Fuel Tech's (FTEK) CEO Vince Arnone on Q4 2015 Results - Earnings Call Transcript

| About: Fuel Tech, (FTEK)

Fuel Tech, Inc. (NASDAQ:FTEK)

Q4 2015 Earnings Conference Call

March 24, 2016 09:00 AM ET

Executives

Devin Sullivan - IR

Vince Arnone - President and CEO

Dave Collins - SVP and CFO

Analysts

Chip Moore - Canaccord Genuity

Operator

Greetings. Welcome to the Fuel Tech Inc. Fourth Quarter and Full Year 2015 Financial Results Conference Call. At this time, all participants will be in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Devin Sullivan, Senior Vice President of The Equity Group. Please go ahead, sir.

Devin Sullivan

Thank you, Kevin. Good morning everyone and thank you for joining us for Fuel Tech's 2015 fourth quarter and full year financial results conference call. Yesterday after the close, we issued a copy of the release and that is available on the company's website www.ftek.com. The speakers on today's call will be Vince Arnone, President and Chief Executive Officer; and Dave Collins, Senior Vice President and Chief Financial Officer. After prepared remarks, we will open the call for questions.

Before turning things over to Vince, I would like to remind everyone that matters discussed in this call, except for historical information are forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in our forward-looking statements. The factors that could cause results to differ materially are included in the company's filings with the SEC. The information contained in this call is accurate only as of the date discussed, and investors should not assume that statements made in this call remain operative at a later date. Fuel Tech undertakes no obligation to update any information discussed during this call. And as a reminder, the call is being broadcast and can be accessed at our website www.ftek.com.

With that said, I'd now like to turn the call over to Vince Arnone, President and CEO of Fuel Tech. Vince, please go ahead.

Vince Arnone

Thank you, Devin. Good morning, everyone and thanks for joining us on the call today. Dave will discuss our financial results in greater detail in just a few minutes, but I would like to take a few moments to provide some perspectives on our full year performance for 2015.

I characterize 2015 as a year where we continued to operate in a very challenging environment in the domestic marketplace driven by primarily by regulatory uncertainty and the migration of fuel sourcing from coal to natural gas and it was a year in which we specifically addressed this fundamental structural shift in the power generation industry via modifications in our approach towards business development activities, cost structure and overall corporate strategy. These unprecedented changes in our country's energy profile contributed to Fuel Tech recording two non-cash charges in Q4 of 2015 which totaled $7.5 million. Dave will address this in greater detail shortly however I want to do stress that these are indeed non-cash charges and as such, they have no impact on Fuel Tech's liquidity, cash flow or compliance with debt covenants. Moreover, these charges do not impact our general outlook for 2016 and beyond.

As you saw in our results for 2015, our APC revenue performance exceeded that of the prior year driven by approximately $40 million in new orders for customers in the US, China, Latin America and Europe for the ESP, SNCR, Advanced SNCR, SCR, Combustion and ULTRA technology solutions. As we have noted previously, it has been our specific intent over these past few years to withstand our geographical presence and our air pollution control product line to ensure that we would not be dependent on any one market or one product at any point in time.

In our FUEL CHEM business we saw a decline in revenue that was driven by a structural change in the dispatch order of coal-fired power generation units in the US. Today most coal units are dispatched as peak units and not as base load units as a result of the low price of natural gas.

In 2015 we reduced our SG&A by $4.3 million versus the prior as a result of specific targeted action at optimizing our cost structure and striking a better balance between our infrastructure and our revenue base. Suffice it to say that we as a company are not satisfied with our full year results. However, as we had expected, we did show improvement in the second half of the year versus the first as we reported positive EBITDA for the third and fourth quarters of 2015 as compared to $1.8 million EBITDA loss for the first half of the year.

Additionally and very importantly, we generated nearly $7 million cash of operating activity during the year and we ended the year with a very strong balance sheet. Cash and cash equivalents at December 31, 2015 were almost $22 million or $0.94 per share, up $7.3 million from September 30, 2015 and up $3 million from the prior year. It is important to note that we built this cash position while still allocating and investing $4.3 million into our research and development expenses and without adding any leverage to our balance sheet. At December 31, 20 15, we had no debt on our balance sheet.

