Arq, Inc. (ARQ) Q3 2017 Earnings Report, Transcript and Summary

Good morning. My name is Sharon and I will be your conference operator today. At this time, I'd like to welcome everyone to the Advanced Emissions Solutions Q3 2017 Earnings Conference Call. [Operator Instructions]. Thank you. Ryan Coleman, Alpha IR, you may begin your conference.

Thank you, Sharon. Good morning, everyone, and thank you for joining us today for our third quarter 2017 earnings results call. With me on the call this morning are Heath Sampson, President and Chief Executive Officer; and Greg Marken, Chief Accounting Officer. This conference call is being webcast live within the investors section of our website. A webcast replay will also be available on our site and you can contact Alpha IR Group for Investor Relations support at 312-445-2870. Let me remind you that the presentation and remarks made today include forward-looking statements as defined in Section 21E of the Securities Exchange Act. These statements are based on information currently available to us and involve risks and uncertainties that could cause actual future results, performance and business prospects and opportunities to differ materially from those expressed and/or implied by these statements. These risks and uncertainties include, but are not limited to, those factors identified on Slide 2 of today's slide presentation, in our quarterly report on Form 10-Q for the quarter ended September 30th, 2017 and other filings with the Securities and Exchange Commission. Except as expressly required by securities laws, the company undertakes no obligation to update those factors or any forward-looking statements to reflect future events, developments or changed circumstances or for any other reason. In addition, it's very important to review the presentation and today's remarks in conjunction with the Form 10-Q and the GAAP references in the financial statements. So with that, I'll turn the call over to Heath Sampson. Heath?

Thanks, Ryan, and thanks to everyone for joining us this morning. Let's begin with Slide 3 and review some of the highlights. Our business plan continues to mature and our momentum continues to build. We saw yet another strong quarter of distributions in the Refined Coal segment as well as continued efforts in the validation of our chemicals business against an increasingly competitive landscape within the Emissions Control segment. Our cash position remained strong, which grants us the flexibility to dynamically evaluate our capital allocation plan and structure. We also remain focused on our shareholder return initiatives paying the second quarterly dividend in the company's history in September and approving the third yesterday, which will be payable in December. Overall, we feel -- we are feeling very well positioned to execute our strategy as we progress toward the end of the year and beyond. The third quarter continued to see favorable progression in the Refined Coal segment of our business, which was reflected by the transaction for half our RC facility in late July, ongoing strong distributions from Tinuum as well as continued momentum in our tax equity investor pipeline. Distributions from Tinuum were $11.9 million during the period, in line with expectation and above the prior year of $10.7 million. For the first 9 months of the year, Tinuum distributions have totaled $37 million, which were nearly 18% higher than the $31.5 million in distributions through the first 9 months of last year. In addition to these distributions, we had a sequential and year-over-year increase in royalties driven by additional RC units that are royalty bearing. Quickly circling back to the July RC closure, this project is located at a coal burning power plant that has historically burned in excess of 3.5 million tons of coal per year and is royalty bearing, which increased the number of invested facilities to 15. Looking forward, we have continued to observe sustained strength in our tax equity investor pipeline through a combination of factors including partial clarity provided by the technical advice memorandum or TAM, a more favorable political environment as well as the continued efforts of the broader Tinuum team. Given the current administration's tax reform plan and focus on corporate tax rate reductions, I believe it is prudent to remind investors that we do not believe that reductions in the corporate rate will significantly hinder the ability to lease additional RC facilities. Potential and existing tax equity investors are large taxpayers and therefore we do not anticipate a diminished interest in tax equity. Additionally, we are proactively managing potential tax changes with the current contracting process to help provide stability to current -- to the current and future pipeline. That being said, the uncertainty of tax reform is somewhat of a hindrance on our marketing efforts. Uncertainty simply slows the sales cycle and adds additional complexity for potential prospects. Thus although a potential tax plan has been set forth in recent days, there remains a fair amount of questions related to the ultimate outcome of various components of that plan. These questions and uncertainties may continue to impact current and future RC deals. That said, our early read on the recent health proposal and most of the initial rhetoric remains positive for our business. We have numerous current and new tax equity investors engaged and are optimistic to future RC closures in the near future. On the Emissions Control side of our business, we observed lower revenues from the legacy equipment business which was expected. We also continued to validate our proprietary patents and related products within the chemicals business. Though revenue was down sequentially in our chemicals offering, remains higher on a year-over-year basis and we expect this nascent business to provide lumpy quarterly sales as we test and build out the viability of our products within the consumables market. The backdrop within this industry has proven very competitive with a more rigorous sales cycle and elongated customer acquisition period than we originally anticipated. This dynamic and competitive market has been evidenced by a recent sale of an activated carbon producer and a recent closure of certain facilities producing activated carbon due to the uncertainty in the marketplace. This heightened competition has led to suppressed pricing and related margin compression at least in the near term. Competitors have lowered their prices dramatically in an effort to maintain market share or even survive. Because of this pricing pressure and changing marketplace, many buyers are re-evaluating their supply contracts. Thus we too have been impacted by this negatively as one of our newest and largest customers suspended use of our offering. However, the short-term loss of this customer was influenced by the potential of implementing refined coal as a portion of their emissions control compliance plan and thus, this could still prove to be a very valuable relationship for the company. Regardless of the competitive environment, the good news is our customer acquisition pipeline remains healthy and we have various RFPs in process. While we're a new player, we have a very strong balance sheet and low cost business models. Thus we are well positioned to compete effectively. This business is resource lite not cash intensive and provides a recurring stream of revenue once we've been integrated into the customer operations. So despite the increased competitiveness, we remain confident in our offering and continue to believe that we can return healthy margins on a long-term basis as the industry right sizes itself and stabilizes. Overall, as I reflect on our progress year-to-date, I am very pleased with the continued momentum in our most important RC business, our further transformation to an efficiently operating public platform and our successful shareholder return accomplishments. I'd now like to turn the call over to Greg Marken, who will review our third quarter financial results.

