Safe Harbor Statement

This transcript of the earnings call that occurred on February 3, 2022, contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or “Exchange Act,” and are made in reliance upon the protections provided by such acts for forward-looking statements. Such statements are not based on historical fact, but are based upon numerous assumptions about future conditions that may not occur. Forward-looking statements are generally identifiable by use of forward-looking words such as “may,” “should,” “intend,” “estimate,” “will,” “potential,” “could,” “believe,” “expect,” “anticipate,” “project,” and similar expressions. Readers are cautioned not to place undue reliance on any forward-looking statements made by us or on our behalf. Forward-looking statements are made based upon information that is currently available or management’s current expectations and beliefs concerning future developments and their potential effects upon us, speak only as of the date of the earnings call, and are subject to certain risks and uncertainties. We do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur, or of which we hereafter become aware. Actual events, transactions and results may materially differ from the anticipated events, transactions or results described in such statements. Our ability to consummate such transactions and achieve such events or results is subject to certain risks and uncertainties. Such risks and uncertainties include, but are not limited to, the matters set forth below:

·           national and international political instability fostering uncertainty and volatility in the global economy including an economic downturn, exposure to fluctuations in foreign currency rates, interest rates, and pressure on prices;

·           the duration and ongoing impact of the COVID-19 pandemic, which could materially adversely affect our financial condition and results of operations and has resulted in governmental authorities imposing numerous unprecedented measures, and court opinions concerning the legality thereof, to contain the virus that have impacted and may further impact our workforce and operations, the operations of our customers, and those of our respective vendors, suppliers, and partners;

·           domestic and international economic regulations uncertainty (e.g. tariffs and trade agreements);

·           the creditworthiness of our customers and our ability to reserve adequately for credit losses;

·           loss of our credit facility or credit limits with our vendors may restrict our current and future operations;

·           significant adverse changes in, reductions in, or loss of our largest volume customer or one or more of our large volume customers or vendors;  

·           managing a diverse product set of solutions in highly competitive markets with a number of key vendors:

·           uncertainty regarding the phase out of LIBOR may negatively affect our operating results;

·           increasing the total number of customers using integrated solutions by up-selling within our customer base and gaining new customers;

·           adapting to meet changes in markets and competitive developments;

·           maintaining and increasing advanced professional services by recruiting and retaining highly skilled, competent personnel and vendor certifications;

·           increasing the total number of customers who use our managed services and professional services and continuing to enhance our managed services offerings to remain competitive in the marketplace;

·           performing professional and managed services competently;

·           maintaining our proprietary software and updating our technology infrastructure to remain competitive in the marketplace;

·           reliance on third-parties to perform some of our service obligations to our customers;

·           our dependence on key personnel to maintain certain customer relationships, and our ability to hire, train and retain sufficient qualified personnel;

·           our ability to implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, systems integration and other key strategies;

·           a possible decrease in the capital spending budgets of our customers or a decrease in purchases from us;

·           the possibility of goodwill impairment charges in the future;

·           changes in the IT industry and/or rapid changes in product offerings, including the proliferation of the cloud, infrastructure as a service, software as a service and platform as a service;

·           our dependency on continued innovations in hardware, software and services offerings by our vendors, availability of those products from our venders and our ability to partner with them;

·           significant and rapid inflation may cause price and wage increases, as well as increases in operating costs which may impact the arrangements that have pricing commitments over the term of the agreement;

·           our contracts may not be adequate to protect us, and we are subject to audit in which we may not pass, and our professional and liability insurance policies coverage may be insufficient to cover a claim;

·           exposure to changes in, interpretation of, or enforcement trends in legislation and regulatory matters;

·           future growth rates in our core businesses;

·           reduction of vendor incentives provided to us;

·           failure to comply with public sector contracts or applicable laws and regulations;

·           our ability to secure our own and our customers’ electronic and other confidential information, and remain secure during a cyber-security attack;

·           our ability to raise capital, maintain or increase as needed our lines of credit with vendors or floor planning facility, or obtain debt for our financing transactions or the effect of those changes on our common stock price;

·           changes to or loss of members of our senior management team and/or failure to successfully implement succession plans;

·           disruptions or a security breach in our or our vendors’ or suppliers’ IT systems and data and audio communications networks, supply chains or other systems;

·           our ability to realize our investment in leased equipment; and

·           our ability to successfully perform due diligence and integrate acquired businesses;

·           supply chain issues, including a shortage of IT products;

·           our ability to protect our intellectual property rights and successfully defend any challenges to the validity of our patents, or allegations that we are infringing upon any third-party patents, and the costs associated with those actions, and, when appropriate, license required technology.

