Good day, ladies and gentlemen, and welcome to the Baker Hughes Company Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Jud Bailey, Vice President of Investor Relations. Sir, you may begin.

Thank you. Good morning, everyone, and welcome to the Baker Hughes third quarter 2020 earnings conference call. Here with me are our Chairman and CEO, Lorenzo Simonelli and our CFO, Brian Worrell. The earnings release we issued earlier today can be found on our Web site at bakerhughes.com. As a reminder, during the course of this conference call, we will provide forward-looking statements. These statements are not guarantees of future performance and involve a number of risk and assumptions. Please review our SEC filings and Web site for a discussion of some of the factors that could cause actual results to differ materially. As you know, reconciliations of operating income and other GAAP to non-GAAP measures can be found in our earnings release. With that, I will turn the call over to Lorenzo.

Thank you, Jud. Good morning, everyone, and thanks for joining us. We are pleased with our third quarter results as we successfully managed the company through the immediate impact of both the pandemic and the industry downturn, while also accelerating our long-term strategy. From an operational perspective, I'm pleased with continued solid execution on cost out from our OFS and OFE teams, as well as the commercial success and performance demonstrated by TPS and DS. We also saw continued free cash flow generation during the quarter and expect to be free cash flow positive for the year. As we move forward, we continue to be intensely focused on improving the margin and return profile of Baker Hughes despite the near-term macro volatility, while at the same time executing on the long-term strategy to evolve our portfolio along the energy landscape. After significant turmoil during the first half of the year, oil markets have somewhat stabilized. However, there’s still quite a bit of uncertainty expected over the next several quarters as demand recovery is becoming to level off and significant excess capacity remains. The outlook for natural gas is slightly more optimistic as forward prices have improved with strong demand in Asia and lower expected future gas production in the U.S. On the economic front, the global economy has rebounded from the severe contraction experienced in the second quarter. However, the recovery so far has proven to be quite uneven and the risk of a second wave impacting economic demand remains relatively high. While some industrial sectors have experienced the rebound in activity, others have remained somewhat suppressed. The current environment has also resulted in the acceleration of different parts of the economy, including technology adoption and the acceptance of new ways of working and living. Importantly, one of these areas,…

Thanks Lorenzo. I will begin with the total company results and then move into the segment details. Orders for the quarter were $5.1 billion, up 4% sequentially, driven by TPS and DS, partially offset by declines in OFS and OFE. Year-over-year orders were down 34% with declines in all four segments. Remaining performance obligation was $23 billion, up 1% sequentially. Equipment RPO ended at $8.3 billion, up 4% sequentially and services RPO ended at $14.7 billion, down 1% sequentially. Our total book-to-bill ratio in the quarter was one and our equipment book-to-bill in the quarter was 1.1. Revenue for the quarter was $5 billion, up 7% sequentially, driven by TPS, OFE and digital solutions, partially offset by declines in OFS. Year-over-year, revenue was down 14%, driven by declines in OFS and Digital Solutions, partially offset by an increase in TPS. Operating loss for the quarter was $49 million. Adjusted operating income was $234 million, which excludes $283 million of restructuring, separation and other charges. Adjusted operating income was up 124% sequentially and down 45% year-over-year. Our adjusted operating income rate for the quarter was 4.6%, up 240 basis points sequentially. We are particularly pleased with the margin improvement in the third quarter, which was largely driven by our restructuring execution. We have achieved roughly 75% of our $700 million in cost out initiatives and are on track to complete the rest during the fourth quarter. Based on our execution to-date as well as additional opportunities that we have identified through this process, we feel confident that we can exceed our initial cost out estimates by the end of this year. Corporate costs were $115 million in the quarter. We expect corporate costs to decline slightly in the fourth quarter versus third quarter levels. Looking ahead to 2021, we expect our…

Thanks Brian. Operator, let's open it up for questions.

[Operator Instruction] Our first question will come from James West with Evercore ISI. Please go ahead.

Lorenzo, I just want to a dig in a little bit further on LNG so that I can level set expectations here. Clearly, the cycle seems to be restarting with major award in the third quarter in Qatar. Is this the -- I mean, I’m not [worried] [ph] about that. Is this the restart of liquefaction build out cycle or was that one off, or is there large number as you know of main projects that were going to be FID-ed this year but things changed, or are we at the beginning of that FID process again?

