Ameresco, Inc. (AMRC) Q3 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Ameresco, Inc. Q3 2016 earnings conference call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Gary Dvorchak. Sir, you may begin.

Thank you, Nova, and good morning, everyone. Thank you for joining us for Ameresco's third-quarter 2016 earnings conference call. I am joined by George Sakellaris, Ameresco's Chairman, President, and Chief Executive Officer, and John Granara, the Company's Chief Financial Officer. On the call management will review the operating and financial highlights of the third quarter of 2016. Following the highlights, we will take questions from the audience. Before I turn the call over to George and John, I would like to make a brief statement regarding forward-looking remarks. This call contains forward-looking information regarding the future events and future financial performance of the Company. Ameresco cautions you that such statements are just predictions and actual results may differ materially as a result of risks and uncertainties that pertain to our business. Ameresco refers you to the Company's press release issued this morning and it's SEC filings, specifically our annual report on Form 10-K and our quarterly report on Form 10-Q filed on May 5, 2016. Those documents discuss important factors that could cause actual results to differ materially from those contained in the Company's projections and forward-looking statements. Ameresco assumes no obligation to revise any forward-looking statements made on today's call. In addition the Company will be referring to non-GAAP financial measures during this call. The non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. A GAAP to non-GAAP reconciliation, as well as an explanation behind the use of non-GAAP financial measures, is available in our press release as well as in our prepared remarks. I will now turn the call over to George Sakellaris. George?

Thank you, Gary, and good morning, everyone. We had a good quarter and the year is shaping up as we expected. Revenue exceeded our expectation and gross margin was up 21.5%, well above both last quarter and last year. Most important was our earnings performance, which is our highest priority. Net income was up 37% and adjusted EBITDA was up 19%. Year-to-date our revenue is up 4.4%. Net income of $8.6 million was up significantly, better than the $2 million in the same period last year. Adjusted EBITDA was up 28%. This meets our ongoing goal of growing earnings versus revenue. New awards in the quarter were $78 million, bringing the year to date new awards to $482 million. Our contracted backlog is 17% higher than this time last year. We also continued to build our portfolio of distributed generation assets, which is a critical element of our broader goal to increase higher margin, recurring revenue stream. In the third quarter, we invested $24 million in operating assets. This brings our total to $45 million of investment so far this year. Year to date energy sales are up over 15%. During the quarter, we also increased our penetration in underrepresented regions. We're making good progress in California and Texas and we made progress in other states as well. A good example is the state of Georgia. Last year we mentioned winning Ameresco's first project there, thus opening that market for us. Based on recent awards, we expect revenue from Georgia to grow nicely in the years ahead. As we near completion of the restructuring of our operations in Canada, we are seeing what we consider to be positive results. Year to date revenue in Canada is up 6.3%. Growth is being driven by attractive efficiency projects with solid profitability. We are also making new firsts in Canada that demonstrate our long term potential there. For example, Ameresco was awarded its first military base project in Canada, a great fit for us given our extensive work with the Department of Defense in the U.S. We have responded to a number of military RFPs and believe this factor can drive growth. We are also winning innovative projects such as a municipal scale street lighting project with smart controls in Ontario. We are in the development phase of a 4 megawatt battery storage project for Ontario's Independent Electricity System Operator. These projects are examples of the innovation that help us sustain our leadership position in our industry. This can be further demonstrated by examining three projects that highlight Ameresco's advanced approach to energy solutions. One is the Ninety First Avenue Wastewater Treatment Plant in Phoenix, Arizona. In August we announced a multimillion dollar biogas project there. We will design, build, own, operate, and maintain an innovative biogas to green energy facility. The facility will process the raw wastewater biogas generated in the anaerobic digesters into renewable natural gas. The green gas will be delivered via pipeline to California, where it will be used in vehicles. This work is expected to be operational in late 2017. Another large and comprehensive efficiency solution is represented by our work with the Federal Bureau of Prisons. In September, we announced a $53 million project for the 776 acre complex in Butner, North Carolina. The Bureau of Prisons is a repeat customer and this is their single largest ESPC ever awarded. More than 2 million square feet of correctional buildings will be addressed by this project. It will include the installation of interior and exterior LED lighting upgrades, a comprehensive HVAC overhaul with smart controls, chiller and refrigeration improvements, and water use reduction controls. Ameresco will also construct a 3.1 megawatt on site solar system which will provide more than 8% of the facility's current electricity demand. The project is also expected to reduce water consumption by 40% and deliver over $3 million of annual cost savings. Butner illustrates why our U.S. federal business is so strong right now. Federal projects revenue was up 40% this quarter and year to date is up 54%. Even with that level of growth, we are optimistic on the outlook for federal in the quarters ahead. Last month, the White House announced that they are extending the Presidential Performance Contracting Challenge by three years, through 2019. This will leverage an additional $2 billion of projects on top of the $4 billion already committed. This extension will solidify the use of ESPCs as business as usual and should help with the transition into the next administration. We are confident this demand driver will endure through the election, because it is driven by great economics. By using ESPCs, federal facilities win financially and structurally, while also delivering environmental benefits. We anticipate that these benefits will drive more federal opportunities for us. Finally, our project with Roxbury Community College here in Massachusetts demonstrates our ability to combine complex energy technologies. The college is in the middle of a major renovation project and decided to take advantage of this to upgrade their energy infrastructure. Ameresco's ESPC with this urban college is expected to deliver $20 million of upgrades, a substantial amount, on top of the $43 million campus wide renovation already in progress. The project includes 23 separate energy saving technologies. A key one is our conversion of one of their parking lots into a cutting edge alternate energy source. Geothermal pumps are being installed under the parking lot, turning it into a heating and cooling source that is expected to meet 90% of the college's needs. Above the parking lot will be canopy solar capable of generating 1 million kilowatt hours per year of electricity. We are also installing 60 electric vehicle charging stations and, by the way, we did all this without reducing the capacity of the parking lot. These three projects indicate the direction in which Ameresco and our industry is evolving. Projects are getting larger and more complex. They are using more sophisticated technologies to impact more resources, thus driving more savings than self-funded infrastructure upgrades. With this type of complexity delivering positive results, we should not be surprised to hear that analysts expect our industry to accelerate its growth over the next couple of years. Now let me turn the call over to John to provide more details about our financial results and guidance. John?