We cannot be certain that our business strategy will be successful or that we will successfully address these and other challenges, risks and uncertainties. For a further list and description of various risks, relevant factors and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see the Item 1A, “Risk Factors” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in our Form 10-K for the year ended March 31, 2021 as well as other reports that we file with the SEC.

This document may also contain non-GAAP financial information. Management uses this information in its internal analysis of results and believes that this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For a reconciliation of non-GAAP measures presented in this document, see our earnings press release issued February3, 2022, a copy of which is posted on our website at www.eplus.com/investors.

February 3, 2022

Prepared Remarks

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, Mr. Kley Parkhurst, SVP. Sir, you may begin.

Kleyton Parkhurst, SVP

Thank you for joining us today. On the call is Mark Marron, CEO and President; Elaine Marion, CFO; Darren Raiguel, COO and President of ePlus Technology; and Erica Stoecker, General Counsel.

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 Form 10-K for the year ended March 31, 2021, and subsequently filed quarterly reports, including our Form 10-Q for the quarter ended December 31, 2021, when filed. The company undertakes no responsibility to update any of these forward-looking statements in light of new information or future events.

In addition, during the call, we may make reference to non-GAAP financial measures and we've 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, CEO, President

Thank you, Kley, and thank you, everyone, for participating in today's call to discuss our results for the third quarter of fiscal 2022. 

ePlus delivered strong financial results in our third quarter.  Our performance highlights resilient IT spend in the marketplace and the successful execution of our growth strategy to capture share in our focused end-user markets, including mid-market, enterprise, and public-sector.  Notably, customer demand was broad-based in the third quarter, with growth across all customer size segments and nearly all end markets.  Our higher-than-market growth rates, despite continuing supply chain challenges, demonstrate that our strategy to drive consultative, advisory and managed services, security, and hybrid Cloud solutions is delivering what our customers demand today.  We are confident that ePlus remains well positioned for the future, with a strong balance sheet, deep engineering expertise, and unique, value-added financing alternatives.

Our adjusted gross billings increased 16.5% year-over-year to $685 million in the third quarter, and on a year-to-date basis increased by more than 14% to nearly $2 billion. Net sales in the quarter grew by 15.7% year-over-year to $495 million, and year-to-date sales increased 12.6% to $1.37 billion.

Given strong top-line growth and the positive operating leverage inherent in our business model, earnings per share again significantly outpaced sales growth. In the third quarter, diluted  earnings per share increased 21% and non-GAAP earnings per share improved nearly 24% from the prior-year period.

I’d like to highlight a few areas that continue to contribute to our strong gross margins and profitability.  Our services revenue was up 20% for both the quarter and year-to-date, reflecting not only increased project-based, professional services, but a continuing increase in managed services annuity-type bookings which create value-added and sticky customer relationships, strengthening the ties we have with our customers as well as driving more predictable future revenue and gross profit profiles.  Along with revenue growth, our service business is generating higher gross margins, achieving 39.4% in the third quarter and 39% year-to-date which is a 120 bps improvement.  As our service revenue scales and increases as a percentage of our total revenue, we expect a continued favorable impact on our consolidated margins, providing incremental and sustainable benefits to our profitability and earnings.

Security continues to be a key contributor to our business accounting for approximately 20% of adjusted gross billings on a trailing twelve -month basis.  Customers are dealing with new regulations, ransomware concerns and post incident response, cyber security insurance requirements and staffing shortages. We have built programs to help organizations develop and manage proper implementation of their security programs, which may  be as simple as providing a gap analysis along with a deliverable roadmap to more extensive solutions, that provide full time CISO resources with key deliverables associated with each functional area.  We continue to see growing customer demand for our consultative and advisory services which in turn has helped increase our gross margins from services.