Yes, James, as we've mentioned before, I think you've got to look at LNG on a longer term basis. And we've always said it's cyclical and obviously, very pleased with the North Field expansion project in Qatar. And I think, again, it's in line with our expectations with where we see LNG on the long term. And if you look out to 2030, again, we expect there to be a demand in place and a capacity requirement for about 650 million to 700 million tons. So if you think about going forward for the next three to four years, you've still got between 50 million tons to a 100 million tons of projects that need to be FID-ed. We're very well positioned for those and we stay very close to those. And as you think about LNG, natural gas, we see it as a key aspect for the energy transition, both from a transition and destination fuel and enabling the reduction of coal usage. So again, we’re very much in line with the continued expansion of LNG and natural gas usage.

And then, Lorenzo, hydrogen becoming a very big topic, part of a lot of the rebuilding stimulus around the world. Something you and I talked about back in April when we talk about -- more about LNG, but it seems like the topic has just grown in size. And you mentioned on the call that you're in discussions. But could you talk about what you're seeing in the background here, maybe not seeing in hydrogen. How much activity is really out there and kind of what's the opportunity set for Baker?

Yes, James. And as you said correctly, there is a lot of interest in hydrogen, and congratulations also on the report you published. I think the excitement is really around where hydrogen can be used in the energy transition towards a zero emissions fuel source, and we're seeing increasing activity. I think it's important to note that hydrogen has been around before. And in fact from a Baker Hughes standpoint, we've been active in hydrogen since 1962 with our compressors. And in fact, we have over 2,000 compressors that are utilized in hydrogen applications today. Where we play is clearly on the compression and generation side. As we see hydrogen continue to evolve, we see an opportunity to play across more of the value chain. As if you think about it, we've got our turbines today that already can run 100% on hydrogen, as well as a mix of both natural gas and hydrogen. We see that increasing as we go forward also our compressors that are actively used. And so when you look at the value chain, there's really an opportunity across the generation and also the movement to storage, liquefaction, and also end destination of hydrogen. I look at hydrogen paralleling the story of LNG. And if you look back 30 years ago, the natural gas expansion and also what we’ve seen in LNG is I think what we'll see also with hydrogen and they'll play together as we go forward. And we're uniquely positioned with the technology investments we've made to participate in the evolution of hydrogen, like we have done with natural gas and LNG. So feel very good about the future prospects there. Early days. But again, something we're staying close to and we've got a history of proven technology in it.

Thank you. Our next question will come from Chase Mulvehill with Bank of America. Please go ahead.

I guess first question, just kind of talking about OFS and the restructuring initiatives that have been ongoing there, some obviously pre-COVID. But really, I think there's kind of two components as we kind of dissect kind of the OFS and restructuring. So you got the associated costs out from the total of the $700 million that you mentioned across the entire organization. So you got a portion of that that’s allocated to OFS. Then also kind of pre-COVID, you had initiatives in OFS to drive better connectivity, optimize supply chain, enhance the service delivery platform and really drive down product costs. So maybe if you can just take a minute update us where you are today on these initiatives and maybe talk to the path towards double digit margins in OFS?

Yes, Chase. Look, you hit the highlights there. Very pleased with how Maria Claudia and the team exercised their operating muscle this quarter. The whole company did a great job on the restructuring. We're about 75% of the way through that. OFS is ahead of that. And you're absolutely right. Their margin improvement is not just coming from what we launched in April, but it's the results of a lot of the work that we talked about in 2019 around supply chain, around product cost, around process optimization. So really a lot of efforts from the team and the results of multiple work streams. What I will say is that we do anticipate having some better results from a cost-out standpoint and that's really a result, Chase, of all this work and finding opportunities as we execute on the restructuring and then some of these other initiatives that we've talked about. In terms of opportunities and the path to get OFS back to double digits, feel good at these volume levels and what we talked about the outlook for what we're seeing in the market in 2021 that the team can certainly get there. We've got more to go on the restructuring. As I said, there's more to come in the fourth quarter and we're confident that we're going to exceed the targets that we talk to you about. And we're still in relatively early days in some of the other process improvements around supply chain, around facilities optimization, process optimization that we've embarked upon. So there's certainly opportunities there and feel good about the pathway to get to double-digit margins. We're not going to stop at where we are today and the pipeline keeps growing.

