AIT

Welcome to the Fiscal 2026 Third Quarter Earnings Call for Applied Industrial Technologies, Inc. My name is Alexandra, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. If you wish to ask a question at that time, please press 1 on your telephone keypad to raise your hand. To withdraw your question from the queue, press 1 again. Prior to asking a question, please lift your handset to ensure the best audio quality. If at any time during the conference call you need to reach an operator, please press 0. Please note that this conference is being recorded. I will now turn the call over to Ryan Dale Cieslak, Director of Investor Relations and Treasury. Ryan, you may now begin.

Thank you, Alexandra, and good morning to everyone on the call. This morning, we issued our earnings release and supplemental investor deck detailing our third quarter results. Both of these documents are available in the Investor Relations section of applied.com. Before we begin, a reminder that we will discuss our business outlook and make forward-looking statements. All forward-looking statements are based on current expectations and are subject to certain risks and uncertainties, including those detailed in our SEC filings. Actual results may differ materially from those expressed in the forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statement. In addition, this conference call will use non-GAAP financial measures which are subject to the qualifications referenced in those documents. Our speakers today include Neil A. Schrimsher, Applied Industrial Technologies, Inc.’s President and Chief Executive Officer, and David K. Wells, our Chief Financial Officer. With that, I will turn it over to Neil.

