NTIC

Good day, welcome to NTIC's third quarter 2026 earnings conference call and webcast. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. Instructions will be given at that time. Today's conference is being recorded. As part of the discussion today, the representatives from NTIC will be making certain forward-looking statements regarding NTIC's future financial and operating results, as well as their business plans, objectives, and expectations. Please be advised that these forward-looking statements are covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and that NTIC desires to avail itself of the protections of the safe harbor for these statements.

Please also be advised that actual results could differ materially from those stated or implied by the forward-looking statements due to certain risks and uncertainties, including those described in NTIC's most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q, and recent press releases. Please read these reports and other future filings that NTIC will make with the SEC. NTIC disclaims any duty to update or revise its forward-looking statements. I will now hand the call over to Mr. Patrick Lynch, NTIC's CEO. Please go ahead, sir.

Good morning. I'm Patrick Lynch, NTIC's CEO, and I'm here with Matt Wolsfeld, NTIC's CFO. Please note that a press release regarding our third quarter fiscal 2026 financial results was issued earlier this morning and is available at ntic.com. During today's call, we will review various key aspects of our fiscal 2026 third-quarter financial results, provide a brief business update, and then conclude with a question-and-answer session. Please note that when we discuss year-over-year performance, we are referring to the third quarter of our fiscal 2026 in comparison to the third quarter of last fiscal year. Strong global demand and increasing adoptions of our ZERUST corrosion prevention and Natur-Tec bioplastic solutions drove quarterly consolidated sales to new record highs. Disruptions to shipping through the Strait of Hormuz during the quarter, caused by recent increased conflict levels in the Middle East, contributed to a significant increase in our raw material costs.

Higher input costs reduced our gross margin by approximately 477 basis points year-over-year, and we estimate that gross profit was negatively affected by approximately $1 million based on gross margin levels prior to the increase in U.S.-Iran hostilities. We believe that the third quarter cost pressure was temporary, and we are pursuing pricing and procurement initiatives that we expect will improve gross margin and profitability in the fourth quarter. Since reaching the profitability levels we planned for is taking longer than expected, we believe NTIC must remain focused on the initiatives within our control to drive more profitable growth, including expanding sales of our higher-margin ZERUST oil and gas solutions and broadening Natur-Tec applications globally.

Our liquidity and financial flexibility remain solid, supported by a significant capital within our joint venture network and anticipated proceeds of more than $1 million from the pending sale of our Beachwood, Ohio, facility, which is expected to close in fiscal 2027. The resilience of our business model, continued demand for our technologies, and our focus on execution give us confidence in stronger, more profitable fourth quarter results. With this overview, let's examine the drivers for the third quarter in more detail. For the third quarter ended May 31st, 2026, our total consolidated net sales increased 12.6% to $24.2 million as compared to the third quarter ended May 31st, 2025. Broken down by business unit, this included a 72.3% increase in ZERUST oil and gas net sales, a 10.3% increase in ZERUST industrial net sales, and a 5% increase in Natur-Tec sales.

Turning to our joint venture sales, which we do not consolidate in our financial statements, total net sales for the fiscal 2026 third quarter by our joint ventures increased year-over-year by 15.1% to $26.7 million, reflecting improved year-over-year demand across many of our joint ventures. We continue to closely monitor trends across our European markets for signs of stabilization following years of subdued demand as governments begin to implement targeted economic stimulus packages. We expect that any economic recovery from these stimulus packages will lead to a positive impact on our joint venture operating income in future periods, especially in Germany. Stable sales trends continued at our wholly-owned NTIC China subsidiary. Fiscal 2026 third-quarter net sales at NTIC China decreased by less than 1% to $4.5 million.

As I have stated before, given that the majority of NTIC's China sales are for domestic Chinese consumption, we believe NTIC China's exposure to U.S. tariffs is limited. We expect demand in China will continue to improve in fiscal 2026, helping to support higher incremental sales and profitability in the market. On a trailing 12-month basis, NTIC China sales have increased 12.8% to $17.8 million, comparing to $15.8 million for the same corresponding period last fiscal year. We believe that China will likely become a significant market for our industrial and bioplastic segments. We'll continue to take steps to enhance our operations in this geography. Now moving on to ZERUST oil and gas. ZERUST oil and gas sales were $2.2 million, a third quarter record, an increase of 72.3% from the same period last year.

