TELUS International (Cda) Inc. (TIXT) Q4 2022 Earnings Call Transcript

TELUS International (Cda) Inc. (NYSE:TIXT) Q4 2022 Earnings Conference Call February 9, 2023 10:30 AM ET

Company Participants

Jason Mayr – Senior Director-Investor Relations and Treasurer

Jeff Puritt – President and Chief Executive Officer

Vanessa Kanu – Chief Financial Officer

Conference Call Participants

Ramsey El-Assal – Barclays

Tien-tsin Huang – JPMorgan

Keith Bachman – BMO

Cassie Chan – Bank of America

Divya Goyal – Scotia

Stephanie Price – CIBC

Dan Perlin – RBC

Richard Tse – National

Operator

Good morning, ladies and gentlemen. Welcome to the TELUS International Fourth Quarter 2022 Investor Call. My name is Jonathan, and I will be your conference facilitator today. At this time all lines have been placed on mute to avoid any background noise. After the speakers’ remarks, there will be a question-and-answer period. [Operator instructions]

I would now like to introduce Jason Mayr, Senior Director, Investor Relations and Treasurer at TELUS International. Mr. Mayr, you may begin the call.

Jason Mayr

Thank you, Jonathan. Good morning, everyone. Thank you for joining us today for TELUS International’s Q4 2022 investor call. Hosting our call today are Jeff Puritt, President and Chief Executive Officer; and Vanessa Kanu, our Chief Financial Officer. As usual, we’ll begin with some prepared remarks where Jeff will provide an operational and strategic overview of the quarter and the year; followed by Vanessa, who will provide some key financial highlights. We’ll then open the line to questions from prequalified analysts before turning the call back to Jeff for his closing remarks. Before we begin, I’d like to direct your attention to Slide 2 of the supplementary presentation available for download on this webcast and also available on our website at telusinternational.com/investors.

The statements made during this call may be forward-looking in nature, including all comments reflecting expectations, assumptions, or beliefs about future events or performance that do not relate solely to historical periods. These forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from our current projections. We assume no obligation to update any forward-looking statements. Jeff and Vanessa will also discuss certain non-GAAP measures that the management team consider to be useful in assessing our company’s underlying business performance.

An explanation of these non-GAAP measures and a reconciliation to the comparable GAAP measures can be found in the appendices of today’s supplementary presentation, along with the earnings news release issued this morning and regulatory filings available on SEDAR and EDGAR. I would also like to remind everyone that all financial measures we’re referencing on this call and in our disclosure are in U.S. dollars, unless specified otherwise, and relate only to TELUS International results and measures.

With that, I’ll now pass the call over to our President and CEO, Jeff Puritt.

Jeff Puritt

Thank you, Jason. Good morning everyone and thank you for joining us today. In the fourth quarter, TELUS International delivered a 5% year-over-year increase in revenue or 9% on a constant currency basis. For the full year, TI grew revenues 12% or 16% on a constant currency basis. As anticipated near-term recessionary headwinds continue to impact the timing and velocity of new projects in Q4, however, TI once again delivered solid revenue growth performance.

Our team also delivered on our commitment to operate a highly profitable business with adjusted EBITDA in the quarter increasing by 10% year-over-year and an adjusted EBITDA margin of 24.9% and for the full year adjusted EBITDA growth was 12% with margin at 24.6%. These results demonstrate TI’s resilience and sustainable business model, which enables us to successfully manage factors that are within our control whilst concurrently navigating challenging headwinds. This model equips us to simultaneously win new client accounts as well as to secure incremental business from the brands we already support.

Indeed, our global sales team has been working diligently to identify and qualify new opportunities to not only replenish our sales funnel as deals are won or lost, but to also continue to grow it. To this end, our sales funnel as of December 31, 2022 stood at $2.7 billion. Notably, this does not include opportunities brought to us to our recent WillowTree acquisition. Among our key wins in the quarter, new logos included a consulting firm that supports complex government defense and intelligence projects, one of the fastest growing e-commerce companies in the travel and entertainment industry, a disruptive AI powered developer and service provider in the sales and marketing space, and a leading digital investment platform.

Across our existing client base, we increased our share of wallet with a highly diversified list of brands, including an online food ordering and delivery platform, a global professional services company focused on HR and project management, a leading video social media network, a top provider of heavy equipment and power generation, and the largest American multinational telecommunications conglomerate. Notably, despite challenging macroeconomic conditions throughout 2022, we’ve maintained our focus on operational excellence. Our track record of exceeding client KPIs and our reputation as a trusted and innovative partner have positioned us favorably in the current down cycle.

Additionally, with the closing of the WillowTree acquisition last month, our client base has increased by over 50 well known brands including FOX, Anheuser-Busch InBev, PepsiCo, Synchrony and Marriott. We’ve also become more diversified across strategic verticals such as telecommunications and media, healthcare and life sciences, financial services, consumer goods, travel and hospitality and technology and software. On that note, Tobias Dengel has now joined our executive leadership team as President of the newly rebranded WillowTree, a TELUS International Company. Together with Tobias, we’ve also secured an exciting infusion of digital talent at scale into our already robust end-to-end digital transformation capabilities, including premium content moderation services, AI data solutions and IT lifecycle services.

The WillowTree acquisition has further elevated and differentiated our ability to design, build, and deliver premium customer experiences and digital products for the world’s leading brands. Meaningful discussions are already well underway with many of our key clients, including our parent company, TELUS Corporation, a world leading communications technology company. In this regard, TI is uniquely positioned with TELUS as an anchor client given its differentiated asset mix that includes exciting growth oriented assets such as TELUS Health and TELUS Agriculture and Consumer Goods. Indeed, we’re already pursuing several exciting opportunities to partner with these distinct businesses, which will also result in us displacing spend away from competitors, thanks to WillowTree’s premium digital design and build capabilities. The large scale long-term projects we’re currently discussing represent countercyclical revenue opportunities to help insulate TELUS International during the ongoing recessionary challenges.

Moving on to my favorite part of these calls, sharing some of our client case studies. And the first example, TELUS international’s engagement began with process consulting to streamline operations and kick start the digital transformation journey of a large U.S. based provider of financial services, property information, and business intelligence across consumer credit, real estate and capital markets. The project then progressed to TI building and implementing the solution. Companies that have seen robust growth often encountered challenges around standardizing their processes and consolidating business units.

