Prepared remarks
Thank you for joining us for the V2X Second Quarter 2026 Earnings Conference Call and Webcast. Today's call is being recorded. My name is Gary, and I'll be the operator for today's call. Operator provides instructions to participants. And now I'll pass the call over to your host, Mike Smith, Vice President of Treasury, Investor Relations and Corporate Development at V2X. Please go ahead.
Thank you. Good afternoon, everyone. Welcome to the V2X Second Quarter 2026 Earnings Conference Call. Joining us today are Jeremy Wensinger, President and Chief Executive Officer; and Shawn Mural, Senior Vice President and Chief Financial Officer. Slides for today's presentation are available on the Investor Relations section of our website, gov2x.com. Please turn to Slide 2. During today's presentation, management will be making forward-looking statements pursuant to the safe harbor provisions of the federal securities laws. Please review our safe harbor statements in our press release and presentation materials for a description of some of the factors that may cause actual results to differ materially from the results contemplated by these forward-looking statements. The company assumes no obligation to update its forward-looking statements. In addition, in today's remarks, we will refer to certain non-GAAP financial measures because management believes such measures are useful to investors. You can find a reconciliation of these measures to the most comparable measure calculated and presented in accordance with GAAP on our slide presentation and in our earnings release filed with the SEC, both of which are available on the Investor Relations section of our website. At this time, I'd like to turn the call over to Jeremy.
Thank you, Mike, and good afternoon, everyone. Thank you for joining us today. Please turn to Slide 3. Today, I will be providing a recap of our second quarter results for 2026 and sharing more of our outlook for the rest of the year. Before I go through some of the highlights, I want to thank our team at V2X for their continued focus and dedication to delivering our customers' mission. In the second quarter and first half, our consistent execution, recent contract wins and continued alignment to national security priorities drove double-digit revenue growth. The value of our end-to-end solutions was reinforced by approximately $1 billion in recent awards across modernization, global training, aerospace and mission readiness. These awards are expected to improve the composite margin of our backlog as we continue to prioritize profitable growth. We continue to pursue new bids throughout the quarter, leveraging our AI solutions that deliver differentiated customer outcomes with more than $8 billion in bids submitted that incorporate these solutions. Our focus remains on margin accretive opportunities that further enhance the quality of our backlog. Supported by our strong cash generation and healthy balance sheet, we also continue to evaluate growth opportunities to allow us to further our Go Towards Tomorrow strategy. As we enter the second half of 2026, we are confident in our market position and are increasing our full year guidance for revenue, adjusted EBITDA and adjusted diluted EPS. We expect revenue and adjusted EBITDA to increase approximately 10% year-over-year at the midpoint and adjusted diluted EPS to increase 16% at the midpoint. Our results to date and momentum underway underscore our continued ability to deliver for our customers and shareholders. With that, let's move to Slide 4, which summarizes the financial operating highlights of the second quarter and the first half of 2026. In the second quarter, revenue increased 17% year-over-year to $1.26 billion. Adjusted net income was $51.6 million, representing an increase of 22% year-over-year. Adjusted EBITDA was $89.8 million with a margin of 7.1%. Adjusted diluted EPS was $1.64, representing an increase of 23% compared to the same period last year. Our solid financial and operating performance reflects the progress we've been delivering on our strategic priorities and our position as a leading provider of mission capabilities. Turning now to Slide 5. We have received approximately $1 billion in recent awards, demonstrating the breadth of our portfolio and its close alignment with our customers' priorities. As it relates to modernization, we were selected to provide multiyear production of carriage equipment, enabling next-generation weapons for the strategic bomber fleet. And in global training we captured awards to deliver solutions for enhanced UAS maintenance and operator training. This reflects the sustained demand we are seeing for training solutions that improve readiness and operational effectiveness. With respect to aerospace, we continue to support essential requirements securing a 5-year recompete to continue delivering proven readiness for the U.S. Air Force C-12 fleet. And in mission readiness, we received awards to support operations for U.S. Marine Corps assets and enhanced electronic security capabilities for a foreign military customer in the Middle East. With an aggregate margin that is accretive to our current portfolio, these recent awards reinforce our continued pursuit of high-quality profitable growth opportunities, and our team is focused on disciplined execution. Moreover, it underscores the diversity of our offerings across markets and capabilities. This is a great sample of differentiated, high-value work that our team is pursuing. While