This growth reflects the investments we have made in our global sales infrastructure and the increasing adoption of our VCI solutions within the global oil and gas industry. The third quarter reflects the fourth consecutive quarter that ZERUST oil and gas sales have been over $2 million, and on a trailing 12-month basis, sales are now over $10 million for the first time in our history. We are encouraged by these trends as adoptions increase and we develop new applications for our corrosion prevention solutions across the global oil and gas market. During the third quarter, we experienced higher year-over-year oil and gas sales in the Middle East, North America, India, and China from both new and existing customers, reflecting the contribution of recent investments we have made to enhance our sales team and add resources to support future growth.

This has improved our sales pipeline as the size and number of opportunities has expanded. Our pipeline includes global opportunities to protect above-ground oil storage tanks, pipeline casings, and offshore oil rigs from corrosion. The nature of this industry will always cause certain fluctuations in ZERUST oil and gas sales. Nevertheless, we still expect to see ZERUST oil and gas sales and profitability to improve significantly in fiscal 2026 as we leverage these investments and rein in operating expense growth. Turning to our Natur-Tec bioplastics business. Third quarter Natur-Tec sales were a quarterly record $6.1 million, representing a 5% year-over-year increase. We continue to pursue several larger opportunities in North America and India that we believe can further benefit Natur-Tec sales in the coming quarters.

In North America, Natur-Tec was recently selected for the International Fresh Produce Association's Packaging Innovation Program, where we are advancing commercialization of compostable barrier laminate solutions for food packaging applications. In India, we announced a collaboration with Bayer to develop biodegradable and compostable seedling cups for nursery applications. This initiative is expected to begin with pilot trials in vegetable and fruit nurseries, and subject to successful validation, could create a meaningful new application for our compostable materials platform. These initiatives build on new food packaging opportunities we have discussed on prior calls and demonstrate the expanding range of markets in which Natur-Tec can provide a practical alternative to conventional plastics. Overall, we believe Natur-Tec is a best-in-class compostable plastics business that is well-positioned for further growth in the U.S. and internationally as we expect sales to continue to expand over time.

Before I turn the call over to Matt, I want to acknowledge the hard work and dedication of our global team of both employees and joint venture partners. Our success and our ability to navigate more complex economic periods are a direct result of their efforts. With this overview, let me now turn over the call to Matt Wolsfeld to summarize our financial results for the fiscal 2026 third quarter.

Thanks, Patrick. Compared to the prior fiscal year period, NTIC's consolidated net sales increased 12.6% in the fiscal 2026 third quarter, the second consecutive quarter of year-over-year double-digit growth. Sales across our global joint ventures increased 15.1% in the third quarter. Joint venture operating income in the third quarter increased 12.2% compared to the prior fiscal year period, primarily due to higher sales at our joint ventures. Total operating expenses for the fiscal year 2026 third quarter increased 5.3% to $10.2 million, primarily due to higher year-over-year selling, general & administrative, as well as research and development expenses. Operating expenses as a percentage of third-quarter sales were 42% compared to 44.9% for the prior fiscal year period. We expect quarterly sales to grow faster than operating expenses as we continue to leverage recent investments and upgrades across our global operations.

Gross profit as a percentage of net sales was 33.6% during the three months ended May 31st, 2026, compared to 38.4% during the prior fiscal year period. As Patrick discussed, gross margin for the third quarter was impacted primarily by higher raw material costs as a result of the conflict in the Middle East and disruption of shipping through the Strait of Hormuz. We expect gross margin to improve sequentially for the fourth quarter of fiscal 2026. NTIC reported a net loss of $263,000, or $0.03 per share for the fiscal 2026 third quarter, compared to net income of $122,000, or $0.01 per diluted share for the fiscal 2025 third quarter.

