레저보어 미디어(RSVR) 2027 회계연도 2분기 실적 발표: 매출 및 가이던스 상승

주요 내용

• 레저보어 미디어(Reservoir Media)는 2027 회계연도 2분기 매출이 전년 동기 대비 10%(인수 효과 포함) 및 자체 성장 4% 증가한 4,990만 달러를 기록했다고 발표했다.
• 조정 EBITDA는 14% 증가한 2,210만 달러를 기록했으며, OIBDA는 14% 증가한 2,070만 달러를 기록했다.
• 순이익은 220만 달러에서 약 460만 달러로 2배 이상 늘었다. 희석 주당순이익(EPS)은 0.03달러에서 0.07달러로 증가했다.
• 음악 출판(Music Publishing) 매출은 디지털 매출 10% 증가와 싱크로나이즈(동기화) 매출 13% 성장에 힘입어 8% 증가한 3,320만 달러를 기록했다.
• 음반(Recorded Music) 매출은 디지털 매출의 33% 성장과 저작인접권 매출 증가에 힘입어 18% 증가한 1,540만 달러를 기록했다.
• 경영진은 2027 회계연도 실적 전망(가이던스)을 상향 및 축소 조정하여 매출 1억 8,800만~1억 9,200만 달러, 조정 EBITDA 7,700만~8,000만 달러로 제시했다.

주요 재무 데이터

2026년 9월 30일로 종료된 6개월 동안 영업활동 현금흐름은 주로 운전자본 시점 차이로 인해 전년 동기 대비 370만 달러 감소한 2,160만 달러를 기록했다. 레저보어는 현금 2,480만 달러와 추가 이용 가능 한도 8,920만 달러를 포함해 총 1억 1,390만 달러의 이용 가능한 유동성으로 해당 분기를 마감했다.

총 부채는 이연 금융 비용 220만 달러를 차감한 4억 5,860만 달러였다. 순부채는 2026년 3월 31일 기준 4억 2,980만 달러에서 4억 3,380만 달러로 증가했다.

사업 및 영업 실적

음악 출판 부문은 추가적인 카탈로그 인수와 지속적인 스트리밍 서비스 성장의 수혜를 입었다. 디지털 매출은 10% 증가했으며, 싱크로나이즈(동기화) 매출은 라이선스 계약 시점에 따라 13% 증가했다.

음반 부문은 보다 빠른 성장세를 나타냈다. 인수한 카탈로그 및 스트리밍 성장에 힘입어 디지털 매출은 33% 증가했다. 신규 제휴 및 인수로 저작인접권 매출도 강화됐다. 경영진은 관련 비용이 거의 없거나 전혀 발생하지 않는 인수가 해당 부문의 OIBDA 마진 개선에 기여했다고 설명했다.

레저보어는 프레드 볼(Fred Ball) 및 제이크 싱클레어(Jake Sinclair)와의 계약을 통해 활성 출판 명단을 확대했다. 또한 신진 작곡가와 아티스트를 발굴 및 육성하기 위해 싱클레어와 합작법인을 설립했다. 경영진은 이러한 미래 지향적 협약이 선상 자금 요구가 제한적이며 필요에 따라 자금이 지원되는 방식이라고 설명했다.

회사는 빌리 스트레이혼(Billy Strayhorn)의 음악 출판 카탈로그를 인수하고 그의 성명, 초상 및 유사성(NIL) 권리에 참여했다. 아울러 호세 펠리시아노(José Feliciano) 카탈로그의 마스터 음반 권리와 성명, 초상 및 유사성에 대한 공동 권리도 확보했다. 경영진은 이러한 권리를 기구축된 카탈로그의 문화적·재무적 가치를 확장하는 또 다른 수단으로 보고 있다.

경영진 가이던스

레저보어는 2027 회계연도 전망을 상향 및 축소 조정했다.

경영진은 이번 실적 전망의 요인으로 인수 카탈로그의 성장, 활성 명단의 기여, 지속적인 비용 통제를 꼽았다. 회사는 통상적인 분기별 변동성에 따라 2분기 일반관리비 집행 속도(run rate)가 하반기의 적절한 추정치가 될 것이라고 밝혔다.