Thanks, Ryan, and good morning, everyone. We appreciate you joining us. I will begin with perspective and highlights on our results, including an update on industry conditions and expectations going forward. David will follow with more financial detail on the quarter’s performance and provide additional color on our updated outlook. I will then close with some final thoughts. Overall, we reported a solid third quarter underpinned by stronger organic sales growth across the business. Specifically, sales increased 6% organically over the prior year, which was the strongest growth in over two years. This was up notably from 2% last quarter and at the high end of our third quarter guidance. In addition, orders, backlog, and business funnel activity continue to build positive momentum. We also delivered another quarter of steady underlying margin performance with gross margins holding firm year over year inclusive of ongoing LIFO headwinds. These dynamics drove record quarterly EBITDA at the high end of our expectations, as well as 6% above the prior year, or 8% when excluding the impact of LIFO. At the same time, we continue to invest internally to support our growth potential and strategy. Taken together, it was a very productive quarter with many encouraging signals for the business moving forward. I want to thank our Applied Industrial Technologies, Inc. team for another solid quarter of execution. A few key points to emphasize. First, stronger sales growth in the quarter was broad-based with several encouraging underlying trends. Average organic daily sales increased 5% sequentially, which was above normal seasonal patterns. Trends strengthened as the quarter progressed, with organic sales in March up 10% over the prior-year period. The stronger growth was volume-driven with customer spending behavior increasingly positive and showing signs of broadening. More positive underlying demand was apparent in year-over-year trends across our top 30 end markets, where 17 generated positive sales growth compared to 15 last quarter. In addition, two-year stack trends across our top 30 markets improved notably on a sequential basis. Growth was strongest across metals, technology, machinery, aggregates, utilities and energy, mining, and construction. This was offset by declines primarily in chemicals, lumber and wood, transportation, rubber and plastics, and refining. Stronger sales activity was evident across both segments in the quarter, with particular strength in our Engineered Solutions segment, which delivered over 9% organic growth year over year. Growth was strongest across automation and fluid power, both increasing by a double-digit percent year over year in the quarter. Organic sales growth across our flow control operations also improved and was a contributor. In addition, segment orders were up by a double-digit percent over the prior year for the second straight quarter, with backlog and book-to-bill both increasing sequentially during the quarter. Overall, this performance is an encouraging sign for our Engineered Solutions segment’s expanding and differentiated growth potential as several favorable dynamics are converging. Of note, sales cycles for our advanced automation solutions are turning faster as customers put money to work in brownfield applications to drive production agility within existing capacity and address labor constraints. Our engineering depth, tailored solutions, and comprehensive application support are helping customers navigate automation deployments in both high-tech industries as well as across our legacy industrial verticals and in process infrastructure. In addition, project activity and investment across the U.S. is gradually increasing. We are also seeing recovery continuing to take shape in our legacy industrial and mobile OEM fluid power end markets following a prolonged multiyear downturn, alongside structural and secular growth in newer verticals where our exposure has increased in recent years following the ongoing expansion of the segment. On this last point, we are seeing solid demand build across our technology vertical, which today represents over 15% of the Engineered Solutions segment and contributed over 300 basis points to the segment’s organic sales growth rate in the quarter. Our exposure to the technology vertical includes an established and ongoing position across the semiconductor space, as well as emerging growth opportunities developing within the data center market. On slide eight of our earnings presentation, we added an overview of our position and the solutions we provide within these verticals, which spans across all three areas of the segment including fluid power, automation, and flow control. In semiconductor, we provide various fluid conveyance, pneumatic, robotic, and mechatronic solutions that are primarily tied to wafer fab equipment manufacturing, as well as flow control solutions used in material processing. In data centers, our deep expertise of fluid management and handling combined with established supplier relationships are presenting growing opportunities supporting various thermal management applications through engineered assemblies. In addition, our automation team provides robotic and machine vision solutions that automate and trace material handling within a data center facility. Our data center service capabilities and coverage were also enhanced through our Hydrodyne acquisition, where we are providing various fluid conveyance solutions and assemblies specified in liquid cooling systems. Overall, it is a very diverse and embedded position within these key growth verticals that highlights our ongoing evolution and technical capabilities as we continue to expand our Engineered Solutions segment. I am also encouraged by the growth potential developing across our core Service Center segment. Organic sales growth of 4% in the third quarter strengthened from last quarter, with average daily sales up approximately 5% sequentially on an organic basis ahead of normal seasonality. Trends were strongest during March, when organic sales increased over 6% compared to the prior year, including nearly 8% within the U.S. Customer spending behavior continues to strengthen as greater capacity utilization drives more break-fix activity and required maintenance on critical and aged production equipment. This drove stronger growth across strategic national accounts as well as our local accounts during the quarter. In addition, 13 of our top 15 industry verticals were up year over year in our U.S. Service Center network during the third quarter. This compares to 10 last quarter and six in the prior-year quarter. Benefits from our sales initiatives and our One Applied value proposition are resonating as we support our customers’ heightened technical MRO requirements within an increasingly positive U.S. industrial backdrop. This includes our deep knowledge and supplier relationships tied to critical motion control equipment and infrastructure, supported by our local service capabilities. Over the past several years, our Service Center team has been executing on a comprehensive strategic plan focusing on deepening our customer relationships, modernizing our sales processes and tools, and enhancing our speed to market through investments in talent, systems, and analytics. In addition, our Service Center team’s value proposition has strengthened through the expansion of our Engineered Solutions segment, giving them access to engineering, design, assembly, repair, and integration support to address our customers’ legacy industrial system needs as well as emerging required investments in automation. This is driving new business wins as well as greater cross-selling activity. We estimate cross-selling contributed over 100 basis points to the segment’s organic growth in the quarter, which is up from the first-half fiscal 2026 levels, and an encouraging sign. Overall, these initiatives remain ongoing and provide solid company-specific growth drivers for our Service Center segment moving forward as end-market demand cycles higher and as customers look to leverage the many secular and structural tailwinds developing across the North American manufacturing sector. Overall, it was a solid quarter highlighting building top-line momentum across Applied Industrial Technologies, Inc. and our differentiated industry position. Positive sales trends have continued in the early part of our fourth quarter with organic sales trending up by a high-single-digit percent year over year month-to-date in April. We are also well positioned to drive further EBITDA margin expansion and stronger earnings growth, assuming the improved top-line trends sustain moving forward. During the third quarter, EBITDA margins were in line with our expectations, while our year-over-year trends improved as the quarter progressed and sales growth strengthened. As a reminder, on an annualized basis, we target mid- to high-teen incremental EBITDA margins at mid-single-digit organic sales growth, with strong support from our ongoing internal margin initiatives, continuous improvement culture, and structural mix tailwinds. We remain mindful that we continue to operate in a dynamic environment where customers’ purchasing decisions remain sensitive to broader macro uncertainty that is persisting. This includes an ongoing dynamic trade policy and tariff backdrop. To date, we have not seen a significant impact from recent tariff and trade policy modifications. Price increase announcements from our suppliers remain steady, and over the last several quarters have normalized to a more regular cadence following an active pace this time last year. However, the inflationary environment and suppliers’ approach to pricing remains highly fluid at this point. We continue to work closely with our suppliers as they assess the evolving backdrop as well as other inflationary pressures on their supply chains. As evidenced by our performance over the past year, our teams continue to effectively manage broader inflationary pressures, and overall, we remain well positioned. We operate from an agile business model in well-structured markets tied to critical and technical processes with strategic supplier relationships. Combined with structural mix tailwinds and various self-help gross margin countermeasures inherent to our strategy, we are highly confident in our ability to continue to adapt and execute as the tariff and broader inflationary backdrop continues to evolve. Lastly, on capital deployment and ongoing opportunities moving forward, year to date we have remained active, deploying over $300 million on share repurchases, M&A, and growing our dividend. With regard to M&A, which remains a top priority and key element of our growth strategy, we are actively evaluating various targets across both our segments with our focus primarily on midsize and smaller tuck-in companies. While timing of M&A can vary quarter to quarter, I continue to believe the next 12 to 18 months will be a more active period for Applied Industrial Technologies, Inc. given the work being done and as we continue to execute on our strategy. Since 2018, we have closed 18 acquisitions representing over $1 billion in acquired sales. This included key strategic acquisitions that expanded our Engineered Solutions capabilities into areas of flow control and automation, as well as strengthened legacy positions in fluid power and within our Service Center network. Over that same period, we have grown EPS by 16% and free cash flow by 18% on a compounded annual basis. I believe that flywheel position and approach to M&A is even stronger today, given the investments we have made in our team, processes, and systems, as well as the compelling value proposition we offer to many companies looking to join our leading technical industry position within a still fragmented industry. In addition to ongoing M&A activity, we remain proactive with share buybacks. Long term, we see significant value creation potential across Applied Industrial Technologies, Inc. considering our strategic initiatives, industry position, exposure to secular growth tailwinds, and margin expansion potential. When appropriate, we will continue to utilize share buybacks to enhance shareholder returns, and as indicated in our press release today, I am pleased to announce our Board has approved a new authorization to repurchase up to 3 million shares. At this time, I will turn it over to David for additional detail on our results and outlook.