For fiscal 2026 third quarter, NTIC's non-GAAP adjusted net loss was $158,000, or $0.02 per diluted share, compared to a non-GAAP adjusted net income of $228,000, or $0.02 per diluted share for the fiscal 2025 third quarter. A reconciliation of GAAP to non-GAAP financial measures is available in our third quarter fiscal 2026 earnings press release that was issued this morning. As of May 31st, 2026, working capital is $20 million, including $7.3 million in cash and cash equivalents, compared to $20.4 million, including $7.3 million in cash and cash equivalents as of August 31st, 2025. As of May 31st, 2026, we had outstanding debt of $14.8 million. This included $11.8 million in borrowings under our existing revolving line of credit, compared to $9.3 million as of August 31st, 2025. Reducing debt through positive operating cash flow and improving working capital efficiencies is a strategic near-term focus.

During the third quarter of fiscal 2026, we committed to a plan to sell our Beachwood, Ohio facility, which has historically been used for our ZERUST segment. As a result, we reclassified the carrying value of the property by $869,000 from property, plant, and equipment to assets held for sale on the consolidated balance sheet as of May 31st, 2026. On May 31st, 2026, we received a non-binding letter of intent to purchase the property for $1.15 million in cash, subject to a customary due diligence period and execution of a definitive purchase and sale agreement. We expect the sale of the property to close during fiscal 2027. On May 31st, 2026, the company had $30.4 million in investments in joint ventures, of which 54.4%, or $16.5 million, was in cash, with the remaining balance primarily invested in other working capital.

To conclude our prepared remarks, we believe our third quarter results demonstrate the continued strength and resilience of our business, highlighted by record quarterly consolidated sales and growth across our core corrosion prevention and bioplastics platforms. While profitability during the quarter was affected by a sharp increase in raw material costs associated with geopolitical disruption in the Middle East, we believe this pressure was temporary and does not change our view of the long-term earnings potential of the business. As we move through the fourth quarter of fiscal 2026, we expect continued sales growth and improved profitability, supported by pricing actions and disciplined expense management. We also remain focused to advancing higher margin ZERUST oil and gas opportunities and expanding Natur-Tec applications globally. We believe these factors position NTIC to deliver stronger financial performance and cash flow generation in the coming quarters.

With this overview, Patrick and I are happy to take your questions.

Thank you. Ladies and gentlemen, to ask a question at this time, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, simply press star one one again. Please stand by while we compile the Q&A roster. Our first question coming from the line of Timothy Clarkson with Van Clemens. Your line is now open.

Hey, guys. Just a couple of questions. I was just wondering, if you're going to separate the oil and gas business, you said you're on pace to do about $10 million. I guess that's annually. How profitable would that division now be? Would that be a 10% net business or a 5% net business, or don't you even look at it that way?

We don't specifically look at it like a separate business as a standalone like that. You can certainly look at oil and gas and say, yeah, we expect the total revenue from oil and gas to be around $10 million for the year. We know what the gross margins are. We know what the contribution is going to be. We can certainly see how things are ramping up in oil and gas across the board, and certainly with expectations of what's going to happen and what we're expecting to see in the fourth quarter. That's really what's going to be the key contributors. If you look at third quarter oil and gas this year compared to third quarter oil and gas last year, it's certainly up significantly. It's up 72%, just oil and gas as comparing that amount.

I'd say that the disappointment in oil and gas numbers, third quarter was lower than second quarter, and the expectation was that we were going to continue to build that oil and gas revenue. There's obviously a very low comparison to the prior third quarter. There were some shipping issues. There were some large projects that came in and ultimately ended up being invoiced in June that will help significantly from a gross margin contribution standpoint in our fourth quarter, which gives me, at least already having it invoiced at this point in time, now that we're already 40 days into the fourth quarter, a lot more confidence in our fourth quarter numbers compared to where we expected to be.

Sure. Just in general, the gross margins in oil and gas are higher than the gross margins in the rest of the company.

Yes. We expect that to play out from a weighted average standpoint.

Right.

The biggest hit we had in the quarter, if you look down the line, revenues were strong across the board. Joint venture contribution in total was up the biggest, and we were able to hold operating expenses at the 5% level, which is what we had planned to do. The big issue that we had was the gross margin impact with polyethylene prices increasing by 30%+ with the conflicts going on in the Middle East. We have now seen polyethylene prices, if you look at the markets, return back to the August 2025 levels.

We expect that to flow through. We've seen that flow through May and through June. We've seen that flow through our inventory, and we were able to pass a lot of those cost increases on to customers. Ultimately, we dropped a few percentage points from a gross margin standpoint because of that situation.

Right.