Thank you, George, and good morning, everyone. As we get started with the financials, please note that unless otherwise stated all the amounts I reference relate to Q3 2016 and the comparisons are for the year-over-year changes. In reviewing our results, the prepared remarks on our website offer both our lines of business and our traditional segment reporting. This will keep the time series comparable for you. Total revenues of 180.6 million were down 4.5%, but were slightly ahead of the higher end of our guidance range of 170 million to 180 million. We are pleased with the solid revenue growth in both the small-scale infrastructure and federal segments, which are up 36% and 31%, respectively. As expected, Canada revenue was down as we finish up the large problem housing projects. Business in Canada is now shifting to smaller, more focused, and more profitable projects. Also, as expected, integrated PV sales were down due to the weakness in the oil and gas market. Finally, our core project business was impacted by the delay of two projects in our contracted backlog. Gross margin was 21.5%, up from 19.2% last year. The improvement was mainly driven by a better revenue mix with a greater portion of higher-margin recurring revenue which included a fair amount of renewable energy incentive revenue, which naturally boosts gross margin. Moving down the P&L, SG&A expense was 28.9 million. That amount included a 2.2 million reserve related to the SunEdison bankruptcy and 0.4 million of lingering charges related to our earlier restructuring actions. We elected to reserve amounts of accounts receivables that we believe may not be collectible due to the bankruptcy of SunEdison. However, we are still attempting to recover the assets associated with the projects. Without the bankruptcy reserve and restructuring charges, SG&A would have been 26.2 million and 14.5% of revenue compared to 26.6 million and 14.1% of revenue in the same period last year. We still have approximately 750,000 of unreserved receivables outstanding with SunEdison. Operating income was 9.9 million, which compares to operating income of 9.7 million last year. This equates to operating margin of 5.5% in Q3 2016. Operating income was higher than last year on both a dollar and percent of revenue basis. Below the operating line, other expenses were 2.3 million. This includes approximately 1.7 million of net interest expense. Our effective tax rate in the quarter was approximately 24%. Net income was 5.7 million, up 37%, and earnings per diluted share were $0.12, up 33%. Non-GAAP diluted earnings per share were $0.16 up 78%. Our bottom-line performance fulfilled our expectation that we would improve profitability in Q3. Adjusted EBITDA was 19.2 million, up 19%. Adjusted EBITDA margin in the quarter was 10.6% compared to 8.5% in the same quarter last year. Note that we are continuing to invest significantly to strengthen our presence in new U.S. regions. Turning to the balance sheet, I will highlight what happened during the quarter so all of the comparisons are sequential. Cash and equivalents, including restricted cash, was $30.8 million, up $3.1 million. Accounts Receivable, including retainage, was $102.5 million, essentially flat. Project assets were up $22.6 million, bringing the total to $279.3 million. As George mentioned, we invested approximately $24 million of CapEx into projects that we plan to own and operate, which brings us to $45 million of investment year-to-date. Consolidated debt of $128.8 million was up $9.2 million. Nonrecourse project debt is $100 million, representing most of our total debt. The debt increase was largely due to draws on the line of credit that we used to fund the assets in development and construction. As a reminder, we used the line until we put permanent project financing in place, which normally occurs after the asset is placed into operation. During the quarter we repurchased 503,000 shares of common stock for $2.5 million. We had approximately $5.6 million still authorized under this program as of the end of the quarter. Now that three quarters of the year are behind us, we are encouraged by our financial results year-to-date. Our solid results provide us with continued confidence in our annual guidance. With only a couple months left in 2016, we naturally have better visibility, so we are tightening the revenue range we offered at the start of the year. However, we are maintaining our earnings range since we have been improving our profitability. For the full year, we expect revenue to be in the range of $645 million to $660 million. We expect EPS in the range of $0.25 to $0.30 and adjusted EBITDA to be in the range of $51 million to $57 million. Please keep in mind that the guidance we've provided excludes the impact of any noncontrolling interest and all charges related to the SunEdison bankruptcy or our restructuring activities. With that, we would now like to open the line for questions. I will turn the call back over to our coordinator, Nova, to run the Q&A session.