Now let's turn to a discussion of our business segments. For our APC business, we announced approximately $40 million of new orders in 2015 for customers with the US, China, Latin America and Europe for virtually all of our technology solutions. The diversity of our business both geographically and across product lines have enabled us to continue to generate a large global pipeline of opportunities. Nearly $22 million of these orders or 55% were from customers outside of the US.

At December 31, 2015 the capital projects backlog in the APC segment was approximately $22 million. Thus far, during the first quarter of 2016 we have announced almost $10 million of new APC orders from customers in the US, Europe and China. Inclusive of these orders, our pro forma backlog as of today is $32 million. Additionally, we have good visibility to another $8 million to $ 10 million in contract awards that should come our way within the next two to four weeks and we hope to announce them publicly soon.

Although we do not provide specific guidance, based on our existing project backlog in our current sales pipeline, we do expect that worldwide APC revenue will be greater in 2015 versus 2015 with contributions coming from all of our targeted geographies. In the US market we do expect to see improvement in 2016 versus 2015, despite lingering regulatory uncertainty and the migration of fuel sourcing from coal to natural gas. We have a strong backlog of projects and are tracking a number of solid prospects for 2016. In the US, our focus is MATS, the Mercury and Air Toxic Standards, boiler MATS and maintenance drivers for ESP upgrade, ULTRA and SCR or industrial applications and SNCR for units requiring compliance with the latest versions of CSAPR.

In Europe, we are pleased to say that we realized record revenue in 2015 and finally began to see a return on the investment that we have historically made to develop this market. We expect to experience increasing customer interest for our internally developed advanced SNCR technology. We have installed our advanced SNCR solution on five units in Europe thus far and are in the process of demonstrating the technology on two additional units.

We expect power generation facilities in Europe to embrace this technology as they seek to comply with the European Union's industrial emissions directive which requires implementation dates beginning in 2016. In the UK especially we are well positioned to compete on the heels of our large contract award in 2015 and subsequent successful implementations. We have visibility to additional opportunities in the UK in particular as a number of coal-fired units there are converting to biomass in order to take advantage of government subsidies.

Additionally, we are now seeing opportunities in other areas of Europe, namely Spain, Turkey, Poland and the Czech Republic. In order to take advantage of these additional opportunities, we have developed business relationships with entities that have local presence and the capability to execute projects in those geographies.

As we alluded in our Q3 conference call and we believe China will experience some modest sales revival 2016. Many power generation unit operators are now looking to comply with more stringent NOx reduction standards for select high population areas. Today, there is a large installed base of current SCR systems that will not be able to meet this new target as presently configured. Upgrading the existing SCR systems will require a parallel upgrade the ammonia production and delivery technology tied to those SCRs.

For Fuel Tech this presents an opportunity to convert a large installed base of ULTRA systems to higher capacity systems and we are also finding that SNCR could be an applicable technology in cases where the customer will look to reduce the inlet NOx emission level to the SCR which will lower the pressure on the SCR to meet the tighter emission standards.

During 2016 we have invested valuable time to better understand the opportunity in India for our suite of technologies. Late in 2015, the Indian central government issued regulations governing emissions requirement for thermal power plants. With these targets now established, India is now developing its understanding of the various technologies that can be used for emissions reductions. As we continue to learn more about this geography we will share additional information regarding our approach towards business development in this market and our expectations.

For our FUEL CHEM business segment, revenues were down significantly in Q4 and full year 2015 while our gross margin percentage remained at the level of prior years. In contrast to our anticipated improvements in revenue for APC in 2016, we expect our revenue for FUEL CHEM will decline further from 2015 levels. As I noted earlier and during our Q3 call, FUEL CHEM continues to face headwinds due to reductions in coal-fired generation, driven by the abundance of low-priced natural gas and resultant coal to gas conversions. This has created an environment where there is simply less of a need for our products in our traditional end markets.

Now given this environment, we are focusing our efforts on meeting evolving customer and market needs that could be addressed by our FUEL CHEM program. In the US, we are currently in discussions with the operator of two large coal-fired utility units that are considering switching the units’ fuel source from higher grade of coal to a less expensive lower grade. Additionally, as call units are required to reduce their load profiles, many of them are finding difficulty running at these lower load levels due to minimum operating temperature requirements. More specifically, there is certain equipment on boiler units that will impede the units from running at lower output levels without a change in operation and the FUEL CHEM program can provide benefit in this instance.

