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Helix Energy Solutions Group, Inc. (NYSE:HLX)

Q1 2012 Earnings Conference Call

April 23, 2012 10:00 AM ET

Executives

Terrence Jamerson - Director, Finance & Investor Relations

Alisa Johnson - Executive Vice President, General Counsel and Corporate Secretary

Owen Kratz - President and Chief Executive Officer

Anthony Tripodo - Executive Vice President and Chief Financial Officer

Clifford Chamblee - Executive Vice President - Contracting Services

Johnny Edwards - Executive Vice President – Oil & Gas

Lloyd Hajdik - Senior Vice President – Finance and Chief Accounting Officer

Analysts

Jim Rollyson - Raymond James

Joe Gibney – Capital One

Martin Malloy - Johnson Rice

Michael Marino – Stephens

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the review of the First Quarter 2012 Results Conference Call. During the presentation all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions).

As a remainder this conference is being recorded, Monday, April 23, 2012.

I’ll now like to turn the conference over to Terrance Jamerson, please go ahead sir.

Terrance Jamerson

Thank you. Good morning everyone and thanks for joining us today. Joining me today, is Owen Kratz our CEO, Tony Tripodo, our CFO, Cliff Chamblee, Executive Vice President of Contracting Services, Johnny Edwards, Executive Vice President of Oil and Gas, Alisa Johnson, our General Counsel and Lloyd Hajdik, our Senior VP of Finance.

Hopefully, you had an opportunity to review our press release and related slide presentation released yesterday afternoon. If you do not have a copy of these materials, both can be accessed through the Investor Relations page on our website at www.helixesg.com. The press release can be accessed under the press release’s tab and the slide presentation can be accessed by clicking on today’s webcast icon.

Before we begin our prepared remarks, Alisa Johnson will make a statement regarding forward-looking information. Alisa?

Alisa Johnson

During this conference call, we anticipate making certain projections and forward-looking statements based on our current expectations. All statements in this conference call or in the associated presentation, other than statements of historical facts, are forward-looking statements and are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual future results may differ materially from our projections and forward-looking statements due to a number and variety of factors including those set forth in slide two and in our annual report on Form 10-K for the year ended December 31st, 2011.

Also during this call, certain non-GAAP financial disclosures may be made. In accordance with SEC rules, the final slides of our presentation materials provide a reconciliation of certain non-GAAP measures to comparable GAAP financial measures. The reconciliation, along with this presentation, the earnings press release, our annual report and a replay of this broadcast are available on our website. Owen.

Owen Kratz

Good morning everyone. We left you on a pretty positive note at the end of the last quarter. We’ll skip page 3 and 4 here, so moving on to Slide 5, which is the high level summary of first quarter results. Quarter one’s revenue has increased from $396 million in Q4 to $408 million this quarter. With all of the increasing attributable to our Contracting Service segment, an increase that more than offset the decrease in Oil and Gas revenues, resulting from lower oil and gas production.

Consistent with the increased revenues, we also reported increased earnings in operating cash flow. The EBITDA generated of 209 million represents an all time post Caldag divestiture quarterly record for Helix.

Moving on to Slides 6 and 7, quarter one’s reported EPS is $0.62. However, this is after absorbing 17 million of pretax charges or $0.10 after tax, associated with the early repayment of a portion of our Senior Unsecured Notes, and a portion of our Convertible Notes.

The uptick in Contracting Services revenues and operating results in Q1 was actually led by our subsea construction business which saw a 94% vessel utilization in Q1. However our well intervention business also had an increased operating result from Q4. Despite the fact that the Q4, our Q4000 and our dry dock in early March and the Seawell went into dry dock in late March.

Canyon, our Robotics business had a very active quarter utilizing 5 different stock market vessels at various times, during the quarter in addition to its four regular vessels under long term charter. Our Oil and Gas production in the first quarter totaled 2 million barrels of oil equivalent, down from 2.2 million barrels of oil equivalent in Q4.

Quarter one’s production decline was impacted by the sale of our main pass field as well as the shutting of our Noonan gas well, along with normal decline rates. We continue to benefit from our oil production being sold at Louisiana light sweet prices, which is at a significant premium to West Texas intermediate prices, realizing 109 a barrel, net of our oil hedge contracts.