Thank you, Heath. Let's start on Slide 5 to review our third quarter financial results. As Heath mentioned, we observed lower revenues during the third quarter almost entirely attributable to the decrease in revenue derived from our legacy equipment business. Total revenue for the quarter was $2.3 million compared to $15.7 million in the third quarter of the prior year. Again, this decrease was expected and future quarters will yield minimal equipment revenue as we complete our historical commitment to that business and work through the remainder of our backlog. As discussed in the 10-Q, upon the adoption of the new revenue recognition standard on January 1, 2018, we anticipate all material currently contracted equipment systems to be recognized through an opening balance sheet adjustment. Thus we would not expect any material equipment revenues in 2018 under the new revenue recognition standard. Revenue generated from the chemicals business came in at $717,000 this period versus $670,000 last year. As Heath discussed, this newer start-up businesses is expected to yield lumpy quarterly sales figures as we continue to validate our proprietary chemical technology offerings and compete for market share against a fragmented and dynamic environment. The main takeaway from this period is the strong pipeline of potential buyers and our continued assessment of the landscape that is increasingly shifting to a commodity market. As such, the commodity based sales process with potential buyers has led to some margin compression as we continue to compete for an expanded customer base. The process involves being on site with the utility and actually getting the product itself into the potential buyer's hands. From there, potential buyers will complete a test cycle, which can lengthen the duration and potential cost of the client acquisition cycle. This trend has been industry wide as new competitors have entered the space, which has led to price and margin reductions for these mercury control consumable providers. As a result of our pricing adjustments and increasing industry competition, we expect this compression to persist into 2018, but expect to be near 25% margins by the end of 2017 and fully expect revenues to increase as well. Our strong existing relationships with utilities have aided in the effort to build out this segment of the business and we remain confident in its commercial application moving forward. Distributions from Tinuum for the quarter were $11.9 million, up over 11% from the prior year of $10.7 million. For the first 9 months of the year, distributions from Tinuum were $37 million, nearly an 18% increase from the $31.5 million last year. Royalties for the quarter were $2.8 million, up from $2.1 million one year ago. The increases in distributions and royalties were the result of additional invested refined coal facilities compared to last year, all of which are royalty bearing to the company. Net income for the quarter of $5.8 million was below that of the prior year of $9.6 million, an 11% reduction. This reduction was primarily due to the increase in tax expense as a portion of the deferred tax asset valuation allowance was released as of the fourth quarter of 2016 as well as the reduction in equipment margin contribution offset by the significant decrease in operating expenses. Our commitment to trimming our overall operating cost structure has helped foster our increased cash position, which has grown to $26.8 million in cash and cash equivalents. This is up over 100% from the $13.2 million at the end of 2016. These levels are inclusive of the 2 quarterly dividends paid, the $13 million used to repurchase nearly 1.4 million of outstanding shares and the release of the remaining restricted cash balances. This cash level has provided us the necessary liquidity to both continue to validate our chemicals business as well as to execute our capital allocation and shareholder return plans. Also, operating expenses within the RC segment continue to be minimal, which should further facilitate growth in our cash levels. For the third quarter, total operating expenses exclusive of cost of sales were $4.2 million. This represents a 22% reduction from the $5.4 million one year ago. The reduction was driven by significant decreases in legal and professional fees, payroll and rent. Our overall cost structure is nearly in line with our previously targeted run rate of $13 million to $15 million of cash cost per year. We feel that we can operate efficiently at that level and we will continue to evaluate potential reductions to achieve that target. I'll now turn the call back over to Heath to walk through our go-forward strategy.