The continued solid performance of our financing segment underscores its value-add as operating income of $8.9 million increased nearly 39% year-over-year in the third quarter. On a year-to-date basis, our financing segment has generated operating income of more than $30 million, which includes an outsized benefit from several large transactions in our second quarter.

In today’s dynamic IT market, our customers seek to architect solid technology foundations that are both flexible and scalable. As legacy applications and business processes increasingly move to modernize their data centers or move to a hybrid cloud environment, we are able to support our customers’ more adaptable business models through our integrated approach that is tailored to meet their specific networking and information security requirements. This past December, for example, we launched a new networking strategy, that provides customers with a roadmap to help streamline complex, multifaceted network implementations.

At the same time, our financing segment provides unique differentiation from a competitive standpoint. As IT initiatives grow in scope and complexity, our financing capabilities offer customers additional flexibility as they manage tighter capital IT budgets and spending plans.

As we enter our fiscal fourth quarter, we are encouraged by continued favorable market fundamentals that are reflected in the strength of our open orders and in our growing services backlog.

We continue to focus on making the right investments – including acquisitions, strategic hires, or investments in technology and partnerships -- to ensure that our services and solutions support our customers’ future technology roadmaps and needs.  And while we have a robust balance sheet and proven integration expertise, which gives us the ability to acquire the right targets, we will continue to be disciplined in our approach to acquisitions.

As we have discussed on prior calls, supply chain constraints remain an ongoing challenge and are likely to remain a headwind throughout this calendar year. We continue to work in close partnership with our vendors and customers to navigate these issues, which in some cases require us to hold ordered inventory in advance of larger customer deployments. This dynamic, coupled with continued strong customer demand for IT equipment, has led to heightened inventory levels that we expect will diminish as supply chain constraints ease and customer projects are completed.

In summary, I am very pleased with our financial and operational performance in the third quarter and on a year-to-date basis. We continue to execute at a high level, delivering strong revenue and earnings growth, while investing in our capabilities to strengthen our competitive position and deliver innovative and cost-effective solutions for our customers.

I will now turn the call over to Elaine Marion, our CFO, to walk you through our financial results in more detail.

Elaine Marion, CFO

Good afternoon everyone, and thank you Mark. I am happy to share more insight about our strong financial performance in the third quarter of fiscal 2022, where we delivered double-digit top line and net earnings growth.

The strong demand for ePlus’ products and services that Mark discussed is evident in our third quarter fiscal year 2022 consolidated net sales growth of 15.7% to $494.8 million. Performance was strong across the board in both our Technology and Financing segments.

Our business strategy and continued focus on our growth areas supported the Technology segment’s net sales increase of 14.8% to $477.0 million compared to $415.6 million in last year’s third quarter. Product and Service revenues increased 14.0% and 20.0%, respectively, evidencing market share gains. We are particularly pleased with our continued streak of Service revenue growth.  This was our sixth consecutive quarter of strong performance driven by broad demand for our managed and professional service offerings. These same trends supported the adjusted gross billings increase of 16.5% to $685.0 million, compared to $587.8 million in the third quarter of fiscal 2021. The adjusted gross billings to net sales adjustment was 30.4% compared to 29.3% in last year’s third quarter as we had very strong growth this quarter for sales of third-party maintenance, SaaS, and subscriptions.

For the Financing segment, fiscal 2022 third quarter revenue increased 48.4.% to $17.9 million, reflecting higher post contract sales from several early buyouts of assets under lease.

Fiscal 2022 third quarter consolidated gross profit amounted to $117.1 million, up 19.3% from $98.2 million year-on-year. Consolidated gross margin widened 70 basis points to 23.7% compared to 23.0% in the year ago quarter. Technology segment gross profit was $104.5 million, up 18.3% year-over-year and gross margin expanded 60 basis points to 21.9%, primarily reflecting expanding margins for Product and Service. Service margins widened 70 basis points to 39.4%, due to increased volume from professional services that yield higher margins. The Financing segment’s gross profit was $12.6 million, reflecting a 28.5% increase.