And a quick follow-up, Brian, really is on free cash flow. And obviously, you've given us some guide points to 2021 across the segments. And obviously, it looks like it's leading to -- implies EBITDA will be up on a year-over-year basis. And when we think about 2021 free cash flow, could you talk to the moving pieces? Obviously, I think you talked about $800 million of -- or there had been $800 million of kind of cash restructuring and severance and things. But maybe talk to how much of that goes away next year. And working capital, CapEx and just kind of the different moving pieces for free cash flow and would be happy if you want to give us a number but definitely, the moving pieces would be helpful.

Yes, nice try there, Chase. Anyway, look, it's a bit early to be very specific, obviously. But based on everything we're seeing in the market today and how the business is performing now, I'll give you kind of the framework and the way I think about it. I think around CapEx, it should really be similar to what this year, assuming similar activity levels that we talked about and how we're seeing the market. Working capital should actually be neutral. And I think how that plays out it's really going to depend on the OFS activity levels and then progress payments from any new orders that come in on TPS and OFE next year. But based on what I see today, I'd say neutral is a pretty good assumption around working capital. And then you highlighted one, the biggest change coming into next year is really around restructuring and separation charges. We expect that to be materially lower in 2021. So with the increase in earnings coming through and then the tailwind from restructuring and separation charges, it should support a material improvement in free cash flow in 2021. And look, Chase, I think you've seen the power of the portfolio and what we can do from a free cash flow standpoint in the last couple of years before we headed into this heavy restructuring. And in those years, we had restructuring and merger-related charges come through there. So that gives you a good gauge about the power of the free cash flow conversion of the portfolio.

Thank you. Our next question will come from Sean Meakim with JPMorgan. Please go ahead.

So let me spend a little more time on TPS. Good results in the quarter, you're able to hold in the margin, you pulled through a lot more throughput on a backlog that was good to see. Orders were solid, Qatar not in there yet. So that's also helpful. One of the key concerns for investors is the trajectory for TPS beyond '21. So next year, you have pretty good visibility on top line growth, some margin benefits should get pulled in there. Post Qatar, large awards look limited, at least in the near term. And so I think there are concerns around 2022 and beyond. So maybe could you just give us an updated view on the trajectory in terms of the moving parts where you have visibility beyond next year?

Yes, Sean, I'll talk through some of that, and I will say the first phase of Qatar is in the orders number this quarter. So that's a good first step here. So look, thinking beyond 2021, the orders that we've got in backlog right now and that we'll book here in the fourth quarter we'll definitely have a positive impact on '21 and '22, given the conversion cycle. So there is some visibility into that. And based on what we're seeing today, Sean, the orders environment next year should be okay. It looks pretty solid. So I'm feeling relatively positive about that. And then I think the other thing that somebody's got to take into account and we certainly look at it, as you think about 2022 and beyond is that the service revenue should continue to expand given the growth in our installed base, a lot of the installs that you've seen come in over the past couple of years and the service agreement profile that we have. So look, this combo of services likely growing faster than equipment when you get beyond 2021 is certainly a tailwind for margin rate. And then the other thing that I would add, Sean, is we talked a lot about growth initiatives for the company and where we're pivoting to from a capital allocation standpoint. A lot of that is in Turbomachinery, and I'd particularly highlight some of the industrial growth areas where it's not really a lot about technology, it's about commercial models, it's about commercial resources, some small investments there. So you will start to see some of that kick in a little more materially when you get to 2022, 2023. So look, I think overall, the TPS backdrop for 2022 and beyond is constructive. And obviously, we'll continue to update you as things evolve. But I think there's a lot of positive momentum in the business. And with the cost out and the way Rod and the team have restructured things to run the business, I feel positive about where we're headed.

Just to complement that, Sean. If you think about, again, a question previously around LNG. Again, we still see about three to four projects for next year. And to the point of the energy transition and also the application of our products in the industrial space, you've got the industrial gas turbines, the NovaLT family, which has been released. You've also got the valves business. And so we're increasingly having conversations on how can people drive efficiency and lower carbon footprint across pulp and paper, across metallurgy and other industries. So there's an adjacency aspect there. And again, it will take some time but we feel good about the prospects of TPS.