In Europe, we are excited about the opportunities to offer our FUEL CHEM to the operators of biomass fired units which are known to have severe and costly slagging and fouling issues and we expect to demonstrate our capabilities in 2016.

Lastly, we are expanding our industrial reach into the pulp and paper industry on a worldwide basis when FUEL CHEM can address the issue of slagging and fouling, black liquor recovery boilers. In the US and Europe, we are working with large multinational companies to solidify technology demonstration and we’ll expect to do so in 2016. In Asia, we've identified a partner that currently services greater than 350 pulp and paper units on their continent. And we will work with this entity to solidify technology demonstrations. It is our goal to have successful technology demonstrations in the US and in Asia in 2016 as a springboard towards accelerating business activity thereafter.

Moving on, now let's briefly discuss the current regulatory landscape in the US. Our second CSAPR rule based on the 2008 ozone standard of 75 parts per billion was proposed by EPA in November 2015 and was open to comments through last month. This proposal has the potential to require ozone season NOx reduction starting in May 2017 since NOx emission are a precursor to ground-level ozone. We are starting to field inquiries for our SNCR systems to address this proposed CSAPR 2 rule with mandates for NOx emission controls for utility generating sources. The proposal calls for 18 states to reduce NOx emissions by more than 20% for ozone season starting in 2017 and beyond. While we are unsure of the final requirements and customer needs related to this current proposal, initial enquires indicate that unit owners and specific states are evaluating fuel options and control technologies and SNCR provides a relatively low capital cost solutions to meet their needs.

In 2017, we expect the opportunities driven by the new National Ambient Air Quality Standards also referred to as NAAQS for ozone emissions which were finalized this past October. NOx emissions are one of the precursor pollutant that contribute to ozone and this new ambient requirement of 70 parts per billion is expected to create the need for sources to reduce NOx in the next several years. With respect to Clean Power Plan, which covers CO2 and methane. Many of you saw that the Supreme Court said the implementation of this rule earlier this year as we currently understand it. The DC Circuit Court will not hear arguments until June with the decision not likely until this summer at the earliest. If the DC Circuit Court upholds the rule, then appeals could take this all the way to the Supreme Court with the ruling potentially being handed down sometime in 2017. This would actually be the best case scenario from a timing perspective.

Adding an additional layer of uncertainty, our political machinations supporting the confirmation of Justice Scalia replacement. Right now, the states have to decide whether to continue to move ahead with their implementation in preparation for the plan being upheld or suspend their compliance activities and risk accelerated implementation with less flexibility if the plan is upheld. If the plan survives then any new high-efficiency gas fired unit will require SER technology as part of a best available control requirement for new operating units. Additionally, by promoting boiler efficiency, FUEL CHEM programs should be able to help operators of generating units reduce CO2 emissions by improving the heat rate of those units. FUEL CHEM can help contribute to the 2% to 4% boiler efficiency improvement for coal-fired units defined in the Clean Power Plan. If the plan does not survive the legal challenge, it is likely that a larger number of units will be affected in the future by the 2015 ozone NAAQS level of 70 parts per billion which will require NOx control on a significant number of sources.

This would apply to a combination of utility and industrial sources since the Clean Power Plan projections at expected 49 gigawatts of power generation being taken off-line. With this number of units now remaining in service or potentially remaining in service, NOx reductions for more sources will be required to meet the NAAQS. For the utility MATS and industrial boiler MATS rules we continue to see bidding opportunities to address particular matter control. As we noted on our last call, Fuel Tech has generated orders and accepted $20 million since our acquisition of the PECO FTC entity in April 2014. Now, let's discuss a fuel conversion initiative. As you’ve seen in our financial reporting, commencing in the fourth quarter of 2015, we created a separate business segment for this new initiate for financial reporting purposes in order to be able to provide greater transparency regarding our actions and results. We continue to advance this initiative which converts low-cost carbon-based feedstocks into high-value engineered carbon products.

