Hornbeck Offshore Services, Inc. (NYSE:HOS) Q2 2019 Results Conference Call August 1, 2019 10:00 AM ET
Ken Dennard - Investor Relations
Todd Hornbeck - Chairman, President, and CEO
James Harp - Chief Financial Officer
Conference Call Participants
Turner Holm - Clarksons Platou Securities
Steve Jones - BTIG
Greetings and welcome to the Hornbeck Offshore Services' Second 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, Ken Dennard of Dennard Lascar, Investor Relations. Thank you sir. You may begin.
Thank you Christina and good morning, everyone. We appreciate you joining us for Hornbeck Offshore's conference call to review second quarter 2019 results and recent developments. We also welcome the Internet participants listening to the call over the web.
Please note that information reported on this call speaks only as of today August 1, 2019 and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening or transcript reading.
During today's call, Todd and Jim will make certain projections about future financial performance, liquidity, operations, and events that are not statements of historical fact and thus constitute forward-looking statements. These forward-looking statements are subject to risks uncertainties and other factors that may cause such future matters including the Company's actual future performance to be materially different from which is projected today.
You can locate additional information about factors that could cause the Company's results to materially differ from those projected in the forward-looking statements in Hornbeck's SEC filings and in yesterday's press release under Investors section of the Company's website which is www.hornbeckoffshore.com or through the SEC website at sec.gov.
This earning call also contains references to EBITDA which is a non-GAAP financial measure. A reconciliation of this financial measure to the most comparable GAAP financial measure is provided in the press release issued by the Company yesterday afternoon.
And finally, the Company uses its website as a means of disclosing material non-public information and for complying with disclosure obligations are under SEC's Regulation FD. Such disclosures will be included on the Company's website under the heading Investors. Accordingly investors should monitor that portion of the Company's website in addition to following the Company's press releases, SEC filings, public conference calls and webcast.
With that behind me, I would like to turn the call over to Todd Hornbeck, Chairman, President, and CEO of Hornbeck Offshore. Todd.
Thank you, Ken. Good morning and welcome to the second quarter of 2019 conference call. Joining me today is Mr. Jim Harp, our Chief Financial Officer.
Second quarter results principally reflected our decision to remain short in a market that we see in general recovery over the levels that we have experienced in the last few years. While our utilization and day rates remain essentially flat for the sequential quarter, they did so against the backdrop of increased activity of our customers and a willingness of our competition to take jobs at rates or contract homes that we would rather not accept.
Because we expect sustained improvement in marketing conditions over the next few quarters, our strategy is to remain disciplined with our fleet of HOSMAX vessels in order to be in a better position to negotiate rates in terms more in-line with the value proposition that are uniquely provides.
We have waited five years to see a turnaround. Our preference is to remain patient now and allow conditions to gel further. The inherent operating leverage in our business should reward our patience. We calculate that for our active fleet of 31 new generation OSVs each $1000 increase in effective day rates can yield approximately $11 million of incremental annual EBITDA and of our fleet of eight MPSVs each $5000 increase in effective day rates can yield approximately $15 million of incremental annual EBITDA.
Today, we reaffirm the positive use we have been expressing in our last three quarterly earnings calls. The market has begun to improve. It is not a recovered market yet, but is on a path to recovery and unless derailed events that no can predict, our business should enjoy the fruits of the turnaround.
Our job is not to get the first groups of that recovery, but to attempt to maximize the harvest for our stakeholders over the long haul. Our fleet of HOSMAX OSVs is a largest fleet of greater than 6000 dead weight ton vessels in the world. The fleet together with our military franchise are scaled with in the Greater Gulf of Mexico region.
Our fleet of regionally deployed MPSVs, our 22 year operating history, our exceptional safety record, our entrepreneurial resourcefulness, our team of experienced marine professionals and our innovative business strategy have intrinsic value that we closely guard. We have retained that value over the last five years so that we can deploy and reap the benefits of it in an improved market. That is our main focus today and our expectation during the coming quarters.
Finally while Jim will take you through the numbers in detail, we were able to close a new $100 million senior credit facility on June 28th. That will provide us additional financial flexibility as market conditions improve.
