DMC Global Inc. (BOOM) Q4 2019 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the DMC Global Fourth Quarter Earnings Conference Call. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host for today, VP of Investor Relations, Mr. Geoff High.

Hello, and welcome to DMC’s fourth quarter conference call. Presenting today are President and CEO, Kevin Longe, and CFO, Mike Kuta. I’d like to remind everyone that matters discussed during this call may include forward-looking statements that are based on our estimates, projections and assumptions as of today’s date, and are subject to risks and uncertainties that are disclosed in our filings with the SEC. Our business is subject to certain risks that could cause actual results to differ materially from those anticipated in our forward-looking statements. DMC assumes no obligation to update forward-looking statements that become untrue because of subsequent events. A webcast replay of today’s call will be available at dmcglobal.com after the call. In addition, a telephone replay will be made available approximately 2 hours after the call. Details for listening to the replay are available in today’s news release. And with that, I’ll now turn the call over to Kevin Longe. Kevin?

Thank you, Geoff. Upstanding execution by our employees during 2019 enabled DMC to report record full year sales and earnings, strong operating cash flow, a much improved financial position and an increase in our annual dividend. These accomplishments came in spite of a slowdown in our primary oil and gas end market during the third quarter and an acceleration of that slowdown during the fourth quarter. Consolidated sales for the fourth quarter were $86.4 million, down 14% sequentially and down 4% versus the 2018 fourth quarter. The results were slightly above the high end of our revised guidance range of $82 million to $86 million. The fourth quarter sales decline principally was due to a fall off in North American well completion activity, which reduced demand at DynaEnergetics, our oilfield products business. DynaEnergetics reported fourth quarter sales of $64.6 million, which was down 16% sequentially and up 2% versus the 2018 fourth quarter. Sales at NobelClad, our composite metals business were $21.8 million, down 4% sequentially and down 20% from the 2018 fourth quarter, which was positively impacted by accelerated delivery of a large order for the chemical industry. NobelClad ended the fourth quarter with an order backlog of $31.7 billion, down slightly from the $33.2 million at the end of the third quarter. Trailing 12 month book-to-bill ratio at the end of the quarter was 1.03. Consolidated gross margin in the fourth quarter was 35%, which was down sequentially from 36% in the third quarter and flat versus the 2018 fourth quarter. DynaEnergetics reported fourth quarter gross margin of 38% versus 39% in the third quarter and 39% in the prior year fourth quarter. NobelClad reported fourth quarter gross margin of 27%, up from 26% in the third quarter and 25% in the fourth quarter of 2018. We reported consolidated adjusted operating income of $13.8 million, which excludes $13.2 million of restructuring charges, primarily related to the closure of our manufacturing plant in Tyumen, Siberia. $12.1 million of the charges were non-cash. Adjusted operating income in the 2018 fourth quarter was $13.6 million. Fourth quarter adjusted net income was $9.5 million or $0.65 per diluted share versus adjusted net income of $7 million or $0.46 per diluted share in the 2018 fourth quarter. Fourth quarter adjusted EBITDA was $17.6 million versus $23.2 million in the third quarter and up from $16.9 million in the 2018 fourth quarter. DynaEnergetics reported fourth quarter adjusted EBITDA of $18.5 million, while NobelClad reported adjusted EBITDA of $2.4 million. For the full fiscal year consolidated sales were a record $397.6 million, up 22% from 2018. Gross margin improved to 36% from 34% in the prior year. We reported adjusted operating income of $78.7 million and adjusted net income of $55.6 million or $3.75 per share. Full year adjusted EBITDA was $93.8 million and we reported cash flow from operations of $64.6 million. Our financial performance during 2019 was driven in large part by growing customer adoption of our DynaStage DS factory assembled, performance-assured perforating systems. Operators and service companies across North America are increasingly reliant on these systems to improve well site safety, enhance efficiency and reliability and drive down the costs of their well completion programs. Today more than 20% of the perforating systems deployed in North America are either DS systems or controlled by our IS2 intrinsically safe initiating systems. The slowdown during the second half of 2019 reflects a shift among North America’s exploration and production companies to our greater capital discipline and funding operations from cash flow. While the near-term impact of this shift has been a reduction in drilling and completion activity. We believe that change represents a critical step towards improving the long-term health of our industry. As a provider of highly differentiated products, we continue to focus on pricing discipline and on achieving margins that reflect the inherent value of our products. This commitment is exemplified by DynaEnergetics performance during January 2020, when it achieved 40% gross margin and sales of approximately $21 million. DynaEnergetics further strengthen its product portfolio during 2019, with the addition of two highly advanced perforating systems. DS Trinity and DS NLine are enabling well completion engineers to pursue increasingly complex well designs, as they seek to enhance production volumes and lower completion costs. Our continued investment in research and development will result in several additional product introductions during 2020. We also continue to invest in the expansion of DynaEnergetics electrical property portfolio. During 2019 alone, DynaEnergetics was awarded 17 new patents and filed 126 patent applications in the U.S. and abroad. From an IP perspective, 2019 was DynaEnergetics’ most active year ever. We now hold 63 patents and 186 pending patent applications, covering the total of 73 patent families. At NobelClad, a successful application development program is led to several recent orders from new customers seeking to address specialized industrial design challenges. The first quarter has brought a notable pickup and booking from both new and traditional end markets and we are optimistic, 2020 will be a year of meaningful sales growth at NobelClad. We have entered 2020 with a strong balance sheet, a very efficient organizational structure and highly differentiated product offerings within both of our businesses. We are also well positioned to navigate the challenges our businesses face at both the macro and industry levels and I’m confident 2020 will be another year of strong profitability and cash flow, further improving DMC’s financial strength. I’ll now turn the call over to Mike for more detail on our fourth quarter and a look at our guidance. Mike?

