Newpark Resources' (NR) CEO Paul Howes on Q1 2016 Results - Earnings Call Transcript

| About: Newpark Resources (NR)

Newpark Resources Inc. (NYSE:NR)

Q1 2016 Earnings Conference Call

April 28, 2016 10:00 AM ET


Brian Feldott - Director, IR

Paul L. Howes - President and CEO

Bruce C. Smith - EVP and President, Fluids Systems and Engineering

Gregg Piontek - VP and CFO


Marshall Adkins - Raymond James

Neal Dingmann - SunTrust

Bill Dezellman - Tieton Capital Management


Greetings and welcome to the Newpark Resources’ First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief 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, Brian Feldott. Thank you, please go ahead.

Brian Feldott

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Newpark Resources conference call and webcast to review our first quarter 2016 results. With me today are Paul Howes, our President and Chief Executive Officer; Bruce Smith, President of our Fluids Systems business; and Gregg Piontek, our Chief Financial Officer.

Following my remarks, Paul will provide a high level commentary on the first quarter 2016, Bruce will provide an update on our Fluids business and Gregg will discuss the mats business as well as the consolidated financial results for the quarter. Paul will then conclude with a discussion of our outlook before opening the call for Q&A.

Before I turn over the call, I have a few housekeeping items to cover. There will be a replay of today’s call and it will be available by webcast on our website at There will also be a recorded replay available by phone, which will be available until May 13, 2016, and that information was included in yesterday’s release.

Please note that the information reported on this call speaks only as of today, April 29, 2016, and therefore you are advised that time-sensitive information may no longer be accurate as of the time of the replay. In addition, the comments made by management during this conference call may contain forward-looking statements within the meaning of the United States Federal Securities Laws. These forward-looking statements reflect the current views of Newpark’s management.

However, various risks, uncertainties and contingencies could cause our actual results, performance or achievements to differ materially from those expressed in the statements made by management. The listener is encouraged to read our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K to understand certain of those risks, uncertainties and contingencies.

And now with that said, I would like to turn the call over to our President and CEO, Mr. Paul Howes.

Paul L. Howes

Thank you, Brian, and good morning to everyone. 2016 is off to an extremely challenging start particularly in the North American market where the rig count declined by nearly 40% since year end. Outside of North America for activity levels have remained much more resilient over the past year, we are now seeing a greater impact of the prolonged weakness in commodity prices causing customers to delay certain projects as well as greater pricing pressure from those that continue drilling. And while the E&P customer activity has yet show signs of a rebound, we are continuing to maintain our focus on those factors we can influence. Protecting our market share, actively managing our cost, protecting our balance sheet and liquidity and penetrating new markets.

With regard to cost controls we took additional steps during the first quarter including salary reductions for executive officers in a significant number of North American employees. The suspension of the company’s matching contribution to our 401k plan, as well as a reduction in the fees paid to our Board, all these actions help to further align our cost structure to the current activity levels.

During the quarter we also trimmed the North American workforce by an additional 20% bringing our total reduction including contract labor to 50% since the beginning of 2015. Meanwhile we maintained our strong balance sheet ending the quarter with $83 million of cash and no outstanding balances under our revolving credit facility. We use $9 million of cash to repurchase convertible notes at a discount on the open market realizing nearly a $2 million gain. We also used $13 million for capital expenditures in the quarter most of which is related to our fluids infrastructure projects including the Fourchon deepwater facility.

Our cash position is further strengthened in April with a collection of $27 million tax refunds resulting from the carry bag of our 2015 tax losses. We are also seeing continued progress in our efforts to penetrate new markets. While our latest deepwater contract in Uruguay is now underway. We are also making progress closer to home in the Gulf of Mexico.

Our Port of Fourchon capital project remains on-track and our marketing strategy aimed at penetrating this customer base is progressing. On the mats side while the weak exploration market is continuing to provide a strong headwind for both rental and mat sales. We are pleased with the progress that we are seeing in other markets most notably in the power transmission segment.

During the first quarter 2016, we generated $9 million of rental and service revenues from non-exploration markets representing a sequential increase of approximately 50%. We remain in the early stages of our efforts to enter these new markets though we are very encouraged by the long-term opportunity that we see from our competitive matting solutions.

