ePlus Inc. (ticker: PLUS) discussed its third-quarter fiscal 2024 results, revealing both growth and challenges in the current economic climate. Despite a decrease in net sales for the quarter, the company reported a year-to-date sales increase of 6% and a solid performance in its services segment. CEO Mark Marron highlighted the potential of ePlus' AI capabilities and the impact of the PEAK Resources acquisition on expansion plans. CFO Elaine Marion pointed to the expansion of consolidated gross margin and expressed confidence in meeting the lower end of the financial guidance for the year.
Key Takeaways
- Net sales for the third quarter decreased by 18%, but year-to-date sales grew by 6%.
- Gross profit margin declined slightly by 3.3%, with consolidated gross margin expanding to 26.3%.
- The acquisition of PEAK Resources is expected to bolster expansion in the Mountain West region.
- ePlus maintains a strong balance sheet and cash position, allowing for further strategic acquisitions.
- The company's AI Ignite program and investments in AI services and hardware are key growth areas.
- ePlus expects conservative IT spending but remains confident in achieving its guidance range.
Company Outlook
- ePlus anticipates customers to be more cautious with IT spending in the remainder of fiscal year 2024.
- The company's focus on high-growth end markets is aimed at driving profitable growth and building long-term shareholder value.
- Despite supply chain fluctuations, ePlus has a positive outlook on the rebound of product sales.
Bearish Highlights
- The technology business saw a 23.3% decline, contributing to a decrease in consolidated adjusted EBITDA to $46.2 million.
- The recent acquisition had an immaterial impact on net sales for the quarter.
Bullish Highlights
- ePlus does not face the same supply chain issues as competitors like Cisco (NASDAQ:CSCO).
- The company has seen a decrease in open orders and a 22% increase in net sales in the first half of the year.
- Investments in AI and the customer innovation center are expected to offer new services and hardware opportunities.
Misses
- Net earnings decreased to $27.3 million for the quarter.
- The diluted share count remained unchanged at $26.7 million.
Q&A Highlights
- The company's AI practice is in the early stages but is poised to change operational methods in the future.
- ePlus has invested in additional resources for AI, believing it will contribute to future growth in cloud security, network modernization, and AI services.
In conclusion, ePlus' third-quarter fiscal 2024 results reflect a company navigating through supply chain challenges while positioning itself for future growth through strategic acquisitions and investments in emerging technologies such as AI. With a strong balance sheet and a focus on high-growth market segments, ePlus remains optimistic about achieving its financial objectives despite a conservative IT spending environment.
InvestingPro Insights
ePlus Inc. (PLUS) continues to demonstrate resilience in a fluctuating market, with InvestingPro data underscoring some key financial strengths that may interest investors. The company's market capitalization stands at $2.08 billion, reflecting a solid position in the industry. With a Price-to-Earnings (P/E) ratio of 16.44, ePlus trades at a valuation that is attractive when considering its near-term earnings growth, as indicated by an adjusted P/E ratio of 15.58 for the last twelve months as of Q2 2024. This is further supported by a PEG ratio of 0.46 for the same period, suggesting that the stock could be undervalued relative to its earnings growth.
The company's revenue growth is also noteworthy, with a substantial increase of 19.97% over the last twelve months as of Q2 2024. This is complemented by a gross profit margin of 24.5%, indicating that ePlus is maintaining profitability despite macroeconomic challenges.
Investors interested in market performance will find the stock's recent trend encouraging, with a 22.27% return over the last three months and a 35.13% increase over the last six months. This robust performance is near its 52-week high, with the price at 96.06% of this peak.
For those considering a deeper dive into ePlus Inc., there are additional InvestingPro Tips to explore. Analysts have revised their earnings upwards for the upcoming period, and the stock generally trades with low price volatility, which might appeal to investors seeking stability. With cash flows that can sufficiently cover interest payments and liquid assets that exceed short-term obligations, ePlus operates with a moderate level of debt, aligning with a prudent financial strategy.
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Full transcript - ePlus Inc (PLUS) Q3 2024:
Operator: Good day, ladies and gentlemen. Welcome to the ePlus Earnings Results Conference Call. As a reminder, this conference call is being recorded. I would like to introduce your host for today's conference Ms. Erica Stoecker, General Counsel. Ma'am, you may begin.