Thanks, Kevin. I’ll begin with a look at our fourth quarter expenses. Consolidated SG&A was $16.2 million or 19% of sales versus SG&A of $17.2 million or 19% of sales in last year’s fourth quarter. Amortization expense was $355,000 or less than 1% of sales. We ended the fourth quarter with net cash of $6.1 million, as compared with net debt of $16 million at the end of the third quarter and net debt of $28 million at December 31, 2018. Year-end cash and cash equivalents were $20.4 million. Total debt at December 31 was $14.3 million and our debt to adjusted EBITDA leverage ratio was 0.2. Turning to guidance, we anticipate consolidated first quarter sales in a range of $80 million to $84 million, versus the $86.4 million we reported in 2019 fourth quarter. Sales at DynaEnergetics are expected in a range of $62 million to $65 million versus the $64.6 million reported last quarter. We expect NobelClad to report first quarter sales in a range of $18 million to $19 million versus the $21.8 million reported in the fourth quarter. Consolidated gross margin is expected in a range of 34% to 35% versus the 35% in the 2019 fourth quarter. SG&A is expected in a range of $16 million to $17 million versus the $16.2 million reported last quarter. We anticipate amortization expense will be approximately $350,000 while interest expense should be approximately $400,000. We expect adjusted EBITDA on a range of $14 million to $15 million versus $17.6 million in the fourth quarter. Earnings per share are expected in a range of $0.50 to $0.55 versus adjusted EPS of $0.65 in the fourth quarter. And looking at the full fiscal year, we anticipate sales will begin to improve during the second quarter based on our new products introduction. However, it is unclear what impact macro developments, including coronavirus outbreak in China, will have on global economic activity and oil and gas demand. Based on the information we have today, we expect full year 2020 sales in a range of $370 million to $400 million versus the $397.6 million reported in 2019. Sales at DynaEnergetics are expected in a range of $280 million to $300 million versus the $310.4 million reported in 2019, while NobelClad’s sales are expected in a range of $90 million to $100 million versus the $87.1 million in 2019. We expect full year gross margin in a range of 34% to 35% versus the 36% reported in 2019. SG&A is expected in a range of $62 million to $64 million versus the $65.5 million, we reported in 2019. Full year amortization expense is expected to be approximately $1.3 million, and interest expense is expected to be approximately $700,000. We estimate our full year effective tax rate will be in a range of 28% to 29%. We’re forecasting adjusted EBITDA in a range of $80 million to $90 million versus the $93.8 million reported in 2019. Full year net income per share is expected in a range of $3 to $3.30 versus adjusted net income per share of $3.75 in 2019. We anticipate capital expenditures will be in a range of $20 million to $25 million in 2020. With that, we are ready to take any questions. Operator?