Thanks, Neil, and good morning to everyone joining today. As a reminder, our quarterly earnings presentation is available on our Investor Relations site. We hope that you will find it a useful reference as we recap our most recent quarter performance and updated guidance. Turning to our financial performance, consolidated sales increased 7.3% over the prior-year quarter. Acquisitions and foreign currency were a modest tailwind in the period, adding 50 and 80 basis points of growth, respectively. The number of selling days in the quarter was consistent year over year. Netting these factors, sales increased 6% on an organic basis. As it relates to pricing, we estimate the contribution of product pricing on year-over-year sales growth was approximately 250 basis points in the quarter, which was in line with our guidance and last quarter’s trend. Netting this impact, we estimate volumes grew 3.5% over the prior year, a nice acceleration from the prior quarter. Moving to consolidated gross margin performance, as highlighted on page nine of the deck, gross margin of 30.4% was relatively unchanged compared to the prior-year level. During the quarter, we recognized LIFO expense of $5.6 million compared to $2.2 million in the prior-year quarter. On a net basis, this resulted in an unfavorable 27 basis point year-over-year impact on gross margins. Excluding the LIFO headwind, gross margins improved year over year reflecting ongoing progress with our internal margin initiatives, price and channel execution, and more favorable mix. As it relates to our operating costs, selling, distribution, and administrative expenses increased 7.5% compared to prior-year levels. On an organic constant-currency basis, SG&A expense was up 6% year over year. Our teams continue to drive strong cost discipline while also focusing on various efficiency initiatives tied to technology investments, shared services, and sales tools. This helped offset ongoing inflationary headwinds, annual merit increases, higher incentives, and ongoing growth investment into the business during the quarter. SG&A expense as a percentage of sales at 19.4% was relatively unchanged from the prior year, but improved approximately 40 basis points sequentially. We saw cost leverage improve nicely through the quarter as sales growth strengthened. Overall, stronger organic sales growth, modest M&A contribution, and favorable underlying gross margin performance resulted in reported EBITDA increasing 6.2% over the prior year. This is inclusive of greater LIFO expense year over year, which negatively impacted EBITDA growth by 2.3 percentage points compared to the prior-year quarter. Reported EBITDA margin of 12.3% was down 13 basis points from the prior-year level, with year-over-year LIFO headwinds negatively impacting EBITDA margin by 27 basis points. EBITDA margins were in line with our third quarter guidance range of 12.2% to 12.4%. In addition, year-over-year EBITDA growth and EBITDA margin trends strengthened as the quarter progressed. Reported earnings per share of $2.65 in the third quarter increased 3.1% from prior-year EPS of $2.57. On a year-over-year basis, EPS was impacted by a higher tax rate and net interest expense, partially offset by a lower diluted share count. Results this quarter included $1.7 million, or approximately $0.05 per share, of non-routine discrete tax expense related to prior-year tax provision adjustments. We expect our tax rate in the fourth quarter to be within a range of 24.4% to 24.6%. Turning to sales performance by segment, as highlighted on slides 10 and 11 of the presentation, sales in our Service Center segment increased 4.2% year over year on an organic daily basis. This excludes 20 basis points of contribution from acquisitions and a positive 130 basis point impact from foreign currency translation. Organic sales growth was driven by stable price contribution and stronger volume growth across our U.S. Service Center operations, partially offset by softer international sales. Segment EBITDA increased 2.7% over the prior year, while segment EBITDA margin of 14.2% decreased 42 basis points. Year-over-year segment EBITDA and EBITDA margin trends were impacted by LIFO headwinds and higher employee-related costs, including incentives, as well as a difficult prior-year comparison. On a year-to-date basis, segment EBITDA growth of approximately 5% is slightly ahead of reported sales growth, while segment EBITDA margins are relatively unchanged year over year. Within our Engineered Solutions segment, sales increased 10.2% over the prior-year quarter, with acquisitions contributing 90 basis points of growth. On an organic basis, segment sales increased 9.3% year over year, primarily reflecting strong volume growth across our fluid power and automation operations, as well as improved growth across our flow control operations. Segment EBITDA increased 11.9% over the prior year, or approximately 14% when excluding the impact of LIFO expense. In addition, segment EBITDA margin of 14% was up 21 basis points from prior levels inclusive of a 50 basis point year-over-year LIFO headwind. The strong EBITDA growth and margin performance in the quarter primarily reflects solid underlying incremental margins on stronger sales growth, firm gross margin performance, and ongoing cost accountability. Turning to cash flow, cash generated from operating activities during the third quarter was $100.1 million, while free cash flow totaled $95.4 million, representing conversion of approximately 96% relative to net income. Compared to the prior year, free cash flow was down 8% reflecting greater working capital investment in relation to stronger sales growth, partially balanced by ongoing progress with internal initiatives. From a balance sheet perspective, we ended March with approximately $172 million of cash on hand, and net leverage at 0.3 times EBITDA. Our balance sheet remains in a solid position to support our capital deployment initiatives moving forward, including accretive M&A, dividend growth, and share buybacks. During the third quarter, we repurchased over 346 thousand shares for $93 million, bringing the year-to-date total to over 897 thousand shares and $236 million. Turning to our outlook, as indicated in today’s press release and detailed on page 14 of our presentation, we are tightening our full-year fiscal 2026 guidance toward the high end of our prior range following our third quarter performance. We now project EPS within a range of $10.60 to $10.75 based on sales growth of 7.2% to 7.7%, including a 3.8% to 4.2% organic sales growth assumption, as well as EBITDA margins of 12.3% to 12.4%. Previously, our guidance assumed EPS of $10.45 to $10.75 on sales growth of 5.5% to 7%, including 2.5% to 4% on an organic basis, and EBITDA margins of 12.2% to 12.4%. Our updated guidance assumes a fiscal fourth quarter EPS range of $2.85 to $2.96 on organic sales growth of 4% to 5.5% year over year, as well as EBITDA margins in a range of 12.6% to 12.8%. We expect inorganic M&A sales contribution to be slightly lower sequentially in the fourth quarter as we anniversary our IRIS Factory Automation acquisition at the end of May, combined with ongoing initial contribution from our Thompson Industrial Supply acquisition announced last quarter. Our fourth quarter organic sales growth assumption takes into account more difficult prior-year comparisons in May and June. While we are encouraged by the positive sales momentum developing, we remain mindful of ongoing geopolitical developments and trade policy uncertainty that may continue to influence customer spending behavior. As a result, we continue to assume a degree of variability persists across our end markets near term. Lastly, from a margin perspective, we expect fourth quarter gross margins to be relatively stable sequentially. This assumes slightly higher LIFO expense compared to the third quarter. With that, I will now turn the call back over to Neil A. Schrimsher for some final comments.