Erica Stoecker: Thank you for joining us today. On the call is Mark Marron, CEO and President; Darren Raiguel, Chief Operating Officer and President of ePlus Technology; and Elaine Marion, Chief Financial Officer. I want to take a moment to remind you that the statements we make this afternoon that are not historical facts may be deemed to be forward-looking statements and are based on management's current plans, estimates and projections. Actual and anticipated future results may vary materially due to certain risks and uncertainties detailed in the earnings release we issued this afternoon and our periodic filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K, quarterly report on Form 10-Q and other documents that we filed with the SEC, including the Form 8-K we filed on October 6, 2023 recasting certain disclosures in our most recent annual report. Any forward-looking statements speaks only as of the date of which the statement is made and the company undertakes no responsibility to update any of these forward-looking statements in light of new information, future events or otherwise. In addition, we will be using certain non-GAAP measures during the call. We have included a GAAP financial reconciliation in our earnings release which is posted on the Investor Information section of our website at www.eplus.com. I'd now like to turn the call over to Mark Marron. Mark?
Mark Marron: Thank you, Erica and thank you everyone for participating in today's call to discuss our third quarter fiscal 2024 results. Our year-to-date performance has been solid with net sales growth of 6% outpacing the industry and our peers. Customers' adoption of digital transformation technologies, security solutions and IT infrastructure to support AI remain strong. Quarter-to-quarter top-line performance has been more variable than in prior years mostly due to supply chain fluctuations, which affected both customer behavior as well as our ability to ship equipment. Over the past few years large enterprise customers ordered equipment well in advance of expected need in order to safeguard their mission-critical projects. As a result we built a backlog of booked orders and as the supply chain eased we were able to ship this backlog equipment helping to drive strong 22% sales growth in the first half of the fiscal year. Following that wave of shipments, we saw some customers pause new orders in Q3 as they deploy these delivered products. As a result in our third quarter net sales were down 18%, but it's important to note that our gross profit held more stable and was down only 3.3%. A contributing factor to the gross profit was our service revenues, which were up 10.7% as we deployed projects for our customers. And our services gross profit increased 21% year-over-year driven by double-digit gross profit gains in both professional and managed services. Overall, our services gross margin was up 340 basis points and we had another strong quarter with our managed services revenue up 22%. Given the mission-critical nature of managed services we provide this business is characterized by recurring and predictable revenue streams. This revenue not only enhances our financial visibility, but also offers new opportunities for growth as we provide existing customers with additional managed service offerings that address their evolving IT needs. The services growth noted above along with solid product margins and strong contribution from our financing segment helped our consolidated gross margin increased by 410 basis points. It's also important to note that our year-to-date consolidated gross profit increased 9% on an increase of 6% in net sales. Net income declined 23.6% for the quarter and increased 8.4% year to-date. Net earnings were affected by lower product sales, higher acquisition related amortization expenses and higher personnel costs. We continue to invest strategically in building out our AI sales and consultative resources, AI optimized solutions and lab capabilities which underscores our confidence in our growth prospects. While sales cycles have lengthened somewhat we do not view this quarter's sales decline as a trend and our annual guidance remains unchanged. It is worth noting again that we faced a tough compare with gross billings up almost 30% last year in this quarter. We believe fundamental demand parameters remain intact and consider the variability in our quarterly sales this year, as primarily a timing issue on when and how deals fell between quarters. We expect sales growth in our fourth quarter enabling us to achieve the lower end of our guidance range. While still early in its evolution, generative AI represents a promising long-term growth opportunity for both our product and services business. We have deep credentials in the AI world and AI is in a new solution set for ePlus. We have been strategizing, building engineering expertise and aligning with top vendors for years. In March of 2018, we were named Elite Level as a deep learning partner for NVIDIA (NASDAQ:NVDA), we were also an early distribution partner for AIRI, the AI-ready infrastructure, architected by Pure Storage (NYSE:PSTG) and NVIDIA, which recognized our vision and integration capabilities. We are excited about the possibilities for AI. And we recently announced our AI Ignite program that will help customers explore, adopt and optimize AI. It will help show what is possible with their data