Now turning to the specifics of the first quarter. As I mentioned a moment ago the market environment has become significantly more challenging particularly in North America, with the sharp decline in drilling activity in the first quarter our North American fluids revenue declined by 31% sequentially, while our international fluid revenues decline 16%.

In the mats business we achieved a 17 % sequentially increase in rental and service revenues with strong rental growth in non-exploration markets being partially offset by continued softness in E&P activity. Meanwhile, mat sales were solid in the quarter leading to a 22% sequentially decline in total segment revenues for the first quarter.

And finally, I like to comment on the recent leadership change in our mats business. Matthew Lanigan joined the company last week is our new President of Mats and Integrated Services. Matthew come in Newpark with over 20 years of global experience, serving in a variety of industries and capacities. After starting his career with ExxonMobil in Melbourne, Australia. Matthew spend the past 16 years with General Electric, serving in a variety of roles within their plastic and capital divisions, including leadership roles in operations, sales and marketing.

The diversity of Mr. Lanigan’s experiences make him uniquely qualified to lead our Mat and Integrated Services business. We are very pleased to welcome Matthew to the Newpark team and look forward to his contributions.

With that let me now turn the call over to Bruce Smith, who will review the performance of our fluids business. Bruce?

Bruce C. Smith

Thank you, Paul and good morning, everyone. In the first quarter the fluids Systems segment generated total revenues of $99 million, reflecting a 24% decrease from the fourth quarter and a 43% decrease year-over-year. In the U.S. revenues were again impacted by the sharp decline in rig count.

U.S. revenue were $37 million down 39% sequentially compared to the 27% decline in average rig count over this period. Consistent with our experience in early 2015 and periods of sharp rig count declines we experienced a disproportionate decrease in product sales as customer slow the purchases on work through their inventories at the rig site ahead of laying down rigs.

In addition, as we highlighted last quarter, our fourth quarter revenues benefited from high downhole fluid losses while drilling, which did not recur this quarter. The combination of these items cause our sequential revenue to decline at a quicker pace than rig counts even though we maintained our U.S. market share.

On a year-over-year basis U.S. revenues were down 62% compared to the 61% reduction in rig count. In Canada, revenues came in at $13 million, up 8% from the fourth quarter, outperforming the 3% increase in rig count. On a year-over-year basis revenues were down 29% also outperforming the 45% rig count decline. Our Canadian business unit has been a bright spot in otherwise challenging North America market as our team continues to outperform the broader market activity benefiting from market share gains.

Our EMEA region posted revenues of $38 million, down 16% sequentially. As highlighted last quarter the fourth quarter benefited from approximately $4 million of completion product sales into the republic of Congo, which were not expected to recur. The remaining $3 million decline in revenues is largely attributable to successful completion of the deepwater Black Sea project.

Algeria remains the most active business in the region as revenues continue to ramp up under the Sonatrach contract signed early in 2015. The increase in Algeria was largely offset by a general slow-down in drilling activity with other customers driven by the weak commodity prices.

On a year-over-year basis revenues from the EMEA region were up 6%, despite a $4 million headwind from currency translation. Adjusting for currency the region’s revenues increased 16% over the last year’s first quarter, benefiting from market share gains in Algeria and Kuwait as these NOC customers tend to maintain activity levels despite the weak commodity prices.

Our Latin America region posted revenues of $9 million in the first quarter, up 2% sequentially. Revenues in Brazil declined by $1 million driven by the continuing reductions in Petrobras spending. Meanwhile the ultra-deepwater project in Uruguay began at the very end of March providing only a modest revenue contribution in Q1.

On a year-over-year basis Latin America revenues are down $5 million or 37%, primarily driven by $3 million headwind from currency translation and lower Petrobras activity levels. Given the continued deterioration in activity and outlook in Brazil we are evaluating lower aggressive measures to right-size our cost structure in this region.

In the Asia-Pacific region fourth quarter revenues were $2 million, down 53% sequentially as customer activity levels continue to soften in the weak commodity price environment. On a year-over-year basis the Asia-Pacific region declined by 73%.

On the technology front, revenues from our family of Evolution systems continue to play although at levels consistent with the overall revenue decline, coming in that $14 million in the first quarter including $12 million in the North America.