These challenges can lead to inefficiencies that negatively impact the customer experience. This was the case for our client, who saw a significant growth period resulting in many dispersed customer support centers throughout the country. The client engaged TI to assist them in assessing their existing contact centers and provide innovative solutions to drive efficiencies, improve technology and increase client satisfaction. The TELUS International team was able to identify quick win opportunities enabling the client to consolidate resources and maximize its people, processes and technology.

We also uncovered ways to improve the clients’ existing IVR design, including technology enhancements to address subpar call deflection capabilities and self-serve options. During the assessment, our team determined that findings focused on one area of the business could actually be applied across various divisions to further optimize the client’s overall operations. These findings expanded the scope of our client engagement from a diagnostic exercise to a process designed consultation in which we created a fulsome digital roadmap for the clients’ tax, real estate and platform services units. By leveraging information and data gathered by our team in the diagnostic phase, we built an improved IVR system that achieved a 25% reduction in average handle time across all business units.

Notably, we achieved a 49% call deflection rate for the tax services business unit. The client has since selected TELUS International as its digital transformation partner to continue its journey to transform the company’s customer experience to a full service omnichannel digital environment. This multi-faced project will include developing a robust knowledge base and customer facing chatbot, introducing additional support channels and automating select processes to drive further cost savings. Another client case study I’d like to share is focused on AI solutions, a leading technology client leverage TELUS International’s AI data solutions to build a multilingual dataset that helps researchers scale natural language understanding technology.

With longstanding linguistic dataset development experience, a diverse AI community and streamlined large scale project management protocols, TELUS International offered critical support to build the dataset, the first of its kind. Our client who’s a pioneering innovator of conversational AI technologies has long prided itself on advancing natural language processing capabilities and providing research communities with access to extensive data sets that fuel AI innovation. Although voice assistants have advanced tremendously in the past decade, their multilingual language understanding capabilities are still evolving.

Our client is on a mission to extend conversational aptitudes to other languages via a multilingual approach. The idea is to enable cross linguistic training where a single machine learning model understands inputs from many diverse languages. One challenge in executing this initiative was the lack of labeled data to assist with training and evaluating the models. The client required an AI data solutions partner with deep data collection expertise, who could provide realistic contextual data for a specific task.

The project demanded language experts with linguistic translation, validations or localization abilities to create comprehensive and accurate conversational utterances in specified languages. Our team of experts supervised the project and delivered effective vendor qualification strategies that included preparing qualification quizzes for other participating vendors, building detailed instructions for tasks across more than 50 local languages and ensuring the delivery of high-quality data sets. We also custom engineered training and qualification materials to support frictionless data collection with carefully curated qualification tests, detailed training materials and clear task instructions. This enabled our AI community to surpass accuracy targets across all of the deliverables. Our AI community produced approximately 60% of the utterances in the data set.

The project spanned nine months, during which time, TI engaged approximately 650 language experts to deliver over 600,000 high-quality language prompts in more than 30 languages or a total of 3.5 million individual language tasks. Tasks also included translating English utterances into local languages, validating utterances or checking translations for accuracy and defining localized expressions for particular prompts. The data set has many machine learning use cases and contains a million realistic parallel labeled text utterances spanning more than 50 languages as well as dozens of domains. With the release of this large language data set, along with the open source code, our client continues to promote research collaborations for natural language processing and upgraded natural language understanding, modeling to advance conversational AI systems.

And to share one more example with you today another client of ours, one of the biggest global financial services companies turn to TELUS International to help safeguard its financial platform by ensuring overall customer safety, including customer verification and fraud protection. With the growth of e-commerce and increasing use of credit, financial institutions and consumers require rigorous security measures to help counter fraud. Our client was also driven by its desire to meaningfully enhance their customer experience journey through credit application, verification, fraud detection and investigation as well as billing disputes. As their partner, TELUS International scaled its program more than nine-fold from under 100 team members to nearly 900 in the span of a year, distributed across three global locations, the Philippines, Guatemala and the United States.

Our team is proud to achieve an average quality score exceeding 90%, well above the target of 85%, while reducing the clients’ exposure to loss of revenue from fraudulent activities. I’d like to stay on the topic of trust and safety for a moment to touch upon another key component of our portfolio, which continues to be a topic of discussion with our clients and across the broader industry, our premium content moderation services with several providers having made the decision to exit the space either in whole or in part over the past three years or so, I think it’s important to point out that TELUS International remains steadfast in our commitment to performing this important work and continuing to play a critical role in ensuring safer digital spaces and online experiences for all.

We also see significant short and long term opportunities to grow our market share in content moderation due to the exponential rise in user-generated content that’s driven by a persistent influx of new social platforms and emerging virtual spaces like the metaverse as well as the growing popularity and prevalence of augmented and virtual reality. Additionally, this continued diversification of languages and dialects used online and younger generations continue to increase their reliance on digital services or education, work and social interaction. We’re also encouraged by the evolution from more traditional content to more complex content types, such as live chat audio and video streams.

We believe that new opportunities in content moderation will continue to emerge as the industry transitions from restrictive to punitive legislation, such as the Digital Services Act in Europe and several similar regulatory frameworks that are pending in the United States. And we expect to see a continued expansion of content moderation use cases as more and more brands grow their online presence. These factors and more are generating an increased demand for content moderation services. More importantly, however, is that the increasing complexity of content moderation work requires that it be completed by highly experienced, dedicated and trusted providers like TI.

At TELUS International, we respectfully refer to our content moderators as digital first responders given the critical work they perform to help keep the Internet safe. Working alongside AI technology, where TI has a meaningful capability at scale to bring to bear, they are at the core of our approach, which leverages human intelligence to handle more contextual moderation decisions in accordance with our clients’ guidelines. Key to our success in this area is our robust recruiting practices, onboarding programs and continued training and support. Like everything we do at TI, we leverage the strong foundation of our caring culture as a differentiator. These include individual and group counseling sessions, access to on-site fitness facilities and quiet spaces and virtual in-person social activities.

Our global wellness team also focuses on providing preventative wellness practices and developing a curriculum to help educate and further empower our team members to take charge of their personal health and well-being needs alongside the strong support of their leaders. Indeed, we see a highly skilled and engaged team as critical to our collective success. And as of December 31, we had over 73,000 global team members, which represents a year-over-year increase of 18% and a sequential increase of 6% versus Q3. Some of this growth is attributable to team members joining TI in support of TELUS Health ongoing integration activities.