and applications, ensure their business and strategy is aligned and help drive scale, efficiencies and cost savings. Our AI capabilities including consulting, managed services and training enable our customers to implement complex AI architectures that are cost effective, scalable and secure. We continue to work closely with our AI partners to develop innovative AI optimized infrastructure for our customers, that can include working on voice recognition projects or autonomous driving initiatives, scanning physical images to provide a better patient experience or just help customers embark on their artificial intelligence and machine learning plans. Our financing segment reported solid third quarter results, fueled primarily by high transactional gains and portfolio earnings. During the quarter, we executed on several large contracts resulting in strong year-on-year volume growth, accompanied by even higher growth in the third quarter segment adjusted EBITDA. Financing remains an important competitive differentiator for ePlus, offering flexibility for our customers, particularly in more challenging economic periods. Acquisitions remain a key element of our growth strategy and we continuously evaluate potential opportunities that would enhance our offerings, strengthen our capabilities and expand our geographical presence. We were also pleased to complete the acquisition of PEAK Resources on January 26th. PEAK is a solution provider in Denver and the Mountain West, with enterprise customers and a corporate culture that parallels our own. This is another example of a geographic strategic acquisition that provides a platform for us to build out the Mountain West region. We believe we can deploy our broader solutions portfolio to their customer base, which should help drive incremental growth in the future. Our strong balance sheet including third quarter ending cash of $142 million, the highest level in the past seven quarters provides us with the flexibility to opportunistically pursue acquisitions that both align with our strategic objectives and are financially accretive. I'd like to thank the ePlus team for their continued dedication in a challenging operating environment. I will now turn the call over to Wayne to discuss our financial results in more detail. After Wayne’s remarks, I will provide our financial outlook for fiscal 2024.
Elaine Marion: Thank you, Mark and good afternoon, everyone. I will provide additional details about our financial performance in the third quarter of fiscal 2024. Consolidated net sales amounted to $509.1 million compared to $623.5 million in the prior year quarter. Technology business net sales were $494.2 million, down from $611.8 million reported in last year's third quarter. The decline was due to lower product sales, as improved product availability in the first half of the fiscal year enabled clients to complete previously delayed projects. Service revenue grew 10.7% to $74.7 million, led by double-digit growth in managed services. Within our technology business, sales were broad-based across customer verticals. On a trailing 12 month basis, our two largest verticals continue to be telecom media and entertainment and technology representing 24% and 17% of our technology business net sales respectively. SLED, healthcare and financial services accounted for 16%, 13% and 10% of our technology business net sales, respectively, with the remaining 20% divided among other end markets. Net sales in our financing segment were $14.9 million, up from $11.7 million in the prior year due to higher transactional gains and portfolio earnings. Although consolidated gross profit decreased 3.3% year-to-year to $133.8 million, consolidated gross margin expanded by 410 basis points to 26.3%. All three of our technology segments contributed to the improvement in gross margin with product gross margin gaining 270 basis points to 21.9%, mainly due to a larger proportion of third party maintenance and services sold in the current quarter, which are recorded on a net basis. Managed services gross margin showed a 330 basis point improvement to 31.8%, due to scaled growth in these services. While professional services gross margin grew by 420 basis points to 43.3%, benefiting from a shift in mix to higher margin services. Consolidated operating expenses of $95.8 million, increased 4.2% year-over-year, reflecting the increases in salary and benefits from additional headcount as well as increases and acquisition related depreciation and amortization expenses. Our total headcount at the end of December 2023 was 1,897, up 152 from a year ago, partially due to the acquisition of Network Solutions Group completed in April 2023, which added 83 employees. Of the 152 additional employees, 133 were in customer-facing roles. On a consolidated basis operating income declined from $46.5 million to $38 million. Earnings before taxes were $38.4 million, down from $49.4 million reported in last year's third quarter. The decrease was due to lower sales as well as the benefit in last year's third quarter from foreign currency gains and a class action payment, which together totaled $2.8 million. The effective tax rate was 29% in the third quarter of fiscal 2024 compared to 27.7% in the year ago quarter. Consolidated net earnings were $27.3 million or $1.2 per diluted share compared to net earnings of 35.7 million or $1.34 per diluted share last year