In addition, natural gas liquids production along with our natural gas hedge contracts allowed us to realize $5.82 from our natural gas production in Q1. Tony?

Anthony Tripodo

Yes, thanks Owen. Continuing on slide 7, from a balance sheet perspective, we continue to strengthen our financial condition. Our net debt position which continues to decrease went from 609 million at year end ’11 to 560 million at the end of the first quarter.

Our cash balances increased to 620 million at the end of Q1 from 546 million at year end. We did a bit of a re-haul of our capital debt structure during the quarter. First, we issued 200 million of new 3.25% Convertible Notes due in 2032 and used the proceeds to buy back 142 million of the 300 million of pre-existing Convertible Notes which we fully expect to be put for repayment in December of this year. The remaining 158 million of the old converts are expected to be put to us and retired in December. Essentially, we preserved a low-cost form of capital and convertible debt by issuing new 200 million notes to replace the 300 million that would fully expect to be repaid by year end and reducing the net amount in this type of debt capital by a 100 million. Further more, we issued new 100 million of the syndicated term loan A and along our revolver borrowings called and retired 200 million of our 9.5% Senior Unsecured Notes. The net effect of this reshuffling results in a much lower cost debt capital structure. With this I’ll turn the call over to Cliff for an in-depth discussion of our Contracting Services results.

Clifford Chamblee

Okay. Thanks, Tony. Good morning all. As you can see Contracting Services had another strong quarter with a total revenue of 265 million, up over a 100 million about a year ago and 40 million higher than Q4 last year. Our gross profit margins of 27% were also significantly higher than a year ago as well as improving upon last quarter’s margins. Utilization was higher this business unit with Well Ops and Canyon vessels at 84% and 93%, respectively. The pipeline vessels utilization was 94% with Express and Intrepid working in a pipeline mode, and the Caesar in accommodations mode.

So, moving on to Slide 10, this slide shows the equity and earnings contribution of the independent hub Marco Polo and the SapuraCrest JV. The results are consistent except for the $4 million write down to close off the JV in South East Asia.

Over to Slide 11, the Q4000 is down at 67% utilization for the quarter and had a near 100% utilization in January and February as they work for Shell and Helix Oil and Gas projects prior to entering the dry dock in early March.

Our two North Sea vessels were also busy with 93% utilization despite the Seawell transiting for dry dock in late March. The Well Enhancer successfully completed its West African campaign. This campaign represented the deepest operations conducted from the Well Enhancer since joining our fleet in early 2009. Both North Sea vessels carry strong backlogs the rest of the year except for a planned dry dock for the Well Enhancer in the third quarter.

The Q4000s’ backlog is beginning to extend into 2014, also note our second Intervention Riser System is now in the Gulf of Mexico and working for Exxon.

So, moving on to Slide 12, on the Robotics side, Canyon experienced high utilization for the construction, support vessels as well with a record 9 vessels on hire during the quarter. The renewable side of the business is again a highlight for us this quarter as we continued to generate significant trenching revenues in the renewable energies market utilizing the Island Pioneer and the Deep Cygnus vessels as well as our ROVDrill coring assets. We are still on target for our Q2 delivery of our new vessel the Grand Canyon and believe this business will generate growth for us.

On to Slide 13, in Subsea Construction, the Express continues to achieve high utilization here in the Gulf. She departed for a project in the Mediterranean earlier this month and is now expected back in the Gulf until the third quarter. The Intrepid finished its campaign off the coast of California before transiting back to Gulf of Mexico at the end of March. Caesar, remains on an accommodations project down in Mexico where the contract is now being extended through August.

On to Slide 14, I leave that for your review and with that I’ll turn it over to Johnny on the Oil and Gas side.

Johnny Edwards

Good morning. Please turn over to Slide 15. Slides 15 and 16, provide the financial highlights for Oil and Gas for the first quarter. Production and revenue for Q1 2012 was lower than Q4, mainly due to the sale of our main pass area properties and the shutdown of the Bushwood Noonan gas well due to high water production. Our production mix in Q1 was 71% oil.