we recognize that not all our awards will have this margin profile, these awards exemplify the progress we have made in our strategic focus looking towards future opportunities. As an end-to-end mission provider, we are proud of our proven ability to support our customers wherever and however they need. Moving to Slide 6. Our robust backlog, funding and pipeline of high-quality awards support our positioning and outlook for the remainder of this year. Bookings were $600 million in the quarter, yielding a quarterly book-to-bill ratio of 0.5x and a trailing 12-month book-to-bill of 1.4x. I'd like to note that our bookings do not reflect approximately $1 billion in recent awards as they came in shortly after the quarter. Total backlog for the quarter was $12.7 billion which includes the modified scope of our LOGCAP work in Kuwait. Importantly, funded backlog increased 10% sequentially and 8% year-over-year to $2.5 billion. This further supports the confidence we have in our 2026 outlook and demonstrates the strong funding environment for the solutions we provide. We are also continuing to see increased activity and funding in the Asia Pacific region and are optimistic about the growth prospects. Altogether, our diverse portfolio, strong backlog and continued demand position us well to drive value and deliver for our customers over the long-term. Turning to Slide 7. As we highlighted in the first quarter, we continue to advance our Go Towards Tomorrow strategy, including expanding our AI capabilities. We are currently operating three AI platforms across our enterprise IT infrastructure, and we see strong adoption across the business. To further employee education, productivity and operational efficiency, we're investing in ongoing training and continuing to expand internal use cases. At the same time, our AI capabilities are embedded into our pursuit of new bids. Last quarter, we introduced early customer-facing applications focused on predictive readiness and operational efficiency. We are expanding our AI opportunities across a wide range of customer solutions, further diversifying our bid portfolio. This is reflected in more than $8 billion of margin accretive new bids we recently submitted that include V2X's AI solutions. By investing in AI capabilities that enhance both internal operations and customer solutions, we are strengthening our ability to deliver more efficient, innovative and mission relevant outcomes for our customers while driving more value for our shareholders. I look forward to sharing more on these strategic pursuits in the coming quarter. I will now turn the call over to Shawn for a more detailed review of our financials.
Thank you, Jeremy, and good afternoon, everyone. Please turn to Slide 8. We reported exceptional second quarter financial performance across the business. Revenue in the second quarter increased 17% year-over-year to $1.257 billion. Revenue growth was driven primarily by the ramp-up of training and aerospace programs and continued support for national security activities. Our ability to rapidly scale and support customer requirements by leveraging capabilities, contracts and global presence remains a key differentiator of our business. We are seeing continued demand to support discrete national security activities, which contributed approximately $100 million of revenue in the second quarter. Based on the demand signals from our customers, we currently see these requirements continuing through 2026 and into the early part of 2027. From a geographic perspective, I'd like to note the growth we're seeing in Asia Pacific, which increased 13% year-over-year in the second quarter. As Jeremy discussed, we are seeing a step-up in activities and funding in the region as compared to last year. Our revenue associated with the U.S. also continues to grow, increasing 26% year-over-year driven primarily by new program starts and national security support. As it relates to the Middle East, revenue was up slightly year-over-year, reflecting contributions from foreign military sales. For the year, we expect revenue in the region to be flat to down as support for logistics-related contracts shifts within the region. Overall, we are well positioned with differentiated solutions across multiple geographies. With our diversified portfolio, global presence and operational excellence, we have the flexibility necessary to ramp our presence to adjust to our customers' needs in real time. For example, we are ramping up to support additional activities in Israel as well as national security requirements in the U.S. while responding to evolving customer requirements in Kuwait. This demonstrates our strategy in action, supporting critical mission requirements across multiple fronts and meeting our customers wherever they are. We are proud of our team's accomplishments in the second quarter, which reflect our ability to deliver integrated solutions across geographies by leveraging capabilities, technology, past performance and access to the right contracts. Turning back to our performance for the quarter. Adjusted EBITDA in the quarter was $89.8 million, increasing 9% from the same period in the prior year. Adjusted EBITDA margin was 7.1%. Interest expense in the second quarter was $16.7 million. Cash interest expense was $15.1 million, reflecting a 21% improvement year-over-year. Net income for the quarter was $25.5 million. Adjusted net income was $51.6 million, up 22% year-over-year. Second quarter diluted EPS was $0.81 based