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Babcock & Brown Air Ltd. (NYSE:FLY)

Q1 2009 Earnings Call

May 07, 2009 08:30 AM ET

Executives

Matt Dallas - IR Manager

Steven Zissis - Chairman of the Board of Directors

Colm Barrington - Chief Executive Officer

Gary Dales - Chief Financial Officer

Analysts

Richard Shane - Jefferies

Andrew Light - Citigroup

Operator

Good morning. My name is Jessica and I will be you conference operator today. At this time I will like to welcome everyone to the Babcock & Brown Air First Quarter 2009 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. (Operator Instructions).

Thank you. Mr. Matt Dallas, you may begin your conference.

Matt Dallas

Good morning everyone. I am Matt Dallas, the Investor Relations Manger with Babcock & Brown Air Limited. And I would also like to welcome everyone to our 2009 first quarter earnings conference call. Babcock & Brown Air, which we will refer to as B&B Air or the Company throughout this call, issued its first quarter results press release earlier today, which is posted on the Company's website at www.babcockbrownair.com.

Representing the Company today on this call will be Steve Zissis, our Chairman; Colm Barrington, our Chief Executive Officer; and Gary Dales, our Chief Financial Officer.

I would like to begin the call by reading the following Safe Harbor statement. This conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include but are not limited to statements regarding the outlook for the Company's future business and financial performance. Forward-looking statements are based on our current expectations and assumptions of B&B Air's management which are subject to uncertainties, risks and changes and circumstances that are difficult to predict.

Actual outcomes and results may differ materially due to factors that are summarized in the earnings press release and are described more fully in the Company's filings with the SEC. Please refer to these sources for additional information. B&B Air expressly disclaims any obligation to update or revise any of these forward-looking statements whether because of future events, new information, a change in its views or expectations, or otherwise.

This call is the property of B&B Air and cannot be distributed or broadcast in any form without the express written consent of the Company. A replay of this call is available from today, Thursday May 7th until midnight Thursday May 21, 2009. A webcast of this call will be archived for one year on the Company's website.

I will now hand the call over to Steve Zissis, our Chairman and the CEO of BBAM to give you some thoughts on industry conditions. Steve?

Steven Zissis

Thank you, Matt. And thank you everyone for joining our first quarter 2009 earnings call.

On the last couple of quarterly earnings calls, I talked about the continuing deterioration in airline industry conditions. Global airlines continue to be under significant pressure, although we see some signs of light and encouraged by the recent rally in the financial markets.

That said, we remain concerned with the balance of 2009 as many of the world's airlines struggle with tight liquidity and excess capacity relative to current demand levels. Our experience in other periods of significant global economic expansion and contraction suggest that aircraft values and lease rates tend to lag the underlying economy on both the downside and the upside.

We will be watching global passenger demand very carefully in the second and third quarter of 2009 as it will be crucial for many airlines to have strong summer season to bolster their financial position.

A strong summer performance is essential for airlines that were weakened initially by record high oil prices in 2008, followed by steep declines in passenger traffic in yields in late 2008 into 2009.

Despite the fairly bleak state of the industry at present, we've been working hard to maximize cash flow at B&B Air. We've had success in remarketing aircraft over the last several quarters at higher lease rates and we still expect the remaining 2009 remarketing to be completed at similar lease rates to those that are expiring.

As we look beyond 2009 into 2010, we expect lease rates on our scheduled remarketing to be level or slightly down. This take you longer to remarket aircraft, and this will result in longer downtime between leases when the aircraft won't be generating revenues. Actual results will vary depending on the aircraft age, maintenance condition, pedigree and type.

We've had no repossessions since third quarter of 2008, and all our aircraft are subjected lease for Letters of Intent.

We are also pleased with portfolios resilience, given the difficult economic environment that airlines are operating under.

Finally, I'd like to turn my comments to B&B Air's financial performance and a transparent nature of the business model part and hand in call over to Colm.

We all know that it's a difficult market. But despite my prior comments about the distress among our airline clients, B&B Air's financial performance has been strong.

In the first quarter we produced a $1.09 of available cash flow or well in excess of $4 per share on an annualized basis. When combined with the company's existing cash balances, there're significant value embedded in the company, even excluding the long-term value of our aircraft portfolio.