Thank you. [Operator Instructions] We’ll go first to Stephen Gengaro at Stifel.

All right. Thanks. Good afternoon, gentlemen. I guess, I’d start with the guidance and as we think about your full year guidance and even the first quarter, to the extent, you can talk about it, how are you thinking about on the DynaEnergetics side, the interplay between pricing, volumes and market share?

When you look at our guidance, the unknown is primarily the completion activity going into the second, third and fourth quarters. We expect our market share to stay relatively constant, and our pricing to stay relatively constant. There’s a fair amount of price competition in the industry, but we’re not participating in that. Over the last two quarters, our share has been stable plus or minus a couple of percent. And we don’t think that we’re going to see more intense pricing competition going forward. And I don’t think that the price competition that we have seen is working for others. And so when you look at our guidance, it’s primarily a focus on – or it’s driven by the estimate of what we think completions are going to be and the adoption of our systems.

And Kevin, is there any thought as far as a change in perf guns per stage either just from the changes in the industry and also from the addition of the DS NLine?

We expect that and we’re starting to see that pickup. And we actually believe that’s what’s going to accelerate in the second, third and fourth quarters of the year. And we would expect the adoption to be up 15% to 20%, not the adoption. But the number of guns per stage.

Okay. Thank you. And then just one other question. When we think about your sales process, and I know, you spent an increasing amount of time as the organization talking directly to E&Ps versus wire line companies. Can you give us an update on the success of that? And then as part of that, when we think about the ability to sell the product, I would guess the E&Ps having – when the E&Ps have more power, it’s probably a little bit easier. But I’m just kind of curious how that process is going and what you’re seeing from those discussions.

We’re seeing – there’s really kind of a bifurcation in the market between the leading E&P companies that have a strong balance sheets and those that might have – or do have weaker balance sheets. And it has to do with really the longer term focus on safety, reliability and operating efficiency versus just the immediate costs of completing a well. And we’re seeing more and more of the stronger companies specifying our products and we’re seeing greater pull through there. And then we’ve seen, on the other end of it, that’s probably where we’ve been had less success, where price is more of the focus near term. And we’re not chasing volume or market share. It’s more important for us to focus on the value that we create for our customers and make sure that we’re paid fairly for that value, because that ultimately translates into the value that we create for our shareholders.

Okay. Thank you, Kevin.

We’ll go next to George O’Leary at Tudor Pickering Holt & Company. George O’Leary: Good afternoon, sorry. I was looking at the guidance you guys provided for the first quarter of 2019 is actually basically the exact same range, $14 million to $15 million in EBITDA for the company. And you guys came out quite a bit better than that. I wonder, if you could explain kind of the dynamics that drove the beat in the first quarter of 2019? And then – what you’re seeing from an activity standpoint or a completion standpoint or a customer inventory destocking standpoint that’s driving the guidance for the first quarter of 2020? Maybe what’s different and what’s the same year-over-year?

Yes. The completions in January were about the same year-over-year. It’s really the rate of which those completions increase in February and March, where we’re given kind of the industry specific challenges that we have in terms of balance sheets and then also what recently has been a overlay of macro from an oil pricing standpoint. We’ve just have guided to a slower start to this year compared to last year. And that’s primarily, what’s reflecting the poor performance of the company in the first quarter compared to 2019. But we’re fairly confident that’s going to start increasing in the second and third quarter, the completions. And we do expect the perforating intensity to increase. We are being cautious, because we’re forecasting an increase that we are anticipating, but haven’t seen yet. We didn’t see that in January, where a year ago, we did see people ordering and building more at this time for the balance of the first quarter. George O’Leary: All right. It sounds like – go ahead, sorry.