respectively. Non-GAAP diluted earnings per share were $1.18 compared to $1.38 in the year ago period. Our diluted share count at the end of the quarter was $26.7 million, unchanged from the third quarter of fiscal 2023. Consolidated adjusted EBITDA decreased to $46.2 million versus $53.3 million in the prior year due primarily to a 23.3% adjusted EBITDA decline in the technology business. Moving to our consolidated results. For the nine months ended December 31st 2023, net sales grew 6% to $1.67 billion led by 6.5% net sales growth in the technology business. Gross billings in the technology business were $2.5 billion, an improvement of 3.4% versus the prior year period. Consolidated gross profit rose 9.2% to $420.4 million and consolidated gross margin expanded 80 basis points to 25.2%, due to improved margins for both product and services. Consolidated net earnings were $93.8 million or $3.52 per diluted share, representing increases of 8.4% and 8.6% respectively. Adjusted EBITDA grew 8.2% to $153.6 million and non-GAAP diluted earnings per share expanded by 9% to $3.99. Turning to the balance sheet. We ended the third quarter with cash and cash equivalents of $142.2 million, the highest in two years as compared to $103.1 million at the end of fiscal 2023. Conversely, inventories declined to $218 million from $243.3 million at the end of March 2023, representing the lowest level in nearly two years. We've seen supply chain pressures continue to ease enabling us to fulfill prior customer orders and complete related services, which should support further inventory reduction over time. Further inventory turns continue to improve to 27 days compared to 29 days in the preceding quarter and 38 days at the end of fiscal 2023. Stockholders' equity increased 12.2% to $877.8 million from the end of fiscal 2023. Our cash conversion cycle was 54 days, compared to 51 days in the year ago quarter and 59 days at the end of fiscal 2023. Given this improvement, year-to-date operating cash flows were $143.5 million, compared to $147 million of cash used in the same period last year. While we expect our customers to be more conservative with their IT spending in the remainder of fiscal 2024, as Mark mentioned, ePlus remains well positioned in the market, given our strategic focus on higher growth end markets, and we remain confident in achieving the low end of our guidance range. I want to thank our talented ePlus employees for continuing to drive our solid financial performance for the first nine months of fiscal 2024. With that, I will turn the call back to Mark. Mark?
Mark Marron: Thank you, Elaine. Driven by our strategy targeting higher-growth market segments like cloud, networking, collaboration and security, ePlus has generated strong financial performance through the first nine months of our fiscal year. Specifically, fiscal year-to-date consolidated net sales are up 6%. Adjusted EBITDA is up 8% and diluted earnings per share has increased 9%, despite ongoing economic uncertainty and the associated impact on IT spending. Looking forward, we expect our fourth quarter results will improve sequentially from the third quarter, as customer sentiment is positive. As a result, we maintain our 2024 financial guidance with an expectation that we will achieve the lower end of the range driven by a re-acceleration of growth in our Technology business and continued positive momentum in Services. Even as the overall IT spending environment remains challenging, we remain confident in the strength of our marketing position and in our growth strategy. With our many industry partners, ePlus offers innovative, scalable solutions that cost effectively address our customers needs today and for the future. We remain committed to driving profitable growth and building long-term value for our shareholders. Operator, let's now open the call for questions. Thank you.
Operator: [Operator Instructions] And our first question comes from the line of Maggie Nolan with William Blair. Please go ahead.
Maggie Nolan: Hi. Thank you. Mark, you mentioned part of this quarter performance was influenced by timing of deals. Have you seen some of those deals closed so far in January, or how are you feeling about the ability to close those in the coming months?
Mark Marron: Yeah. Hey, Maggie, how are you? So, yes, we've seen activity pick up in Q4. We've already seen some of those deals close. And just to give you a quick recap on the quarter, Maggie. So first off, it was a volume issue. Our net sales was down 18.4%, but our gross profit was only down 3.3%. And a lot of that had to do with our strong margins, our Services uptick. We had a pause with our Enterprise customers, but we also saw an uptick in our Project Services. So there was kind of the offset there and then we had a nice Finance quarter as well. But really, what we're seeing, Maggie is what it came down to is timing issues between the quarters. So, if you think about it with the supply chain easing, we were up 22% in the first half. What we saw was the pause with some of our bigger enterprise customers, plus, if you remember, we kind of pointed out we had a tough compare this quarter, where adjusted gross billing -- sorry, our gross billings were up almost 30%, last year and this quarter. But with all of that, we expect growth to be back to a little bit normal ranges in Q4 and deliver a solid fiscal year and hit the low end of our guidance range.