경영진은 또한 가이던스에 적절한 수준의 보수성이 반영되어 있으며 회계연도가 진행됨에 따라 재검토될 것이라고 덧붙였다.

리스크 및 주요 관전 포인트

• 레저보어가 카탈로그 인수 및 작곡가 계약 자금을 조달하기 위해 추가 부채를 활용함에 따라 이자 비용이 증가했다.
• 로열티 지급, 매입채무, 로열티 선급금 회수 시점으로 인해 상반기 영업활동 현금흐름이 감소했다.
• 경영진은 인수 시점이 선형적이지 않으며, 분기별 거래 집중도가 출판, 음반 및 신흥 시장 자산 간에 다를 수 있다고 언급했다.
• 레저보어는 공개 시장의 밸류에이션 격차에도 불구하고 음악 자산 인수 멀티플의 하락을 관찰하지 못했으며, 이는 인수 경제성을 제약할 수 있다.
• 회사는 보호 대상 저작물의 무단 사용 혐의와 관련해 특정 AI 플랫폼을 상대로 소송을 진행 중이다. 경영진은 기술적 진보를 지지하지만 창작자의 권리를 보호할 것이라고 밝혔다.
• 특별위원회는 이전에 공개된 구속력 없는 자발적 인수 제안에 대한 검토를 계속하고 있다. 경영진은 이 절차가 일상적인 우선순위를 바꾸지 않았다고 말했다.

애널리스트 Q&A 하이라이트

경영진은 음반 부문의 마진 개선이 주로 관련 비용이 최소화된 권리 인수에 기인한다고 연결 지었으며, 이는 해당 분기의 수익성이 단순히 시점의 영향보다는 최근 인수한 자산의 경제성을 반영했음을 시사한다.

관리비와 관련하여 경영진은 1분기에 연도 전체에 걸쳐 반복되지 않는 연말 미지급금 정산(true-up) 및 보너스 비용이 포함될 수 있다고 설명했다. 2분기 비용 수준은 3분기와 4분기에도 대체로 안정적으로 유지될 것으로 예상하고 있다.

레저보어는 또한 기존에 수작업으로 이뤄지거나 시간이 많이 소요되던 프로세스를 자동화하기 위해 내부적으로 AI 도구를 활용하고 있다. 경영진은 이러한 효율화 작업이 지난 6~9개월 동안 가속화되었다고 밝혔다.

M&A 파이프라인은 출판 카탈로그, 마스터 음반, 신흥 시장 자산 전반에 걸쳐 균형 있게 유지되고 있다. 그러나 경영진은 거래 흐름과 완료 일정을 예측하기 어렵고, 매도자의 기대치와 인수 멀티플이 실질적으로 하락하지 않았음을 강조했다.

실적 발표 전사록 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Greetings. Welcome to the Reservoir Q2 FY '27 Earnings Call. [Operator Instructions] Please note, the conference is being recorded. I will now turn the conference over to Jackie Marcus at Alpha IR. Thank you, Jackie. You may begin.

Jacqueline Marcus

Thank you, operator. Good morning, everyone, and thank you for participating in today's earnings conference call. Reservoir Media issued a press release with results for its second quarter of fiscal year 2027 ended September 30, 2026, earlier this morning. If you did not receive a copy of our earnings press release, you may access it from the Investor Relations section of our website at investors.reservoir-media.com.

With me on today's call are Golnar Khosrowshahi, Founder and Chief Executive Officer; and Jim Heindlmeyer, Chief Financial Officer. As a reminder, this call is being simultaneously webcast and will be recorded and archived on the Investor Relations section of our website. Before I turn the call over to Golnar and Jim, I'd like to note that today's discussion will contain forward-looking statements that reflect the current views of Reservoir Media about our business, financial performance and future events and as such, involve certain risks and uncertainties.

Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that our expectations, beliefs and projections will result or be achieved. Please refer to our earnings press release and our filings with the Securities and Exchange Commission for more information on the specific risks uncertainties and other factors that could cause our actual results to differ materially from our expectations, beliefs and projections described in today's discussion.

Any forward-looking statements that we make on this call or in our earnings press release are as of today, and we undertake no obligation to update these statements as a result of new information or future events, except to the extent required by applicable law. In addition to financial results presented in accordance with generally accepted accounting principles, we plan to present during this call certain financial measures that do not conform to U.S. GAAP. If we believe they are useful to investors or if we believe they will help investors to better understand our performance or business trends. Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures are included in our earnings press release.