We're still pretty optimistic, given what we've seen in June, given what we've seen with what the backlog is for July and August, that it's still going to be a pretty strong fourth quarter, that it should be our strongest quarter of the year, and certainly give us a lot of momentum with what we expect to do going into fiscal 2027.

Right. You mentioned that there's been some positive things going on in Germany. Can you do a little more color on that?

I think the positivity, when I look at what's going on, kind of in Germany and things like that, we are seeing from a revenue standpoint that revenues are bouncing back compared to prior periods. We're starting to see kind of a stabilization where we hope that we've certainly hit the trough and are starting to come back as far as what's happening from an industrial standpoint. If they can get some things figured out at the country level as far as energy prices and things, hopefully that trend kind of continues from our standpoint.

Right. I assume you guys are always looking to try to cut expenses wherever you can.

Yeah, certainly. I think one of the key comments that Patrick made, when you look at it, is we are ramping up revenues. We do expect fourth quarter revenues to be higher than third quarter revenues, and we do expect to hold our expenses relatively flat.

Right.

We're not coming into this saying the reason why that we didn't make money this quarter is because we increased our expenses, and we made all these investments. We're now at a point where we have capped off the investments. We're holding things as flat as possible, and we're seeing the revenue, where we expect the increased revenue to drive the gross margin dollars to the bottom line. That's what I expect to see in the fourth quarter and expect to see throughout fiscal 2027. We do not have

Right

significant investment plans, either from an employee standpoint or from a capital purchase standpoint in North America in fiscal 2027. One of the things we do have is because of the growth that we're seeing in Brazil, in ZERUST oil and gas, because of the growth that we're seeing at Natur-Tec India, because of the opportunities there that we're looking at over the next coming years, they are investing in some new facilities to be able to meet the demand there. There will be some investments, but those are at the subsidiary level, not at the NTIC level.

Right. Okay. Well, I'm obviously anxious to see the improved profitability, and I'm still there. Thanks for your time.

Thanks, Tim.

Thank you. Our next question coming from the line of John Bair with Ascend Wealth Advisors. Your line is now open.

Thank you. Good morning. I've got a couple of questions for you. Number one, can you expand on how you're addressing your ability to source raw materials used for, let's say, Natur-Tec or even ZERUST to get yourself away from the need to source raw materials from the Middle East, if that's possible, how that might play out and help you in improving your raw material costs?

Sure. I think the one item to point out is that there are no raw materials that we're sourcing from the Middle East. It simply has to do with the raw material impact that the situation in the Middle East had on raw material prices around the world. We are not currently sourcing from anywhere, but obviously there's a huge amount of global trade that flows through the straits. That ripple effect is what caused the 30%+ increase in the LDPE prices. That ripple effect is what we saw that caused a lot of our other base chemistries that go into some of our powder-based materials and things like that to increase.

From a production standpoint, we've spent the past three years looking at diversifying our capabilities of producing in China, producing in India, producing and subcontracting in Vietnam and Thailand, other areas, so that as there are tariff changes and opportunities, we're able to kind of capitalize on those countries. We're still pursuing that plan. We've certainly established over the past three years the ability to source from different areas around the world to get the most effective pricing to keep our costs down and our gross margins at stable levels.

Okay. Very good. My second question is, if you could expand on your recently announced compostable seedling cup efforts, and is that something that could be replicated in, let's just say North America for the U.S., Canadian, Mexican market, or maybe even in South America. Secondly, can you expand on the timeline of when this effort could potentially play out beneficially for you? In other words, get away from the trial stage, and implementation to where it may impact the bottom line.

I would say that it can be implemented globally. In terms of how long it's going to take to hit our bottom line, I would guess that they'll be testing for another period of time. Maybe start some commercialization in a year.

I'm sorry, say that again. I'm sorry.

We might see some commercial sales in a year.

I see. Okay. This effort is focused in India with Bayer, but it has a global approach. In other words, can you set up operations to do this within, say, the U.S. or within Canada where there's large agricultural efforts?

Yes. Absolutely, it has applications in those countries.

Okay. Is this a global effort with Bayer? In other words, it's not just specific to India?

For right now, it's specific to India. I don't presume to know everything that Bayer is thinking. They're a big company.

Right. Okay. Very good. Thank you. Those are the questions I had.