Thanks, Greg. I'd like to take a moment to review our go-forward strategy in each of our business segments. Let's start on Slide 7 and talk about the current refined coal environment. As I mentioned earlier and on our last earnings call, the refined coal environment has undergone favorable shifts this year. After somewhat of a frozen environment in 2016, the IRS' publication of the technical advice memorandum as well as more favorable outlook on domestic coal production has led to significant build in our tax equity investor pipeline. The publication of the TAM and what we believe was a validation of our tax equity model has brought both new and legacy investors to the discussion table and we have been very pleased with the pace and cadence of those negotiations. We see the July closure and the expected near-term future RC deal closures as affirmation that our model, approach and the favorable landscape has provided an environment that is more conducive to multiple RC closures. Slide 8 shows the current invested in operational facilities versus the non-invested facilities that are not operating. As of September 30, Tinuum has leased or sold 15 facilities with the remaining 13 facilities either installed and awaiting a tax equity investor or awaiting for a utility and tax equity investor. But the challenge here again does not necessarily lie within identifying the utilities, but rather in identifying tax equity investors to invest in the idle units. As shown in the right side of the slide, there is enough capacity for Tinuum to effectively double production provided the remaining facilities can be leased or sold. Slide 9 provides the quarter-by-quarter breakdown of Tinuum operating volumes and retained tonnage. As a reminder, retained tonnage is tonnage we operate on our own behalf. We pay the operating expenses, but also receive the tax benefits. You'll see that the sequential tonnage has increased as is normal with third quarter volumes, but also was positively impacted by the increased number of invested facilities. These increases and related increases in cash payments from Tinuum will continue to allow us to execute our capital allocation initiatives as we collect future cash flows. Our top priority is to obtain more investors as fast as possible and build on the cash payments we receive through 2021. Slide 10 shows the royalty versus non-royalty schedule. This schedule has been updated to reflect the July closure of half of a facility. This closure pushed the number of royalty bearing facilities to be greater than non-royalty bearing facilities. Again, all future RC closures are expected to be at power utilities that are royalty bearing to the company. Let's continue to Slide 12, which outlines the emissions control opportunity environment. As I discussed earlier, over the last few quarters we have observed an increasingly competitive environment as numerous industry players continue to compete for market share that was significantly overestimated a few years ago. The rapidly changing market dynamics have required a nimble and proactive approach to remain competitive and win customers in what has appeared to be a race to the bottom type environment. This is evidence of excess inventory in the market as well as shown by the recent idle facilities by a major activated carbon producer and the sale of another major activated carbon producer to an international company. Going forward, we do expect to see some consolidation coming given the level of fragmentation in the market. We anticipate that the companies will simply have to buy size in order to salvage margin. In addition, as we previously discussed, the market is increasingly driving to a commodity type market without significant consideration for IP advantages. In response, we've had to adjust our pricing to reflect this added inventory and tight competition. I would also like to quickly mention that the current administration's repeal of the previous administration's clean power plan regulation will not affect MATS regulations. So, these changes are unlikely to have a material effect on our normal business operations and go-forward strategy. Lastly, regarding the emission control segment, I'd like to reiterate that our operating income will be entirely driven by the chemicals business as our equipment business is no longer material. We believe that it is important to compete in this emission control segment as the surviving entities that have scale will have recurring revenue for many years to come. I expect that the winners and losers in this marketplace will shake out over the next 12 months. Flipping to Slide 13, this slide shows the expected future cash flows through 2021. As of September 30, we are expecting between $225 million to $250 million in consolidated cash flows through 2021. This figure is based on the 15 currently invested facilities and does not reflect the expectation of any future RC closures. Slide 14 shows our balanced capital allocation plan moving forward. As previously mentioned, our high cash flows continue to fund our Tinuum initiatives, our organic investment in chemicals business, optimization of our public platform as well as our shareholder return initiatives. The company paid its second ever quarterly dividend of $0.25 per share on September 7 for over $5.2 million and a total of $10.5 million returned between the first two dividend payments combined. In addition, yesterday the board approved the third dividend payment, which will be paid on December 6. This dividend plan is expected to return in excess of $21 million to our shareholders annually. Finally, I'd like to like to again lay out our strategic approach to M&A moving forward. Given our strong generation of free cash and the expected further consolidation within the industry, we remain diligent for strategic roll-up type acquisitions that could theoretically complement our emissions control segment as well as provide both revenue and expense synergies by leveraging the ability to provide bundled products and services to our customers. On the other hand, we will also look for investment opportunities outside of the power market that do not require operating resources and allow us to monetize our tax assets. We've outlined an explicit set of criteria any acquisition would have to be -- have to be an ideal fit. Basically we need to clearly believe that an acquisition will provide more shareholder value than buying back stock or dividending additional cash. We are committing additional resources to increase deal flow as the current activity has not met our expectations. Let me conclude today by revisiting our 2017 goals and priorities on Slide 16. We remain focused on helping Tinuum close the remaining RC facilities with tax equity investors; completing the remaining EC equipment commitments on time, on schedule and on budget; capturing an increased share of the $300 million to $500 million mercury control market and continuing to build out the viability of our chemicals business; evaluating a dynamic and fragmented fossil fuel market in the U.S. and/or other markets to potentially provide investment or M&A opportunities and finally, executing against our balanced capital allocation program to distribute and create value for our shareholders. Let me extend my thanks to both our team and the extended Tinuum team for their efforts this quarter. We are entering a new stage for this company and I am extremely excited to continue to execute -- execute on our strategy and provide near-term and long-term shareholder value. Lastly, I'd like to once again thank our shareholders for your ongoing support. With that, we'll open the line for questions. Operator?