I would now like to turn the call over to Golnar.

Golnar Khosrowshahi

Thank you, Jackie. Good morning, everyone, and thank you for joining us today. Over the last 2 decades, Reservoir has built a reputation as a trusted partner for our talent, partners and shareholders alike. During the second quarter, we continued to deliver against that reputation, advancing our strategy across both publishing and recorded music, adding proven creative talent, expanding existing partnerships and pursuing opportunities in attractive markets.

Our recent investments reflect our ability to identify value across different stages of the music life cycle from supporting active talent whose efforts will yield new untapped copyrights over the coming years to stewarding established catalogs with enduring cultural and commercial significance.

Today's earnings results continue to reinforce the strength of those fundamental strategic pillars with another successful quarter. In the second fiscal quarter, we extended our run of top line growth with revenue up 10% year-over-year and organic growth of 4%. Looking first at our publishing business, we continue to strengthen our roster with established songwriters and producers whose track records position them for continued success.

In September, we announced a futures publishing deal with London-based songwriter and producer, Fred Ball. Fred co-wrote and co-produced Rihanna's Diamond-certified Love on the brain and his work spans records with Deane, JZ, M&M, Alicia Keys, Mariah Carey and Olivia Dean, among many others. He remains a sought-after collaborator among leading artists, and we are excited to be part of the next chapter of his career. We also signed Grammy-nominated songwriter and producer, Jake Sinclair, to a publishing deal for his future works. Jake has written and produced hits for Falloutboy, Weezer, 5 Seconds of Summer and Panic at the Disco, including their diamond-certified track, High hopes.

Alongside the publishing deal, we formed a joint venture with Jake to identify and develop emerging songwriters and artists, combining Jake's creative instincts with Reservoir's global platform and publishing expertise. We believe this approach can generate attractive opportunities to build incremental value for both Reservoir and Jake by further aligning our interests.

We also expanded our frontline roster across key genres and markets. In the U.K, we welcomed Scottish Indie Rock Band The Snuts and Ivor Novello winning Singer Songwriter -- or [ La Gardlet. ] Across country and Fok Music, we announced deals with songwriter Justin Dukes, Singer Songwriters Eva Liv Mabry and Riley Veterer and Singer Songwriter Duo the Recloss.

Together, these signings demonstrate our continued commitment to developing a globally diverse roster of talent. By investing in creators across genres, geography and career stages, we strengthened the range of opportunities available across our publishing business. Beyond our active roster, we continue to build on long-standing relationships with established catalogs and their representatives. During the quarter, we announced the acquisition of Billy Straayhorn's publishing catalog in addition to participating in rights to his name, image and likeness.

Widely regarded as one of the great composers in Jazz's history, Straayhorn was Duke Ellington's long-time creative partner and wrote enduring standards, including, Take the A Train and Luslife. Reservoir has published his catalog for more than a decade, working closely with his estate to champion his music, and we are honored to continue to steward his legacy in the years to come.

In recorded music, we expanded our portfolio through a deal with legendary Puerto Rican singer songwriter, Jose Feliciano, to acquire master recording rights to his catalog as well as shared rights to his name, image and likeness. Over a career spanning 6 decades, Jose has released more than 60 albums crossing over into Anglo American Pop and earning multiple Grammy awards, a star on the Hollywood Walk of Fame and the National Medal of Arts, among numerous other honors. He is also the writer and original recording artist behind Feliz Navidad, one of the world's most enduring and widely played holiday songs to this day. But the recording, which returns to the charts each holiday season and recently reached #6 on the Hot 100 was inducted into the Grammy Hall of Fame in 2010 and just this year was selected by the Library of Congress for preservation in the National Recording Registry.

This deal builds upon our existing investments in Latin music, which remains one of the fastest-growing areas of global music demand. Jose's remarkable catalog combines blasting cultural relevance with continued audience engagement, reflecting our strategy of partnering with influential artists and investing in music with the potential to resonate across generations and markets.