Maggie Nolan: That's really helpful, Mark. And then so one other piece of value that was you had talked about maybe there was some lengthening sales cycles and maybe that's some of the Enterprise commentary that you were giving, but you felt like that wasn't necessarily indicative of a trend yet. Can you elaborate on why that may not be a trend and what you're seeing out there in the market?
Mark Marron: Yeah, Maggie, you know, it's funny. What we saw in the calendar year-end, the end of our Q3 was not the normal year-end budget flush that we see. But since the fourth quarter, beginning in January has picked up. We've seen orders, pipeline, all pick up nicely. So some of the Enterprise deals have actually, some of the deals that moved push from Q3 into Q4 have closed and some of the time lines people seem to whether it's a budgeting issue or not have started to move forward a little bit quicker in terms of their sales cycle. Still not back to I'll call it pre-COVID levels if you will, as it relates to the sales cycle but definitely improved from Q3.
Maggie Nolan: Thank you.
Mark Marron: Hey, Maggie. One other thing to just to point out, you note, it's an interesting time with the supply chain. So what we believe happened at least with us is we had a lot of customers that were deploying technology that we delivered in the first half, especially in this Q three. So it's a -- it really is a timing issue between the quarters with the supply chain deploying that technology and then customers starting to invest whether it's in security or AI or things along those lines.
Maggie Nolan: Okay. That's helpful. Thank you.
Mark Marron: Thanks, Maggie.
Operator: And your next question comes from the line of Matt Sheerin with Stifel. Matt, your line is open.
Matt Sheerin: Yes, thank you. Mark, I just wanted to follow up on Maggie's question regarding your outlook. I'm looking at my model here in going back seven years. You've been down sequentially every March quarter and it does sound like you didn't see the seasonal trends that you typically expect. So I guess a question other than that you've seen some pickup here in January. Is your backlog or any other sort of tangible evidence that you can point to this rebound here?
Mark Marron: Yeah. Hey, Matt, good question. So what we've seen is some of the deals that we -- I just discussed with Maggie that pushed from Q3 into Q4, the demand parameters have really not changed that as it relates, and I got to admit Matt, this is a little bit different than our normal seasonal Q3 to Q4 and a lot of this is timing. The other thing I'd ask you to kind of keep in mind as you go through your models, if you look at the first half, our net sales were up 22%. I think it was in the first half and our net sales year-to-date are up 6%. And our gross profits up 9%. So it's in line with what we were thinking for the quarter. A lot of it just came down to timing issues and a lot of it's supply chain related and customers pushing deals out from Q3 to Q4 for whatever reasons.
Matt Sheerin: Got it. But it wouldn't seem that supply chain would be an issue, right? Because everyone saying that products are readily available. Cisco's talked about that, your networking sales were down 24% year-over-year. So I'm trying to figure out is it supply chain or just customers being more cautious?
Mark Marron: Yeah. Hey, Matt. Two things. If you think about it, what I'm saying on the supply chain is that a lot of customers in our first half we were up 22%. And some of our bigger customers were actually installing implementing deploying that technology as compared to buying new technology. So some of those bigger customers as you know had the wherewithal and the capabilities to order in advance. So that's what we're seeing in the quarter. And then if you look at it for the year, we're still up 6% on the net sales and 9% on our gross profit. So the other factor that comes into play is, if you look at our services, they were up 10.7% and our project services were up nicely both from a revenue and from a gross margin standpoint. So some of that ties to what I'm talking about with the projects being deployed as compared to buying new technology. The second part of that is what I had said to Maggie a little bit earlier is that some of these deals, some of these enterprise deals or customers pushed into Q4 and we've seen an early pickup, and we don't think the demand parameters are changing both in terms of our pipeline our backlog and what we're hearing from our sales teams related to their forecast for Q4.
Matt Sheerin: I got it. Okay. And could you remind me on the revenue contribution from the in this quarter from the acquisition that you just completed does that have much of an impact?
Mark Marron: It was a Matt. It was immaterial to net sales, maybe 3% to 4% of net sales. So it was immaterial for the quarter.
Matt Sheerin: Okay. I mean but for the March quarter? I could you just you just you just closed the acquisition, right? So you have a quarter where revenues also?
Mark Marron: Yes, sorry that's immaterial to Matt. That's a small acquisition roughly 35, 36 employees. What it does for us it gives us a platform for the Mountain West. And they've got skill sets in the kind of data center cloud security space that we can we can build upon and then bring all the other things that ePlus brings to the table. So we think it's a nice platform to build on but it's immaterial for Q4. Okay.