[Operator Instructions]. Your first question comes from Amit Dayal from H.C. Wainwright.

Any visibility of closing any additional RC facilities before the end of the year?

Yes. Like we talked about the -- we have many good discussions and are close on a couple of facilities. What's in front of us right now is the recent house bill that came out around tax reform so everybody is digesting that. So as we move through that and there's more clarity in that because it does need to be finalized, we just got to make sure that what's in there is currently what we expect to be in there and that our -- that our investors that are close agree with that. So, we should expect closures this year.

Understood. And in regards to the chemicals business, you said you're seeing some pricing pressure, but at the same time have you lost any customers or are these customers just not sort of ordering as frequently as they used to? Can you give us some color on that aspect of the business?

Yes. So, most of our activities because we're new to the market is trying to displace incumbents so that's a lot of our activity. We have, like I mentioned in the script, 1 of our largest customers has stopped buying from us as they have higher weight this dynamic market. There's a lot of pricing movement and different competitors are doing different things. So in the short term, we have lost 1 of our large customers not because they've gone to a competitor, they're just using their current solution right now. So, we expect that there will be a -- again this will be competitive for the next number of months. There's a lot of RFPs with large utilities that are currently out and those should expect to be awarding over the next number of months. So, it will be clarity within this market for us and for everybody else in the marketplace in this next year or so.

Understood. Just one last one from me. On the R&D side, I'm seeing some fluctuations over the last 3 quarters. Can you talk about what's driving this fluctuation?

In the quarterly numbers, there is a little bit of noise in previous quarters about some of the reimbursements we've had from legacy Department of Energy reimbursements. Right now our spend is fairly focused to just monetizing our current IP portfolio so this last quarter is probably more representative of what we should see going forward.

Your next question comes from Sameer from H.C. Wainwright.

Just to follow up on some of Amit's questions. The RC facility that was deployed in July, it was 50% or 49% owned or sold something like that, am I right?

Yes. So, the right way to think about it so half of the facility was with an external third party, the other half is retained by Tinuum and therefore we get our -- basically our half of that other half. So it's fully monetized, which is half in an external, half with Tinuum.