Yeah.

Thank you. Our next question in queue coming from the line of Don Hall with DMH Investments. Your line is now open.

Good morning, gentlemen. I believe in previous conference calls you mentioned some contracts, particularly in Brazil and then possibly some other countries, and I think it was for the ZERUST product. Are those proceeding as expected, or is there more you can tell us about them, or am I possibly mistaken?

No, you're not mistaken. The contract in Brazil was related to opportunities that we have for offshore FPSOs. That is a contract that was about a $14+ million contract over several years that is scaling up as far as our Brazilian subsidiary taking advantage of that. That is in process. That's been in process for a few quarters. If I look at the Brazilian oil and gas revenue, the nine months ended in May 2026 compared to the prior nine-month numbers is up close to 70%. That's a result of the implementation of this contract. We expect based on how we are servicing those companies, it's kind of a cumulative effect. It's not the kind of situation where you have $4 million per year over a three-year period.

It's a ramp-up where you are providing the materials and service to these offshore FPSOs and continue to add more and more. It's a slow scale-up to where in year three, you'd ultimately be implementing on a number of FPSOs, three times the number of FPSOs in the third year that you would in the first year. It's kind of a cumulative buildup of the project. Yeah, that's certainly moving forward and certainly is successful.

Should lead to some increased sales in that geography, right?

Yes.

Yeah. Okay, good. Thanks very much. Are there other possibilities like that?

Yeah. Overall, the nine-month oil and gas revenue across the board is up 67%.

Yeah.

That means that the non-Brazil number is up 67% flat. The Brazil oil and gas number is up 67.7%.

Great.

The increased revenue that we're seeing in the oil and gas space is in North American opportunities, in our new subsidiary in the Middle East that we spent significant amounts investing in over the past 12-18 months. That is scaling up well and is at a point where it's making contributions. The expectations are that we're going to continue to see sizable annual revenue growth in all of the areas in oil and gas.

Yeah. All right. Thank you very much.

Yeah. Thanks, Don.

Thank you. Our next question coming from the line of Gus Richard with Northland Capital Markets. Your line is now open.

Yes. Thanks for taking my questions. Just wanted to ask about Natur-Tec. In the press release, you mentioned gross margin pressure. On the call you mentioned new products, which I would expect to help gross margins. I was just wondering if you could talk about how you see the trajectory of those two things in terms of margins for Natur-Tec.

I think there's different aspects. As you're well aware, there's different business lines inside of Natur-Tec. There is what I'll call the commodity Natur-Tec business made up of bag liners and cutlery and things like that. Then there's the proprietary resin formulations that we're working on for applications with other companies. I think what we're seeing is that, for a lot of the commodity-based trash bag liner revenue that we have, it is a cost-sensitive, price-sensitive business. In order to maintain those revenues, at times there are pricing issues that we have and different that have impacted our gross margins. That's what I alluded to in the earnings release as far as how some of the Natur-Tec gross margins have been impacted.

We saw some positive gross margin improvement over the prior 18 months with some of the raw material prices coming down. We're also seeing, as I noted, we're seeing some of the price competition inside of Natur-Tec being a little bit of a headwind. That kind of on top of the issues we saw with the ZERUST Industrial raw material prices is what kind of caused the impact for the overall gross margin of the company to be lower than expected. I mean, I can say that even inside of Q4 for the industrial business, we have seen a recovery of the gross margin. For Natur-Tec, it's still at a point where those aren't one-time issues. Those are discounts and pricing that we have pushed through to customers. That's not going to change unless we're able to change input costs.

Okay, got it. Just so it's clear in my mind, the war has had an impact on the oil and gas business globally, not just you guys. I'm just wondering from your perspective, has the war in the Middle East had a positive or negative impact on your oil and gas business? People ramping up production places or ramping it down or what have you.

It definitely had a negative impact in the third quarter. I mean, we had the individuals that are working in our operations in Dubai, they weren't allowed to leave their houses at various times in our second quarter because there were bombs and missiles flying overhead and bomb sirens going off and things like that. It certainly has an impact on what they're able to do and projects in normal business occurring in the area. Certainly what we saw in that area was down a little bit. I can say that there was a lot of infrastructure in that region that was damaged that is going to need to be rebuilt. There are going to need to be investments. They are going to be doing that over the coming years. That certainly is going to continue to drive opportunities.