[Operator Instructions] Our first question comes from the line of Noah Kaye of Oppenheimer. Your line is open.

Good morning, gentlemen. Nice quarter. Maybe just to start with the O&M line; it looks like revenues are down just a touch year over year, while your project revenues have been growing a fair amount year over year. Can you just help us understand what drives that recurring O&M piece higher, George; which kind of initiatives do you have there to increase that? I know that's been a focus for you.

The special amount of the O&M comes behind some of the larger contracts that we execute, whether the federal government or a particular college, and then we have an O&M contract right behind it, like the Savannah River which is for [20 years]. In addition to that we have been winning some contracts for operation and maintenance, let's say, for a cogeneration facility. One of the last contracts we won, Novartis, for example, they built a cogeneration facility in Cambridge and we were selected to do the operation and maintenance for that particular job. And we have some other ones. So we have people that they focus in selling more operation and maintenance contracts behind our existing performance contracts or sometimes we may build an asset. Some of the smaller cooperative utilities, electric utility companies, we have built landfill-to-gas projects for them. They own them, but they have asked us to operate them and maintain them. And I think we had it in our portfolio a couple contracts where we have the operation and maintenance. So we have a focused effort of expanding the operation and maintenance business of our company. The primary is behind our existing contracts, but we have gone outside that and tried to get other projects as well, especially where we have the capabilities and presence. For example, in California we operate in I think seven or eight of our own landfill gas to energy projects, so it's a great market for us to add projects for other people that we will operate and maintain.

Okay, thank you. That's very helpful.

The only thing I would add there is that we are like our core projects business, there is some lumpiness as to when the new O&M agreements will start. For example, I know that Savannah River phase two is coming online towards the end of the year. So on an annualized basis our actually O&M recurring revenue is up; you're just not seeing that yet. So year to date we are up 8%. We would expect that to, on an annualized basis, be moving closer to that double digit growth which we have talked about in the past.

Okay, great. That's very helpful. George, you mentioned some pretty innovative projects that you have 4 megawatt battery storage, municipal scale street lighting. How are you assessing your current technology integration capabilities? What do you need to do in terms of bringing on any additional competencies to serve the marketplace as demand for some of these, let's say, relatively newer applied technologies comes into the market? How do you feel you are positioned from a technology integration perspective?