Our 2019 convertible senior notes mature on month, month today and we have sufficient liquidity to repay the remaining balance of those notes. In addition, we continue to have constructive dialog under our non-disclosure agreements with the professional representatives of the Ad Hoc Group for 2020 and 2021 senior note holders.
We are continuing those discussions to explore a variety of ways to address those notes in advance of their maturities and open a path for greater strategic opportunities that we believe we are well positioned to pursue at this time.
These discussions can go in many different directions. However, our guide post is that we want to find a solution for our stakeholders that is in-line with the intrinsic value of our Company in a recovered market.
At the same time, we recognized that we have a contractual obligation to replay our outstanding debt instruments. We have explored solutions with our note holders that involve repayment of our near-term maturities at par and expect that we will continue to do so.
We are well aware of the challenges to accomplish that objective with respect to our upcoming 2020 and 2021 maturities. To address our senior notes , we continue to explore a number of options that involve various combinations of discount capture, maturity extension, credit enhancement and or improved economics, including the potential use of limited equity.
Because we believe that par payment in a recovered market is achievable. Our appetite to issue, equity is not that great, but it is certainly not off the table in order to obtain other necessary concessions that would benefit the Company and our stockholders today.
We appreciate that to the extent the face amount of our debt were to be meaningfully discounted, then the holders of that debt may understandably seek a commensurate amount of equity compared to what a par claim would suggest.
Our conviction around the underlying value of the business its operating leverage in a recovering and recovered market, and our acceptable strategic options has made that type of transaction, a discounted exchange for more equity dilution, less attractive to us.
Also, forefront in our minds are opportunities to achieve growth through acquisitions that we think are before us now. As some of our restructured competitors have learned. Their new owners have different ideas about this industry in the future of those companies. That has proven to create a unique moment for us to achieve strategic objectives that will be harder to achieve as market conditions continue to evolve.
We have had a number of discussions with various strategic capital providers, including several deep pocketed private equity and institutional investors who proactively sought us out that lead us to believe that there is an appetite to support acquisitive growth under our stewardship.
These considerations also fit within the overall Rubik’s cube that we are working to solve with our debt holders. So there is a lot to be accomplished and a lot that we are working on.
For reasons that are obvious, we refrain from disclosing much of the content of these efforts, because until farm agreements are met, they are not information that we think is actionable by the investing community. Nevertheless, we are mindful that some media outlets are anxious to report on ongoing liability management efforts.
We do not make it a practice to comment on these types of stories when called upon to do so. Our practice is to share information concerning the Company through appropriate channels, such as our press releases, conference calls and security filings. This is the manner in which we communicate with the investing public.
While the Company remains optimistic regarding its ability to come to mutually agreeable terms with a multiple parties I referenced with respect to holistic deal structures that will permit both the addressing of our senior note maturities and the completion of our acquisition efforts. There can be no assurance that any of the contemplating transactions will ultimately come to fruition.
With that said, Let me turn the call over to Jim to take you through the numbers in greater detail.
Thanks, Todd and good morning, everyone. Yesterday afternoon, we reported our second quarter results and updated the forward-looking guidance information contained in the data tables to our press release to provide third quarter and updated annual guidance for 2019 and limited annual guidance for 2020. For various categories of financial and operational data. Keep in mind this information is based on the current market environment, which is always subject to change.
I will begin my remarks this morning discussing our balance sheet and overall capital structure. As Todd mentioned on June 28, 2019 we closed on a new $100 million fully funded senior credit facility that provides us additional liquidity and enhances our financial flexibility going forward.
I won’t go to all of the details regarding this new facility, but you can refer to our earnings release yesterday as well as the Form 8-K are filed on July 5, 2019 for more a detailed information.
The senior credit facility is secured by first priority liens on certain eligible receivables, certain restricted cash amounts and related assets and is comprised of two tranches that will rebalance each month based on the variable receivable backed borrowing base.
The unrestricted receivable backed tranche maybe used for working capital and general corporate purposes including the repayment or refinancing of existing debt subject to among other things compliance with certain requirements.
The restricted cash back tranche may overtime rebalance to the receivables back tranche of eligible receivables increase and maybe refinanced overtime. At closing and as of June 30, 2019 the full $100 million outstanding under the senior credit facility was deposited into the restricted tranche subject to certain post closing undertakes.