Increased salaries and variable compensation were the main drivers of the 17.6% increase in SG&A to $76.9 million and the similar growth in operating expenses. Our total headcount at the end of December 2021 was 1,554, flat sequentially, and a 2% decrease compared to 1,586 a year ago in the third quarter which included 102 employees added from the SMP acquisition on December 31, 2020.

Our strong top line growth and operating leverage led to 23.3% growth in operating income to $36.1 million. Our effective tax rate for the quarter decreased to 26.4% from 28.1% last year due to an adjustment to the prior year’s tax return related to foreign taxes. For the full year, we expect our tax rate to be between 28% and 29%.

For the same reasons I just mentioned, consolidated net earnings of $26.4 million, or $0.98 per diluted share, represented increases of 22.1% and 21.0%, respectively, from $21.6 million, or $0.81 per diluted share in last year’s third quarter. Non-GAAP diluted earnings per share increased 23.6% to $1.10, compared to $0.89 in the year ago quarter. As a reminder, EPS and the diluted share count of 26.9 million reflect the 2 for 1 stock split that took effect on December 13, 2021.

Also, adjusted EBITDA increased 21.5% to $41.8 million for the quarter.

Moving to our consolidated results for the nine months ended December 31, 2021, net sales increased 12.6% to $1.37 billion. Net sales in the Technology segment were up 11.7% to $1.31 billion.  Year-to-date adjusted gross billings increased 14.2% to $1.98 billion. Consolidated gross profit increased 16.9% to $345.6 million. Consolidated gross margin expanded 90 basis points to 25.2% and our Technology segment gross margin increased 90 basis points to 23.2% reflecting the effective execution of our growth strategy.  This, combined with the operating leverage inherent in our business model, led to an increase in year to date net earnings and earnings per share of 38.3% and 37.7%, respectively, to $81.4 million or $3.03 per diluted share. Adjusted EBITDA increased 32.0% to $130.3 million and non-GAAP diluted earnings per share increased 36.3% to $3.38 over the nine month period.

As for end markets, on a trailing twelve-month basis, Telecom, Media & Entertainment continues to be our largest end market accounting for 29% of net sales, followed by Healthcare, SLED, Technology and Financial Services which represented 16%, 15%, 15% and 9%, respectively. The remaining 16% is distributed among several other customer types.

Now looking at the balance sheet, we ended the quarter with $105.6 million in cash and cash equivalents compared to $129.6 million at the end of March 2021. This lower level was due to share repurchases totaling $9.5 million and increased working capital needs to support strong demand for our products and services in the Technology segment, particularly as it related to inventory, which more than doubled to $147.7 million when compared to the end of fiscal 2021. This is due to an increase in committed ongoing customer projects coupled with some impact from continued supply chain constraints.

I want to remind you that we have approximately $188 million in our financing portfolio and a portion of that could be funded with third parties for additional liquidity to fuel our growth.  In addition, we recently expanded our Wells Fargo credit facility to $375 million. Our cash conversion cycle at the end of the third quarter was 47 days, up from 24 days in the year ago quarter and 35 days in the prior sequential quarter.  This sharp increase is mainly due to the increase in inventory and an increase in sales to customers with greater than 60-day terms.

To sum up, our strong performance year-to-date gives us confidence in our ability to continue to grow our business, gain market share, and to deliver value to our shareholders. I would like to extend my thanks to the entire ePlus team for their unwavering perseverance and performance. With that, I will now turn the call back over to Mark.

Mark Marron, CEO, President

Thank you, Elaine.  Before we open the call to questions, I’d like to take a moment to thank our global team for their continued strong execution, despite the challenges of the rapidly changing Covid environment and supply chain constraints. Their hard work and dedication allowed us to support our customers key business initiatives while delivering solid operating metrics. We believe we are well-positioned and have the flexibility and expertise to meet our customers’ ever-evolving needs.

I’d like to open the call to questions.  Operator?

Operator

[Operator Instructions] Your first question is from Maggie Nolan with William Blair. Your line is open.