As Paul mentioned with the exceptionally weak market conditions in the first quarter we continue to take more aggressive cost actions to right size our organization. As highlighted in yesterday’s press release, the first quarter included $3.2 million of charges associated with workforce reductions predominantly in North America. Our North American workforce was reduced by nearly 25% in the first quarter bringing the total reduction since the beginning of the cycle to nearly 60%. Adjusting for the severance charges, the segment reported a $12 million operating loss in the first quarter, reflecting the impact of the lower revenues.

While the North America region has been the hardest hit in the current market environment, Latin America and Asia-Pacific both reported small operating losses in the first quarter of 2016.

Turning to our near-term outlook, we expect to see North American revenues continue trend closely to the overall rig count with the U.S. rig count currently standing of more than 20% below the first quarter average and Canada currently in spring breakup. In the EMEA region although we were seeing increasing pricing pressure, we expect to see a modest improvement in revenues driven by higher activity levels in North Africa and start of the work in Albania.

Meanwhile, despite the continuing pullback in spending from Petrobras our Latin America region is expected to strengthen in the second quarter, driven by the ultra-deepwater project in Uruguay. With the benefit of the Uruguay project, we expect total segment revenues to remain in a similar range as Q1 over the next quarter.

In terms of operating margin, we expect the second quarter to benefit from the full period impact of the recent cost actions, which should help improve our results somewhat from a normalized $12 million loss in Q1. And finally, I’d like to take a moment to comment on yet another new market entry as we recently received our first contract award in Oman. While this four year contract is expected to provide only a modest revenue contribution over its term, the award is meaningful as it represents another step in our expansion in the Middle East building upon our 2014 entry into Kuwait.

With that I will now turn the call over to our CFO. Gregg Piontek.

Gregg Piontek

Thank you, Bruce and good morning, everyone. I’ll begin by discussing our mats business before finishing with our consolidated results. The mats business reported first quarter revenues of $16 million down 22% from the fourth quarter and 57% year-over-year. Sequentially, the revenue decline is primarily attributable to a $7 million decline in mat sales. First quarter mat sales were soft coming in at $1 million although the P&L impact was partially offset by the sale of older modeled used mats from our rental fleet. For income statement presentation purposes used mat sales are not reflected in revenue but rather as disposal of PP&E with a $1.1 million net gain on the used mat sales recognized in other income.

Substantially all of our mat sale in the first quarter both new and used were to customers in non-oil field markets. Rental and services revenues came in at $15 million for the first quarter reflecting a 17% sequential increase as compared to the $13 million last quarter. Despite the continued weakening of the E&P markets the stronger revenue contribution was driven by our efforts to expand in new markets. To that point customers in non-exploration markets contributed $9 million of our rental and service revenues in the first quarter, reflecting approximately 50% growth from the $6 million generated in the fourth quarter.

Meanwhile oil field markets continue to soften declining by approximately 10% sequentially. A bright spot in the exploration has been the performance of the Defender Spill Containment System. To-date this year the Defender System has been deployed on three drilling sites with three different customers, two additional sites are currently scheduled and customer feedback regarding the system performance has been very favorable.

Comparing to prior year the $21 million decline in revenues included a $12 million decrease from rental and services along with a $9 million in mat sales. As highlighted in yesterday’s press release the first quarter operating income for the mats business benefited from a reduction in depreciation expense associated with our mat rental fleet, reflecting changes in estimated useful lives and residual values.

As a result of these changes in estimates depreciation expenses for the quarter declined by $1.6 million. Segment operating margin came in at 24% up from 14% last quarter benefiting from the depreciation change along with a gain on the sale of used mats but well below the 43% operating margin from a year ago.

Looking to our near-term outlook while our visibility is always a bit challenging in this business the second quarter is currently shaping up to look a lot like the first quarter. While we continue to see a meaningful level of opportunities both on the rental and sales side the timing of the projects is very difficult to predict. Meanwhile we expect E&P customer activity will remain soft until we see a more meaningful improvement in commodity prices. Overall, we expect segment revenues to remain in the similar range to Q1. At this revenue level we expect operating margins in the teens.