During the final quarter of 2015, we completed the primary engineering efforts as planned and began to focus on specific commercial development activity. While engineering refinement will continue through all aspects of project development and plan operations, we have turned much of our attention now to evaluate build-out strategies and potential site selection opportunities. We continue to identify potential sites that are close to the required feedstocks as well as offer proximity to the markets we will initially target. We remain in contact with several end-users where interest in high to engineer products and test them on a larger scale. The testing is often done in a collaborative effort to improve product performance. We continue to gain insights into the target market and refine the engineering aspects of both the process and plant design. As we progress through 2016, our attention is on commercial development and expansion and we look forward to reporting our progress throughout the year.

Now before turning things back over to Dave, I would like to mention that earlier in this current quarter, we completed an additional cost reduction program which in conjunction with actions taken in 2015 will leave us much better suited to balance our infrastructure with our revenue base and further enable us to focus on achieving improved profitability in 2016 and thereafter. We expect to realize annualized savings in 2016 of between $3.5 million and $4 million from our cost reduction initiatives. In closing, against the persistent backdrop of sluggish domestic APC sales and fuel switching from coal to natural gas that has impacted results at FUEL CHEM. We are positioning [Technical Difficulty] significant effect dedicated towards fuel conversion commercial development and re-energize focus on new product development activities.

Thanks for your attention and now I will turn the commentary over to Dave.

Dave Collins

Thank you Vince and good morning everyone. During 2015, we experienced an increase in our air pollution control segment revenue while our FUEL CHEM segment revenue declined. We’ll talk more about each segment in a bit. Our business continues to push from difficult market conditions and as a result we recognized non-cash charges in the fourth quarter with long-lived assets totaling $1.4 million and US deferred taxes totaling $6.1 million. These charges contributed to a net loss for the full year 2015 of $4.4 million and a fourth-quarter loss of $9 million. We would point out that the US deferred tax charge of $6.1 million in valuation allowance and we can reverse this charge in the future and re-establish our US deferred taxes when we have achieved profitable operations in most geographic market.

Our adjusted EBITDA for the full year 2015 was negative $1.2 million, down from the prior positive amount of $4.4 million. Consolidated revenues for the full year $73.7 million, a decrease of $5.4 million or 7% from the prior year. This revenue decrease is associated with our FUEL CHEM segment and related to a specific customer relationship that has reduced its order flow due to changing business conditions. Consolidated gross margin percentage for the full year was 39%, down 5% from prior year. This decline resulted from a decrease in our APC segment gross margins and a decrease in our FUEL CHEM segment revenue which carried a higher gross margin percentage. We will talk more about our segments in just a minute. Our selling, general and administrative expenses for 2015 totaled $31.1 million, a decrease of $4.3 million from the prior year. This decrease resulted from cost reduction activities in all geographies with particular focus in US domestic cost reductions. We expect the full impact of these cost reductions to approach $4 million.

Additionally we are also incurring specific costs in 2014 related to strategic initiatives of $600,000 and we recorded a bad debt expense of $760,000 in 2014 was contributed to higher cost in prior year. During 2015 and 2014, we recorded non-cash impairment charges of $1.4 million and $23.4 million respectively related to our APC technology segment intangible assets and goodwill. These non-cash charges were recorded due to the declines in revenue we have experienced over the past two years related to delays in expected order flow from various regulatory drivers. The majority of the intangible assets and goodwill charges are incurred related to a specific acquisition we made in 2009. We continue to believe in the long-term opportunity for our APC business.

Our research and development spending in 2015 totaled $4.3 million, an increase of $2.8 million for the prior year. The incremental spending is related to the fuel conversion business development efforts which include product development and testing equipment design and configuration, and marketing customer development initiatives. We plan to continue supporting the fuel conversion business and have included a new business segment to allow for clear updates in our development efforts and financial commitment. Long term, we continue to believe the development of new products and processes is essential component of our future growth.

During 2015, we recorded evaluation allowance against our US deferred tax assets totaling $6.1 million. As mentioned previously, we can re-establish our US deferred tax assets and reverse this evaluation allowance when our US business becomes profitable. As a result of this charge, we will not have any tax expense or benefit recognized for our US domestic operations in 2016. We are currently expecting to have a very small tax expense recorded in 2016 and we will provide updates on our tax rates as we move through 2016. Consolidated net loss for the full year was $12.4 million or $0.54 per diluted share and our adjusted EBITDA for the full year was $1.2 million. On a non-GAAP basis exclusive of these charges, our consolidated net loss would have been $4.4 million.