The ongoing cash flow being generated by the business is sufficient to allow us to cover the current dividend while at the same buying back significant amount of the company's debt and equity securities.

As you're aware, the company made the very difficult decision several months ago to reduce the dividend. The decision was not taken with -- sorry. The decision was taken not because the company was in financial difficulty, but instead so we could return capital in different form to our shareholders.

We've made significant progress on our share repurchase program in recent months. Since the beginning of 2009, the company has repurchased 2.2 million shares and amounting to a 6.8% of the shares outstanding.

Since the beginning of our share repurchase program, the company has repurchased a total of 3.3 million shares or approximately 10% of the original shares issued at the time of the IPO.

We also repurchased a $100 million of debt. We intent to make further progress on both the share and debt repurchases, as opportunities present themselves.

I would now like to turn the call over to Colm Barrington, our CEO.

Colm Barrington

Thank you, Steve and good morning everyone. As I said on our last call in March and following on from what Steven just said, B&B Air entered 2009 in a sound financial state. This has placed us in a very strong position to achieve our objective of adding value for our shareholders.

I'm particularly happy to report that during the first quarter of 2009, we've enabled to use this strong position to achieve our objective, specifically to attractive debts and share buybacks.

Since January 1, B&B Air has utilized more than $64 million to repurchase 100 million face value of our securitized debt for 48 million, purchased 2.2 million shares for 9 million and paid dividends of $0.20 per share for over $6 million.

In the March quarter, B&B Air had net income of $47 million, representing EPS of $1.45 per share. Net income includes an after-tax gain of 36.4 million or $1.12 per share on the repurchase of notes payable.

Our available cash flow in the quarter was 35.3 million or $1.09 per share. On April 15th, we declared a dividend of $0.20 per share with respect to the March quarter, representing 18% of available cash flow in the quarter. This dividend will be paid on May 20th.

By the initial fears of uncontrolled outbreaks of swine flu's seem to have past, the March quarter was a difficult one for many airlines as Steve has stated. 2009 is still generally expected to be a difficult year for the airline industry. And we remain concerned about airline traffic, airline yields and airline profitability as we head into the summer.

Despite these conditions, B&B Air's portfolio continue to perform very well in the first quarter. All, but one of our 62 aircrafts who are leased throughout the quarter and this aircraft is committed in a schedule to be delivered to a new lessee in the second quarter.

We have been working with one of our lessees that leases two aircraft a bus, to restructure the leases. Starting on January 1, 2009 we have not recorded any operation lease revenue due under these two leases.

Overall, however, our fleet more than 97% utilization effect during the quarter. At quarter end, our rent receivable balance was $5 million, compared to $4.1 million at the end of December and 5.1 million at the end of September 2008.

We believe that B&B Air is well protected from some of the problems been faced by airlines and by some lessors. Of these, 62 aircrafts comprised mainly of modern fuel efficient narrow-body types, which continue to be the most widely used commercial aircraft.

At March 31, the average age of our fleet 6.6 years and our average remaining lease terms 5.2 years. At quarter end, our annualized leased rentals were $225 million, unchanged form December 31st.

We have three scheduled lease returns in 2009, which we've not yet finalized to committed lessees. Two of these aircraft which were expected to be returned in April, remain on lease with the original lessee at the original lease terms.

We now expect that these aircrafts would be returned later in the year. Redelivery of the third aircraft is scheduled in October 2009. We have extended the leases of two of the six aircraft two back to us in 2010. And the third aircraft in 2010 is committed to a forward sale contract.

Despite the expenditure of 48.7 million on the purchase of debt, B&B Air ended the March quarter in a strong cash position with total cash of $154.4 million, of which $34.5 million was unrestricted.

At the end of March, our total shareholders equity was $437.2 million or $13.46 per share, as compared to $389.4 million or $11.99 per share at the end of December 2008.

Last June, our Board of Directors authorized a $30 million share repurchase program through June 2009 and subsequently extended this program through June 2010.

We continue to believe that our share price represents a significant discount of the net asset value of the company and that we can increase shareholder value by repurchasing our shares at current prices.

To-date, the company has repurchased 3.3 million shares, which represents approximately 10% of our initial share issued in 2007. We expect to continue this program of which $14.4 million remains. Although, the timing of the share repurchases will depend on a variety of factors including market conditions and maybe suspended or stopped at anytime.