Hey, George, sorry about that. So, yes, in January, we started the year weaker last year as well. February and March, we’re stronger. We also, last year, had a project in EMEA that we pulled forward into the first quarter as well that we weren’t sure we were going to be able to do last year, so fairly significant there as well last year. George O’Leary: Okay. That’s very helpful context. And then just thinking about the sales effort targeting more E&Ps, I wonder, if you could just update us strategically on how that effort is going and maybe frame what percentage of your customers today are actually E&P specking in your systems to the wire line folks?

Okay. So we’ve added over the last 12 months to our sales efforts to our marketing efforts – marketing development roles, people that focus on the E&P companies in particular to go out and explain the value that our systems create for completing a well. And we’re seeing the specking of our systems approaching 50%, which is quite an increase over the prior year. And so we feel that that’s going to work well for us as the year progresses and we – the value proposition is pretty straight forward. Our products are a little bit more expensive. But it’s a fraction of the savings that we can create for an E&P company. George O’Leary: Very interesting. I’ll sneak one more in if I could. I think you guys had historically guided to – the desire to continue to increase market share and I realize the environment has changed in competition and pricing have heated up. Is the guidance for kind of flattish market share year-over-year, just that change in competitive landscape? Or is there something else that’s kind of driving the apprehension to say, oh, go after a couple hundred basis points or you will achieve a couple hundred more basis points of market share in 2020 versus 2019?

So we’re – it’s primarily context in which we’re operating rather than how we’re operating. When we look at the completion activity and how that picks up, the pricing in the market is kind of all across the map right now. I believe it’s going to settle down. It’s not working for some of those companies and you can see it in their reported performance. And so we’re just being cautious and focused on executing and executing well. We do believe that with the pricing going down in some of the areas and our adoption of our newer products going forward, that we are going to pick up a couple of percent market share. But what’s really driving our guidance is the overall activity. George O’Leary: Great. Thank you very much for the color, Kevin and Geoff.

[Operator Instructions] We’ll move next to Gerry Sweeney at ROTH Capital.

Hey, good afternoon, Kevin, Mike, Geoff. Thanks for taking my call. I apologize, if any of this was hit. I broke connection and I dialed back in. But over the course of this – or over the course of 2019, competitors have been talking about adding some new products to compete against your systems. Curious, if you’ve had a chance to see any of these products. We all know that you have a lot of technology embedded in your systems, but anything that materially changes your position with any of these new product rollouts?

Not really. I think that, first of all, we welcome the competition on systems. I think that, it does bring a greater efficiency and single source responsibility to perforating and improve the safety and the reliability around the well site. What we see are some innovative and creative packaging designs coming from others in the market. However, their packaging technology that’s been used for years in the market, it’s not really challenging. Our integrated switch detonator and doesn’t have the same safety and operational benefits. We feel that there’s more to gain as – for us as the market moves towards systems. And that’s kind of why we welcome the competition, because it does help grow the market for systems and we feel that our product line stands on its own and as in a great competitive position.

Got it. And speaking of just additional technology and things like that Trinity and NLine. You’ve obviously the traditional DynaEnergetics saves on manpower efficiency and helps on safety. But we’ve also started talking a little bit about the enhanced oil recovery with some of these newer products. Any data, quantitative or qualitative, you can interject into the conversation on that.

We’re just seeing the Trinity work its way into the marketplace. It was introduced in the second half of 2019. The adoption is picking up, that information is just starting to come in. It’s still a relatively small part of our overall DS systems business. But that’s something that probably by the second or third quarter, we’ll be able to share more information. We’re careful right now because it’s a small group that we’re developing or working with. And there’s proprietary information there.

Got it. Understood. And then this may be for Mike, EBITDA guidance, $80 million to $90 million for 2020. I think, you said your CapEx $25 million, this paints a picture potentially free cash flow $45 million, $50 million. Is that sort of in the ballpark? Obviously, there’s some working capital adjustments, but that may actually be a positive, at least in the near term in 2020. Any thoughts on sort of that prop sketch?

