. Net interest income for the third quarter of 2023 was $0.4 million compared to 0 interest expense in the same period last year. Net interest income in the current period was driven by interest earned on cash in the company's money market investment account. Other loss for the third quarter of 2023 was $10 million as compared to $13.4 million in other income for the same period last year. Other loss in the current period represents the impairment of the company's investment in Tropos resulting from the economic conditions and uncertainties that have significantly affected Tropos performance and financial position. Other income in the prior period was recognized in connection with the sale of C-Series inventory that was formally written down to 0 cost through inventory reserves. Net loss for the third quarter of 2023 was $30.6 million compared to a net loss of $35.4 million in the same period last year. Turning to Slide 13 to discuss our balance sheet. As of September 30, 2023, we have approximately $38.9 million in cash. Our cash burn during the quarter was down quarter-over-quarter as we primarily decreased spending on inventory, and we expect this trend to continue through Q4 and into 2024. Importantly, we are taking major steps to strengthen our financial position and focus on reducing expenses to ensure we have the runway to execute our strategic plans. We are in advanced discussions with third parties to obtain additional financing to support our growth plans. We are also evaluating other options to strengthen our liquidity position. Our 10-Q as of September 30, 2023, includes going-concern language as a result of our slower-than-anticipated sales ramp in HVIP availability. As I mentioned, we have a strong cash position of $38.9 million to fulfill our obligations and continue to operate. We are taking steps to remedy the going concern, including efforts to drive revenue growth, gain additional financing and liquidity. We will continue to evaluate the best path forward and have several options to continue to fund the next phase of production and growth. Turning to Slide 14. We have provided an update to our 2023 guidance to reflect the HVIP voucher situation, significantly impacted our Q3 results and full year sales. We now expect to generate between $10 million and $15 million in revenue this year. The resolution of the HVIP voucher is positive news and provides momentum for us as we work through the remainder of 2023. I'll now turn the call back to Rick to wrap up the call.

Thanks, Bob. Let me briefly discuss our Q4 priorities, which are outlined on Slide 15. I can easily summarize these very quickly. Our largest single Q4 priority is straightforward: to build and sell trucks and drones. That's it. Build and sell trucks and drones, plain and simple. Additionally, as Bob mentioned, we will focus on strengthening our financial position and reviewing options to enhance our liquidity position so we can achieve our future growth plans. Before opening the line to questions, let me mention a few final thoughts. Being true pioneers in the industry going through a generational technology change is not easy. It's tough. It's hard, and sometimes it's thankless work. No one in America could accurately forecast how fast or how slow the transition to commercial EVs will occur. One thing I do know is that we now have the people, the products, the manufacturing processes, the qualified suppliers, the experienced distribution partners in place to be ready when that transition does occur. Every fleet customer that has visited Union City and driven our truck has asked for a demo. And every demo we have executed in the past 90 days has been successful. Our foundations are in place at Workhorse for us to emerge as one of the survivors and winners in the commercial EV industry. We're now ready to open the call for your questions. Operator, please provide the appropriate instructions.

[Operator Instructions] Our first question is from Greg Lewis with BTIG.

Rick, I wanted to touch a little bit more on HVIP. Clearly, congratulations on getting those final approvals. As we think about it, I guess looking at Q3, there were a handful of trucks sold. How much of those were related to HVIP?

Do you mean the lack of sales?

Well, I mean, what, you had $700,000. That looks -- I mean I'm thinking that's 5 to 6 or 7 trucks.

Yes. A couple of those trucks went out to some of the new dealers we have as part of our stocking orders. We really are blocked in California. And as everybody knows, right now, the cost of an electric truck is much higher than ICE truck, driven mostly by the batteries. The government has put in place, both at the state level and now at the federal level, some significant incentives to help move into the EV segment. Without those incentives, you aren't really going to sell too many trucks. And I think we are seeing some -- not resistance, but I'll say there's some weariness on the part of the fleets. Are these EV trucks really going to be capable of handling the duty cycles and the payloads and the ranges that they require on a day-to-day basis? I can tell you, based on the demos our company has done side by side against others, we're convinced and so are some of the customers that our trucks can do the job. I don't know if they can say that about some of the other guys. I'm not going to spare a name of any of the competitors, but EV trucks that are out there, some of the initial prototypes, especially from some of the start-ups, are having some struggles is what I'd say.