Matt Sheerin: Okay. Fair enough. And just relative to your EBITDA guidance for the year at the low end that would imply that your EBITDA or operating margin for the March quarter would be or an operating profit would be down year-over-year despite a good revenue growth because your revenue growth is going to be up double-digits year-over-year. So what's beneath -- what's happening there and why is that down?
Mark Marron: Well, I think, if you look at it Matt is probably some of the things that we talk about. We're investing for the future. So we believe we're a growth company. So we didn't touch on AI yet, but we've made some big investments as it relates to resources AI optimized solutions. We built out a lab a customer innovation center. So Elaine touched on our head count was up. I think it was 152 employees, I'd say about 130 to 135 were customer facing. So you'll see our salaries and benefits still up based on the investments we're making there. And then over time, I think you'll start to see operating leverage, but we still believe we'll be in the range on the adjusted EBITDA and the net sales on the low end that we talked about.
Matt Sheerin: Okay. Very good. Thank you very much.
Mark Marron: All right. Thanks, Matt.
Operator: And your final question comes from the line of Greg Burns with Sidoti. Greg, your line is now open.
Greg Burns: Yes. Just -- sort of a kind of follow-up on the on the product sales. Is just a little bit of a bottleneck, you saw this quarter. Cisco imply that maybe there was a couple of quarters like it was going to be longer duration here to work through some of this bottleneck of product that's been shipped but it seems like you feel that you're going to rebound pretty quickly in the next quarter. Can you just help us understand what gives you confidence there? I know you touched on a little bit, but Cisco in particular seem to think that it was going to be a little bit of a longer term headwind for them to work through this product -- product that's out in the market?
Mark Marron: Yes, hey, Greg how are you? So a couple of different things. So I don't I don't think we have the I'll say supply chain issues that Cisco has. Now, obviously it's a portion of what we do, but we've seen our open orders continue to go down on a regular basis overall. So I think some of it is open. Orders are getting closer. I won't say they're at pre-COVID levels, but they're a little more. I don't know if normalized, but at more natural levels that we think. So we've got a good handle on our open orders slash backlog. You know the supply chain easing really eased up a lot for us. I can't speak to Cisco, but for us in the first half if you think about it being up 22%, I don't think there were too many companies out there up 22% in the first half on net sales. So you had that supply chain easing. And then the other thing for the quarter is, we've seen the activity pickup. We've got the forecast from our sales team and the demand parameters really haven't changed for us. We feel we're in the right value added areas, with cloud security, network modernization, AI and all those services we're predicting. So that would be the reason behind it.
Q – Greg Burns: Okay. And then with some your AI practice, AI Ignite is that mainly a services opportunity like a professional service opportunity. Is there hardware associated with that? And do you feel like you have the capabilities in-house to grow that business, or is that something that you need to maybe add inorganic expertise to grow that part of your business?
Mark Marron: Yes. So, Hey, Greg, a couple of different things there. One is in the early innings, if you think about it, but I think it's going to change how companies operate as they go forward in the future. The other thing and it kind of fits right in our wheelhouse. So if you think about converged infrastructure hyper-converged AI optimized infrastructure is the same thing, in terms of compute networking storage, and all the things that kind of plays to our strengths. So, a lot of that we have resources, but we have invested in additional resources. And I had mentioned the lab and the customer innovation center, but it's not just a services play. So, it's actually the services is the first part of it where we help them kind of explore, adopt and optimize AI. And that means, you know, are they ready for AI, envisioning workshops, really it's about the data. It's kind of a data strategy. First is, you've got all this data that's expanding exponentially, if you will. So then you've got to think through governance and risk. Once you've decided on your AI strategy, then it gets into what I call the IT optimized infrastructure, which is the hardware play and to be honest Greg, the -- it's a big play where it's a big opportunity in the market. So I think I'm saying what anybody else would say related to AI, it's early innings but it's both the services and a product play for us. And the product play kind of fits with our heritage and our history. And what we're good at
Q – Greg Burns: Perfect. Thank you.
Mark Marron: Okay. All right, Greg, thank you. And everybody, thank you for joining us today for our quarterly earnings report. We appreciate that you took the time and have a good night. Take care.
Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
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