Notably, through the deals with Billy Strehorn and Jose Feliciano, Reservoir is taking part in the NIL value chain, a facet of transactions we have leveraged throughout the last 12 months during the Miles Davids Centennial. Introducing Miles and his music to new fans through key brand partnerships has been an important way of continuing to bring value to his portfolio, both culturally and financially.

Structuring deals with NIL components is a thoughtful way we continue to seek opportunities to enhance the value of Reservoir's assets and share them to a wider audience. In looking at the broader music landscape, several trends are particularly relevant to our business. Subscription pricing continues to present opportunities for growth as streaming services implement price increases and consumers consistently demonstrate the value they place on access to music.

Additionally, sentiment around catalog transactions remains positive, reinforcing our view that well-managed catalogs are durable long-life assets. And third, for many established artists, touring and brand partnerships now drive more of their economics than a traditional record contract. Together, these trends reinforce our conviction in the long-term value of music copyrights and the opportunities available to companies with the expertise to manage, market and monetize them effectively.

We remain focused on positioning Reservoir to participate in this growth while maintaining the financial discipline that has guided our investment decisions. One other trend worth noting is the potential industry growth from new AI licensing revenue as noted in Goldman Sachs Annual Music and MA report. You may have recently seen Reservoir's litigation against certain AI platforms. Reservoir's business is rooted in our responsibility to protect the rights and creative legacies of our songwriters, artists, estates and partners.

And when we believe their work has been exploited without authorization, we will hold AI platforms legally accountable to ensure those rights are upheld. We will continue to advocate for a framework that supports technological progress while protecting the creative work at the heart of our industry.

Jim will take you through the details of our financial performance shortly, but I wanted to emphasize that the consistency of our revenue and cash generation is what allows us to continue investing in our team, our infrastructure, our creators and new strategic opportunities without compromising financial discipline.

Before turning to our financial performance, I'd like to briefly address the previously disclosed nonbinding and unsolicited acquisition proposals received by the company. In March 2026, the Board formed a special committee of independent and disinterested directors to evaluate the proposals, and the special committee engaged Morgan Stanley & Company LLC as its financial adviser and Watetel, Lipton, Rosen & Katz as its legal counsel. While the special committee's review continues, our team remains focused on executing our long-term strategy and the process does not change our day-to-day priorities.

I will now turn the call over to Jim to discuss our fiscal second quarter financial performance. Jim?

Jim Heindlmeyer

Thank you, Golnar, and good morning, everyone. Our strong second fiscal quarter results reflect our impressive catalog of in-demand assets as we continue acquiring more catalogs, deepen existing relationships and identify opportunities.

Revenue for the second fiscal quarter was $49.9 million, a 4% year-over-year improvement on an organic basis and a 10% increase when including acquisitions. This was led by the 18% growth in our Recorded Music segment and the 8% increase we had in Music Publishing.

Turning to our operating expenses. The total cost of revenue increased 7% compared to the prior year quarter, while our administration expenses and amortization and depreciation costs grew 7% and 12%, respectively, versus the prior year. The increase in administration expenses was driven by higher expenses within Music Publishing and Recorded Music segments. Amortization costs grew due to the acquisition of additional music catalogs.

Looking at operating performance for the second quarter, OIBDA was $20.7 million, an increase of 14% year-over-year, and adjusted EBITDA was also up 14% to $22.1 million compared to our Q2 and fiscal 2026. The increases in OIBDA and adjusted EBITDA were due to higher revenues, partially offset by increases in cost of revenue and administration expenses, as I just mentioned.

Interest expense was $7 million for the quarter versus $6.7 million in the prior year, driven primarily by increased debt balances used to fund acquisitions of music catalogs and writer signings.

Net income for the second quarter was approximately $4.6 million compared to net income of $2.2 million in the second quarter of fiscal 2026. The increase in net income was primarily driven by the increase in operating income and the higher gain on fair value of swaps and gain on foreign exchange, partially offset by increases in interest expense and income tax expense.

This resulted in $0.07 diluted earnings per share for the quarter, up from a diluted earnings per share of $0.03 in the prior year quarter. Our weighted average diluted outstanding share count during the quarter was approximately 66.8 million.

Now let's dive into our segment review for the quarter. Music Publishing had an 8% increase in revenue versus the prior year quarter at $33.2 million, largely due to a 10% increase in digital revenue, which was driven by the acquisition of additional music catalogs and continued growth at music streaming services. Additionally, synchronization revenue expanded by 13% within Music Publishing, driven by the timing of licenses.