As we prepare to close out fiscal 2026, we do so from a position of strength with several growth catalysts beginning to emerge across our business. We remain prudent with our near-term assumptions and outlook as we are still navigating an evolving and dynamic market backdrop influenced by geopolitical and trade-related uncertainty. As we have seen over the past year, this could still present choppy and uneven end-market demand as customers continue to balance a complex landscape. That said, the trajectory of our sales and broader industrial macro indicators year to date in calendar 2026 are currently more indicative of an early end-market recovery beginning to take shape following a prolonged stagnant period of deferred maintenance and capital spending throughout the last two years. Business funnel and order momentum are sustaining a positive trajectory, while technical MRO spending requirements are high given aged manufacturing equipment across North America. As these trends progress, we expect customers to partner with larger, more capable providers like Applied Industrial Technologies, Inc., given our comprehensive solutions and technical service capabilities. At the same time, automation growth is accelerating as adoption of cobots, mobile robots, machine vision, and IoT solutions are increasingly viewed as need-to-have. We are also favorably positioned to benefit from multiyear growth tailwinds continuing to develop across our technology vertical, while our cross-selling initiative is gaining traction. Overall, momentum is building in the right direction. Our teams are executing well. The industry and competitive position we have assembled is strong. We are excited about the opportunities in front of us and remain highly focused on translating our growing momentum into superior long-term shareholder value creation. We will now open the call for questions.