Heading into 2023, we will continue to leverage our virtual recruitment tools as part of our broader talent acquisition strategy, including space, a virtual recruitment platform that provides job seekers with a fully immersive experience in an interactive digital environment. The platform also increases the speed of the recruitment and hiring process, broadens the global recruiting talent pool and maximizes candidate engagement. On the flip side, many companies continue to contend with a prolonged challenging macroeconomic environment and the tech sector, in particular, has been disproportionately affected.

According to Layoffs.fyi, a website created in 2020 to track tech layoffs globally, goes to 160,000 workers from 1,040 companies lost their jobs in 2022, with more than half of them incurring in November and December and nearly 98,000 individuals have been laid off to date in 2023. Although many external factors, including a rapid series of interest rate hikes by central banks have contributed to these job losses, TI’s thoughtful and agile approach to recruitment, intentionally adjusting the pace of our new hires in line with our cost optimization efforts and near-term demand dynamics has helped us avoid over hiring and minimize these difficult situations. Our intentional and sustained investment in upskilling and cross-training our team members has also helped in this regard. In 2022 alone, our team members completed or enrolled in nearly 16,000 courses on Udemy, an online learning platform featuring a curated collection of business and technical courses.

More than 2,600 team members graduated from the TELUS International University with 65 different degrees and certificates. Over 850 team members from our sites in Guatemala and El Salvador graduated from our Language Academy at TI, improving their proficiency in English and French. Through our partnership with both Amazon Web Services and Google Cloud Platform, we now have hundreds of our team members, who hold cloud certification along with AWS cloud practitioners and solutions architect associates. And lastly, our team members also completed hundreds of tech certifications, such as open JavaScript, Node.js application developer, test automating engineering and professional cloud architect certification. Not only has our approach enabled us to transition team members between client accounts, we’ve also been able to address company-wide skill gaps and drive high engagement rates.

In fact, for the ninth consecutive year, TI has achieved a top quartile engagement score as a result of a company-wide global survey conducted by a third-party provider. Our focus on culture naturally leads to better team member retention and helps drive TI’s resilient margin profile and is at the core of how we delight our clients. We’ve seen the benefits of these investments first hand to TELUS International. For example, a global leader in tech real estate informed us that our commitment to culture and diversity was a major factor in their decision to initially do business with us and then to expand our partnership portfolio of support within the first year. Similar feedback was received from a global tech giant, who felt we differentiated ourselves among their other partners for the thoughtful and direct ways we give where we live at events like our TELUS Days of Giving, which are focused on strengthening social infrastructure and environmental stewardship across the globe.

In this regard, I’m proud to share a sampling of events that we were held – that were held in partnership with local charitable organizations that our team members volunteered for in Q4. 1,500 volunteers cleaned and refurbished to school in the Philippines in time to welcome back 9,000 students to attend in-person classes since the beginning of the pandemic. We helped build a 12th school in Guatemala and 850 volunteers renovated the child development center at an SOS Children’s Village in El Salvador. Team members in India planted 3,500 trees in partnership with SayTrees Environmental Trust. Our teams in North Charleston, Las Vegas held toy drives for their local Toys for Tots programs over the holiday season. And in North Charleston, our team built a storage unit to house supplies for victims of domestic violence, while 200 volunteers in Las Vegas supported local food banks and soup kitchens over two weekends.

We’ll also be releasing our first standalone TELUS International Sustainability Report in early April, focusing on our company’s environmental, social, governance priorities, commitments, policies and progress. Last year, we included considerable ESG data in our 2021 annual report, which you can access from our website. TELUS International is a compelling ESG investing opportunity with our culture at the core of our commercial success, and we’re excited to offer this new element of disclosure as we look to help investors see more clearly the value we’re creating for all our stakeholders and striving to do our part in making our operations, partnerships, communities and environment more sustainable.

Our commitment to our team members well being contributed to TELUS International being recognized for the sixth consecutive year on the Global Outsourcing 100, the annual listing of the world’s best outsourcing service providers. Other contributing factors leading to this distinction included our impressive customer references, programs for innovation, CSR activities and awards and certifications. Additional award highlights from 2022 included our company being named to the Forbes Best Employers for Diversity List, Mogul’s Top 100 Workplaces for Diverse Representation, and for the second year in a row, we won the Best Informational Bot Solution in the AI Breakthrough Awards for intelligent TELUS International’s assistance Agent Assist bot. On that note, our team has also been exploring the exciting possibilities of how we can leverage ChatGPT and other generative AI tools to further progress our proprietary intelligent bot platform, both for our clients and internal applications.

Through our TELUS International iLabs, our R&D initiative launched in 2020 to design and build disruptive solutions for customer interactions, we have long been developing in-house chat bot solutions, leveraging natural language processing, speech recognition, and semantic understanding among other tools. The possibilities presented by ChatGPT and similar alternatives are seemingly endless in how we can leverage generative AI to design and build better bots that are more conversational, can better answer follow-up questions and admit mistakes and even reject inappropriate requests.

Our team at WillowTree, a TELUS International company, have also started to experiment with various forms of AI in their digital build process and believe it will help to standardize our coding and enable us to increase our speed to market in delivering digital solutions to our clients. Of course, generative AI technology also represents an attractive business opportunity from a supply perspective to TI as even the smartest AI needs to be taught and tested with best-in-class data labeling that we provide to our human-in-the-loop AI data solutions. We’ll have more to share on this topic of ChatGPT and generative AI more broadly at our Investor Day next week and in the month ahead as we continue to integrate the WillowTree and TI ecosystems, which will lead to many new use cases and enable us to create increasingly innovative solutions that leverage this exciting technology.

With that, I’ll now invite our Chief Financial Officer, Vanessa Kanu, to take you through a detailed review of our financial results, after which I’ll return to answer your questions. Vanessa, over to you.

Vanessa Kanu

Thank you, Jeff. And good morning everyone. Thank you all for joining us today.

As usual, in my review of the financial results, I will refer to some items that are non-GAAP measures. For descriptions and a reconciliation of our GAAP to non-GAAP measures, please see our earnings release and regulatory filings from earlier this morning.