We continue to believe that B&B Air has significant inherent value. With a young and attractive fleet of popular wide used and fuel efficient aircraft that continue to be in strong demand, we have a broad and well diversified base of lessees generating attractive rentals.

We have a strong and experienced team that has managed aircrafts and leases through several cycles. We have attractive financing with no significant principal payments due until the end of 2012. We have no future capital commitments. We're generating strong cash flow and are increasing our unrestricted cash on a monthly basis.

B&B Air's management team, all of whom are shareholders in the company are strongly focused on and incentivized to maximize shareholder value to greatest extent possible. We believe and expect that these efforts will continue to benefit our shareholders over time.

I'm now going to turn the call over to Gary Dales, our Chief Financial Officer, who will provide you with the review of the fourth quarter financials.

Gary Dales

Thank you, Colm. Beyond the purchase of our securitization debt, which improved our ratio of debt-to-total capital and reduced our financing requirements in 2012, we're reporting solid financial results, which I will now discuss in more detail.

Our net income for the quarter was $47 million or $1.45 per share. It includes recognition of a pre-tax gain of $49 million associated with the debt purchase and $6.5 million representing a partial settlement in respect of the early terminations of certain leases.

Operating lease revenue for the first quarter of 2009 was $53.4 million, an increase of $5million or 10% over revenue reported in the same period of the previous year. The increase is due to the full quarter of rentals associated with the seven aircraft acquired in the first quarter of 2008, five aircrafts acquired during the balance of 2008. And operating lease revenue from aircraft previously accounted for as direct finance leases in 2008. Partially offsetting these increases, this is partially offset by the downward adjustment on our eight leases whose lease rates adjust with LIBOR.

The revenue decrease resulting from the two aircraft that were sold in 2008. The effects of placing one of our lessees are nonaccrual basis, and a reduction to revenue associated with counting for lease incentives.

In addition, during the first quarter of 2008, we've recognized $3.2 million of end of indoor lease revenue, for which there was no comparable amount in 2009. Our direct finance leases were terminated on April 2, 2008.

We had no finance lease income in 2009, whereas we recognized $2.4 million in the first quarter of 2008. Interest and other income was $245,000 in the first quarter of 2009, compared to $1.1 million in the same period in the proceeding year.

The first quarter 2008 amount reflects interest earned on the proceeds of our IPO and securitization. The first quarter 2009 interest income reflects the reduced cash balances along with reduction in interest rates.

Total expenses for the first quarter of 2009 were $48.1 million, compared to $38.5 million for the same period in the previous year and consist of depreciation expense of $20.6 million, interest expense of $20.6, selling, general and administrative expenses of $6.2 million and maintenance and other costs of $688,000.

Depreciation expense for the first quarter of 2009 was $20.6 million, compared to $15 million for the same period in the previous year. The current period depreciation expense reflects a full quarter depreciation on the seven aircrafts acquired in the first quarter of 2008 and the five aircrafts acquired during the balance of 2008.

Also in the first quarter of 2008, we had four aircrafts on direct finance leases which were not being depreciated. Depreciation from these four aircrafts are included in depreciation expense in the first quarter of 2009.

Interest expense for the first quarter of 2009 of $20.6 million, compared to $17.9 million for the sane period in the previous year. The increase is mainly due to the increased borrowing associated with the growth of the portfolio, partially offset by decreases in LIBOR which reduced the interest costs on debt amounts associated with aircrafts subject to variable lease rentals.

Selling, general and administrative expenses were $6.2 million in the first quarter of 2009, compared to $5 million for the same period in the previous year. The increase is due to the increase in the size of our portfolio and the incurrence of foreign currency translation charges associated with settlement of Irish bad returns.

Maintenance and other costs were $700,000 for the first quarter of 2009 and include approximately $300,000 associated with maintenance and releasing aircraft that has been in our possession to earlier lease defaults.

Our provision for income taxes for the first quarter of 2009 is $14 million, representing an effective rate of 23%. The effective tax rate for the same period in the previous year was 13.3%. The increase in the effective rate reflects the recognition of deferred taxes at a 25% rate on the gain associated with purchase of the securitization notes.