Now let’s move to more in-depth discussion of our segments. Our APC segment reported full-year revenues of $43.5 million, up $1.5 million or 3% from the prior year. Our consolidated backlog at December 31 was $22 million, up from $18 million in 2014. We continue to experience a sluggish US domestic market for our APC technologies, while we are seeing some renewing prospects in foreign countries, including our Europe, Western Asia and China/Pacific Rim businesses. We also secured an additional project in Chile during 2015, which will allow us to continue our business activities in this region. We will remain active in exploring opportunities in all geographies as we continue to focus on our core strengths for our chosen technologies.

Gross margin for the APC segment was 30%, down 7% from the prior year. This reduction is due to specific contracts with lower margins due to a full scope of work including installations, while our gross margins will be impacted by the scope of new projects booked. We expect to see an increase in our APC segment gross margin in 2016. Our FUEL CHEM segment reported 2015 revenues of $30 million, which is down $7 million from the prior year. As mentioned previously, this decrease is associated with the specific customers that has reduced its consumption of our FUEL CHEM products due to changing business conditions. We expect to see continued attrition in our FUEL CHEM business in 2016 of roughly the same amount at which level we would expect to see the business firm up.

We are pursuing a number of new opportunities, which will allow us to offset this attrition, although the timing and amount of these increases are uncertain. Gross margin for our FUEL CHEM segment has remained consistent at 52% to 53% in both 2014 and 2015 and we expect this to continue through 2016.

Now, for some comments regarding our Q4 results. Consolidated revenues were $18.2 million, down slightly from the prior year amount of $18.7 million. Our fourth quarter APC segment revenue increased by $3.6 million over the prior year and our FUEL CHEM segment revenues declined by $4.1 million, offsetting our gains in APC. Our fourth quarter FUEL CHEM revenue was impacted by customer attrition discussed above and adverse weather conditions and fuel pricing. Our consolidated gross margin percentage for the fourth quarter was 38%, which was down 9% from the prior year. During Q4, our APC segment margins were 32% while our FUEL CHEM segment margins were 51%. We would expect to see our APC segment gross margins around 35% in 2016, while we anticipate that our FUEL CHEM gross margins will approximate between 50% and 52% next year.

Our SG&A expenses for the fourth quarter totaled $7.4 million, down $2.6 million from the prior year. The decrease is reflective of the cost containment actions we have taken and we would expect to see our expenses drop by approximately another $1 million per quarter in 2016. We will also continue to monitor our SG&A spending and make necessary adjustments when needed based on market and business activity outflows.

Net loss for the fourth quarter 2015 was $9.1 million or $0.39 per share. On a non-GAAP basis, inclusive of the non-cash impairment charges of $7.5 million, our net loss for Q4, 2015 would have been $1.6 million. Adjusted EBITDA for the fourth quarter was $50,000 and $948,000 in 2015 and 2014 respectively. Cash and equivalents at December 31 were $21.7 million and we are debt free. Our working capital balance decreased $4 million to $36 million at December 31. This decrease was due to the reduction of deferred taxes of $1.8 million and the losses incurred in 2015.

Cash provided by operating activities was $6.9 million, while our spending on property and equipment, purchases of other intangible assets and business acquisitions totaled $776,000. We expect to continue generating positive cash flow from our core business model in 2016 and we will continue to invest in our research and development activities to enhance our product portfolio.

Now, I'd like to turn the call back over to Vince.

Vince Arnone

Thank you, Dave. Operator, I would now like to open the call for questions please.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question today is coming from Chip Moore from Canaccord Genuity. Please proceed with your question.

Chip Moore

Good morning. Thanks. So Fuel Conversion, new segment that helps, obviously we get some more transparency, good to see. Can you talk a little bit more about market opportunity and how you see that playing out next several years, particularly in ‘17?