Let me now expand upon the components of our financial performance. In the fourth quarter, we delivered revenue of $630 million, up 5% year-over-year on a reported basis and 9% on constant currency landing at approximately the midpoints of our latest guidance range. For the full-year, we generated revenue of $2,468 million, up 12% on a reported basis and 16% in constant currency. Resilient double digit growth is especially notable in what was a challenging year for a number of well-known reasons such as high inflation, rising interest rates, volatile markets, and recessionary fears that impact consumer confidence.

Let’s look at our revenues a little closer, starting with revenues by vertical. In the first quarter, our largest vertical, Tech and Games, grew 4% year-over-year on a reported basis, but on a constant currency basis, it grew by 10%. Our leading social media network client represented just under a third of the Tech and Games vertical revenues in Q4. Revenues from this particular client were down in Q4 and flat on a full year basis, although when adjusting for currency movements, revenues from this client were up 11% in constant currency on a full year basis.

For the full year Tech and Games increased 15% on a reported basis and a strong 21% in constant currency driven by continued growth with existing clients for services ranging from AI data solutions, and trust and safety, to customer experience management.

Within our eCommerce and FinTech, vertical revenues in Q4 declined year-over-year by 12% on the reported basis and 9% in constant currency terms due to challenges experienced by certain FinTech clients. For the full year, eCommerce and FinTech revenue increased 10% on a reported basis and 15% in constant currency.

Growth in our Communications and Media vertical remains solid, driven by higher volumes and abreast of services we provide for our parent company, TELUS Corporation with revenues in the quarter increasing 6% year-over-year and growing 8% for the full year.

Banking Financial Services & Insurance, or BFSI, continue to grow healthily with revenue in the fourth quarter, increasing 39% year-over-year, and 71% for the full year, driven by a large global financial institution that was added to our client roster at the end of 2021.

Lastly, our Travel and Hospitality vertical grew 5% year-over-year and 21% for the full year.

Looking at our revenues by geography in Q4, Asia-Pacific and Central America continue to deliver strong growth, each up 21%. Revenues in North America grew 18% year-over-year. While in Europe, we continue to see recessionary pressures coupled with a weaker euro relative to the U.S. dollar, with a revenue decline in Q4 of 15% year-over-year, while on a constant currency basis the decline was 5%, primarily due to lower volumes with some of our Tech and Games and eCommerce clients.

For the full year, Asia-Pacific posted a strong 30% growth in revenue, while North America was up 24%, followed by Central America at 19%, and revenues in Europe declined for the year by 4% on a reported basis, but grew at approximately 8% in constant currency.

Moving on to operating expenses, salaries and benefits in the fourth quarter were $349 million, up 5% year-over-year. For the full year salaries and benefits increased 14% to $1.393 billion. Increases in both periods were due to higher team member counts to support business growth and higher average employee salaries and wages partially offset by the lower average exchange rate across a variety of currencies relative to the U.S. dollar. In 2022 salaries and benefits as the percentage of revenue overall remained steady at 56%.

Our goods and services purchased were $124 million in the fourth quarter, a decrease of 1% year-over-year, while for the full year goods and services increased 8% to $468 million with these increases coming from our business growth including higher crowd contractor costs from the expansion of our AI business.

Share-based compensation expense in the fourth quarter was $5 million, a decrease of $4 million year-over-year. Or for the full year it decreased by $15 million to $25 million. The decrease was primarily due to the lower average share price during the quarter and for the year overall compared to the prior year.

Acquisition, integration and other charges in the fourth quarter were $23 million, an increase of $18 million, while for the full year it increased by $17 million to $40 million with the increase in the quarter and the year primarily due to the transaction cost incurred in Q4 in connection with the WillowTree acquisition.

Our depreciation and amortization expense in Q4 was $68 million, slightly above $66 million in the same quarter last year. For the full year, depreciation and amortization expense was $258 million in line with the $257 million for the prior year with our investment in capital and intangible assets being offset by the lower average Euro to U.S. dollar exchange rates on assets held in our European subsidiaries where the functional currency is the Euro.

Our interest expense in the fourth quarter was $12 million compared with $8 million in the same quarter last year, driven by higher interest rates. For the full year interest expense decreased 7% to $41 million, primarily due to lower average debt balances in our credit facility, partially offset by higher interest rates. Interest on our credit facility is based on SOFR plus a credit spread that is tied to our leverage ratio.

In the fourth quarter, we recorded an income tax recovery of $3 million compared with an income tax expense of $21 million in the same quarter last year. And our effective tax rates decrease from 36.8% to a negative 9.7%. The Q4 recoveries primarily due to a change in the foreign tax differential that is driven by a change in income mix in the quarter in addition to recovery that is not expected to be recurring. For the full year income tax expense increased $3 million to $67 million, while the effective tax rate decrease from 45.1% to 26.8%, primarily due to a change in the foreign tax differential and a decrease in non-deductible items, which in the prior year were results of our IPO.

Moving on to profitability. Our adjusted EBITDA was $157 million in the fourth quarter, a year-over-year increase of 10%, driven by business volume growth, and operational efficiency improvements and other cost realizations For the full year adjusted EBITDA was $607 million up 12%, driven by growth in revenue, partially offset by higher salaries and benefits and goods and services purchased to support overall growth in our business. We achieved an adjusted EBITDA margin for the full year of 24.6%, which was consistent with a year ago, a tremendous result given the challenging macroeconomic backdrop.

Adjusted net income for the fourth quarter was $95 million. And on a per share basis, this translated into an adjusted diluted earnings per share of $0.35 up 25% year-over-year. For the full year adjusted net income increased 24% to $332 million and adjusted diluted earnings per share for the year was a $1.23, up 23%.

Turning now to cash flows and our balance sheets, I wanted to point out some disclosure in the 20-F related to the presentation of cash interest paid, which changed in the fourth quarter of 2022. It is now included in cash flows from financing activities while previously it was an operating activities. This change is permitted by IFRS 7 statements of cash flows, and you can find further details in our audited financial statements filed earlier today. As a result of this change, all free cash flow amounts for comparative periods have been reclassified to conform with current period presentation.

In the fourth quarter, we generated free cash flow of $60 million up 62% year-over-year driven by higher cash provided by operating activities for business growth and lower share-based compensation payments and lower capital expenditures. As a percentage of revenue free cash flow was 9.5% of revenue in Q4 compared to 6.2% in the same quarter a year ago, an increase of 330 basis points. For the full year free cash flow was $333 million, up 59%, driven by higher operating profits generated from our business, lower net outflows from working capital and lower share-based compensation payment. And as a percentage of revenue free cash flow was 13.5% in 2022, an increase of 390 basis points versus the prior year.