Moving to the balance sheet, we have total assets of $2 billion, of which $1.8 billion is invested in flight equipment held for operating lease. Our total cash and cash equivalents is a $154.4 million, of which $34.5 million is unrestricted.

These balances have already been reduced for the debt repurchase and the dividend paid during the first quarter. We have no outstanding purchase commitments. Subsequent to March 31st, we spent approximately $9 million to repurchase 2.2 million shares of our common stock.

At March 31, 2009, our receivable balance is $5 million, compared to $4.1 million at December 31, 2008. The balance is concentrated with a few lessees and supported by security deposits that are available should a lessee default.

The book value of our company has increased to $437.2 million, an increase of 47.8 million reflecting the first quarter net income and the reduction of the fair value obligation associated with our interest rate swaps, caused by the slight decrease in market interest rates.

Our cash position and liquidity remain strong. Our available cash flow or ACF was $35.3 million for the first quarter of 2009, compared to $29.9 million for the same period in the previous year. On a per share basis, ACF was $1.09 for the first quarter of 2009, compared to $0.89 in the first quarter of 2008, an increase of 22%.

The growth of our portfolio contributed positively to our ACF, we define ACF as net income plus depreciation, amortization of lease incentives and debt issue costs, and deferred income taxes; all non-cash charges. The gain on purchase of the securitization notes is excluded from ACF.

We believe that ACF provides a meaningful measure of B&B Air's capacity to reinvest in our business and to execute other initiatives designed to create shareholder value. However, actual cash and cash available for distribution may differ from our ACF measure, because other cash expenses that are not reflected in net income.

You will find a reconciliation of ACF to net income, the most directly comparable GAAP measure at the end of our press release issued this morning.

With that let me turn it back to Colm for his closing remarks.

Steven Zissis

Thank you, Gary and thank you everyone for joining us. I think we've given you a pretty broad description of B&B Air in the first quarter. So we'll now hand over to your questions.

Question-and-Answer Session

Operator

(Operator Instructions). Your first question comes from Mike Linenberg with Banc of America.

Unidentified Analyst

Yeah. This is actually Alison Lawson (ph) on behalf of Mike. I just had a quick question regarding your leases. You had mentioned that there were two young aircrafts with one lessee that that's you're renegotiating the leases with. I'm wondering if that's any different from prior cycles or are you seeing more of an uptick with renegotiations and contract restructuring and all that?

Steven Zissis

Allan, it's Steve Zissis. I know it's pretty consistent with the last cycle that we went through during 9/11, where we had a lot of lessees come to us and look for possible restructuring of their leases. So it's not anything that's unexpected during this downturn?

Though I have to say in the last couple of months it has been leveling off with quite a few requests, I'd say six months ago and things seem to be improving slightly now.

Unidentified Analyst

Okay, great. And then maybe this is question more for Gary. But in regards to the 6.5 million in the partial settlement for this quarter, I think it's maybe another 6 million for the future quarters. I was just wondering if you can kind of comment on that and kind of the nature of the settlement?

Colm Barrington

We do have some restrictions in our agreement with the guarantor. So we're not really at liberty to give you details on that settlement.

Unidentified Analyst

Okay, great. Thanks very much.

Operator

Your next question comes from Rick Shane with Jefferies & Company.

Richard Shane - Jefferies

Good morning, guys. Thanks for taking my questions. Couple of things here. The two planes that are on nonaccrual are the cash, or is the airline actually making the payments?

Steven Zissis

They're making very few payments at this point, Rick. They are making some payments, but I' am going to say it's a very small amount compared to what they owe us.

Richard Shane - Jefferies

Okay. And given that situation I guess the decision not take that planes back at this pint is a function of partial payments from an airline in not having to put -- having take planes back and recondition them and get them back out seems to be better solution, is that thought process?

Steven Zissis

Well, the kind of the way we look at it is when an airline goes into fall with us, we have to make a determination at that point whether we think the airline has a plan to survive, and whether it can recapitalize itself and perform in the future.

And some airlines that fall in that category, we say yeah we think they can make it. They've got a good business plan going forward and therefore let's restructure and hang with them. And there are other airlines that you say what they're not going to make it, no matter what happens. Let's just take the aircraft back. And in this case, we feel this airline has a good chance of recapitalizing and has a very good market that it's operating in, so we do think that has a viable future.