And then maybe to clarify the prior question on free cash in the '21 or just to dig in a bit deeper. By the middle of next year, we'll be wrapping your fourth year post the initial deal between Baker and GE. If anything, the challenges the pandemic accelerated the restructuring plan. And so I'm just curious why there should be any charges of materiality next year. Could you maybe just clarify where and why we should still see more charges next year that could have a drag on cash?

Yes, Sean. I mean anything that would come through would not be material anywhere near the level that we're talking about here, you're right. We have accelerated a lot of the actions that we were looking at into this year. The thing I would say is as we go through this process and as we work on driving OFS margins and returns higher, we have seen some areas where there could be some potential opportunities for additional cost out and additional improvements. Anything that we would do, Sean, in this space would have incredibly quick paybacks. And again, nowhere near the levels that we're talking about right now, so minimal in terms of additional charges, if at all.

Our next question will come from Angie Sedita with Goldman Sachs.

So thanks for all the details, Brian, really very helpful and nice to see the margins across the board given the cost out program. So if you could, maybe you could talk about '21 margins and maybe the path of margins across segments, you touched on it briefly, but additional color there. And then if you could also give us an update around where you think normalized margins will be for each of these businesses, given the cost out?

As I said, I'm really pleased with how all the teams have performed here in executing on the restructuring in this incredibly tough environment. So look, just a little bit on '21 and then we can move over to what we think on a longer-term basis. Given the profile of Oilfield Services, with a potential second half recovery if oil prices improve but international is still down year-over-year and North America relatively flat. We believe all the cost out actions that we've taken in OFS to translate to modest margin improvements in 2021. So you'll have the carryover of all this cost out that we've worked on. Similar story for Oilfield Equipment. While revenue will be down year-over-year given the order intake in 2020 and I think the environment will be a little soft next year as well, we think we'll maintain positive operating income, given the cost out that we've done that should offset the volume declines. On TPS, look, again, the revenue growth next year will be driven by backlog conversion, and we think services should rebound some given that maintenance can't continue to be pushed out. So I'd expect solid growth in operating income, driven by higher volume but that equipment mix could actually impact the margin rate, Angie, but still great performance by both pieces of the business. And then DS margin rates, should be getting back into the low double digits for the full year as volume recovers in the broader industrial space. I think aerospace and oil and gas might still lag a little bit. But given how we position the business, I think we're in good shape there. And if you take a step back and look more broadly, look, as I said earlier, I feel really confident about OFS getting into the…

So maybe going back to the hydrogen and carbon capture and so forth. I mean, it's really nice to see this leadership and the energy transition. And maybe, Lorenzo, you could talk about where you see the biggest near-term opportunities versus long-term opportunities, whether it's hydrogen and the hydrogen blend or 100% hydrogen on the turbines or is it compression, and compare that to the path and opportunity set for carbon capture?

So Angie, first of all, I think clearly, it's going to take some time as we evolve on the energy transition. And again, if you look at the presence of oil and gas, that's going to remain in the short term. As we position ourselves, I think CCUS is particularly important as you look at the Paris Agreement and reaching some of the climate goals. We see an increasing discussion with our customer base of both on brownfield and greenfield LNG projects of incorporating CCUS. In fact, we've got experience of already some LNG projects utilizing carbon capture and sequestration. So I think near term, there's the opportunity there. Hydrogen is going to be longer-term as the infrastructure is built out. As you look at energy transition, though, I think, Angie, a lot of this is going to be predicated also on some of the government policies. The technology is very much in place today and we've proven the technology in many cases and we've had it for some time. We need to make these from an economic justification standpoint standalone as well. And some of that's going to come through with the increasing government policies over the next few years and some of the subsidies that get put in place. We're seeing a lot of activity in Europe. You've seen the statements by China and where they want to get to from a net zero perspective. So again, evolving space and we're going to be playing our role and with the technology that's required.

Thank you. Our next question will come from Bill Herbert with Simmons. Please go ahead.

So getting back to cost out. I'm curious as to how much more relative to the original $700 million target. And so these are a few questions embedded in one. One, how much of that is OFS? Secondly, in light of the redefined market opportunity in Lower 48, it's not just debt or in maintenance mode but the industry, from your client standpoint, is consolidating rapidly and significantly. That's not a good outcome for Lower 48, OFS, anyone. And so I'm just curious as to how you guys think about that and how much more do you need the cost out and then more over additional portfolio adjustments in light of the fact that you're not only in maintenance mode but your client base is shrinking.