We will now open the call for questions. If you would like to ask a question, please pick up your handset and press star one on your telephone keypad to raise your hand. To withdraw your question from the queue, press star one again. As a reminder, if at any time you need to reach an operator, please press star 0. We will pause for just a moment to compile the Q&A. Your first question comes from the line of Christopher Glynn with Omnicom. Your line is now open. Please go ahead.

Thanks. Good morning, everyone. I was curious if you may have mentioned a little bit, but I wanted to go a little deeper into the trends you are seeing with locals versus nationals. I am guessing some of the sequential acceleration may have been led by the local accounts picking up some momentum, but I will speculate.

We saw good growth with both. Local accounts year over year were up 5% versus 3.5% in Q2. We also saw good growth and progress with national accounts, up 7% year over year versus 4% in the second quarter.

Great. You have some exciting things going on with automation and fluid power. Flow control has been kind of a narrower sine wave trajectory, but clearly some broadening out there. Can you go down a layer or two into flow control and the process arena?

Flow control benefited from the technology vertical, which contributed roughly 300 basis points to the segment’s organic growth in the quarter. Flow control was up about 6%, so strong mid-single-digit growth. We also saw benefit in primary metals, general industry, and energy and utilities. Chemicals would be the one still down year over year, but the trend is improving, and they are encouraged as we close the year and move into the next fiscal year.

You mentioned on automation that sales lead times and conversions were shortening. Are you seeing that trend on the process side as well?

The reference was really around customers moving projects faster. When we are part of a larger project, we are seeing good speed there, and when we are providing productized solutions, more customers are accelerating automation projects for productivity and quality assurance. That is encouraging, as are the order rates and the backlog that we have been building. Thank you.

Your next question comes from the line of Ken Newman with KeyBanc Capital Markets. Ken, your line is now open. Please go ahead.

Good morning. On Engineered Solutions, the operating leverage seemed a little lighter than I would have expected given the 9% organic growth. You are talking to mid-single-digit growth with mid- to high-teen incremental margins on the EBITDA side. Can you talk about what we saw in the margins, how much was driven by LIFO headwinds or mix, and what you think about normalized operating leverage in the ES segment into the fourth quarter and beyond?

Incrementals in the quarter for Engineered Solutions were about 16% ex-LIFO and roughly 19% when excluding LIFO entirely. We feel good about that performance.

Within that, flow control had some projects that came in lower margin given mix, which can be typical. Also recall that Hydrodyne is currently at about the fleet average for the company, which is under the Engineered Solutions average, but with continued focus and improvement. We are pleased with the trajectory.