On Slide 16, our operating costs were lower in Q1 with the major differences being reduced workover expenses and less facility repair work. Looking forward, we have some exciting opportunities. On the Shelf, we expect to start two oil producing properties in the second quarter. We will begin production from our (inaudible) field at about 1000 barrels of oil equivalent per day net and at (inaudible) 86 we will begin producing about 500 barrels of oil equivalent per day net from one well with two additional wells to drill this year.

In deep water, we expect to add production from two wells in 2012 in the Bushwood field. First the Danny II well is expected to spud by the end of this month. This is an exploration well targeting oil just below our Danny oil well. If successful we will add an estimated 3600 barrels of oil equivalent per day net. Production from Danny II is scheduled for third quarter. Also, in the Bushwood field the Nancy well which was drilled in fourth quarter 2008 has been completed and is waiting to flow. First production from Nancy is estimated in Q3 also in 2012. This gas well will add an estimated in equivalent basis 2000 barrels oil equivalent per day net.

The Phoenix field and the HP1 continue to produce very well in Q1. We have received the APD and we have contracted a rig to drill the Wang well. The rig for the Wang well will not be available until mid to late Q3, therefore, we have scheduled first production for Q1 2013. If successful the Wang well can add an estimated 3400 barrels oil equivalent per day net. We also have two proved undeveloped oil wells to drill at Phoenix, but we do not anticipate drilling those until after 2012. Over to you, Lloyd.

Lloyd Hajdik

Thanks, Johnny. Slide 17 summarizes our current commodity hedge positions with the 3.2 million barrels of oil equivalent covering about 62% of our forecasted combined oil and natural gas production for 2012. On estimated production from PDP were hedged on a combined basis totaling 74% for the year. We also have a portion of our 2013 production hedge, notably with natural gas slightly above a floor price of $4 per Mcfe in oil with a floor price of nearly $100 per barrel. And regarding our oil hedges, over 80% of our current hedge is in place by volume for 2012 and 2013 are based on the Brent benchmark. And we have mentioned on past calls that we are using the Brent benchmark to better correlate our financial hedges against the actual pricing we are receiving for our Gulf of Mexico crude sales. The actual spread in quarter one between the WTI benchmark and what we actually received for our crude oil sales in the first quarter was approximately $15 per barrel.

Turning to slide 19 and 20. Slide 19 profiles our current debt levels and liquidity position at March 31. Gross debt increased slightly during the quarter as a result of the completion of our new $200 million 3.25% Convertible Senior Note offering. As Tony mentioned earlier, we used $142 million of the proceeds to repurchase and retire a portion of our existing 3.25% Convertible Senior Notes. The existing notes affordable to Helix beginning in December of 2012. We ended the first quarter with $620 million of cash on hand, and that’s up $74 million from the $546 million at December 31 and our liquidity position remained at $1.1 billion as of the end of the first quarter.

Over to slide 20. This slide provides our current update on overall debt maturity profile as of March 31st. As we mentioned on the quarter four call earlier by Tony, we introduced our new $100 million term loan with a syndicate of banks in February. This term loan funded in late March and we took the proceeds plus $100 million borrowed under the revolver, we paid $200 million of our 9.5% Senior Unsecured Notes on March 30th. The Senior Unsecured Notes have been reduced to $275 million, or half of the original $550 million issuance in December 2007. With the reduction in the high yield bonds we have realized a sizeable cash interest savings over the next few years with our overall cost that’s just slightly over 5% at March 31. Tony?

Anthony Tripodo

Thanks, Lloyd. Well, we are off to a much better start in 2012 than we originally expected. As such we now expect our EBITDAX forecast for all of 2012 to exceed the approximate $600 million we originally forecasted for 2012. The key variables impact in this forecast, in addition to the commodity price assumptions shown on the chart on slide 22, are little or no tropical disruptions impacting our oil and gas business, as well as the successful drilling and completion as Danny 2 oil target. As Johnny mentioned, we expect to spud as well later this month and estimate first production around October 1st. What has changed is that although we have secured our permit in rig for the Wang oil target, which we expect to spud in Q3, we have pushed in a production contribution out of our forecast until 2013. But despite moving Wang production out of the 2012 forecast we still estimate our total production as 7.5 million barrels of oil equivalent, the same as our original 2012 forecast. With both the Seawell and Q4000 and dry dock for the most of April we expect our contract and service business to pull back somewhat in Q2, however activity levels remain very strong particularly in the well intervention business.