Capital expenditures for the full year increased 3% to $104 million with increase primarily due to additional investments in our Asia-Pacific region as well as in our AI Data Solutions business. And for the full year capital expenditures as a percentage of revenues was 4.2%.

We also continue to reduce our leverage lowering our net debt to adjusted EBITDA leverage ratio as defined per our credit agreements to 1.1x as of December 31 a further improvement from 1.3x as of September 30, 2022.

Our total available liquidity as of December 31, 2022 was approximately $1.383 billion compared to $831 million a year ago. Liquidity increased in Q4 due to the timing of our upsize and extended credit facility. Our credit facility was extended for a full five years and now matures in January 2028. The overall facility size was increased to $2 billion to accommodate the WillowTree acquisition with a consistent pricing grid and an improvement on certain terms such as higher cash netting for leverage.

Following the close of the WillowTree acquisition in early January, our net debt to adjusted EBIDA leverage ratio as per our credit agreements increase to 2.9x and remains within the target steady state range of 2x to 3x. We believe our robust cash flow profile will once again drive meaningful deleveraging, a proven ability we’ve demonstrated following large strategic acquisitions in the past.

Now turning to our outlook. We anticipate continued, robust double digit profitable growth in 2023 amplified by our WillowTree acquisition. Our outlook for revenue is in the range of $2.97 to $3.03 billion, which represents revenue growth of 20.3% to 22.8% on a reported basis, and includes the contributions from WillowTree in the range of $255 million to $260 million. Excluding WillowTree, we expect organic growth of 10% to 12% for the year. Within this outlook range we are anticipating some near-term softness in revenues from our second largest clients, offset by meaningful incremental opportunities with our largest client TELUS and other enterprise clients.

We also assume an average exchange rate of €1 to US$1.08, reflecting current rates.

For adjusted EBITDA, we expect a range of $705 million to $725 million or 16% to 90% year-over-year growth with adjusted EBITDA margins of 23.7 to 23.9%. This includes WillowTree’s adjusted EBITDA margins of approximately 20% of revenues.

Our outlook calls for adjusted diluted earnings per share in the range of a $1.20 to a $1.25, which includes certain near term dilutive impacts from the WillowTree transaction.

Interest costs are naturally higher as a result of the debt financing. And as mentioned previously, our credit agreement pricing grid is based on SOFR plus a credit spread that is tied to a leverage ratio. For 2023 we expect an average interest rate of approximately 6%, which assumes a continued near term increasing SOFR, partially offset by improvement in the credit spread as our leverage ratio continues to decline throughout the year.

Also factored into adjusted diluted earnings per share in 2023 is the equity issued in connection with the WillowTree acquisition in January in the amounts of 6.5 million subordinated voting shares. Our outlook assumes a weighted average diluted share counts of approximately 277 million in each of the quarters.

And finally, for the full year 2023, we expect our effective tax rates to be in the range of 24% to 28%, reflecting the expected jurisdictional mix of earnings.

While we do not provide quarterly guidance, I would like to call out certain seasonality factors that should be helpful in modeling seasonal cadence. We expect revenue seasonality of approximately 47% in the first half and 53% in the second half of 2023, and adjusted EBITDA seasonality of approximately 45% in the first half and 55% in the second half. Both skews reflecting our current expectation of the macro environment in addition to normal revenue ramp timing and the accretive nature of such revenue ramps on EBITDA in the back half of the year and continued realization of cost efficiency programs.

Furthermore, our WillowTree cross-sell opportunities will naturally contribute to revenue and EBITDA more meaningfully in the back half, given normal contracting cycles and project ramp periods.

Finally, our effective tax rate is also subject to seasonality being higher in the first half of the year and lower in the second half.

In summary, while there continues to be broader, near-term macroeconomic uncertainty, we feel confident that TELUS International is well positioned to continue executing with resilience and growing the business profitably in 2023.

With that, let’s move over to questions. I kindly ask you to please keep it to one question at a time so that everyone can participate. Jonathan, over to you.

Question-and-Answer Session

Operator

Thank you, Ms. Kanu. [Operator Instructions] One moment for our first question. And our first question comes in the line of Ramsey El-Assal from Barclays. Your question please.

Ramsey El-Assal

Hi, good morning. Thanks for taking my question. I wanted to ask about the eCommerce and FinTech vertical. I mean, not surprisingly we’re seeing some incremental weakness there. I just was wondering if you could give us some color on the sort of drivers and dynamics, what types of projects are slipping and also whether you’re seeing some stabilization there or whether we should expect kind of headwinds to continue to intensify going forward in that vertical?

Jeff Puritt

Hey, Ramsey, nice to hear your voice. Looking forward to seeing you next week, hopefully.

Ramsey El-Assal

Absolutely.

Jeff Puritt

I think we’re cautiously optimistic that we’re sort of stabilized in that portfolio. As I shared last time, our exposure there is not huge for the business and obviously as Vanessa just shared a little bit of challenge in terms of continued growth relative to previous trajectories, but I think what we’ve kind of, as I said, stabilized the kind of work we’re doing for them as you might expect, is around trust and safety principally and support more broadly to help customers access their platforms, secure access to financial payments on both sides of the borrowing and lending equation.

So I think what we’re expecting for this year is fairly flat in terms of year-over-year growth and then hopefully towards the end of 2023, we’ll start to see more meaningful recovery there.

Ramsey El-Assal

Perfect. Thank you.

Jeff Puritt

Thanks Ramsey.

Operator

Thank you. One moment for our next question. And our next question comes on the line Tien-tsin Huang from JPMorgan. Your question please.

Tien-tsin Huang

Hi. Thank you. Appreciate the chance here to ask a question. And good morning. I wanted to ask on the – Jeff the TELUS. You sounded quite bullish on the potential for work there. I’m curious how much of that is just on the base business itself, WillowTree, cross-sell? I know there is a big opportunity there. And maybe can you just elaborate on the countercyclical nature. I heard you mention that a few times. Maybe you can just elaborate on that. That would be great. Thanks.