And so the royalty payments and the actual proceeds from Tinuum to you, how should we look at them? Should we look at it as a whole facility and then expense it somehow or can you explain how you look at it accounting wise?

Yes, I know, it's a good question. From a royalty perspective, assume that it is a full facility because the full facility was monetized so we will get royalties for a full facility. Because we are in essence monetizing ourselves or what we say retain from a Tinuum perspective and externally, the cash flow is about neutral. So, the cash we receive from the investor and the cash that we need to fund the operations of retained facilities is basically a push. So, that's the right way to think about that. We also -- but the other thing you have to realize when you're building out your model is that we're going to receive tax assets on our half that we have invested as well. So cash flow neutral, tax assets going up, royalty payments assumed as if it's a full facility.

Okay. And then one last one. The remaining RC facilities, should we expect the average tonnage or capacity to be the same as the previous 15 already installed?

I think it will be trending up over the previous 15 and closer to that $4 million-ish per facility.

Your next question comes from Kevin from Stifel.

My question is in regards to the chemicals. Can you tell me about corrosion in the different products that are available and competitive advantages out there?

So, our proprietary technology no one can use in the chemical space. The chemical we use, we basically can use at least 10x less. So when you think about the impacts around primarily the halogens, the competitor product is more corrosive and that's a major advantage for us being able to go into a power plant is that our technology is less corrosive. In addition, because there's less, it's easier from a supply chain perspective and operating perspective and then where we place it allows for an ease of operation. So you put all that together, that's our main competitive advantage compared to the corrosive competitor's products and more operationally intensive as well. But really when you think about that, it's also important for us to be competitive on price. Though we have those competitive advantages and the protected IP, we've needed to properly pivot and have a more competitive price because that's a major factor for a majority of the utilities to survive.

All right. And just kind of a follow-up. The less corrosive side of it is what you anticipate to drive the business?

Yes, that's one of the factors that's a big competitive advantage for us versus our competing product. Absolutely.

[Operator Instructions]. Your next question comes from Steve, private investor.

Former crew with RBC. At any rate, it's been a long time and I'm wondering could you explain to us in layman's terms why we're not making greater use of the tax credits you have on the books right now to offset those tax liabilities?

So if you're sophisticated to look at our balance sheet and see that we have a lot of tax assets, a good portion of those tax assets are reserved but we do have a lot of tax assets and the potential to get more tax assets. So, we are using -- the reason why a couple quarters ago that we were able to release our valuation allowance were for a couple reasons. We cleaned up the company and are not burning cash flow and in addition to the positive momentum and progress that we have in the refined coal business, we're utilizing significant tax assets each quarter and you can see that as each quarter goes by and Greg talked about it that we are utilizing those tax assets. And with those cash flows that we expect through 2021, we will utilize our tax assets for that. So, the right way to think about it is that we have enough tax assets currently on our book to shelter a good chunk of our expected income from the RC facility. The other thing that I mentioned, we are currently looking at investment opportunities that allow us to further utilize tax assets. So it is an important part of our strategy, we've started to execute on that as we're using them and we expect to continue to look for opportunities to use even more.

Okay. So, if I understand you correctly, you're amortizing the assets that you have on the books over good results in '21 lifespan of ex-credits have hopefully gone forward from there.

Yes. Maybe said a different way, we're utilizing our tax assets to shelter our income that we expect to have over the next number of years. That's correct.

Okay. Secondly, you indicate that you anticipate given the 15 units are currently deployed and monetized that you should be able to generate upwards of $450 million through to the end of 2021. And the market, apparently given the limited coverage that we have at this point, is valuing the company essentially at that level not giving any credit at this point to maybe further expansion of the chemical business or acquisitions that you might have. Is there any way forward as to how you might be able to expand that outlook or possibly coverage from analysts to increase the market cap in the company because it seems to me your market cap will diminish, share price will diminish as more and more cash is distributed as time goes on without some expansion going forward.

Good insight into our current stock price versus the cash that we have coming in, you're correct. I can tell you my philosophy -- our philosophy is to execute and improve those results, that's the best way to show to current shareholders and future shareholders that we are doing more than what we have. So, that's priority 1 and I feel really good about where we are with the RC business and though slower where we are with the chemical business. And then 2, the other optionality around potentially having investments. So, that is absolutely our priority to increase value and therefore increase our cash flows coming into the business and therefore stock price. But we'll be disciplined in that approach and we'll continue to evaluate whether it makes sense to dividend back or buy more stock back. But you're correct in your assessment, let the results speak for themselves. We'll continue to be in the marketplace telling our story and I'm optimistic that as we continue to execute, that will be reflective in our shareholders and hopefully our stock price.