On July 30, 2019 all of the conditions precedents to funding the receivables back barn based were met and yesterday approximately $44 million of cash was transferred from the restricted tranche to the unrestricted tranche.
Borrowings will approve interest at monthly LIBOR Plus a fixed spread of 5% for the life of the facility. Upon closing, our total secured debt outstanding increased from $471 million to $571 million. Our second quarter net loss was $31.9 million or $0.84 per diluted share compared to a reported net loss of $37 million or $0.97 per diluted share in the first quarter.
Our reported operating loss was $24.8 million in the current quarter compared to an operating loss of $26.7 million in the first quarter of 2019. EBITDA for the second quarter was approximately $3.6 million up $2.1 million or 140% from first quarter EBITDA of $1.5 million.
Over the past year, we have talked extensively about the GAAP treatment of expenses related to cash settled stock based compensation units and how the liability method has caused drastic swings in our G&A expense and hence our EBITDA.
On June 20, 2019 we received stockholder approval to increase the maximum number of shares available under to the Company’s long-term incentive compensation plan and such shares will be used to settle virtually all of our currently outstanding cash settled awards.
Accordingly in the second quarter, we modified our expected settlement method for accounting purposes as such awards are now expected to be settled in shares. These awards were previously accounted for as liabilities at the awards were expected to be settled in cash.
As a result of this modification our stock-based compensation expense will be fixed in the future periods and our G&A expense will no longer be susceptible to volatile quarterly swings due to mark-to-market adjustments based on our stock price as required by GAAP on cash settled awards.
For additional information regarding EBITDA as a non-GAAP financial measure, please refer to the data tables in yesterday’s earnings release including Note 10. We have not in the recent past given actual dollar value EBITDA guidance and do not intend to do so in the future.
Revenue for the second quarter of 2019 was $57 million in-line with the sequential quarter. Average new generation OSV day rates for the second quarter of 2019 were approximately 18,200 in-line with the sequential quarter.
Utilization for our new generation OSVs for the second quarter of 2019, was 32.3% in-line with 32.5% sequentially. While utilization for our MPSVs for the second quarter of 2019 was 37%, up from 28% sequentially.
Adjusting for - vessel days, the effective utilization of our active fleet of new generation OSV was 70.4% down from 72.1% sequentially. Our effective or utilization OSV day rates we are $5900 in-line with the sequential quarter.
Geographically our foreign revenue was just under $21 million or 36% of our total revenue for the second quarter of 2019 compared to roughly $18 million, or 33% of our total revenue for the first quarter of 2019.
Operating expenses were $40 million for the second quarter in-line with the sequential quarter and we are at the lower end of our guidance range. Aggregate cash operating expenses for the full calendar year of 2019 are projected to be in the range of $160 million to $170 million.
Our operating expenses in each fiscal period can vary based on charter mix, specialty jobs such as float -work versus the standard OSV Mud Run, for example. Geographic footprint and active vessel count. In each of our quarterly earnings releases, we update our forward guidance as these factors and our operations change. In a market like we are in today, changes are constant and the variable factors are many.
So our historical quarterly OpEx is not always a good indicator or predictive run rate for future quarters, reflected in the projected cash OpEx for fiscal 2019, are the continuing effects of several cost containment measures we initiated over the last four plus years, including among other actions, the stacking of new generation OSVs and MPSVs on various dates since October 1, 2014, as well as Companywide headcount reductions and across the Board pay cuts for store side and vessel personnel.
As a reminder, we have provided you with updated full-year and third quarter 2019 OpEx guidance in our press release issued yesterday afternoon. Consistent with our cash OpEx guidance for prior periods, these estimated ranges are good faith estimate based on best available information as of today and are only intended to cover our currently anticipated active fleet complement, geographic footprint, charter mix and industry market conditions.
While our updated guidance is predicated on an assumed average stack fleet of 35.5 OSVs and 2.1 MPSVs for the full-year fiscal 2019. We may consider stacking or reactivating additional vessels as market conditions warrants.
Our second quarter general and administrative or G&A expense of $13 million was up $1 million, compared to $12 million for the sequential quarter. G&A expense for the second quarter of 2019 was at the high end of our guidance range. This sequential increase in G&A expense was primarily due to higher legal expenses. For challenger 2019 G&A expenses are expected to be in the range of $48 million to $53 million.