Jeff Puritt

Sure, thanks Tien-tsin. Looking forward to seeing you next week as well hopefully. There are multiple drivers in the TELUS relationship that have been hugely helpful to TI over our history and I think get even more exciting in 2023 and beyond. And admittedly, turbocharged, if you will, off the back of our WillowTree capability. Over our tenure, we have steadily displaced legacy incumbent partners that TELUS has relied upon for technology enablement, digital transformation, where, at the time, TI simply didn’t have the requisite experience and expertise to support TELUS and its ambitions of transformation. As we, over the years, have continued to improve, extend, expand, increase our capability set, we’ve had to compete with those incumbents in order to displace them and once demonstrating our capabilities have indeed taken over that work and successfully so, hence, the continued growth of our franchise, if you will, and enabling TELUS across a myriad of services.

The WillowTree addition on the mobile access, and design and build component of our ecosystem in particular, this is going to be an even bigger game changer for us as we can displace even more incumbent legacy spend and really help to accelerate TELUS’ ongoing digital transformation journey.

We’ve got nine really exciting shovel-ready initiatives that we’re already digging into and starting to ramp up. These are all pretty exciting, and they are multimillion dollar multi-month or year programs. And I think this was one of the primary drivers of our excitement on the WillowTree transaction at first instance because we recognized out of the gate, the kinds of opportunities we had with sort of our anchor customer and partner at TELUS, TELUS Ag, TELUS Health, et cetera.

And when I say countercyclical, what I mean is we’re all seeing, reading and unfortunately experiencing some of the macroeconomic headwinds and challenges, uncertainty, reduced consumer volume driving at a minimum indecision or delayed decision-making, if not diminished demand in the near term from sort of the broader customer base, tech in particular, but not exclusively. While that’s going on, this opportunity to serve TELUS in its ongoing transformation needs, really is helping us to overcome some of those challenges inoculating us from those macro cycles right now.

Tien-tsin Huang

Got it. Appreciate that. Sell you all next week.

Jeff Puritt

Look forward to. Thanks Tien-tsin.

Operator

Thank you. One moment for our next question. And our next question comes from the line of Keith Bachman from BMO. Your question please.

Keith Bachman

Hi, good morning. And I feel a little left out. I don’t think I’m going to see you next week chief [ph]. But I wanted to ask about Europe, in particular. And Europe degraded from the September quarter and the variances with the rest of the geos widened. And yet it doesn’t seem like the economic data would support it. And so really, it’s a two-part question. A) What’s going on in Europe that made the degradation, so to speak, more significant? And then secondly, and I’d say, argue more importantly, you gave the guidance for the year. And just what’s your confidence level that the rest of the geos don’t veer towards Europe as opposed to the inverse. In other words, does Europe represent a risk profile that we should be thinking about for the rest of Europe? And that’s it from me. Thank you.

Vanessa Kanu

Thank you, Keith, it’s Vanessa. I’ll start and Jeff certainly top up as appropriate. Europe has been a challenged region, I think, even macro-wise. But you’re right, I don’t think there was a particularly singular events that happened in Europe macro-wise in Q4. What we are seeing, however, in our results for Europe is a lot of that decrease that we saw in Europe is actually from the tech and game sector. So I’m not sure if you put it up from my commentary, but that actually was what affected Europe disproportionately. A lot of the work that we do for that second largest clients of ours actually done out of Europe. So that client saw softness in Q4 that obviously drags down the overall European performance. So it is macro-wide, but it’s also very specific to the clients that we’re serving from that particular geography.

To answer the second part of your – so I think as we go into 2023, we’ve continued to assume that we will continue to see softness in Europe, Keith. Our guidance actually has factored that we’ve taken that into consideration. We don’t think that our large social media client is going to bounce up anytime soon. So we built that softness into our guidance, as I mentioned in my remarks. However, we have tremendous other offsetting factors as well, like other enterprise clients that we continue to see growth from like the opportunities with TELUS Corporation that we’ve also talked about. But those are going to be in other geos. They’re not going to be in Europe. So we do expect to see a bit of a shift in our geographic mix of revenues in 2023, and we factored that in.

Keith Bachman

And Vanessa, just to push on that for one second, if I could. Within the 10 to 12 organic guidance that you provided, is Europe – it remains at these levels? Or does Europe improve against the negative 15?

Vanessa Kanu

Yes. So we don’t guide by. Yes, we don’t guide by geo. I don’t think I want to get to that level of specificity, but we have assumed softness in Europe, so you can take that to mean, we expect a decline. I wouldn’t get into the quantum of the decline. But overall, again, our guidance is not by geo, but it’s a weighted view of what we expect to happen in these geographies. So while we expect Europe to decline, we’ve also factored in growth in other regions from, again, the opportunities that I just talked about. And let’s remember as well, as we kind of think about the overall guidance, it is a robust guidance, but there are a number of factors that give me confidence, whether it’s in the Americas or elsewhere.

Number one, ample opportunities that we talked about in supporting TELUS Corporation through their own digital transformation journey that Jeff just spoke to and the countercyclical nature of that opportunity, which is offsetting some of the risks that we’re seeing in the tech sector and the e-commerce sector that you just heard Jeff talk about. But two, a very robust funnel. You also just heard Jeff talk about the funnel being $2.7 billion. It’s a very, very healthy and robust funnel, and that’s across multiple geos. And of course, we again just talked about the WillowTree cross-sell and upsell opportunities and the capabilities rather than that brings to us now. And so yes, while we do have the softness in Europe, there’s a lot of reasons for us to be confident and optimistic in the overall guide in terms of where we expect to see growth prospectively.

Keith Bachman

Okay. Many thanks Vanessa.

Vanessa Kanu

Thanks Keith.

Operator

Thank you. One moment for our next question. And our next question comes from the line of Maggie Nolan from William Blair. Your question please.

Unidentified Analyst

Hi everyone. This is Kate Grunstein [ph] on for Maggie Nolan. Congrats on the nice quarter. So I wanted to quickly talk about hiring levels. Last quarter, we saw scale back in hiring, following the higher levels in the first half, but it looks like you guys hired quite a bit this quarter, despite some demand headwinds. Were those new hires primarily help tell us health integration that you mentioned? Or what was the biggest driver behind the increase versus the third quarter?

Jeff Puritt

Hey, Kate, welcome to the call. Thank you. Yes, you’re exactly right. Meaningful hiring associated with the TELUS Health integration effort that that we are in the middle of enabling for TELUS and TELUS Health as a result of the LifeWorks acquisition that they completed late last year.

Unidentified Analyst

Okay, great. Thank you for taking my question, and we’ll look forward to seeing you all next week.