on 31.5 million weighted average shares. Adjusted diluted EPS in the quarter increased approximately 23% year-over-year to $1.64. Adjusted operating cash flow improved 23% year-over-year and was $71.8 million in the quarter. Please turn to Slide 9, where I'll discuss our year-to-date results. Year-to-date revenue was $2.511 billion, up 20% year-over-year, driven by new programs and on-contract growth. This growth was partially offset by lower volume on certain logistics programs. Adjusted EBITDA for the first half of the year was $175.4 million, increasing approximately 17% year-over-year with a margin of 7%. The interest expense through June was $34.8 million. Cash interest expense was $31.6 million, improving approximately 15% compared to the first half of 2025. Year-to-date net income was $44.5 million. Adjusted net income was $99.7 million, increasing 35% year-over-year. Diluted EPS in the first half was $1.41. Adjusted diluted EPS was $3.16, up 37% compared to prior year. Year-to-date, net cash used by operating activities was $108.4 million. Adjusted net cash from operating activities was $49.7 million, reflecting a $109.5 million year-over-year improvement. As discussed last quarter, we expected our cash flow in the first half of 2026 to track more favorably relative to our historical profile, and our first half results demonstrate that performance. Please turn to Slide 10, where I will further discuss our cash flow profile and strengthening balance sheet. The ability to generate significant durable cash flow with low CapEx remains a hallmark of our business and this quarter was no exception. Our capital expenditure requirements remain disciplined, averaging approximately 0.4% of revenue over the past three years. The positive cash flow attributes of our business are evident in the balance sheet with net debt improving approximately $71.4 million year-over-year. The progress we've made strengthening the financial and operational aspects of the business presented us with the opportunity to reprice our first lien term loan, immediately lowering our borrowing costs and creating additional interest savings. This progress was also acknowledged by Moody's, which recently revised its credit ratings outlook to positive. Putting it all together, we expect 2026 to be a year of solid adjusted operating cash flow generation, which we anticipate will drive our net leverage ratio to approximately 2x or below by the end of 2026. Please turn to Slide 11, where I'll discuss how the combination of high operating cash flow and low CapEx combined with our focused capital allocation strategy creates significant flexibility to pursue growth and value-creating opportunities. Looking ahead, our capital allocation strategy remains unchanged. We are focused on: one, generating strong predictable cash flow and targeting at or above 100% adjusted net income conversion on average over time; two, maintaining a low CapEx profile; and three, strategically deploying capital to pursue growth and margin expansion via organic and inorganic opportunities. As it relates to margin accretive M&A, our focus is on opportunities that reinforce our value proposition and expand our capabilities, customer access and domains. We continue to prioritize M&A that is strategically complementary to our business and the missions we support today. From an organic growth perspective, we will continue to invest in our innovation strategy, which includes deploying internal R&D to support opportunities we are seeing in engineering and modernization. Key recent success here was the carriage equipment production award for the strategic bomber fleet, which went from a development program to full rate production expected to continue for years until the fleet is built out. Additionally, and as Jeremy discussed, we will continue to invest in AI to advance business processes, customer solutions and profitability. We believe that in aggregate, these investments strengthen our ability to generate recurring cash flow and further compound the growth and value creation flywheel. Overall, we have established clear criteria as we actively evaluate opportunities to invest for growth and value. Please turn to Slide 12. We are pleased with our performance through the second quarter as our team continued to bring the best of V2X to meet our customers' critical mission requirements. Given our momentum and current trends, we are increasing our guidance ranges for revenue, adjusted EBITDA and adjusted diluted EPS. Revenue is now expected to be between $4.875 billion and $5.025 billion. Adjusted EBITDA is expected to be between $347.5 million and $362.5 million. Adjusted diluted earnings per share is expected to be between $5.90 and $6.30. Adjusted net cash from operating activities is expected to be between $160 million and $180 million. With that, I'll turn the call back over to Jeremy for some closing remarks.
As outlined on Slide 13, we have solid momentum heading into the second half of the year. We continue to innovate and expand our capabilities across the enterprise, making V2X a stronger, more integral national security partner. As we advance our Go Towards Tomorrow strategy, I want to again recognize the dedication and talent of our global team. Their continued hard work and commitment to our company and our customers' mission drive our success. Their unwavering focus is what allows us to pursue growth opportunities and support the critical missions of tomorrow. With that, I'll open it up to questions.