Now moving on to our consolidated results. For the first quarter of 2016, we reported total revenues of $115 million, down 24% sequentially and 45% year-over-year. SG&A cost were $23.5 million down 7% sequentially and 10% year-over-year. The sequential decrease is primarily attributable to decline in legal costs and incentive compensation while the year-over-year decrease includes the benefits of cost reduction efforts along with lower legal costs.

Corporate office expenses were $7.4 million in the first quarter compared to $13.6 million in the fourth quarter and $7.8 million in the first quarter of last year. As we highlighted on last quarter’s call, fourth quarter results included $5.8 million of charges largely associated with the anticipated resolution of pending wage and hour litigation and related expenses. Adjusting for these items, first quarter corporate expenses were down $400,000 from the prior quarter.

Consolidated operating loss was $18.8 million in the first quarter compared to an operating loss of $94.3 million in the fourth quarter of 2015 and operating income of $6.1 million in the first quarter of 2015. As we reported last quarter the fourth quarter results included $83.5 million of charges largely associated with the impairment of assets. Foreign currency exchange netting to a $500,000 gain in the first quarter, up slightly from the fourth quarter and $2 million better than the $1.6 million currency loss in the first quarter of last year.

First quarter interest expense netted to $2.1 million compared to $2.5 million in the fourth quarter and $2.3 million in the first quarter of last year. The reduction in interest expense is primarily attributable to lower borrowings, including our outstanding convertible notes. During the first quarter we repurchased $11.2 million of our outstanding convertible notes in the open market for $9.2 million resulting in a $1.9 million gain on the extinguishment of debt.

The first quarter 2016 tax provision was a benefit of $5.3 million, reflecting an effective tax rate of 28.3%. The low effective tax benefit rate is largely attributable to the pre-tax losses in certain foreign jurisdictions for which recording of a tax benefit is not permitted.

Net loss for the first quarter was $13.3 million or $0.16 per share, compared to a loss of $1 per share in the previous quarter and net income of $0.01 per share in the first quarter of last year. As noted in last quarter’s press release the fourth quarter charges accounted for $0.89 of the fourth quarter loss.

Now let me discuss our balance sheet and liquidity position. During the first quarter, operating activities used cash of $3 million, changes in working capital provided a minimal benefit in the quarter, as reduction in receivables and inventories were largely offset by reductions in accounts payable on accrued liabilities. We used $12 million to fund investing activities including $8 million spent on facility and information projects in the U.S. and Uruguay.

Financing activities used $12 million including $9 million used to repurchase convertible bonds and $2 million of net payments on foreign lines of credit. As of the end of the quarter, borrowings under our foreign lines of credit were $6 million, in addition to our $160 million of convertible bonds that mature in Q4 of next year. We ended the first quarter with cash of $83 million and a total debt balance of $166 million, resulting in a total debt to capitalization ratio of 24.4% and a net debt to capitalization ratio of 13.9%.

As anticipated while no borrowings are currently outstanding under our revolving credit facility following the further deterioration in the North American market in recent months we were unable to remain in compliance with the financial covenants of our bank facility. We’ve been working closely with the members of the bank group and are currently in advance discussions regarding alternatives and anticipate having the process completed within the next 10 days prior to the filing of our first quarter Form 10-Q.

The amendment is likely to include typical asset based lending characteristics, which provide us with a greater level of assured access to additional liquidity through the cycle should we need it. For the full year 2016 we’ve modestly trimmed our capital expenditure expectation with CapEx now expected to be in the range of $30 million to $40 million, including approximately $15 million of remaining spending for the deepwater shore base project.

As we discussed in previous quarters until we see a rebound in revenues we expect to continue generating cash through working capital reductions most notably from inventories. In addition during the month of April we received $27 million of our tax refund resulting from the carry back of our 2015 U.S. tax losses.

Now I’d like to turn the call back over to Paul for his concluding remarks.

Paul L. Howes

Thanks, Gregg. Clearly 2016 is off to a challenging start, but we again moved quickly to respond to the rapidly changing market. Our balance sheet remains strong with the current cash balance of over $100 million and net debt below 70 million. Our near-term focus remains on diversifying our revenue stream including our efforts to penetrate the Deepwater Gulf of Mexico and our continued expansion of the mats business beyond the rig side. Despite the extremely difficult market conditions we remain committed to our long-term strategy. In fluid the change in the global competitive landscape continues to drive additional opportunity particularly in the International markets.