Jeff Puritt

Me too. Thanks.

Operator

Thank you. One moment for our next question. And our next question comes from the line of Cassie Chan from Bank of America. Your question please.

Cassie Chan

Hey guys, I just wanted to switch gears and ask a little bit about margins. So you guys are expecting 2023 margins to be lower. Is that just purely due to WillowTree or are there any other factors such as like pricing or labor costs or attrition, utilization offsetting any of that and anyway to quantify? Thank you.

Vanessa Kanu

Hey, Cassie, it’s Vanessa. I’ll pick this question. You’re absolutely right. The 2023 margin guide does incorporate the WillowTree margins. So that is a little bit diluted. So that’s the impact that you’re seeing. But in terms of any other factors, there’s always going to be client and portfolio mix impacts. As I mentioned earlier, as we were talking about revenue, we expect certain clients to flex down a little bit and other clients to flex-up. So the weighted balance of that margin profile is reflected in our guide. But in terms of pricing specifically just given that you asked, as I think you know and others know in 2022 we were pretty successful in passing on price increases along with other measures to help neutralize the impact of inflation.

In 2023 while we do assume that the labor markets will start to get a little freer particularly towards the later part of the year compared to the last two years. We’re still assuming a level of inflation, but we’ve taken a more conservative view to our expectations of pricing increases relative to what we did in the past just given the, the macro environment. So I think you’re seeing a little bit of that caution reflected in our margin guidance as well.

Cassie Chan

Got it. Thank you.

Vanessa Kanu

Thanks Cassie.

Operator

Thank you. One moment for our next question. And our next question comes from the line Divya Goyal from Scotia. Your question, please.

Divya Goyal

Hi. Good morning everyone. So I had a quick question here, Jeff and Vanessa on the acquisition expense for the quarter. I do see that the number for the quarter is at $23 million. That seems pretty high for a due diligence. I understand WillowTree is a large enough acquisition. We were projecting a higher number in this coming quarter for the integration costs. I would appreciate if you could provide some guidance from a modeling standpoint and provide some color on the Q4 number there?

Vanessa Kanu

Yes. Divya, and we can certainly spend more time on our – on the one-on-one call back later on. So we haven’t incurred any integration costs in Q4 because we did a deal in close until January 3rd. So what we’re referencing was actually deal transaction costs for M&A advisory, et cetera. So those costs hit us in Q4 2022 and those were significant. And that’s what you heard in my commentary. But in terms of integration costs, you’re absolutely right, those will start in Q1, just given the timing of when the deal closed on January 3rd.

Divya Goyal

Thanks Vanessa. Yes. Like I think we were projecting a slightly lower number. That’s why it came as a bit of a surprise for us from a due diligence call standpoint. But thanks a lot for the color. I look forward to speaking to you later today.

Vanessa Kanu

Thank you.

Operator

Thank you. One moment for our next question. And our next question comes from the line of Stephanie Price from CIBC. Your question please.

Stephanie Price

Hi, good morning. Jeff, I was hoping you could talk a little bit about the early conversations you’ve had with WillowTree customers and just in terms of what TI products are resonating the most with them? And then maybe related to the last question, Vanessa, how do you think about the timeline to get WillowTree onto the TI margin here?

Jeff Puritt

Hey, Stephanie. We’ve had some very exciting conversations with WillowTree clients and candidly, equally if not more exciting conversations with our clients about bringing WillowTree capabilities to bear. But on that former topic it’s a combination of our content moderation capabilities in particular that seem to be attracting the most attention to several of the WillowTree clients as well as more broadly TI’s what we call are deliver or run capabilities. The WillowTree historically has intentionally stayed away from that part of the client experience ecosystem. So they get engaged on the design front, the build front principally.

And then once they’ve completed their work on many occasions their customers have invited them to continue to stay involved in terms of supporting the end user community, modernizing the back office support that’s connected to those front end applications. And they have intentionally said, that’s not our core competency. We’re staying away from that. And now given TI’s expertise at scale we’re now having a much more holistic end-to-end conversation with the WillowTree customer community saying now we can actually bring the entire package to bear on their behalf. So we’re pretty darned excited about how quickly we’re going to realize the synergy thesis for the cross-sell opportunity. Our services to their customers, their services to ours.

And Vanessa, over to you for the second question from Stephanie.

Vanessa Kanu

Thanks, Stephanie. So your question was how quickly can we get the WillowTree margins to the TI margins? We see WillowTree being accretive in 2024, and we’ll talk about that a little bit later at our Investor Day next week where we’ll actually talk a lot more about WillowTree as well. And we see that – we see it being accretive in 2024 for a number of reasons. Economies of scale as they grow and they’re not going to need to add on some of the incremental SG&A for example, that they normally would have as a stand-alone entity leveraging the broader TI, leveraging our global footprint in terms of cost management et cetera. In addition to obviously as the revenue synergies continue to build up, that also comes with a margin uplift as well. So we are quite bullish and we do think that we’ll be accretive here in 2024.

Stephanie Price

Thanks so much.

Vanessa Kanu

Thank you.

Operator

Thank you. One moment for our next question. And our next question comes from the line of Dan Perlin from RBC. Your question please.

Dan Perlin

Thanks. Jeff, I don’t want to steal a lot from next week’s event, but I did have a question just around AI and ChatGPT in particular. As to why you think it, one, it’s an opportunity maybe versus a threat for content moderation and your digital CX business? We are obviously getting a lot more of these questions from investors. So I would just like to get your view on that.

And then just Vanessa, did you say interest expense, I think you said was 6%, are you level setting that at a little over $100 million, if we think about it from an absolute dollar amount for 2023? Thank you,

Jeff Puritt

Vanessa, you want to go first and then I’ll come back to the ChatGPT?

Vanessa Kanu

Sure. I said about 6% interest rates that’ll be a little north of $100 million for 2023, about 110-ish in that ballpark.

Dan Perlin

Yes. Okay. Thank you. That’s perfect.

Vanessa Kanu

Go ahead Jeff.

Jeff Puritt

So Dan, I think ChatGPT is getting all kinds of media attention and understandably so given really the exciting natural language capability, which I think admittedly is probably the more revolutionary for lack of a better word, attribute of this capability. I mean, chatbots and that capability more broadly been around for years and years now. What I think really has ChatGPT standing out and why I think they had a couple hundred million downloads just in the first two months of its launch, is really what it’s able to do in terms of sounding so human-like, so natural.