Okay. Just one last comment. I know it's impossible to project in terms of future, but is there any hope that you can see in 2021 or before that that Congress would like to extend the Section 45 tax credit that will expire at the end of '21.

Yes, I get that question a lot and though we are close to everybody in Washington and the necessary regulators in the space, I think it's very unlikely that the tax credit in Section 45 particularly as relates to refined coal would be extended.

In my recollection that the credits as per Section 29 tax credits had been extended at some point [indiscernible]?

That's a good question. There's definitely a different time in this environment especially in the energy space and for sure in the coal burning fireplace -- coal burning utility space. So, I don't remember if that happened in Section 29. Again I think it's unlikely in our current environment that these tax credits will be extended beyond 2021.

Your next question comes from Shantanu from BlackRock.

My question is regarding the RC facilities, I just want to revisit some of your comments there. You said you hope to close on a couple facilities this year. Given it's already November, there isn't that much time left in the year so you really are saying that you're pretty optimistic on closures over the next 45 days or so. Is that the right read that if this conference call is not held today, but maybe a month or so in the future, there would be a little bit more tangible progress to potentially talk about on the monetization front?

It's a good question, Shantanu, and I was deliberate in my words around near term without giving a specific timeframe because these discussions that we're in, it really has to do with tax reform. So because I feel good about where we are, I didn't want to nail us down to a specific date because of the uncertainty that potentially could come out from the government in this. So we feel good about where we are, I think it's the right read to save through this year and if that changes, of course I'd be updating you. I'm giving some information that I think we're close and if that changes, I would let you know as well in this near-term future. So, again I think we're in a good spot this year to have a few closures in the near term.

Understood. And then is it correct to read as well that on your forward pipeline, the average facilities are larger than your current facilities. It looks to me that your average facility today is running something like 3 million tons per year and I think you said maybe we should be using something like 4 million tons on any future closures to the extent you can close them. So, kind of the future monetizations could be 30% plus bigger.

Yes. I think on average, that's the right thing to do, it's 4 million tons. There's a wide range of what it could be for our utilities that are there, but I'm confident that it's going to be above our current run rate in average for the remainder of those facilities. So, I think that's a good range to use is the 4 million tons.

Got it. And in terms of tax reform in your pipeline, you guys are obviously in active negotiations. Have any of your potential customers gone through the tax reform and kind of blessed it and said there are no whammies here?

Yes. So, I like your term no whammies. That was a big part of what we looked at, Tinuum looked at and our related attorneys looked at in the House bill and there are no whammies against the credit itself so that's wonderful news. So, really it's down to what else is in that tax reform that would affect the business case. What's the rate going to be, the corporate tax rate going to be? When is that corporate tax rate going to be effective? What is the effect potentially on the AMT? So there's no whammies, which is great, and we don't expect there to be whammies to continue to use your term.

But some of that is also a positive right on the AMT?

Yes. It's the right way to think about it. I think what we see in tax reform is potentially positive and opening up other parts of the market. I don't want to get too bullish on that because it's new and who knows the timing of that. But in general, I think the right way to think about it is there's nothing negative in there. Now, it's just trying to the plum the business case based on what the expectations are and how this final plan does nail out. We'll update you more as time goes of course.

And the final question from me, just talking about cash. I mean you're sitting on a lot of cash and over $1 a share at this point going into year-end. Is the board considering special dividends and more share buybacks? I know you talked about M&A. But can you talk a little bit more about the dividend and buyback potential?

So, it's definitely that cash is on our balance sheet and if in the event that we don't find anything in the right timeframe that would truly be accretive to our stock price, then it's absolutely on the table to do buybacks or dividends. So we're evaluating that on a quarter-by-quarter, month-by-month basis and we'll make the right decision as we move through the rest of this year and next year.

Great. Hopefully we get some positive news into year-end. Good luck.

At this time, I will turn the call over to the presenters.

Well, thanks again to everyone for your time today and your continued support. I look forward to updating you all on our progress. Have a great day, everyone.

This concludes today's conference call. You may now disconnect.