Long term, I don't see, even looking forward just a couple of quarters, it looks like the opportunities have kind of rebounded and things have calmed down. Certainly during the second quarter it was concerning with what was going on very close to employees that we had in the region.

Got it. Thanks. Your decision to sell Beachwood, the ZERUST business, Industrial is improving, looks strong and just wondering into the decision to sell the Beachwood facility.

Well, we've had that facility for probably 20 years, right around there. For the most part, with the building that we purchased up in Minnesota, the expansion, the building that we purchased right next to our headquarters we've had for a long time, it's given us more opportunity just to consolidate everything in Minnesota. We moved the Beachwood office was kind of the oil and gas group and the R&D people that were there, that were kind of working in the Beachwood office. They're being brought up to Minnesota just as an effort to kind of consolidate the facility. There's no real reason to remain in Ohio.

Got it. Last one for me on SG&A. It's a little bit above what I would have expected. Was there a one-time item there or what's going on with that line?

No significant one-time charges or one-time expenses in SG&A.

Okay. All right. Thanks so much.

Thanks, Gus.

Thank you. Our next question coming from the line of Zach Liggett with Desmond Liggett Wealth Advisors. Your line is now open.

Great, good morning. Thanks for taking the questions. Nice job on the quarter. A lot of stress here in the Middle East. You guys seem to be handling things pretty well with the things you can control. Natur-Tec, good color there. Any way you can quantify what the volume growth looked like? My follow-up to that is on the innovation front. Is there any more you can tell us about what's happening with the food packaging innovation?

From a volume standpoint, if I look at Natur-Tec from a revenue standpoint, the Natur-Tec revenues for the nine-month period are up 5%. For third quarter, it's up 5%. I would say from a volume standpoint, it's probably up closer to 10%-12% if I'm looking at case quantities and things like that. You can see based on that what portion of it is price concessions and what portion of it is volume growth. That's where we are from that standpoint. As far as expectations of what's going on with food packaging, those are, I'd say, a little longer in the development as far as what needs to happen with these specific chemistries and then being able to use the resin that we produce on the customer's existing equipment to generate that product.

There's just a lot more involved with doing things that involve food that take a little more time. Certainly the applications that we're pursuing have been very positive. We're very optimistic about them, and they are sizable, healthier margin opportunities. Those are certainly some of the things that we expect to fuel the growth of Natur-Tec over the coming 12, 18, 24 months are some of these food service opportunities, both in the United States and in India.

Okay, great. Last one from me. On the AI front, I think I asked this before, I'm curious with your sales teams, or just internally, are you guys piloting any projects? Are you finding any productivity gains from the use of AI tools at this point?

Well, specifically from an AI standpoint, one of the benefits that I wasn't expecting when we made this decision, when we made the switch to SAP 18 months ago, let's say that the data that we're able to gather from both a manufacturing standpoint, from a sales standpoint, from a product sales standpoint, there's significantly more data available than what our historical system had. What we're finding is that with using external tools like Claude and being able to really pound through and analyze hundreds of thousands of lines of data that we didn't have before, it gives us a really, really clear insight into what's going on with each individual customer, each individual ordering level of the customers, gross margin at the customer level, gross margin at the product level, which we didn't and wouldn't have had access to before.

Those are certainly some of the areas where we're able to go in and rather than going in and hammering something with a hammer, we're able to go in with a scalpel to kind of fix different things and kind of evaluate where we are. Additionally, on top of that, what we're finding is that SAP, that we're looking at implementing is they have internal AI tools that can be utilized directly in your system. Employees will be able to utilize the SAP AI tools to pull up things faster, to be able to respond to customers faster, other things like that. On all levels, from executive level down, we are working to implement these things to become, I wouldn't say just more efficient, but be able to be more reactive and be able to really tighten things up from a business standpoint.

Yep. Good. Sounds great. Thanks for taking the questions.

Yep.

Thank you. I'm showing no further questions in the Q&A queue at this time. I will now turn the call back over to Mr. Patrick Lynch for any closing comments.

Thank you for joining us this morning, and have a nice day.

This concludes today's conference call. Thank you for your participation, and you may now disconnect.