Yes. Bill, I'd say on the cost out, look, not really going to provide a revised estimate at this time. But we do see upside coming through here in the fourth quarter. And roughly, we said about two thirds of the cost-out comes from oilfield services. And the incremental is probably about -- it's about that level, maybe a little bit higher from where the cost is going to come out. I mean, again, I just want to, again, congratulate Maria Claudia and the team for exercising some pretty strong operating muscle here and working hard on the cost-out. So that gives you a rough guide as to where you'll see that come through and we'll update you as we roll through the quarter and report out on earnings, just how much that was. In terms of what's going on from a portfolio standpoint and what's happening in the marketplace, and Lorenzo can jump in here as well. But I think if you look at some of the consolidation that's happening, you're going to have larger players. I think a lot of those players are going to look at technology to help them drive better cost, better performance, better return to their customers. And actually, that bodes well for us. So we've got good relationships with these customers and think that we can help them make a difference. And from a portfolio standpoint, look, we'll continue to look at the places where we actually can generate returns that meet our hurdle. And that may mean that we don't do some things or we partner in different ways with others to do things that maybe we don't think are the right thing for us to offer as part of an integrated package. But we're being quite flexible and very pragmatic about it and are committed to getting higher margins and returns, particularly in OFS.

And last one for me, with regard to Q1. Is the seasonality that you're expecting at this point typical or atypical? And if it's atypical, how is it so?

Look, I'd say, right now, everything I'm seeing, Bill, would say it's going to be typical seasonality. I don't see anything that will change that at the moment. If we see any different indicators, we'll certainly let you guys know. But right now, I'd say it seems pretty normal from a seasonality standpoint.

Thank you. Our next question will come from Scott Gruber with Citigroup. Please go ahead.

Brian, I want to circle back on your comments that working capital would be broadly neutral next year. I think it's better than the expectation in the marketplace. So just drilling down a little bit, I thought as we look at the contract liability in TPS, I thought that, that would unwind some and present a headwind, maybe a couple of hundred million bucks. Correct me if I'm wrong there. And then as I think about OFS, since working capital is driven by changes in your current accounts from year-end to year-end, it would seem that the recovery in OFS exit-to-exit would present another working capital headwind even if we just get back to the maintenance levels. So is that fair? And if so what are the offsets? You mentioned down payments on new TPS orders. But are there others that neutralize the potential headwinds from your two larger segments?

Yes. So, Scott, you're right on the progress collections. We have built up that progress collections liability as we've increased our orders particularly in Turbomachinery. But as we talked about specifically we look to keep those projects free cash flow positive over the life of the project. So look, I don't expect this decline in the liability to be a materially large cash drain in 2021 or 2022 at this point. And a few things to think through. Look, the increase that you have seen will draw down over the next two, two and half years, as we mentioned. Look, you can still clearly see the progress liability on the balance sheet, but what's harder for you to kind of untangle or partial offsets is just on the asset side. Typically, when we get an upfront payment, we place orders for long lead items, we bring inventory in and build up inventory on our project. In addition, there will be some receivables associated with that project as well. So it's not exactly a one-for-one in terms of the cash flow impact that you see in the progress collections line. Another consideration, as you mentioned, is what the future awards are going to be like over the next couple of years. So look, based on the project cycle, where we are, how each of those projects should perform from a free cash flow standpoint. Again, I don't see that being a major drag as we go into next year. And then around OFS, you're right, as activity levels increase, typically, you do see a working capital drag. A couple of things I would highlight. As part of the work we've been doing in OFS over the last couple of years to really drive better free cash flow performance we've made a step-function change in both the collections and order to remittance process, as well as the inventory input process. And feel good about the new processes that we have in place and that we'll be able to manage incremental volume while continuing to improve our inventory turns, as well as our days sales outstanding. I mean, we've made great improvements since coming together in 2017 and there's more that can come there. So we're all incentivized on free cash flow. It's the largest piece of our short-term incentive plan. And we've got pretty good processes in place to capitalize on that as volume returns. The other thing I would mention here is OFE, in particular. We're in a cycle in OFE that's probably been more of a draw on working capital just given where the projects are in their execution phase and that should turn around as we go into next year as well.