Our CapEx estimate for 2012 is $450 million, essentially the same as our original forecast, $130 million of the $450 million in CapEx is slated for the new Q plus well intervention semi of which we paid $60 million first installment in Q1. We have contracted two additional ROV support vessels under long term arrangements based on a very favorable outlook for the ROV business, both for the oil field and for the renewable energy markets, both of these vessels are copycats of the Grand Canyon vessel which is expected to enter our fleet mid-year. The other two vessels are expected to be delivered in 2013 and 2014, respectively. I believe they will replace existing long term charter vessels in our robotics fleet or depending on market conditions expand our ROV support capacity in the future. CapEx spending again is $450 million, essentially the same as our original forecast and again $130 million of this represents spending for the new Q plus vessel.

I’ll skip slides 27, 28, leave them for your reference, and at this time I’ll turn the call back over to Owen for closing remarks.

Owen Kratz

For the bottom line is that the company has been in good shape, operating well and position for growth while continuing to strengthen financially. Debt is down to a comfortable level for a service company our size. All assets are at high utilization levels. The markets we serve are strengthening and margins continue to improve. We are bringing on new assets into growing markets that are measured, proved and paced. And then in the last 12 months we have committed to adding six new world class ROVs, a new trench is going into service in the renewables market in July or August onboard a new build charter vessel as mentioned in the previous presentations. The construction of the new Q plus is now being kicked off at the Jurong yard in Singapore. By the end of Q2 we should have four of the five dry docks scheduled in 2012 behind us. These steps towards that in growth are being achieved within our strong cash position and without adding debt. The debt reshuffling we have been able to accomplish the past six months has served to reduce our debt service and there is more that can be done. Presently we have a strong visibility on the utilization and rates. Production is consistently in line with our estimates, with two highly prospective wells to be drilled. We now have permits and rig contracts in hand for both of these wells. For now, things are going well.

We are on track to exceed our original 2012 outlook to the investment markets. Our strategy over the past three years was to delever the balance sheet and to grow the well ops and robotics service lines. We have identified the growth opportunities and have the financial strength to execute and have taken the initial steps. We are now on the verge of adding meaningful growth capacity to Helix and remain open to monetization options on assets that would allow us to accelerate growth, but we are in the fortunate position of not being under any pressure to monetize for less than the reasonable value and still comfortably achieve our targeted service growth.

I am proud of what we have accomplished in the position we are in and with that I’ll turn it back over to the operator for Q&A.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question comes from the line of Jim Rollyson with Raymond James. Please go ahead.

Jim Rollyson - Raymond James

Good morning, guys.

Owen Kratz

Good morning, Jim.

Jim Rollyson - Raymond James

Excellent quarter. Tony, you mentioned marine probably pulling back going into the second quarter compared to first quarter given the dry docks schedule and all. I was wondering if you or Owen can maybe just kind of characterize what you are seeing or thinking in when it comes to marine margins? You had really strong sequential uptick in margins and that’s even with the Q4000 being out for the better part of the month in the quarter. As you kind of look out, number one at your schedule and how you think about it for this year but also equally important just from a pricing standpoint looking out you mentioned Q4000 having backlog going into 14, how is that margin curve kind of progressing?

Owen Kratz

I’ll take this and I’ll let Tony follow up if you want. Jim, I think all of the markets that we are looking at are gradually strengthening over time. I think there is a long way for them to go, so I do think that margins will improve on the back of the market. But even without the market I think what you are seeing in the company is a real focus on our cost and our operating efficiency and I think that’s greatly improved and there is always more work to be done there. So I think we have the internal opportunity to at least hold margins where they are and possibly improve them going forward.

Anthony Tripodo

Jim, I think, obviously utilization is important to margins but I do think there is opportunity for margin expansion in our well intervention business and long term margin expansion in the Subsea construction business. As you know, there are much better margins in Q1 and that’s with one vessel update, even though it’s worth. Caesar really not making any money so there is opportunity for a more meaningful work for the Caesar in the future we hope. So, all things being equal we see the environment being more positive for margin improvement as we go forward.