Questions and answers
The first question today is from John Siegmann with Stifel.
So nice news about that recompete you won on the C-12. You had talked about previously how this year was light for recompetes. Do you mind taking a forward look at 2027? Is there anything to think about as potential things that we should be tracking? I'd appreciate it.
John, we don't talk specifically about programs. What I've been saying for the better part of the last 18 months is we're in a nice recompete holiday. And that recompete holiday, even though we had C-12 come at us, we're thrilled with the outcome there. Obviously, we'll have other recompetes that we'll pursue in the same vein. But if you look at the majority of the capital allocation for our new business, it's on growth and it's on new business that is not in the portfolio today. I think that's why you're seeing not only our win rates, but also our ability to drive top line growth. Those investment dollars and the strategy we've put in place are all benefiting us as it stands right now. But again, we're highly focused on recompetes. I'm pleased with our recompete win rate. But again, we don't talk about specifics. We have benefited from having a smaller part of the portfolio in the recompete world, which has enabled us to spend the money we have on new growth.
Great. And then maybe just given the level of tempo for the warfighters, it's pretty high in the last couple of months, is there any way to think about what that's meant for your business and how that may or may not taper off in the months ahead?
No. I think because it's a global business, we respond on a global basis. We are very able to spin up and spin down capabilities within a region or on a global basis. That's the advantage of the portfolio. Regardless of where we're at, we're enabling our customers to deliver their mission. That serves the portfolio and our customers well. One thing I will say is the team in the Middle East has stood shoulder to shoulder with our customer and continues to do so. It's a testament to their leadership and the people in that region; they deliver on their mission every day unwaveringly. My heart goes out to them and everything they do because they have done everything the customer has asked. I'm very proud of them.
The next question is from Trevor Walsh with Citizens.
Jeremy, maybe for you, just piggybacking a little bit off the win rate. Can you give us a sense for that new business? It sounds like you had about $1 billion or so that you've won across several opportunities and then the $8 billion plus that you've just submitted in pipeline. How are you assessing the win rates there in terms of what you're expecting? Is it by nature of what you're actually bidding for? Do you feel like you have better chances than V2X may have had in the past? Maybe just give a sense of how the team is seeing the prospects for the things that you've submitted and what your chances are.
It's a really good question, and that's why I spent so much time on the call talking about what Greg Lundy is doing as our CTO to help us create differentiation with AI. There's a very rigid process to get something to the point where you submit a bid, and it's a very disciplined process because we wouldn't bid something if we didn't feel like we had a better-than-most chance of winning it. But I do appreciate what the team has done to put us in a position to put things on the table that are compelling to the customer. I think they are recognizing that. When I look at what we have on the table, I view that as a differentiated solution, with great customer intimacy and also the ability for us to look at the requirements from what we do on a global basis and meet their needs.
Fantastic. Appreciate it. Shawn, maybe just a quick follow-up for you. Around your comments for Middle East revenues being flat to maybe even down for the year: do you think things that could move in the Middle East are pretty much more to the upside? Or could there be any surprises more on the negative? Or do you think most of the disruption has been worked out of the system and you guys largely know what's happening there?
Thanks, Trevor. Let me give you some context. As we sit here today, 98% of our revenue for the total year is in backlog. That's a testament to having the right strategy, the right contracts and the right capabilities around the globe. Relative to the Middle East and our assumptions, we do have the activity that we were performing in Kuwait significantly contracting in the second half of the year. That's baked into the guide we issued today. That's down probably about $150 million sequentially from what it did in the first half of the year. There's a ramp on some other activities there that we know of today, but they're modest. It's dynamic, to say the least, and our teams respond in a timely manner. As we see things today, that's why you saw comments about flat to perhaps down in light of activities in that region. But it can change very quickly—you saw that happen since the last time we talked at the end of Q1 versus today.
I'll add that when I think about regional activity like Kuwait, the diversity of the portfolio is really important. Look at Israel, for example—we announced an award there, and as that spools up we'll continue to look at how we can support the customer in Kuwait. The diversity of the portfolio and our ability to be present in-region with accessible contracts is what differentiates us from many other companies.