I will now review some of our other key balance sheet related items for the second quarter. As previously reported, during the first quarter of 2018 we notified the shipyard that we were terminate the construction contracts for the last two vessels under our nearly completed 24 vessel new build program.
As of the date of termination, these two remaining vessels were projected to be delivered in the second and third quarters of 2019 respectively. In February of 2019, we changed our core guidance for the delivery dates of those two vessels to be in the second and third quarters of 2020 respectively.
Due to the amount of continuing uncertainty surrounding the timing and location of future construction activities, for guidance purposes we will not update our prior guidance related to the delivery date and the timing of the remaining cash outlays associated with this program during fiscal 2019 and fiscal 2020 until we have more reliable information upon which to base any further changes.
The aggregate cost of our fifth OSV new build program is expected to remain on budget at approximately $1.3 billion of which $23 million and $38 million are expected to be incurred during fiscal 2019 and fiscal 2020 respectively.
The timing of the incurrence of these final constructions are also subject to change based on the ultimate delivery dates of the vessels which are yet to be determined. From the inception of this program through June 30, 2019, we have incurred roughly 96% of the total expected project cost with surplus $59 million left to go.
For an update on our historical and projected regulatory dry docking activity as well as expected cash outlays for maintenance and other CapEx I would refer you to the data tables on Page 12 or 15 of our earnings release yesterday afternoon.
As of June 30, 2019 the Company had an unrestricted cash balance of $143 million which represents a sequential decrease of $32 million. As I mentioned earlier, as of June 30, 2019 the $100 million of new money funded under the new senior credit facility was presented as restricted cash on the balance sheet.
Yesterday on July 31st, the amount of the restricted cash tranche under the senior credit facility was reduced from $100 million to $56 million and the amount of the unrestricted receivables backed tranche under the senior credit facility was increased from zero to $44 million resulting in a corresponding increase in our unrestricted cash balance.
Pro Forma for this post closing rebalancing our total unrestricted cash balance as of June 30, 2019 would have been about $187 million and our restricted cash balance would have been approximately $56 million.
Our net debt position calculating using our actual quarter end unrestricted cash balance of a $143 million and based on the carrying value and face value of our senior unsecured notes first lien term loans, second lien term loans and senior credit facility was approximately $1.1 billion as of June 30, 2019 up from $1 billion sequentially.
As of June 30, 2019 all of our funded debt was long-term except for $26 million of 2019 convertible notes due on September 1, 2019 and $224 million of 2020 senior notes due on April 1, 2020 which went current on our balance sheet in the second quarter of 2019.
We currently have a blended average fixed cash coupon of about 5.8% on $821 million of total outstanding face value of secured and unsecured debt, resulting in an annual run rate of cash debt service for our fixed rate debt in the amount of roughly $48 million.
After taking into account the new senior credit facility, we now have a floating cash coupon of 8.8% on $450 million of total outstanding face value of first lien secured loans and the senior credit facility, resulting in an annual run rate of cash debt service for our floating rate debt in the amount of $40 million based on our current rates, which will vary overtime.
Cash interest on our first lien term loans and senior credit facility is variable based on a floating rate LIBOR Plus a fix spread of 700 basis points and 500 basis points respectively. The LIBOR rates are applicable to the 30 day trances we currently have outstanding under those two facilities are 2.24% and 2.4%, respectively. The LIBOR spread on our first lien term loan is next scheduled to increase to 725 basis points on June 15, 2020.
For detailed guidance and a granular breakdown of our GAAP interest expense, as well as our projected cash interest and taxes by quarter and annually please see our guidance tables on Page 13 of our earnings release yesterday, which are also available in excel format in the investor section of our website.
We currently project that even with the currently depressed operating levels, cash generated from operations together with cash on hand should be sufficient to fund our operations and commitments through at least March 31, 2020.
However, absent the combination of a significant improvement in market conditions such that cash flow from operations were to increase materially from currently projected levels coupled with a refinancing and or further management of our funded debt obligations. We do not currently expect to have sufficient liquidity to repay the remaining amount of  (Ph) senior notes and the full amount of our 5% senior notes as they mature in fiscal years 2020 and 2021 respectively.