Richard Shane - Jefferies

Got it. And two questions related to that. Is it domestic or is it a non-domestic carrier?

Steven Zissis

Non-domestic.

Richard Shane - Jefferies

And are there adequate maintenance reserves, I know those vary from contract-to-contract, you feel like you have adequate maintenance reserves if you end up taking the planes back?

Steven Zissis

Correct.

Richard Shane - Jefferies

Okay.

Steven Zissis

Yes, our maintenance reserves and secured, cash security deposits.

Richard Shane - Jefferies

Okay, great. And one other question and I just want to make sure I understand this. In the ACF calculation, there is an amortization of lease incentives, I don't remember that being in that report, what is that?

Colm Barrington

This was, came up at the end of last quarter. And when a lease has an agreement where the lessor will contribute to that first maintenance event. The accounting treatment is now that the estimated cost of the lessor contribution to that maintenance event, is treated just like a lease incentive. And so the accounting for lease incentive is you approve for that. And it reduces your rental revenue during each period.

Richard Shane - Jefferies

Okay. I think I'm going to follow-up with that one offline. And maybe the hour out here on the West Cost or I may need a little help, more help on that one.

Colm Barrington

We're glad to help you with it.

Steven Zissis

For those of us, who are non-accountants, we fully understand your position.

Richard Shane - Jefferies

Okay. Thank you guys. One last follow-up I mean when we look at the numbers solid across the Board and you're making comments, I think an interesting leading indicator here is a comment that the number of carriers who are trying to renegotiate seems to be slowing down, yet you're commentary is fairly cautious. What's going on here, I mean obviously the airlines are getting a lot of relief in terms of lower fuel prices. Is it really just traffic and utilization or what's out there at this point that makes you a little bit more circumspect?

Steven Zissis

Well, pardon my conservative nature to begin with. But these are difficult times and I think this summer is going to tell you a lot about what the rest of 2009 is going to look like.

So, although our underlying business is fairly resilient and probably performing a lot better than I would expect at this point. I remain fairly cautious about the remainder of 2009 and how the airlines will do. Again, Rick I think it's really going to depend on how much cash these airlines can generate during the summer period here. And whether they can restore the health of the balance sheet by having a good summer. If they cannot, then I think we're going to see a quite few more restructurings or bankruptcies in the latter part of 2009 or early 2010.

Richard Shane - Jefferies

Okay, great. That's very helpful. Thank you, guys.

Operator

Your next question comes from Andrew Light with Citigroup.

Andrew Light - Citigroup

Good afternoon. A question on the overall strategy. I mean you're buying back a lot of equity and debts, obviously very cheaply in the case of the debts. At what point do you think it's going to become increasingly difficult to get attractive prices there? And at what point do you think it's worth switching to using your credit warehouse to do repurchase on these debts for example?

Colm Barrington

The good thing about our warehouse Andrew is that we can't continue to use that to purchase aircraft. We can't use that to purchase debt or --

Andrew Light - Citigroup

Yeah.

Colm Barrington

Or securities. So as we see opportunities to buy additional aircraft, we will avail of them. We don't know -- we don't give any forecasts of what we're going to do in that regard. But we certainly are continuing to look at possibilities and if they look attractive, we'll acquire them. As regard to debt and equity, there isn't a huge liquidity in our debt in particular.

So, we are looking at opportunities on ongoing basis. And if we find more, we will certainly evaluate them and potentially avail of them. And I think on the share buybacks if we can get more shares at a decent price, we will continue to do that too. But we -- because we think those value and those shares relative to the value of the company.

Andrew Light - Citigroup

Right. But are you -- but you clearly haven't been repurchasing aircraft this late, I mean is that clearly currently off your agenda and your focus is very much on the liability side as well as on managing defaults --

Steven Zissis

Yeah. Andrew this is Steve. What I said in my opening remarks is that aircraft and lease rates tend to lag the market.

And what we found over the last couple of cycles is that that aircraft values are pretty sticky on the way down. But security values which are what the debt and our equity trade debt will reflect the market pretty quickly. So we're finding much better opportunities buying back our debt and our equity in this environment than putting money into aircraft.

Now at some point that will change. Where the market will start looking forward and the debt and the equity will start trading backup to where we think the correct values are and you'll probably see aircraft values and opportunities in the aircraft markets much more attractive. So at some point, it will cross over again and you'll see us buying aircrafts.