I would add that through the quarter we saw incremental margins and EBITDA margins in the segment strengthen on a year-over-year basis as the top line strengthened. The results from an incremental margin and leverage standpoint were aligned with our expectations, with improvement as the quarter played out.

Thanks. It was nice to hear about orders within Engineered Solutions being up double digits for the second straight quarter. How should we think about the timing of those orders flowing through the P&L into fiscal 2027, and how much conservatism is embedded in the fourth quarter guide relative to what you are seeing on orders?

We want to be prudent given trade policy changes and geopolitical dynamics. We are encouraged by orders. Timing of conversion can vary based on the complexity of the order and our engineering time, and because some projects are tied to customers’ broader project schedules. Some orders convert in 60 to 90 days, while others extend out.

One more quick one. How big is the step-up in the May and June comps versus last year?

May’s comp compared to April steps up about 200 basis points, and June steps up another 200 basis points.

As a reminder, if you would like to ask a question, please press 1 on your telephone keypad to raise your hand. Your next question comes from the line of Andrew Oven with Bank of America. Your line is now open. Please go ahead.

Good morning. On the M&A environment, it is such a big driver for value creation. Your M&A has been slower post-COVID. What are you seeing that encourages you? You have been constructive for a while, but we have not seen a huge acceleration. What is changing or remaining stable, and what would it take to unlock the M&A potential?

We have clear priorities, with Engineered Solutions targets across fluid power, flow control, and automation—both bolt-ons and midsize opportunities like Hydrodyne. We also have adjacency and geographic opportunities in our Service Center network. We are active and engaged at various stages of the M&A process. An improving environment may bring more sellers to the table. Given our pipeline, priorities, and team engagement, I expect M&A to be a stronger contributor over the next 12 to 18 months.

Thank you. On markets you highlighted as headwinds—refining, chemicals, and transportation—we have heard some spending pauses tied to events in the Middle East, but a view that activity comes back in the second half of calendar 2026. And on transportation, would you be positively impacted if trucks come back?

In refining and chemicals, I agree with the logic for second-half improvements. Given our North American footprint and focus, we are likely to see more activity occur in the U.S. and North America. Broadly across transportation, it is not our largest segment, but we will participate, so an improving environment would be good for us.

Your next question comes from the line of David Manthey with Baird. Your line is now open. Please go ahead.

Hi. Good morning. This is Anar Khan hopping on for Dave. For my first question, I know pricing can be imperfect to measure since you do not sell every SKU every year, but with that caveat, can you frame how the 6% organic growth this quarter split between price and volume? Is realization tracking ahead of the 1% to 2% range?

Price in the quarter was about 250 basis points by our estimate, based on SKUs where we have clear reads and extrapolations. That implies about 350 basis points from volume. The 250 basis points was consistent sequentially and in line with expectations. Our Q4 guide assumes pricing moderates a bit, largely due to tougher year-over-year comparisons from tariff and other discretionary, impact-driven increases we saw in the prior-year Q4. Still a nice contributor, and a nice volume rebound this quarter.

Super helpful. Can you provide an early April read on volume through the first few weeks? Are you seeing customers pre-buy or pause given the policy environment? And can you remind us what One Applied specifically means to you today and how you are measuring progress?

Month to date we are up high single digits year over year. As a reminder, the comparison steps up by about 200 basis points in May and another 200 basis points in June, so comps get tougher as the quarter progresses, but we are encouraged by the start.

One Applied means that from the end-customer standpoint, there is really nothing moving inside their facilities that our products, services, and solutions are not a part of. Our Service Center teams have deep operating know-how of customers’ equipment and how they make money with uptime and production. We support those plant operations with greater Engineered Solutions expertise—fluid power systems, process flow control, and discrete automation—collaborative and mobile robots, machine vision for quality and inspection, and IoT connectivity to pull performance data across equipment and facilities. We are seeing growing customer need for that full utilization. Our pipeline of projects is growing, and cross-selling contributed over 100 basis points to Service Center organic growth this quarter. We expect that to continue to grow.

At this time, we have no further questions. I will now turn the call over to Mr. Schrimsher for any closing remarks.

Thank you, everyone, for joining us today. We look forward to speaking with you throughout the quarter.

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.