We remain fully cognizant of the challenges currently facing the offshore oil and gas industry and as Todd discussed, we continue to review our capital structure and assess our strategic options and alternative analysis.
We may from time-to-time depending on market conditions and other factors repurchase or acquire additional interest in our outstanding indebtedness, whether or not such indebtedness trades above or below its base amount for cash and or in exchange for other securities, term loans or other consideration in each case, in open market purchases and or privately negotiated transactions or otherwise.
With that, I will turn it back to Todd for any further comments or to entertain questions.
Thank you, Jim. I think we are ready for questions now. Operator?
Thank you. We will now be conducting a question and answer session. [Operator instructions] Thank you. Our first question comes from line of Turner Holm with Clarksons Platou Securities. Please proceed with your question.
Hey Todd and Jim, good morning.
Yes. Todd would say you on balance sounded pretty optimistic. So I would like to ask a couple of questions about that optimism this morning. It sounds pretty clear that you all see a change coming in the second half of the year, so just like to dig into that. First of all, on the OSV side, what kind of rates are you all seeing now, are you seeing anything going over say $20,000 a day and what do you see driving the change in the OSV side?
Yes, Turner. I think we do see the second half is starting to improve I mean there is already known demand drivers that will be coming into the region, U.S. Gulf of Mexico side, Mexico and in the Caribbean basin, which is our backyard.
And as we stated, we do have one of the high spec fleets in the region, or the highest spec fleet in the region. Day rates are just started to stabilize, we did see this past month market was still kind of sloppy and so we chose to stay short, not chase some of the deals that were out there that were still below what we thought the market should be.
But we are starting to see gust of 20 and above 20 for spot jobs as the demand drivers come in we anticipate three to four more rigs being in the Gulf by the end of the year some of that. As rigs come online what could happen in the third quarter, can it be delayed a couple of weeks here and there, of course as we starting up well programs and equipment.
But we do see the market tightening, we do see more equipment leading the Gulf of Mexico, large fact equipment into various regions in what I talked about the Caribbean base and Mexico. So with all of those dynamics at play we just think it’s wiser to stay short and be able to start to get some rates that are reasonable.
Anything on PSVs that are below 25,000 a day you are really not doing much, so I think the rates have to get back to at least 25 and above before we will see positive cash flow. And that is our strategy.
In MPSVs still been a little bit sloppy, but we are start to see a lot of bids and a lot of demands for that equipment. We did say Mexico is going to attract MPSVs, we are starting to see some MPSV inquiries our Mexico to be more of that type of equipment down there. And so the region is starting to stabilize and we just think it’s best for us to be very, very patient at this time and let it gel.
Sure. Yes I appreciate that and I guess it’s certainly pretty clear on the OSV side that there are some positive demand elements coming on and therefore is leading the region. On the MPSV side if I could just dig a little bit further into that because it is just so much less transparent, but I think everybody maybe even including yourselves, but with regard to possible kind of breakout of the range bound pattern we have seen here in the first half of 2019, is there anything specific upcoming work commitments or possible contracts that you see swinging the MPSVs in the back half of the year or it’s maybe just…
I think with eight MPSVs you can have some - a lot of noise in that because these are big drivers as you know of revenues. So for instance we had our largest - the Iron Horse on dry-dock, it’s been on for - you know it’s still in our 10 years survey, a big, big capital outlay to do that.
But she has got a lot of opportunity, she came off of a contract to go to dry-dock, she had to come off early to be able to go to a regulatory dry-docking, she is out for about 45 to 50 days to do that and then she will go back working immediately.
We had some downtime, like we told you last quarter on the Achiever, because a motor that went out that had to be replaced resulting about 25 days of downtime. Those things have a big effect on - when you just have eight in theater, or eight in the market, eight in our fleet.
But we are seeing a utilization starting to finally stabilize, hopefully we will start to get some pricing discipline in that market as well. It seems like when you look at ROV utilization in the region is starting to pick up, some of that demand is of course coming from rigs and other demand is just coming from repair and maintenance installation work throughout the whole region.
So, [indiscernible] and all those places pick up, it’s going to start to demand more MPSV opportunities, Mexico is picking up, U.S. Gulf of Mexico is getting tight on available MPSVs. So I think that we are finally going to have some scarcity in the region where customers are going to need to pick up this tonnage.