Jim Rollyson - Raymond James

That’s great color. On 2Q specifically, you have got, the Q out for April you got to see well that will be out for a good chunk of the quarter. How much impact do we have from the couple of vessels that are in relocation, one coming back from California and the one going to Mediterranean, is that 30-day type impacts or just kind of trying to get a sense of how utilization might look from 1Q to Q2?

Anthony Tripodo

Well, Jim the mobilization of the Express and the de-mob of the Intrepid were still revenue earning periods for us, so that’s really not an impact. The big impact for us again is the Q4000 and the Seawell being out of service for most of April. It rather well there in dry dock, but the other two vessels are in revenue producing mode even as they are mobil.

Jim Rollyson - Raymond James

Okay helpful and last one, you guys have the two new charters similar to the Grand Canyon which I think said, may be replacement or maybe additive, just thoughts on capabilities versus your existing fleet and maybe kind of how charter rates are looking for the two new vessels versus what you have been paying or even what you are paying on the Grand Canyon?

Clifford Chamblee

This is Cliff, I will take that one. Yeah, we get that the Grand Canyon is coming to us in July of this year and then we have contracted two almost identical vessels to it after that and we kind of got involved that with the first charter to the Deep Cygnus, a very similar vessel or so. We believe we got the spec that is right for the market size, shape, crainage, etcetera for those vessels. As you mentioned, the idea is we kind of have a fleet contracted on a rotating basis so depending on market fluctuations, we can either add two by keeping the next two vessels coming out or we can replace sort of vessels that we have and take those off charters, let those charters expire.

Jim Rollyson - Raymond James

Alright, thank you.

Operator

Our next question comes from the line of Joe Gibney with Capital One, please go ahead.

Joe Gibney – Capital One

Thanks, good morning, just a follow up on the chartering question. You guys flexed up on the smart vessel side with a five short-term charters. I was just curious how that is looking into the sequential quarter, has it drawn off a little more outside of the four you got on long term, I was just kind of curious as it was up a lot sequentially?

Clifford Chamblee

Yeah, we have long term chartered vessels, they usually run for 3 years to 5 years and options on those as well and those are our primary vessels. And then from an opportunistic stand point as we see short jobs pop up, that could be anywhere from 2 weeks to 6 months, then we pick up other vessels for those as required and that is what you are seeing reflected in this last report. That is a little hard to predict what we will do, but I expect that we will, throughout the year, we will continue -- all those vessels are pretty much gone at the moment but we will pick those or similar type of vessels up through the rest of the year in Southeast Asia and with the rig drill asset well.

Joe Gibney – Capital One

Okay, that is helpful. And just outside of near term utilization impacts from the dry dock schedule, just curious on the Subsea construction size as a strong quarter, you guys have a lot of visibility now more so than you have had in the past. Can the Express and the Intrepid outside of dry dock schedules maintain 90% utilization? It is a high hurdle rate, but given your visibility is that reasonable to get pass the dry dock side of things?

Clifford Chamblee

Yeah I will that one again. Yeah with Express, I don’t think we have too much concern on the high utilization for it, as we mentioned it is on the way to the mid and then go on to the North Sea and then back here, we will probably pick some more work in the North Sea and we got work when it is back here. The Intrepid, it will be a bit of a struggle to keep it working rest of this year because it is truly Gulf of Mexico based, but we are starting to see that turn a bit as well. So, yeah, we don’t have a real strong backlog for the Intrepid, but that is also a vessel that we pick up, we are pretty short to lead time, but we are going to execute the work, so it is typically not contracted out a year in advance, it is usually two months in advance or so before we contract.

Joe Gibney – Capital One

Alright, fair enough. Last one for me, just curious Tony if you could detail what the deferred mob revenue contribution was for the (inaudible) during the quarter?

Anthony Tripodo

Joe of the top of my head, I don’t have that figure, so let me get back to you on that.

Joe Gibney – Capital One

Okay, thanks guys, I will turn it back.

Operator

And our next question comes from the line of Martin Malloy with Johnson Rice, please go ahead.

Martin Malloy - Johnson Rice

Congratulations on the quarter.

Anthony Tripodo

Thanks, Marty.

Martin Malloy - Johnson Rice

Could you talk about opportunities with Statoil on the Cat-A contract?