And then just a quick follow-up on TPS aftermarket. Obviously, you had material COVID disruptions this year but there's also an upcoming tailwind from the last LNG build-out cycle. How much does TPS aftermarket recovering in '21 and then what's the follow-on growth potential in '22? Any color there on growth rate potential would be great.

Yes. We do see a modest increase in services revenue next year after it's been declining in the low double digits so far this year. I think contractual and transactional services have behaved this year roughly as we expected. The areas that have been a little bit weaker have been in upgrades as well as services on pumps and valves in the midstream and downstream space as customer’s pretty aggressive on preserving cash and minimizing OpEx. So when I put all that into 2021, I do expect some level of recovery on the things that have been deferred from this year from a transactional services and for pumps and valves. So I would expect that. There could be some movement from next year into 2022 in that space. But do expect the contractual services to improve next year and into 2022 and beyond based on the LNG build-out as you pointed out. And then the other thing that I would say that could snap back relatively quickly depending on what's going on in the environment are upgrades. There's a lot of activity right now in that space, particularly around decarbonization and an opportunity to make a dent there. So I'd say the commercial team and the engineering team are pretty busy. Customers aren't ready to pull the trigger on those yet given the environment, but that could be materially better as we go into '21 and '22. So again, a positive backdrop for services underpinned by the contractual services. And then on the transactional side, we know what parts have to be replaced. We know what maintenance needs to be done. It's just a question of when.

Thank you. And our final question on today's question-and-answer session will come from Blake Gendron with Wolfe Research. Please go ahead.

So one question, two parts. Two areas of the digital industrial realm, that would be great to dig into. The first is on asset performance management through the BHC3 partnership. It appears that refiners and camp facilities are attacking the structurally lower demand environment by accelerating APM adoption. It seems like you're going up against some industrial software providers, perhaps some equipment OEMs. So what gives you confidence in being able to win in such a nascent competitive landscape? And then the second area I want to dig into is additive manufacturing. We've seen a ton of start-up activity in this realm. It's not new technology per se but perhaps nearing inflection point for multi-industry adoption. Is this mostly a cost-efficiency lever for Baker and supportive core segments kind of along the lines of Chase's question on supply chain? Or is this something you can monetize in core and diversification end markets? Thanks.

Yes, Blake, just first of all on the digital transformation, and you're right. We're seeing increased levels of activity around really implementing digital transformation at both our customer sites and then also internally ourselves within our internal processes. We're very happy with the BHC3 relationship. You'll have seen that we've developed applications that we're providing to our customers. And again, it's a drive towards reducing nonproductive time. And we're able to do that through advanced analytics. And what's unique about C3.ai is the artificial intelligence that it has and the ecosystem that its created, which isn't just used within the oil and gas space but it's used in multiple other industries, defense, banking and C3 has been regarded externally as a pioneer in artificial intelligence. So we're having good success in the conversations with our customers and also with applying it internally ourselves. So we see that continuing. I'd say COVID has actually accelerated the application of digital transformation, as you've also seen with our remote operations that are taking place. And we see that continuing as people drive for productivity. On the aspect of 3D printing and additive, again, this is not new. And we see it both being an operational improvement for our customers because, obviously, it reduces the cycle time in which we can get them parts, we can actually drive incremental productivity within our own manufacturing. You're moving away from casting and metals to being able to have again 3D printing at site. And so it makes it much quicker. And we think it's an opportunity, again, to become more efficient and productive as we continue to drive efficiencies, both internally for ourselves but then also for our customers. So two areas that we've discussed before and we continue to invest in as we go forward. Okay. I think we'll go to the wrap. And I just wanted to take a moment to thank everyone for joining us today. And I'd like to leave you with some closing thoughts. We're pleased with our third quarter results and believe they illustrate and reinforce the potential of Baker Hughes as we execute on our margin and return objectives and evolve our portfolio with the energy landscape. I want to take a moment to thank our employees for their continued commitment and dedication in delivering for our customers, shareholders and each other. I'm extremely proud of the Baker Hughes team. Thank you, and I look forward to spending time with you again soon. Operator, you may close the call now.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.