Sure. I appreciate that market color. And I guess my last question is just about your comments related to you the creditor discussions, and you sounded optimistic there - with regards to the possibility of getting a deal done with development creditor groups. And I just wanted to try to see if I could understand, is that optimism guided just by the maturity date drawing near or it's more driven by improvement in optimism related to underlying market conditions and sort of how would you gage your optimism...
You know we would have preferred to do it, sooner than toward the end of the maturities you know of course, but it didn't play out like that. Because, the market really hadn't rebound and it is very, very difficult to negotiate intrinsic value of a business, if you can't point to a market that is improving.
And I think now, and you are just seeing it across the Board, not just from what we are saying on this call, but from the drillers, from other companies that are in the deepwater space that things are starting to improve.
And not just in the Gulf of Mexico, Brazil, the whole Northern Coast of South America, Mexico, this whole hemisphere is really starting to be able to point to actual demand drivers when they are coming in, the companies that we service are making announcements that they are doing new projects and so you are not just hearing that from us, you are hearing that from all of our peers in deepwater.
Now we have something to talk about, because this Company has a lot of intrinsic value, it has a lot of workforce in place. The right type of fleet, I think we are a prime candidate to do consolidation. Our military franchise is doing very, very well and in the next several quarters and into 2020, I think you are really going to start to see how that translates into more revenue and earnings power.
Alright. Well I appreciate it. I will turn it back. Thank you very much Todd.
Alright. Thank you so much.
[Operator Instructions] Our next question comes from line of Steve Jones with BTIG. Please proceed with your question.
Good morning all. Thanks for all the information you have given already. I wanted to talk a little bit more in the form of trends. I know in the past you all talked about the second quarter of this year starting the trend of EBITDA moving higher. And I was wondering if you could comment on that, do you see a delay in that, are we still at the lift off point?
Yes. Think what we said actually three quarters ago is that we see the demand drivers coming in the second half of 2019. We are still holding to that, whether that is going to be the first quarter of the third quarter or the second or third quarter of the third quarter, you know that can be sloppy.
Our knife isn't that sharp dealing with big assets that have to come in, get certified, get on location, permits have to be done. So a lot of things have to be done before that drill bit starts and then we are the beneficiary of it as an industry and our Company are beneficiaries.
So we have called the second half of the year as the inflection point, we are still holding to that. Our analysis of demand drivers that are coming in locally to the Gulf of Mexico into the region should validate that in the next quarter or so and through the balance of the year. So yes that is what we have called and we are still holding to that expectation.
And from that point of view on the trending higher, does that mean sort of sequentially is it versus year-over-year, can you put little bit more color around what trending upwards sort of means?
Yes. It's sequentially and I think you are going to see a quarter-over-quarter now. First, we have to get stabilization through utilization first. You got to have the utilization and then we can start trending to higher rate. So what we should see, through the balance of the year is a higher utilization first and then probably start to see our average day rates start to climb.
We would hope it would happen with our patients being the largest player in the spot market. We would hope it would happen together, but it may not, it may be utilization first and then ten rates, but we have seen these markets throughout our 22-year history as we have gone.
Of course we haven't gone through a five-year downturn, but through market swings we have seen those happen symbiotically where because we are a largest spot player with the higher end equipment that we can usually achieve rate and utilization at the same time. But we will see through this market what happens.
Okay. And just lastly along that line, do you see this trending upwards supplanted by acquisitions at all, strategically or do you think it will be organically, you can...
No. I don’t think it will be organically, I think it will be if we are able to grow our footprint will be through acquisitive growth or acquisitions. I think the market still needs to be consolidated. I think that our mindset is more of a regional mindset not a worldwide mindset.
I think these assets are very sophisticated assets to operate and I think expanded control is important. So I think from a regional standpoint meaning our region being the Western Hemisphere, not just the Gulf of Mexico, I think, that is where our main focus is going to be.
Great. That is all for me. Thanks so much.
Alright. Thank you so much.
We have no further questions at this time. I would now like to turn the floor back over to management for closing comments.
I would like to thank everybody for joining our conference call today. We look forward to talking with you in the third quarter. That conference call is going to be actually on Halloween, October 31st and hopefully we will have some treats for you. Thank you very much and stay sailing.
Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.