I think the Company is very, very well positioned. Like the LEDs, we were one of the early companies that we started converting traffic signals and then also financed them way back in the early 2000s when not too many people would tackle those kind of projects. And now, especially on the LEDs when it comes to the streetlights, we have expertise within the Company. What we have done, we have identified a particular individual that we think is a great developer and a great leader and pretty much he is in charge for the whole company to educate the rest of the Company for that particular technology. We did the same thing with battery storage. Again, a new technology and we have hired individuals and actually that is [Indiscernible] industry that they have the expertise in the battery storage and they are with us now. And we have done a couple smaller installations, but you see us that basically we are getting into larger and bigger projects associated with that. So the key to staying competitive in this business and ahead of the competition is basically staying up on the technologies and that's one of the expenses in the last two years that the investment, I would say, that we made. And I think it's beginning to pay off because the projects are getting more complex out there and that gives us a competitive advantage.

On a related topic, you spent some several quarters I think at least educating your workforce on the solar side. You noted an update 60 megawatts equivalent of assets in development, but can you give us an update now on what you are seeing in terms of the broader opportunity set for your renewable pipeline? Maybe what kind of rationalization are you seeing in solar project returns? And can you just update us on how you are fixed for tax equity capacity?

As far as the tax equity, we have resources and that's helping us a lot because we cannot use the tax equity right now. And for all the projects that we have in our pipeline or even some of the projects that we look in some other developers that might be developing that they have a hard time financing it and we are looking to take some of that over for our company. So from the financial point of view, we are -- and John can add to that -- we feel we are very, very good position. As far as the market and what we were thinking of putting in place this year, of that 30 megawatts I think we will probably exceed that we have in development and profession. But a good chunk of them, because of the utilities they have, especially in Massachusetts, substantial backlog, we will not be able to connect them on the grid. So don't be surprised that most -- a good chunk of them will be -- although mechanically completed by the end of the year as required by the new rules, some of them they will be operational probably the second quarter of next year. And in the market, even though the Massachusetts has slowed down, we have expanded and look for opportunities across the country, especially in areas where there's pretty good [SReg]. Like New York is a good market we target; New Jersey, Maryland, California of course, and so on. And the fact that we have all the salespeople out there, it gives us again a competitive advantage in the marketplace.

Okay, great. Finally, just one more from me, you gave us an update on the share repurchase program. What are you thinking in terms of the -- do you have a target in terms of the timing of completing that program? And can you just remind us how long that authorization lasts until?

Yes, so the authorization is open-ended. It's really a dollar amount, Noah, and so we have approval and authority right now to execute 10 million. That's why I said we had 5.6 million remaining at the end of the quarter. I would say that I would expect to be -- if we were to continue to purchase, and I have to preface that, at the same rate then we probably would be substantially completed with it by the end of the year. And we would then revisit our plans for capital allocation at that point in time.

Okay, thank you very much.

Thank you. Our next question comes from the line of John Quealy of Canaccord. Your line is open.

So, First on the revs, so fully-contracted backlog at $443 million I think it is; that's the highest in five or something years like that, but you tweaked down the revenue range a little bit by $20 million for the year. Is that timing? Did you pull too much into Q3? Just walk us through the offsetting things here that we see with the great backlog but rev guidance comes in a little.

Yes, I mean I think the near-term revenue guidance, it's really one quarter, John right and so I think when you look at our contracted backlog and that's going to be recognized over a 12 to 24 month period. So I can say a couple of trends that we are seeing is that the larger projects are taking a little bit longer. George mentioned the Bureau of Prisons project and the square footage and you're navigating through correctional facilities there, so that's a project that is going to take a little bit more time. The other thing that we are impacted by is client direction and whether or not they are going to give us access to their locations and sites. So certainly that's impacting the short term impact. As I did mention, we did have two significant projects that were delayed. And that is part of the reason that's driving down from the top end; bringing us down is that we had a project in the state of Illinois that was delayed and then also a large Housing Authority project that was delayed. And so those two items impacted the near-term results. Long term, we still feel very good about where we see things. I don't think it's a permanent trend. I think that we are able to absorb the delays still and we are still hitting the revenue guidance. More importantly, and more encouraging, is that we are maintaining the earnings so we are actually starting to see the operating leverage of the model with the higher revenues coming from the higher-margin recurring revenue streams.