The expansion in Oman serves as yet another step forward in our strategy. With each opportunity we’re making progress towards our goal to becoming a recognized global leader in drilling fluids. In the mats business we are excited with the addition of Matthew Lanigan as the new President his background is ideally suited to capitalize on the opportunities that exist for this business.

We are continuing to make progress in our efforts to diversify our mats business into markets that are less dependent on drilling activity. While it takes some time for our penetration in these markets to take hold, we remain very confident on our ability to capture a meaningful share of these markets longer term, which will ultimately lead to a greater diversification in the revenue stream and improve stability of earnings throughout the commodity cycle.

In closing we remain cautious regarding our outlook for the business in the near-term, while there are some positive signs that the fundamentals in the oil and gas industry are stabilizing and the recent modest improvement in the pricing and commodities is encouraging. At this time we’re not planning for the recovery to occur into 2017.

Our visibility into the coming quarters is limited at this point and a number of clouds hang over the industry such as the continuing reductions in capital spending by our customers and the backlog of drilled uncompleted wells. For these reasons we will remain focused on preserving our balance sheet and manage our business to be in a position to take advantage of the market when you start to see signs of a sustainable recovering.

With that, we will now take your questions. Operator.

Question-and-Answer Session


Thank you. We will now be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from the line of Marshall Adkins with Raymond James. Please proceed with your questions.

Marshall Adkins

Good morning, guys. Gregg, I got a couple for you this morning. The debt negotiations you referred to all service companies seem to be going through that and a lot of them just been host by the banks, so I am just curious I’d like to get a little more color on how that’s going to the extent you can and timing, the size of credit line get knocked down, et cetera.

Gregg Piontek

Yeah, well in terms of the timing of it as I had mentioned a moment ago we expect that to be completed here within the next 10 days. So we are deep into the discussions and it’s going fairly well. As far as the size of that, yes, I would expect some degree of reduction from the $150 million facility that’s in place and I think that’s pretty consistent with what we are seeing across the marketplace. Beyond that I think the big change here is just the transition to the asset based structure, which is in times like this actually an improvement because it’s linked to your underlying assets, your receivables, your inventories and that provide you with a much more assured availability regardless of the state of the industry.

Marshall Adkins

Sure, okay, good, that’s good to hear. The second one for you is the depreciation on the mats, what’s going on there and what makes the logic of how things have changed there?

Gregg Piontek

Sure and actually there is a little bit of a linkage there between what we saw coming through the P&L in terms of the gain on sales as well as with the depreciation change. But as we have gained more experience with the mats and developed more of a history on the useful life, the residual values as we disclose this quarter we have sold some of the older model mats out of our fleet at a meaningful gain and that’s what caused us to go back and revisit our depreciation policies associated with the mats both the useful lives as well as the residual values that they have at the end and both of those were adjusted in that we have now reflected that going forward. So that $1.6 million benefit that we saw in the quarter we’ll see alike benefit here going out from this point forward. It’s a real positive because it reflects the strong performance of those mats.

Marshall Adkins

Right, well that’s why I was curious just seeing strange but it makes sense in that context. I was thinking one last one here working capital help us understand where you think that evolves over the next three quarters or so?

Gregg Piontek

Sure, as I mentioned the biggest opportunity that we have on the inventory side at this point. We have been taking that down over the past three or four quarters, but as we have talked about in the past that one is more of a slow grind and at this point though we see another $20 million plus of opportunity in terms of the inventory side and aside from that there is some opportunity in the receivables, receivables will naturally flow with your overall revenue.

So, as the activity continues to come down we get a little bit more from that, but inventories really the bigger driver on working capital. The last one that I think is worth highlighting though is we mentioned this NOL carry back that we benefited from and ultimately recovered that $27 million here in the month of April, but with as rough as the 2016 is setting up for, we have similar opportunity the next year. So…

Marshall Adkins

Perfect, that's helpful guys. Thank you all.


Thank you. Our next question comes from the line of Neal Dingmann with SunTrust. Please go ahead with your questions .