Next question is from Tobey Sommer with Truist.
I was wondering if you could speak to the M&A market, what you're seeing for opportunities for acquisitions and whether you had any call-outs of professional fees in the quarter as you're looking for opportunities.
It's a good question. We have a capital allocation strategy we've discussed previously. In terms of the market, we continue to look at opportunities that would augment platform modernization, counter UAS, space domain awareness, electronic warfare, integrated air and missile defense, C6ISR and similar areas that would augment the overall portfolio. We're very disciplined in how we look at things, and that approach has served us well. But when opportunities come to market, we evaluate them against our strategic criteria and exercise patience.
Were there any notable investments to pursue acquisitions in the quarter or nothing to call out like in Q1?
There was a modest amount of spend in the quarter, down from what we had spent previously. We won't comment on specifics about M&A activities, but we do have a solid pipeline and the team uses a disciplined approach to evaluate opportunities.
On your recent wins that are coming at a higher margin and you say the bid pipeline is superior margin as well, how should we think about that and sort of define it? Is it the contract type varying in favor of higher-margin forms like fixed price or time-and-materials? How would you break that down so we can understand it further?
I don't think it's primarily a contract type issue. It's about differentiation. We've focused on what we do and used differentiation to create separation—whether that's AI tools, past performance, or readiness rates we provide. Customers recognize that differentiation because it gives them better mission outcomes. That's enabled us to work with customers to provide what they want, where they want it and when they want it. I'm excited about this strategy coming together and starting to see benefits.
The next question is from Peter Arment with Baird.
Jeremy, Shawn, Mike, nice results. Jeremy, 98% already in backlog. So a continuing resolution is more noise. But could you just describe what you baked in or assumed for the budget process?
CRs can potentially impact many companies, but much of what we do is mission-critical. Even during the last, rather protracted CR, we were not significantly impacted. You still have to keep aircraft in the air and deliver on production and time-based programs. I hope they avoid a continuing resolution, but I don't think the type of work we do is highly at risk unless something unforeseen happens.
Got it. That's good color. And then regarding the T-6 program, could you give us an update on how the second half ramp is scheduled to go?
The program is performing as expected. It delivered about $40 million of revenue in the first half of the year. Consistent with prior commentary, we expect it to be about $100 million in the second half of the year. The team is doing an exceptional job and the program has ramped exactly as expected. We have regular program check-ins and are very happy with the progress.
Next question is from Joe Gomes with Noble Capital.
Can you break down the recent revenue growth into new program wins, expansion on existing contracts and maybe higher volume on recompetes?
On a year-to-date basis the growth is largely from existing contracts and contract vehicles the company has had. The right contracts and capabilities around the globe have driven much of the growth. The significant driver in the first half and for the total year is support for national security missions at a much higher ops tempo than last year. Other programs that ramped at the beginning of the year, including activities in the Middle East, Balad and WTRS, are performing as expected. So the contribution is material but not primarily from a set of brand-new wins.
People sometimes underestimate the value of having the right contract vehicle and being in the right location—new requirements being added to an existing program or vehicle often drive growth. The team does an exceptional job delivering mission outcomes for the customer in a timely way because of our presence and contract vehicles.
Which recent award do you view as most strategically important rather than simply the largest going forward for the company?
They fall into two buckets: each is a proof point for our strategy, but the carriage equipment production award for the strategic bomber fleet stands out. It moved from development to a long-term production program, demonstrating our engineering capability and the ability to move from design to production, and it's a long-lived production run. I'm excited about that and other programs with similar characteristics.
Shawn, on the guide you raised revenue roughly about $50 million and adjusted EBITDA only up by about $2.5 million. Could you explain why the projected margin on the guide is lower for the second half of the year?
It's modest mix changes, nothing more than that. The guide contemplates about 49% of adjusted EBITDA in the first half and 51% in the second half, which implies a higher margin contribution in the second half versus the first half. That margin expansion reflects productivity improvements, contract actions and similar items. So there is margin expansion in the back half of the year consistent with our historical profile.
Next question is from Andre Madrid with BTIG.
You highlighted that recent awards are carrying margins above the current company average. How should we think about these high-quality awards impacting margins and when we can see the accretion?