Moving to our Recorded Music segment. We had an 18% increase to $15.4 million in revenue compared to our Q2 last year. This was driven by a 33% increase in digital revenue, which was also supported by the acquisition of additional music catalogs and continued growth at music streaming service. Robust neighboring rights revenue driven by the acquisition of additional music catalogs and new affiliations also supported our strong growth in Recorded Music.

Turning to our balance sheet. For the 6 months ended September 30, 2026, cash provided by operating activities was $21.6 million, which was a decrease of $3.7 million compared to the same period last year, primarily due to a change in cash used for working capital resulting from the timing of royalty payments to creators and payments of accounts payable, partially offset by the timing of royalty advance recoupments.

We had total available liquidity of $113.9 million, consisting of $24.8 million of cash on hand and $89.2 million available under our [indiscernible]. We ended the quarter with total debt of $458.6 million, which was net of $2.2 million of deferred financing costs, and thus, we maintained $433.8 million of net debt. That compares to net debt of $429.8 million as of March 31, 2026.

Given our strong first half performance, we are narrowing and raising our full year guidance ranges. We now expect revenue of $188 million to $192 million, which at the midpoint implies growth of 8% versus fiscal 2026. We are also raising our adjusted EBITDA guidance range to $77 million to $80 million, which signals growth of 7% over the prior year at the midpoint of that range. We will continue to review our outlook as the year progresses and look forward to providing an update when appropriate.

After the first half of fiscal 2027, the drivers behind our performance are consistent with our strategy, acquiring catalogs that continue to grow under our stewardship and active roster contributing to today's hits and continued cost discipline. Between our consistent cash flows and our measured approach to capital deployment, we remain confident that we'll be able to deliver on our raised fiscal 2027 guidance.

With that, I'll now pass the call back to Golnar.

Golnar Khosrowshahi

Thank you, Jim. We are pleased with the first half of fiscal 2027 and with the opportunities we've identified ahead of us as Reservoir heads into its 20th anniversary in calendar year 2027. This quarter's activity from futures partnerships with Fred Ball and Jake Sinclair to investments in talent like Orla Gartland and Riley Beeterer and to our agreements with Jose Feliciano and the Billy Shrehorn Estate shows the range of Reservoir investments across genres, eras, geography and deal structures. Our pipeline remains robust, and we look forward to sharing more proof points of our strategy.

With that, we will now open the line for questions.

Operator

[Operator Instructions] Our first question is from Griffin Boss with B. Riley Securities.

질의응답

Griffin Boss

I just wanted to start off on OIBDA. So on the recorded side, specifically, there was a meaningful step-up in the margin year-over-year. Just curious, Jim, is that more a function of timing? Or are you seeing structurally higher margins on new acquisitions and affiliations?

Jim Heindlmeyer

Yes. Sometimes with our new acquisitions, when we are acquiring rights that have very low, if any, expenses, it's going to improve that margin. And I think that's really what we're seeing in the quarter relative to last year, given some of the acquisitions that we've done in the past year.

Griffin Boss

Understood. And then just sticking on profitability. So it's good to see the raise and narrow guide, but that does imply a slightly slower growth in EBITDA than what you're expecting on the top line. So I just want to dig into kind of how much of that could be maybe conservatism versus expectation for higher administrative or other expenses in the back half of the year?

Jim Heindlmeyer

Yes. I think that with respect to the administration expenses, it's really like our Q2 run rate is probably a good proxy for the rest of the year. I think that there's an appropriate level of conservatism built into our guidance, and it's probably what's impacting what you're seeing there.

Griffin Boss

Okay. Got it. And then if I could just sneak one more in here, maybe for Golnar. There are other large public labels, of course, publicly traded labels, one of which supposedly held talks earlier this year, entertaining the idea of going private, just given kind of what seems to be steep discounts in the public market.

So I'm curious if you're seeing in your M&A activities, any step down in multiples versus what you've seen historically given what we're seeing in the public markets for music assets?