Neal Dingmann

Good morning guy. Say a question on the fluids I continue to hear I mean international still seems like there is just a lot of upside there. Wondering Bruce for you or Paul when you look at that two questions around that, one just what regions I mean again you certainly continue to have sort of expand in different ones. So where do you see sort of the more upside the next sort of two to three years regionally speaking? And then in addition offshore as well if you could comment about that.

Paul L. Howes

Regionally we have opportunities everywhere. I think our main focus has to be to focusing on areas where we can do the more crude. So the Middle East is one that we’re obviously focused and I did mentioned a few moments ago but the contract that we picked up in Oman, which modest in revenue but strategically very important to be in that country that [indiscernible] worked in there [indiscernible] will work in there. So it’s very critical steps in our advance through the Middle East market.

There are opportunities obviously depending what happens with the Uruguay project we’ll see there may be further opportunities there in Uruguay. Beyond Total Drilling there, there are many customers that are they waiting in line to drill in that area. And of course our Gulf of Mexico deepwater as we feel are going to be many opportunities coming our way there. The facility as mentioned is nearing completion and expect to later in the year to be reaping the benefits of that.

Neal Dingmann

And then just Bruce one follow-up on that. In those same areas you’re referring to maybe just talk a little bit Evolution there the potential there I mean again I still continue to think just because of the environment that international that’s going to continue to even become bigger and bigger if you could talk about Evolution internationally versus the best like opportunities?

Paul L. Howes

Yes well Evolution is still playing in the certain areas internationally. But of course it’s playing in revenue levels consistent with the rig count declines in the overall revenue, but it’s still playing for example in China still playing. And in Asia-Pacific and Australia still playing. That all be at reduced levels, it’s still playing well here domestically. The ratio of work that we have that’s Evolution work compared to the total revenue we have is still holding up in a fairly good ratio there as it was previously when things were better.

So the technology is still in play, still moving forward. On the offshore side, we’ll be moving more of course to Cronus [ph], which we talked a little about Cronus Deepwater system. And as we develop things in offshore deepwater Gulf of Mexico and as things develop in Uruguay and different places around the world from an offshore standpoint we’ll be moving to a slightly different technology.

Neal Dingmann

That’s very good, thank you.


Thank you. And your next question comes from the line of Bill Dezellman with Tieton Capital. Please go ahead with your questions.

Bill Dezellman

Thank you. First of all would you please talk about the gain in market share in Canada and really what you believe is driving that?

Bruce C. Smith

Yes historically we’ve done quite well in Canada. And Canada is a quite a unique market. And we have a team that have been together in Canada for quite some time. And we also have some new technologies that we have up in Canada that are playing quite well. And then little different approach to the market out there for we’re using a brine based system with various attitudes that allow people to do things in -- at one stop shop as it were other than they go to the numerous places to do that. So it’s people and technology really I would say. And we’ve done so far so good.

Bill Dezellman

And speaking of technology I’m going to open myself up my ignorance here. The new system in the Deepwater Gulf of Mexico as you were referring to that will likely be your focus. I don’t have linearity with that would you please discuss that system and what’s unique about it and why that’s the play for the Deepwater Gulf of Mexico rather than Evolution or some other technology?

Bruce C. Smith

Yes the offshore requirements in deepwater are quite different from the land operations, obviously that Evolution used in. So the whole formulation and the whole Cronas [ph] development is based around the requirements from that technically demanding business. For example you need low ECDs, low equivalent circulating densities, it takes a very special formulation to do that. But suffice to say I think it’s just a different technical game in deepwater and Cronas has been formulated for that.

Bill Dezellman

Thank you. And then Oman you mentioned that the revenues are anticipated to be small, was that over the four year life of the contract that it’s a small contract or was that really comments directed to 2016?

Bruce C. Smith

It’s over the life of the contract. It’s not a huge contract, but it is our first contract in that country and it’s moving forward with our Middle East strategy paddling from what we got in Kuwait.

Bill Dezellman

Great. Thank you, Bruce.


Thank you. That concludes our question-and-answer session, I would now like to turn it back to management for final remarks.

Paul L. Howes

We’d like to thank you once again for joining us on the call and for your interest in Newpark Resources. We look forward to talking to you again next quarter. Goodbye, everyone.


Ladies and gentlemen, thank you for your participation. This concludes today’s teleconference. You may disconnect your lines and have a wonderful day.

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