Clifford Chamblee

I will take that. We have spent a lot of time on Cat-B and I think you saw last week, well I think prior to that you would have heard us say that we were moving on without considering the Cat-B and with the build of the Q Plus. The other contract that we are involved with Statoil tendering is for a Cat-A which is a small amount of haul similar to the Enhancer type vessel or Seawell. I think the tendering process is through, all submissions are in and we are now awaiting the award and when we actually hear about that award, I am not too sure given the history of extensions that Statoil puts on things. So it is should be near but I can’t tell you exactly when we might hear.

Martin Malloy - Johnson Rice

Okay. And then with respect to the Caesar vessel outside of working on accommodations mode, are there bidding opportunities that you are seeing out there to prove up the pipeline capabilities of the vessel?

Owen Kratz

Yeah, right now the extended accommodation is in Mexico through August into first part of September. There is an option we are discussing on how to extend that further into next year, but we are also now planning to get back into the pipeline mode with that vessel, probably half way through 2013 or so in the mid 2013. And yeah, there are projects that we are chasing here in the Gulf and internationally.

Martin Malloy - Johnson Rice

Okay, thank you.

Operator

(Operator Instructions). Our next question comes from the line of Michael Marino with Stephens, please go ahead.

Michael Marino – Stephens

Good morning. A question on well intervention rates, I guess drill rig rates have moved up -- could you maybe compare what is your bidding the well intervention assets for today versus maybe what you are working them forward of today?

Owen Kratz

Well a lot of the well intervention work that we have today and the rest of this year is long term contracts that we had in place, so we are not really able to raise those rates. But, yeah we do see, I think Tony mentioned earlier room for improvement in well intervention business, so that’s definitely part of our strategy to get those rates up and part of the timing to build the Q Plus and we are talking to clients now about the rates for the Q Plus. So those margin rates and margins on Well Enhancer Seawell and the Q4000 here are steadily increasing as we can but as I mentioned some of these are one and two-year contracts so we can’t increase rates until those expire, but we do see room for improvement.

Anthony Tripodo

But generally speaking, the rates in our backlog Michael are higher than what you saw a year ago, generally speaking. So that is locked up in our backlog right now and certainly drill rig rates if they hold up pretend well for our rate situation beyond which backlog as well and certainly, when you see a generation six drilling rigs out there at 550 a day and higher that is going to give us plenty of opportunity to put the Q Plus to work at very nice rates.

Michael Marino – Stephens

Right. Just in order of the magnitude, I mean are you talking 10% kind of increases from which you are currently working or is it greater than that?

Anthony Tripodo

Well, I think we are talking about opportunity for rate increases. I certainly think there is an opportunity over the next two years to see a 10% rate increase, but that again is going to be subject to market conditions at the time.

Michael Marino – Stephens

Sure, good. And just maybe if I could looking out a little bit further on the E&P business in the 2013, I guess this year you will spend close to $200 million there, is that kind of a good level for or strategically Owen how you see kind of spending in that business, where you are working things on the shelf and maybe some opportunistic things in the deep water, but kind of trying to keep it in that range or maybe your thoughts on kind of E&P longer term and how much spending you direct there?

Owen Kratz

Let me let Johnny express what his wish list is and then I will look at the balance sheet and later on tell you what the actual is going to be.

Michael Marino – Stephens

Fair enough.

Johnny Edwards

Yes. In 2013 we could have similar number of projects and similar spending that we do in 2012. We still have a backlog of projects to develop that are in proved undeveloped category and we still have some deep water wells we would like to drill in the Phoenix field, because the Phoenix field has just continually outperformed our expectations. So, we will be bring in another list in 2013 that will look like 2012.

Owen Kratz

I might just add a follow on I think Johnny and the guys at the ERT [ph] are allocating capital very wisely in them. And I think as a company, there is a refocus on the return on capital for every dollar deployed from CapEx, that boards well, but we will endeavor a very prudent a row with a lot of discipline to stay within or close to our cash flow and avoid any recurrence of debt increases.

Michael Marino – Stephens

Great that is very helpful. Thank you.

Operator

And there appears to be no further questions at this time.

Terrance Jamerson

Okay. Thanks for joining us today. We very much appreciate your interest and participation and look forward to having you participate on our second quarter 2012 call in July, thank you.

Operator

Ladies and gentlemen that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.

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