Golnar Khosrowshahi

I guess if we keep saying that, maybe we'll see it. But unfortunately, we haven't really seen any loss in -- or any decrease in these purchase multiples. We continue to execute at attractive multiples and that information or updated information will be included when we disclose the next investor presentation. But on balance, as far as the deals that we see trading and those that we're participating in, we are not seeing any decrease in expectations whether as a result of or separate from this disparity in value between the sort of asset value and where these stocks are trading.

Operator

Our next question is from Richard Baldry with ROTH Capital Partners.

Richard Baldry

You talked about the administrative expenses being a good run rate from here. The level in the quarter was down from both first quarter and even the fourth quarter of last year. Can you talk a little bit about sort of where you've gained some efficiencies there, why that's sustainable? And does that just naturally sort of step up year-over-year when we move out to fiscal '28?

Jim Heindlmeyer

Yes. I think on the overhead side, the administration expenses, our Q1 is sometimes impacted by some of the activity in our Q1, which is to be true-ups of year-end accruals. There's some bonus activity in Q1 that hits that's not recurring throughout the the rest of the year. So there's a few things there that are impacting that. And I think that as you look at the Q2 run rate, it really should be pretty steady from there for Q3 and Q4, some minor variances with some of the things that just fluctuate throughout the year, but it's a pretty good run rate.

Richard Baldry

And I think of it as more of a hands-on sort of company dealing with your clients. But beyond that, is there any back office ability to sort of leverage newer AI technologies to automate maybe some of the accounting end of the table that might be more manual today than it could be down the road as an efficiency gain?

Jim Heindlmeyer

Yes. Our teams are certainly very active with AI tools to find areas where things that have historically been a pretty manual process or time-consuming process where we can leverage those AI tools to find efficiencies. And that's been happening quite a bit over the past kind of 6 to 9 months, as you can imagine.

Richard Baldry

And turn to the new JV, for example, can you talk about sort of how a development like that works? How much resources you typically would put in? What payback periods you're thinking about? I assume these are fairly long tail events.

Golnar Khosrowshahi

Rich, I'm sorry, which JV are you referring to?

Richard Baldry

You were noting one with a younger artist.

Golnar Khosrowshahi

I mean every deal is different. These JVs are structured such that we are able to capitalize on the talent and the access that, that talent brings. We are never fully tied in that we can always make a decision to sort of alter course on that front. We're not talking about significant dollar amounts, and we are talking about investment that is made on an as-you-go basis. Again, these are mostly futures deals. So the investment number, the absolute value is not a significant number.

Richard Baldry

Okay. And last for me. It looks like an unusually good cash generation quarter and sort of your net debt number came in pretty good. I don't have the queue yet to sort of go through that. Can you talk about if there's any unusual sort of onetime events in there or just traditional seasonality that's driving that so I can better understand.

Jim Heindlmeyer

Yes, sure. Typically, our Q2 and Q4 are pretty strong cash-generative quarters for us. So I think that you're certainly seeing some of that. That's probably the most significant thing. It was a fairly light quarter for us on the M&A front, which happens quarter-to-quarter. We can't control the timing of deal flow, and that's not something that's linear throughout the year. But I think it's just those 2 things that are coming together.

Richard Baldry

Maybe one last one. If you look in your M&A pipeline, is the balance of opportunities changing at all, whether it's by geography, recorded publishing or still just opportunistic as the best thing sort of plug into each sector?

Golnar Khosrowshahi

I think I would look at it 2 ways. One is what's coming in and what's coming in varies quarter-by-quarter. Obviously, we can't predict deal flow, but I think it's a pretty well-balanced grouping of publishing targets and recorded targets as well as emerging markets assets. As far as what is making it across the sort of exclusivity line and into our short-term deal flow, I believe that, that is also mirroring the general deal flow, which is, again, a good balance across the board.

We may end up having some concentration in any given quarter on publishing acquisitions or Masters acquisitions, but that is not really an indication because it's just such a small time frame to be looking at. We are always looking to do the best deals we possibly can.

So at certain points, that might concentrate on recorded publishing, emerging markets, what have you. But we're seeing a very good balance of deals in front of us.

Operator

We have reached the end of the question-and-answer session. I would like to turn the floor back over to Golnar Khosrowshahi for closing comments.

Golnar Khosrowshahi

Thank you, everyone. We appreciate your support and interest in Reservoir. Thank you.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.