Vince Arnone

We’ll do. Thanks for the question, Chip. At this point in time, we haven’t spoken publicly about, call it, market sizing relative to Fuel Conversion and as we sit here today, what I can tell you was that we are continuing to invest obviously in the initiatives. We find very attractive end markets, both on the consumer and industrial side or what I would call the engineered carbon feedstock products. As we come to realize that there are more uses of carbon for a multitude of activities and we have even [ph] realized. So from our perspective, the investments that we’re making are obviously very worthwhile. We’re still in the development phase, but we are working with, at a minimum, three potential customers right now that do represent good opportunities for us for what I would call more near term business, okay.

The market sizing is, I mean, right now, Chip, they are large market opportunities without quantifying them today. If we didn’t believe that, we would not be continuing to further invest in further development, look to commercialize. Now, relative to near term, as we look at how we’re looking to further develop fuel conversion, we have various steps that need to take place before we actually will generate revenues from Fuel Conversion and in all likelihood, we would not see that happening until at a minimum late this year, early 2017 as we look to invest in and build out a facility that can generate product. That is the next phase we’re going through at this point in time. But we’re excited about the opportunity.

Chip Moore

Okay. That’s helpful. And to sort of frame that I guess, if you do [Technical Difficulty] is there a sense of capital cost or anything along those lines?

Vince Arnone

Yes. We’re looking at a variety of different options as to what I would call site selection and that the different options actually have very different capital investment requirements just because of the, what I would call the infrastructure that would be resident at those sites. So, it’s a pretty wide range. I’ll give you a, call it a high level target, it could be as low as call it $10 million to $15 million and as high as $30 million to $40 million, somewhere in that range. But at the same time, as we’re working through development and commercialization, we’re also looking at financing opportunities for the initiation as well. So all of this is happening in parallel as we sit here today.

Chip Moore

Okay. That’s helpful. And just for a second with the diversification theme, I guess particularly for FUEL CHEM, you touched on standing -- more in paper and pulp and some other areas, I guess ‘16 is a little bit more of a feeding the market kind of year, just how do you see diversification playing out I guess over the next several years there.

Vince Arnone

Yeah. Obviously, coal assets are under pressure and that’s no surprise. It’s been that way for this past 2 to 3 years now. The rapid nature of that pressure is something that really has been extraordinary to watch develop, but from our perspective, what that means is that we do need to take the FUEL CHEM product line to other markets and other opportunities and we do see that there are other opportunities for the FUEL CHEM program. Pulp and paper is one, biomass is another. Many of those opportunities are going to be outside of the borders of the US and so right now, we’re looking at ways to capture those market opportunities.

We still believe that coal has a viable future, it’s just not going to be going away in this next handful of years and so as the overall market environment stabilizes, as we look forward over the next decade, we still believe that there are going to be some coal opportunities for FUEL CHEM, but probably not as abundant as they were historically. Okay. That’s why we have to focus on quality, the non-core business development for FUEL CHEM, we have to right now.

Chip Moore

Right. That makes sense. And then just lastly for me, on the APC backlog, $32 million or so with some more in the near term hopper, can you talk a little bit about cadence of at least over the next several quarters, if you have visibility on how that rolls off? Thanks guys.

Vince Arnone

Thanks, Chip. Dave, would you like to go ahead and talk to that?

Dave Collins

Yeah. We would look to see the current backlog that we have carry through probably the first three quarters of 2016 and then any additional orders that we would book of course would schedule out. We think of a cycle of about a 9 month cycle on the APC side and depending on what type of order it is, if it’s a larger project, that can extend over 12 to 15 months, specifically we think of it as a 9 months turn.

Chip Moore

Okay. Thanks very much.

Vince Arnone

Thank you, Chip.

Operator

Thank you. [Operator Instructions] We have reached the end of our question-and-answer session. I would like to turn the floor back over to management for any further or closing comments.

Vince Arnone

Thank you, operator. For all of our Fuel Tech investors, thanks for taking the time today and for your continued interest in Fuel Tech. I would characterize 2015 as a rebuilding year for Fuel Tech, a balancing of our cost structure and revenue base as we look to enter into profitability for our base businesses in 2016 and beyond. Additionally, investments for our future are absolutely critical for us right now. We see Fuel Conversion as a great opportunity to further grow and enhance Fuel Tech’s value proposition. And on top of that, we have instituted a reenergized new product development program, which today is focusing on a variety of different activities that we believe can provide future benefit to Fuel Tech. So thanks for your time and we’ll be talking again soon.

Operator

Thank you. It does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.

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