And so much so that I think even millennials might be persuaded to actually ask for help now. Where we see the opportunity though is, as I said in my prepared remarks, the nature of AI is inherently retrospective in that you take a data set, you annotate it, tag it, label it, you feed that information into your machine learning algorithm, and then you invite AI to make predictions, if you will, to offer outcomes predicated on that historical data set. But by definition, if the data set is static, then the answers you’re going to get will not necessarily be helpful if for example, there was no historical reference.

So let me give you a specific example. If you asked ChatGPT right now, how to swap your SIM card out of your iPhone. It would in a very effortless, accessible way, talk to you like you’re talking to an expert at your phone provider and invite you to take a paperclip and stick it into the little hole in the inside of your phone, and a little tray would pop out and you would manually remove, excuse me, the sim card and then insert it in the same way into your new phone. The problem with all of that though is that iPhone 14, which came out after 2021, do not have SIM card trays.

And so you would actually be entirely misled despite how believable, how compelling, how accessible that instruction was because the dataset that ChatGPT ran it’s AI on is stale dated, and simply didn’t know that iPhones would change their construct. So where we see the opportunity as we have done with our clients for many years now, is it’s our annotation labeling, tagging capability at scale that can be used by open AI and other generative AI partners like Google, like Meta and others to ensure that those data sets continue to be refreshed on a reoccurring basis so that they’re providing accurate information.

And then bidirectionally, there’s no question that incorporating that more comprehensive, accessible natural language processing capability into our own chatbot community prospectively is going to create even more opportunity for us to win more business. And the disintermediation of traditional live agent support that will be a consequence in part of this evolution.

I think this is just a natural evolution of that dynamic that’s been going on for several years now as automation and process improvement has naturally pushed the humans in the loop further up the food chain because simple, predictable, repeatable interactions can and frankly should be automated because it’s a better user experience, never mind more cost effective. So we don’t see this as a threat at all. We see this as an opportunity to be partnering bidirectionally with them and others similar to them. And we will indeed talk a lot about it Investor Day next week.

Dan Perlin

Excellent. Look forward to seeing you.

Jeff Puritt

Me too.

Operator

Thank you. And our next question comes from the line of Richard Tse from National. Your question please.

Richard Tse

Wondering if you can sort of talk about the current attrition levels of the employee base? Like how does it compare to the prior year? And how does it compare to the industry sort of in context with some of the comments you made earlier about the competitive landscape?

Jeff Puritt

Hey Richard. Thanks for the question. It’s hard to compare like-for-like with the competitive landscape. I think, unfortunately, attrition has been one of those metrics that has so many variables in it and folks take, I guess, a differentiated or self-serving view sometimes, whether it includes or excludes voluntary, involuntary total front line, including training, not including training, so on and so forth. So what we tend to do is focus really inside TI and across each of those elements compared to prior quarters, prior years, et cetera, and where Q4 for us landed was continued improvement from prior quarters, still not quite yet back to pre-pandemic levels, but thank goodness, getting closer still. Always in my view, a critical element of our success is managing attrition effectively.

A combination of the ever more complex work that we’re invited to undertake on behalf of our clients, requiring more competent, capable, experienced tenured talented people to do the work and getting them keeping them is just so critically important to deliver great service on a sustainable basis to our customers. But equally importantly is the cost to replace them if they attrit – re-recruit, retrain, wait for proficiency, I think we’ve been fortunate in that regard and intentional and hence, why we continue to enjoy the margin profile that we do relative to others because I think we do a better job than most but always room to do better still.

Richard Tse

Okay. Great, thank you for the insight.

Operator

Thank you. This does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Mr. Jeff Puritt for any further remarks.

Jeff Puritt

Thanks, Jonathan, and thank you all for your engagement and questions, as always. Despite the concurrence of a recessionary environment, rising inflation and geopolitical conflicts, I believe that at TELUS International, we’ve just barely scratched the surface of the opportunities ahead of us. Thanks to our resilient business model and focus on profitable growth, innovation and our unique caring culture. We believe that we’re at the beginning of a tech super cycle that will impact all industries primarily driven by huge leaps forward in next GenTech like the generative AI revolution, augmented and virtual reality applications at a metaverse that bridges the digital and physical worlds.

TI is well positioned to build deep relationships with existing and new clients as they seek to streamline, optimize and modernize their processes to enable scalable digital solutions. Furthermore, today’s clients are looking for innovation and proactivity from third-party providers. They expect exceptional partners for human centered design thinking, customer journey mapping and digital road map prioritization and full cycle product development, including rapid prototyping. Through organic growth and strategic acquisitions, TI has deeply embedded each of these capabilities into our highly synergistic service offerings, and we continue to attract and retain the best talent to design, build and deliver our digital solutions, bolstered by our commitment to diversity, equity and inclusion, including through our impact sourcing programs. Sustainability and social responsibility are increasingly as important to our clients as they are for us.

In 2022, our team volunteered more than 75,000 hours participating in 13 TELUS Days of Giving events and various other community activities focused on strengthening social infrastructure and environmental stewardship across the globe. Since 2007, TELUS International has meaningfully impacted the lives of more than 1.2 million people around the world through volunteer activities and charitable giving, and our team is excited to do even more.

I’d like to thank each and every one of our team members for giving back so meaningfully and becoming part of our company’s strong legacy that will positively impact future generations. I’ll end my closing remarks today by noting that TI is hosting our first Investor Day on February 16th next Thursday at the New York Stock Exchange. We’re particularly looking forward to ringing the closing bell, something we weren’t able to do in person at the time of our IPO back in 2021 due to the pandemic.

Vanessa and I hope to see many of you there in person where you’ll also have the opportunity to meet members of the TI executive team and hear directly from them about the dynamic product portfolios they’re running, how our technology and innovation drives our differentiated go-to-market approach and how our ESG focus sets us apart in the market. I won’t go through the whole agenda right now, but suffice to say, I can’t wait for this exciting opportunity to discuss more about my favorite subject, TELUS International.

We’ll be webcasting the event live, and the webcast link is available on our Investor Relations site. Please feel free to reach out to our IR team if you’ve got any questions. And otherwise, I hope to see you all again on our next quarterly call in May. Thank you all again. Please keep yourselves and your family safe and goodbye.

Operator

Thank you. Ladies and gentlemen for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.