Maggie Nolan, William Blair

Hi. Thank you. Nice performance.                

Mark Marron, CEO, President

Thanks, Maggie.

Maggie Nolan, William Blair

Mark, I'm hoping you could maybe give us a little bit more detail on the backlog and where it stands. I think you had record levels last quarter. What does it look like as you're looking out from here? And any kind of color on maybe products versus services within that as well would be helpful.

Mark Marron, CEO, President

Yeah. So Maggie, our open orders continue to grow. In fact, they're up about 106% over last year. Our services backlog is up as well pretty significantly and our pipeline of opportunities for Q4 and beyond are both visible and strong at this point. So as it relates to, I'll call it, backlog, open orders, visibility into the pipeline, we're seeing pretty strong demand across all customer sites right now.

Maggie Nolan, William Blair

Okay, thanks, Mark. And then on the services gross margin, Elaine, I think you alluded to maybe that was a little bit of mix within services. But there does seem to be kind of a pattern of a couple quarters here of pretty strong gross margin in services. So is that mix shift becoming a bit of a trend or are there any trends in pricing that we should be taking note of?

Elaine Marion, CFO

Yeah. This quarter, it was really related to an increase in project related services, and those come with the higher margin compared to last year where we had COVID, we couldn't get on-site as much. So I think project services wasn't quite as high as it was this year. In terms of trending, our services is just growing as a percentage of our total net sales. And project based staff augmentation as well as managed services, they are all up across the board.

Mark Marron, CEO, President

Yeah. I think, Maggie, if I could add to Elaine's piece, what we're seeing in the market is a lot of companies are short on staffing. So what we're seeing is they have need for both staffing resources, on demand resources to go out and install routers and switches and things along those lines. We also see with everything going on with Log4j and all the other types of security threats that are out there, that they're looking for security services. So we've seen some nice upticks across the board on services. And as Elaine kind of alluded to, if you look at our services, what's nice is, it's up 20% for the quarter, but it's up 19.9% for the year, and the gross margins are actually increasing. So that's a nice mix for us right now.

Maggie Nolan, William Blair

Got it. Thank you for taking my questions.

Mark Marron, CEO, President

Thanks, Maggie.

Operator

[Operator Instructions] Your next question is from Greg Burns with Sidoti. Your line is open.

Greg Burns, Sidoti

Good afternoon. In regards to the rise in working capital, the rise in inventory, what's the timing on the completion of the projects tied to that, like when do you expect them to be delivered, and do you – at what point do you start to think that the working capital will start to decline going forward?

Mark Marron, CEO, President

Hey, Greg, as it relates to the inventory, I think this is going to go on for a little bit. I think with the supply chain issues that are in place, I think you're going to see them through the end of the year – of this calendar year based on everything we're seeing and hearing. So I think that's going to continue for a period of time. We're lucky enough, it really didn't affect us in the quarter too much as it relates to some of the supply chain things similar to previous quarters as it relates to the supply chain. So I think this will continue for the near future. And then over time, it'll start to wind down as we move forward related to inventory.

Greg Burns, Sidoti

Okay, thanks. And then in terms of labor availability, are you seeing any issues there in terms of being able to hire as well as maybe the cost of labor going up, how do you feel about that going forward?

Mark Marron, CEO, President

Yeah. It's – I think it's a competitive market, to be honest, Greg. We've been lucky. From an attrition standpoint, it's up a little bit compared to previous years. I think it is a competitive market, both for new hires as well as people that potentially leave. And the – with labor costs being up, I do think it's a little more expensive with replacements on, I'll say, either terms or new hires. So it is a little bit challenging at this point.

Greg Burns, Sidoti

Okay. And then, I guess, with that in mind, how do you feel about continuing to be able to drive operating leverage to the business? Are you – is it going to be more of a – I know, historically, you're investing in forward facing kind of sales and technological head count, and more recently, we're starting to see some leverage in the business. So going forward, how do you feel about balancing that in this current environment?