As we've discussed before, we will work through backlog. As we add new, accretive-margin backlog to the portfolio, it will gradually improve the overall margin profile. Some of these programs start relatively immediately, like C-12, so you'll see a progression as we continue to execute the strategy. As we win new work and replace older backlog, the overall margin should expand.
Important to note many of these awards occurred post-Q2 and will be booked in the third quarter. They are multiyear programs—think five-year type programs—so you'll see incremental improvements, but they'll be modest on an annual basis relative to the total portfolio.
Could you discuss the opportunity you're seeing in Asia Pacific today? Where is demand the strongest and how could we think about that region becoming a more meaningful contributor to growth over the next couple of years?
We consider Asia Pacific to be our backyard and are pursuing both organic new business and on-contract growth with the contract vehicles we have in-region. We're highly focused on INDOPACOM and supporting customers' mission requirements. The team performs well on on-contract growth and is also pursuing new business opportunities leveraging our core capabilities.
We're pleased with 13% growth year-over-year in the quarter and are seeing strong demand signals with incumbency in several locations. We're submitting proposals and white papers; clearly strong demand signals. We'll need to see that funding convert to booked activity, but the prospects are very good for the region.
Next question is from John Godin with Citi.
Congrats on the quarter. Can you dive a bit deeper into the main sources of upside to the new guide on the back of what looks like already solid business momentum?
Let me give you the assumptions that went into the guide. Kuwait activities delivered approximately $180 million in revenue in the first half and we see that as $20 million to $30 million in the second half—so roughly a $150 million headwind. National security support missions delivered about $200 million in the first half and we see them at about $180 million in the second half. The T-6 ramp delivered about $40 million in the first half and will be about $100 million in the second half, so roughly $60 million incremental. Programs like Balad and WTRS are performing in line with plan. At the midpoint of the guide, revenue is roughly split 51% in the first half and 49% in the second half, consistent with these assumptions and the Kuwait outlook I provided.
Got you. As a follow-up, how are you thinking about potential political changes such as a blue wave—what should investors consider on that front?
I don't spend much time on election outcomes. What we do is mission-critical and I don't think the need for readiness changes. Our focus is on doing excellent work for our customers to ensure national security is in a position to deliver required readiness. That's what matters most to me.
Next question is from Greg Parrish with Morgan Stanley.
I want to ask about the national security customer. Is there potential for this pace to continue, or is the work more one-time in nature?
It has evolved, and it speaks to our capability. We do see the ops tempo continuing into the first part of 2027 based on current demand signals. It's dynamic and evolving, and we remain ready to support the customer as needs change. The volume we're seeing reflects the capability the company provides to deliver that mission.
Thanks. On AI, could you give some examples of the AI capabilities built into bids and what those look like?
AI efforts are twofold: internal operational effectiveness improvements and customer-facing solutions. We've announced partnerships and are leveraging tools that enable increased readiness rates, better training platforms and predictive analytics that drive operational efficiency and mission performance. We've seen these as proofs of value both in bids and internally. I'm encouraged by what our CIO and CTO are delivering—these are showing up in bids and operational improvements.
Next question is from Ken Herbert with RBC.
Your guidance implies about 3% growth in the second half. Given tougher comps, I'm trying to get a sense of the bookings outlook and where there could be conservatism in your assumptions for the second half of the year.
Bookings can be lumpy. For the year, we're targeting a trailing book-to-bill in the 1.3x to 1.5x range. If we play out the high side of the guide, changes could come from OPTEMPO in the Middle East or differences in T-6 and WTRS performance. We believe we've appropriately bracketed the guide and are feeling very good about 2026, particularly with 98% of revenue in backlog at the midpoint.
You're exiting the year around 2x leverage. Is the goal beyond 2026 to continue pushing leverage down, and how should we think about capital allocation post-2026?
We have a healthy pipeline of M&A opportunities that align with our strategic focus areas. Our capital allocation strategy remains centered on generating cash flow, maintaining low CapEx, and deploying capital to drive growth and margin expansion. We aim to use capital in ways that enhance shareholder value and support long-term growth.
This concludes our question-and-answer session. I would like to turn the conference back over to Jeremy Wensinger for any closing remarks.
I want to thank everyone for joining today. I also want to thank my team; they work tirelessly on a global basis. I can't thank them enough for what they do. Thank you for joining the call. I appreciate the questions and your time.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.