Thank you for that. In terms of the backlog again, you had a great gross margin quarter this quarter. Talk to us, if you would, about the characterization of gross margin in the backlog. Is it similar? Can you break out federal versus nonfederal? Just give us a little more color, if you don't mind, on that backlog for the next, like you said, 12 to 24 months.

Sure. At the consolidated basis we are probably trending a little bit towards the top end of our guidance, in that 20% range, in a normalized environment. I say that because we did, you may recall we did have a few million dollars slip out of Q2 that came into Q3, so if you look at year-to-date that's probably in line for where our margins are going to be, which is a little over 20.5%, 20.6%. So we are just above the high end of our, on a consolidated basis. I will say that the larger projects do have naturally a lower gross margin as a percentage of revenue, because there's a significant amount of materials that come with those projects. So that will naturally bring the project gross margins down, but overall I would still say in the mid to upper teens for the project-based businesses is where I would still see that. Then, of course, the O&M revenues are more in the 20% to 25% range; similar for the operating assets. I don't see a significant change in the next 12 months, so I think where we're at right now is probably where they will remain. I think where we are hoping to get operating leverage is on the OpEx line. As you see, we are actually able to reduce our operating expenses year over year, excluding the restructuring charges, so that's where we are going to be able to get a lot of operating leverage as we continue to grow the top line.

John, my last one for you, while I have you, the SunEdison write off; remind me again why you are not taking the remainder $750,000 on the balance sheet just to get rid of it. Is it more of a legal thing or why not just flush it out?

It's a good question. So we do have a line of sight for the remaining amount. Now nothing is guaranteed and, of course, we have a lot of things that we need to navigate from a legal standpoint, but the amount we had left remaining, the $750,000, is actually something that, as of right now, we think we may be able to recover. Of course, we will be updating you going forward on a quarterly basis, but as of right now, we do have visibility into recovering the $750,000.

Okay, so moving forward we shouldn't be thinking about other charges with Sun? It's done and we are anticipating $750,000, some sort of recovery on that dollar?

That's where we are today. I think there's still a lot of legal work to be done. I wouldn't say we are not going to have any additional charges. I think that we have some legal navigation to do and obviously through the bankruptcy it is still not 100%. Clear but I can say we have a tentative line of sight to that $750,000.

Okay. George, Canada I think alluding to the previous question. A lot of interesting things going on up there with streetlights and energy storage. Remind us again how you reconstituted that office. These projects are a little bit technology forward for you guys, as I would've thought, versus what Canada was several years ago. So is it a different philosophy or that happened to be what was in the RFP pipeline?

Good question. First, as you recall, we downsized that office and restructure it. We reduced the number of employees and the number of offices. Then what we tried to do integrate them more with the rest of the Company and bring some of the technical expertise that we have across the United States in Canada as well. For example, on that federal contract that we won for the military in Canada, the proposal was developed by both groups, the federal group from the United States as well as the group up in Canada. When it comes to the battery storage, again the people from Framingham, the experts that we have hired to help us in the rest of the Company, are helping the Canadian group develop that expertise. And the same applies in some other opportunities as we are looking at their combined heat and power and the streetlights. Again the person that runs for the United States group on the LEDs for the streetlights was an integral part of selling that particular project up in Canada. So we have integrated and made it more part of what I would say the overall company. And as you probably know, we did hire a new president up in Canada, but he is reporting to one of the senior executives out of central region.

Got you, okay. Let me add two [indiscernible].

Try to make it more and more look like the rest of the Company.

Well, you've done a good job thus far. So two more for you, George.

It looks good so far.

And I assume, while we keep talking about this, the margins are so good there, right? They are innovative projects, but they are better than average margins; is that a way to think about it?

This is what I wanted to point out. When we compare them to some of the old projects that the previous teams had signed up its perceivably better and that's why I implicated on my remarks that we signed energy efficiency projects with reasonable with good profitability. They are probably, I would say, a little bit lower size in the United States profitability, but it's pretty good.

Yes, yes, okay. So bigger question for you, George; back to the contracted backlog, back to that five-year mark. When you go back five, six years you start to see backlog numbers of 500 million, 600 million contracted. Is that possible in the next several years based on the platform you have? What needs to happen, if anything, from a policy or Btu price arbitrage? If you could just give us your thoughts on the recent momentum you've had and the sustainability of it.