Mark Marron, CEO, President

Yeah. I think a couple of things there, Greg, that you touched on. One, we are going to continue to invest. We think we're in a pretty good spot with the solutions and services we have. So it's really about getting more feet on the street to touch more customers. So we think we'll continue to invest in head count. So that'll drive up some of the, I'll call it, the S in SG&A, if you will, from an OpEx perspective. But if you look at this year, we've been able to drive our operating income, consolidated income is like 30 – up like 36% year-over-year. And actually, the operating income margin is up, I think, it's like 140 basis points. So I think we have some room within that model still to get operating leverage and continue to grow both top-line managed through some of the, I'll say, salary increases for lack of calling anything else to still have a nice bottom line from an operating perspective.

Greg Burns, Sidoti

Okay, great, thank you.

Mark Marron, CEO, President

Thanks, Greg, We’ll see you.

Operator

And your next question is from Matt Sheerin with Stifel. Your line is open.

Matt Sheerin, Stifel

Yes, thank you. Actually, couple of questions from me. Mark, just to start, you talked about the strength and the strong demand in the quarter. Were you able to meet all of that demand or did you have product constraints that that pushed out orders? Were there revenue left on the table, in other words, that you missed?

Mark Marron, CEO, President

See, well, we try not to leave revenue on the table, Matt, but there's definitely things with the – look, with the supply chain, it's an interesting dynamic. I think demand is, obviously, outpacing supply. I think there is, obviously, constraints. Lead times are changing and extending all the time, Matt. But we've been lucky enough, the team has done a really nice job of working with both our vendor partners and our customers on setting expectation. So, I think there may be some that leaks over from Q3 into Q4 and then Q4 to Q1, but I don't think it's anything material, or it hasn't been material at this point. And I'm not expecting it to be material in Q4 at this point.

Matt Sheerin, Stifel

Okay. And are you seeing price increases and just passing that along that, is that inflation contributing to your revenue growth?

Mark Marron, CEO, President

Not yet, but it could. With the price increases, it could potentially, as we go forward, we have been able to pass it on at this point. But a lot of the pricing changes has just come into play recently. So there were some things in place honoring old pricing. And some of the new pricing just came into play January 1, so just starting in this quarter. So haven't seen it where it would affect revenues yet. But as each of the vendors increase their pricing and if we're able to pass it on, you should see some uptick there.

Matt Sheerin, Stifel

Okay. And I appreciate that you don't give forward guidance and you haven't given outlook for the March quarter, but typically you're down seasonally, down last year, you were down double digits sequentially. And maybe is that sort of the expectations that more seasonal demand trends because of the product constraints or anything different than that?

Mark Marron, CEO, President

Yeah. No. I think seasonality still comes into play, Matt. It always does every year for us in the March quarter versus the December calendar year end. So I think seasonality is in play. I also think on our group side, our financing side, we have a tough compare for Q4 to last year. I think there was some sales of off-lease equipment and a few other things that jumped up that number last year, so we got a little tough compare there. Those will be the two things, but, once again, as I mentioned earlier, the pipeline, the backlog and all the other things that we're seeing are still strong.

Matt Sheerin, Stifel

Okay, thanks for that. And just, Elaine, I have just a modeling question regarding OpEx. You talked about an acquisition contributing to OpEx or SG&A. Could you give us an idea of what we should expect for the March quarter?

Elaine Marion, CFO

Yeah. I think if you follow what this quarter looks like, it should be running in the same lines, except variable comp will, obviously vascillate based on the gross profit in the quarter.

Matt Sheerin, Stifel

Okay. So flattish, give or take?

Elaine Marion, CFO

Yeah.

Matt Sheerin, Stifel

Yeah. Okay. Okay, that’s it for me. Thanks a lot.

Mark Marron, CEO, President

All right, Matt. See you, take care, Matt.

Operator

No questions at this time. Presenters, please continue.

Mark Marron, CEO, President

All right. Thank you, everyone. Thanks for joining us today. We look forward to everybody being safe and sound during some of the storms that are coming through the US and abroad, if you will. And then, we'll speak to you at the end of Q4 for both our Q4 and year-end results. Take care.

Operator

Ladies and gentlemen, thank you for your participation. This concludes today’s conference call. You may all disconnect.