Andrew Light - Citigroup

Okay, thanks. I've got a quick question on this facts, you obviously paid some kind of capital gains on the repurchase and under your Irish tax jurisdiction, is that also free of cash?

Gary Dales

Yes. With the, tax is the deferred tax. So there is no cash payment and are the way we've structured the transaction whereby the debt is actually held by one of our other subsidiaries and not actually cancelled. We have established a tax rate at the Irish capital gains rate of 25%. But when and if that those funds are repatriated back to Ireland, that tax will be due. There is nothing in the near future that would cause that repatriation to occur. So the tax is a book accrual and not a cash requirement.

Andrew Light - Citigroup

Right. Thanks very much for that.

Operator

Your next question comes from Joe Fashback (ph) with JAFP.

Unidentified Analyst

Hello, really nice performance. Couple of follow-ups. Now that the debt has been repurchased, as we look forward over next few quarters, I'm assuming that interest costs should come down what roughly 1.5 million a quarter is that a good way to think about it?

Gary Dales

Well, we have to do our math. The savings that occur on the debt repurchase will be the LIBOR rate plus the margin. We still have all of our swaps in place on the balance of the debt.

Unidentified Analyst

Okay.

Gary Dales

So if you're calculating our all in interest factor, you will see a reduction of that amount. We do have the interest savings of fairly a substantial amount, because it's $100 million of debt we've taken out. But it won't be taking our all in interest rate and just factoring that into each quarter.

Unidentified Analyst

Oh, no, I wasn't thinking about it that way. What I meant was this isn't the all in not the all in, your interest margin, your interest cost roughly is 5.5 or 6% on that 100 million. So should, we can take the 20.6 million in interest cost this quarter. And rollback forward to next quarter will be roughly a 1.5 million less on that, assuming you've said something on the order of 6 million a year?

Gary Dales

No, I don't think that's exactly the way to look at it. Because the all in interest costs includes our rate swaps that we have. Many of them are put in place in November, October-November of '07 when interest rates were much higher. So when repurchase the debt, the only savings we have is on the LIBOR component.

Unidentified Analyst

Okay.

Gary Dales

So the LIBOR is the -- actually very small and you see the effects of that in our derivative valuations which are fairly significant.

Unidentified Analyst

Alright. It sounds like the higher level of math, I am prepared to discuss. I am on the West Coast as well. But, when you guys look at these opportunities in for debt and share repurchases, obviously you're being opportunistic. But is there a sort of a minimum cash level that you're targeting, and beyond that level, you're trying to think of using your cash to return to shareholders?

Gary Dales

Yeah. I mean we obviously want to prudent to all of this. But as you can see from our financial statements, we're producing ACF of about $35 million a quarter or over $10 million a month. The cash balance will grow pretty quickly, if we don't do anything with it. And therefore, as we grow the cash we're looking at other opportunities to use this to -- and these are value enhancing ways.

Unidentified Analyst

Okay. And then just on the pickup in G&A quarter-to-quarter, you mentioned something about Irish debt returns and I think there is one other factor. Can you just sort of quantify how much the -- I assume that the debt return issue is a one-time event or are we looking at a more normalized rate for G&A in the $6 million range as opposed to the 5?

Gary Dales

No. This year is a little bit extraordinary. I'm not sure we can say that it's not going to be non-recurring always. But the reason we had a higher foreign currency cost this quarter is all of our bad returns are due in euros.

Unidentified Analyst

Oh, I see.

Gary Dales

So we paid in euros. And in the process of getting those refunds, because we were actually pretty close to being a net zero debt payer. But we filed the returns and paid in the tax when the euro exchange rate was much higher than it is today. And when we got to refund, it was much lower. We expected debt exchange rate issue is going to be much smaller and probably de minimis in future periods.

Unidentified Analyst

Got it. Okay. Well thank you very much.

Operator

At this time, there are no further questions. I would now like to turn the call over to Mr. Dallas for closing remarks.

Matt Dallas

Thank you operator. This is Matt Dallas. We would now like to conclude the call. We'd like thank everyone for joining us and we look forward to updating you on the business again next quarter.

Operator

This concludes today's conference call. You may now disconnect.

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