Yes, makes sense. And then so as we think about -- you mentioned the dealer in California. Realizing we didn't disclose any name, any sense for the size of that dealer as we think about their track record maybe in terms of size? Any kind of color you can give us around that dealer?

Yes, I'll give you a little color. I won't give you the name. I'll just tell you it's in Southern California. It is a one brand commercial truck-only dealer. That current brand he carries will not have a viable EV product until '25 or '26, and he basically said to us, "I'm dead in the water with regards to EVs in California, and I really want to partner with you guys. But I can't do that if you're going to give me trucks without vouchers." And so he waited. Very smart, I'd say on his part. And now he's signed up. We're going to get him some stocking orders yet this year, and he's already working on a deal that's more than 40 or 50 vehicles. So...

[Operator Instructions] Our next question is from Chris Souther with B. Riley Securities.

I was just curious on the review of the aerospace. Can you give us a sense of what like the cash burn from that segment is today? Just wanted to kind of frame, as we look at like strategic alternatives and reviewing that business, like what the impact on the financials is from that.

This is Bob. currently, we're spending about $700,000 a month in Aero, down from previous in the year, but that's kind of where we are right now.

Got it. Okay. And then on the overall kind of CapEx trajectory, how should we think about where we are as far as kind of readying the plant for scaling? Is there kind of additional CapEx that we really need to kind of focus on for the next quarter, couple of quarters here? Or are we pretty set on that front?

Yes. I think kind of split that in 2. I think for the rest of this year, if you look at our CapEx through the first 3 quarters, we'll be down in the fourth quarter as we're through most of those projects. And really, from the plant perspective, we've got the capacity to scale without a lot of CapEx. We'll have the typical maintenance type things going into next year, but the heavy lifting is out of the way now with the finalization of our paint line.

Yes, and I'll jump in there, Chris. So W4 CC and W750, we have the assembly lines fully tooled up. We're waiting just a couple of minor manufacturing devices to put on the panels on the top of the W56, minimum money that will be spent this year. W56, we just got the AGVs in this week. I'm sure we owe a last payment to them once they're run off, and we're just analyzing the paint shop runoff. So we have a little bit of payment there. Other than that, we're set, 5,000 W56 a year. The W4 CC, probably 800 up to 1,000 trucks a year depending on the demand. Only money we really need for CapEx will be supplier tooling as we go into what we call the W56 cab chassis version, which we'll launch sometime next year. So the capital has been spent. Plants have been reconditioned. Test track's in place. Warehouse has been refurbished. Paint shop's in. Everything we have is in place to be a $1 billion-plus OEM.

And maybe just last one here. You talked about being prepared to scale the business for profitable growth, 2024. Can you -- are we at a point here, you think, where you have a sense as to kind of what that breakeven revenue level would look like and timing around that? Just any kind of clarity you can provide at this stage would be I think helpful for folks.

Sure. Well, first of all, we're actually just kind of getting into the budgeting process, so we don't really have the answers there just yet. As I said, on, I think, a previous call, our positive gross margin is around 300 trucks a quarter, 100 trucks a month. We've not gotten into full cash flow, but you can probably do some math from there. But we think 300 is a magical number for us to get to step one here, and that's positive gross margin.

Our next question is from Craig Irwin with ROTH MKM.

So this past year, as you were planning for sort of a higher revenue run rate, there was a lot of work done developing customers and supporting those customers in procurement of HVIP vouchers, some of these vouchers out of New York, New Jersey, Massachusetts. It kind of means like some of the heavy lifts for growth over the next year has probably been addressed. Can you maybe talk to us how you feel about the pipeline right now as far as deliveries once production is there and these trucks are fully certified to be handed over to customers that have been working to receive them? And is there any detail that you can share with us on the vouchers or how you feel about the eligibility of vouchers as these final certifications come through?