The traction -- getting back to the five to six, I don't know if we have -- were we ever above $500 million? I don't think so, but it's possible to get there and that's our goal. We do want to get to over 500 and 600 over the next few years. I think we do have visibility that we will get there. As far as the market, let's say the federal that it continues the pace that they are right now. We've been getting excellent traction and a good number of requests for proposals. We are responding to them. We win in a good portion of the market. So if that were to continue, let's say for the next two or three years, it will be very, very good for us. In addition to that now, if you recall, last year the central region was the best-performing region for us and this year it's probably the weakest performing region. The reason behind it, the state of Illinois, with some of the budget issues that they had and because we are doing about over 50% of our business in the state of Illinois, that shorts us. But on the other hand, if you look at the Southwest region, last year it was one of the regions that wasn't performing very well and this year it's the best-performing region. So if somehow, someway we get all the states in the United States to be on the uptrend [indiscernible]. The Eastern region again we have seen good visibility for the next couple of years, so if we get the rest of the country behaving the same way like the East and the West and the federal government continues the way it is and Canada is staying on track, because right now we have very good visibility for the next year or so, there's no reason why we cannot get to $500 million to $600 million of contracted backlog and have a solid development pipeline of projects that we will own, assets we will own. So otherwise, continue with our plan of increasing the recurring revenue stream from assets that we will own and operate.

Then lastly, George, since I.

It's a long winded answer, but that's.

It's a good one. Let me ask you M&A; I know you're never going to give me your real thoughts. But, generally speaking, do you see more opportunity to pick up businesses on the cheap or not; it's still a fairly frothy market for multiple?

We always look and we evaluate them very, very carefully, but for the last year or so we were focusing more fine-tuning where we have. That's why you see focusing on the profitability, reducing operation and maintenance. One of the target goals that we have that we have over 10% going to EBITDA from the top line. This past quarter we were at 10.6% to the EBITDA line. I was talking to John and I said we made it. He said, no, we have to have $180 million quarter each and every quarter and then we would be in good shape. But I don't want to avoid your question. We will continue to look at opportunities. The prices have gone up considerably, but in pockets here and there, especially smaller companies, we will take a hard look at them. I will tell you one thing: some of the mistakes that we made in the past when we got to the software and some other business, you're not going to see us that ever again.

[Operator Instructions] And our next question comes from Neil Gagnon of Gagnon Securities.

Good morning. John, on the estimates that you give, you give $0.25 or $0.30 for the year and I believe that's a GAAP number. If I wanted to look at a non-GAAP number, would I add roughly $0.12 to that?

We would have to tax effect that, Neil, but through the year that would seem about right. But I would have to.

Well, you have a [indiscernible], so I'm saying maybe $0.12 add for the year?

Sounds reasonable.

Okay, good. Just wanted to get that clear, thank you.

Sir, I'm showing no further questions in queue. I would now turn the program back to George for closing remarks.

Thank you, Nova. Before we conclude, let me summarize the key points of our performance. The year is shaping up quite well. Year-to-date revenues up 4.4%. Net income is up significantly and adjusted EBITDA is up 28%. We are growing earnings faster than revenue, our top priority. We are also building visibility. Year-to-date the project pipeline is up 17%. Total backlog is up 6%, driven by year-to-date new awards of $482 million. Contracted backlog is up 17% compared to this time last year. We are achieving this by hitting our strategic objectives: increasing market penetration, entering new geographies, growing the distributed generation portfolio, and reducing costs through restructuring and efficiency initiatives. We are a leader in an industry that is poised to grow meaningfully in the next few years. Our leadership position is driven by our embrace of innovation and an ability to execute. Innovation drives our solutions. Whether it's solar, geothermal pumps, energy storage, biogas, biomass, wastewater treatment, smart networks, or controls for lighting and HVAC, Ameresco offers the highly skilled engineering and design talent required to integrate, implement, and finance these technologies. Before we end, I want to thank our great employees for their dedication, innovation, and hard work. I also want to thank our customers for choosing Ameresco as their trusted sustainability partner. With that, we will close the call. Thank you for your attention and interest. We look forward to updating you on our progress again next year. Thank you and have a good day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a wonderful day.