Yes. Let me -- our priorities are -- we did all the brand-new truck in less than 22 months, so we're still working through stabilizing suppliers, stabilizing our own assembly processes and launching the paint plant, right? So we have some work to do still to get towards the run rate to start picking up the pace. I'd almost say, Craig, we're priming the pump right now. That's internal, right? And we think we have that under control pretty well. When it comes to the pipeline, we're seeing various feedback from the marketplace. Obviously, the CARB mandates for clean fleets takes effect January 1, 2024, in California. And we're seeing the flurry of RFP activity out in California, primarily through government-funded organizations. So you're talking to state level, the city level, the county level, of the municipalities, right? So that's an opportunity for us. That's why it was so important for us to get these HVIP credits and vouchers out in California. We did 2 demos with fleets. One fleet is talking about buying 40 to 50 EVs, and 1 is talking about 30 or 40 EVs but only if the CARB mandate stays in place on January 1. You tell me. I don't know. There's a legal appeal against the California mandate by the California Trucking Association that should be heard in the next 30 or 60 days. My experience growing up in the auto industry for almost 50 years now, I've seen CARB lose battles, but I've never seen CARB lose the long war. Okay? So I think there's a move going forward. We've talked to some of the biggest fleet operators in California. You name it, FedEx, UPS, Ryder, Penske, others, Cintas. And guess what, they're all trying to figure out how fast they need to move to EV and at what pace, right? Similar stories over in New York City. I think we're seeing strong interest in New York City, New Jersey area, the Metro New York City area, I'll call it. That's where we're doing our reefer demos. We have a reefer out there. We worked with Arctic Chill to put the reefer in the back of the W4 CC. It's out running its route right now. That route is 20 to 30 miles only. But it makes over 100 stops a day at each restaurant as it delivers food, dairy products, et cetera. So we think that's an opportunity. One of the customers that I inherited when we got here, which we ended up buying the trucks back right away because all 5 trucks failed, have told us they are 100% committed to go to EVs in '24, '25, '26. They want Class 4 trucks that can carry 5,000 pounds. That's exactly what the W750 and W4 CC can do. And so we have those trucks out there being tested. I'm confident that we'll finish those demos like every other demo successfully, and we hope to win those orders. But I can't tell you if that's going to be a 100-truck order or a 10 trucks order. That's kind of the wildcard right now here as we fight our way into this transition. Does that help?

That's very helpful. I definitely appreciate that. So a key part of the value proposition to all of these customers is a reduced maintenance. And previously, the company was saying there was about a 65% reduction in maintenance and operating costs for these trucks, for the Workhorse trucks. Your designs have evolved. I mean, I guess it probably got more efficient, more reliable. But can you maybe quantify for us what the customers are looking at? Is it still roughly 2/3 reduction in maintenance and operating costs? And how does this resonate with this customer group?

Yes, it's a great question. I think we'll have better hard factual data at the end of this peak season here in the fourth quarter. We will be able to share with you guys on our end of the year earnings call early next year. I can tell you right now at Stables & Stalls in the fleet of about 10 vehicles, we spend close to $30,000 a month in fuel. 70% of our trucks are now electric, and so we're not spending nearly that much on fuel. We've had 0 repairs of any of our W750s for any meaningful powertrain parts. We have had some damages on the side or on the bumpers when our drivers hit things and that kind of stuff, like that. So I do think the numbers are going to be somewhere north of 60% or 70% in terms of TCO savings. We'll be able to actually document it. And I want to reiterate, when we talk to these customers out like we were out in California, when we can tell them we have our own fleet of trucks and we're making the conversion from ICE to EVs, their lights light up. One fleet I was at, the average age of the truck is 15. They keep their trucks 15 to 20 years. The average age is around 7. And we talked, we had a laugh over a couple of coffee about failed transmissions, brake jobs, drive shafts, axle repairs, engines, all those kind of things like that. All that goes away with the EVs, right? So...

We have reached the end of our question-and-answer Session. I would like to turn the call back over to management for closing comments.

I appreciate your support. It's not easy, this transition. It's a little bit hairy sometimes. As Bob says, we're well poised from an operational standpoint. We need to go sell trucks and drones, and we got to look at opportunities to improve the length of our runway, so we can land this ship successfully here at Workhorse. We appreciate it. Look forward to seeing you out on the road. Have a great day.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.