Yes, Gerry. I think that $20 million to $25 million on CapEx and given that adjusted EBITDA range that I provided free cash flow and call it $30 million to $40 million range after the CapEx of $20 million to $25 million. So maybe just a little bit of working capital drag there.

Okay. Got it. Any thoughts on, obviously, you instituted the dividend earlier this year and I think that was a vote of confidence in your balance sheet. You’ve got some excellent metrics, return on invested capital, the balance sheet, net cash positive improving free cash flow is going to be very nice this year, potential buybacks or anything like that in terms of capital allocation?

We expect of, as Mike was saying, have a good cash year and we’re going to be building cash. And it’s basically a discussion that we’re going to have with our board as we go forward and how best to use that cash. We have a couple of growth opportunities that we see in front of us and but it’s important for us to return value to our shareholders. And so I would expect us to increase our targeted yield from where we are, which would also raise the dividend over time.

Got it. Okay, I’ll jump back in line. Thank you.

[Operator Instructions] We’ll move next to Edward Marshall at Sidoti & Company.

Hey guys. Good morning. How are you? Good afternoon. I’m just curious – so I’m just curious when usually you talk about slowdowns in good environment for share gain and you’re kind of looking at constant [Audio Gap] 2020. And I’m curious as to how that discussion is going with your customers and maybe why not. Why aren’t you being a little more optimistic kind of on the share gain, considering that’s been the environment that you’ve seen success for in the past?

I think it gets to that bifurcation. We would expect our shares going to increase with the stronger E&P companies in the marketplace that are looking longer-term. And there’s some part of the market where there’s – what appears to be a nearer term desperation if you will, and it has to do with where balance sheets are, where there’s an E&P company or a service company. And so it’s kind of targeting and growing our base with a different type of customer going forward. A lot of this has to do with pricing and not chasing prices that don’t make sense for us. And we have in the low to mid 20s market share in terms of revenue. But I think that our market share is much higher than that if you just rolled up the reported operating income of the companies in this market. And it’s really the operating income market share that’s most important to us.

Got it, got it. Okay. Thanks very much for your comments.

And with no other questions holding, I’ll turn the conference back to Mr. Kevin Longe, for any additional or closing comments.

Yes. Thank you everybody for joining today. We expect…

I’m sorry. Jess, we did – I just saw one question come in.

Yes, certainly. We’ll go to Jim Brilliant at Century Management.

Yes. Hi, guys. How are you?

Hi, Jim.

Good afternoon. Q4 you actually – your EBITDA kind of outperformed what your revised guidance was. What was that due to?

Yes. I think on a couple – if you just go down the P&L, I think we outperformed the most of the lines, but we also had a favorable tax rate. In the fourth quarter our adjusted ETR was 25.5% versus a full year 28%. So we got a lot on the tax line.

Yes, I was looking at more at the EBITDA lines.

So on the EBITDA, we certainly outperformed on the margin versus the guidance.

Okay. And then did you say that January of 2020, DynaEnergetics did $21 million and 40% gross profit? Did I hear you right?

I did. And what we’re saying is that some of the cost savings that we have through our fourth quarter restructuring are already entering their way into our income statement. And I was quite pleased with that performance, which is why we mentioned it to – and it highlights if you will, not only how quicker our organization response to market situations. But also the fact that it’s a technology driven business with good margins and high variable cost versus fixed cost and really getting the margins for our products is more important than just the absorption.

Well, clearly you’ve done a great job on margin. So congratulations on that. And then can you expand a little bit? I think you made the comment that you expect that guns per string to be up 15% to 20%. I think I heard that right. Can you expand on that and what you are looking at through the remainder of the year with that respect? So volumes will be – gun volumes for you should be a bit higher than, I guess, due to the Trinity line and the NLine.

Yes. We see beginning in the second and starting to accelerate, being up 15% to 20% more guns per stage, going from say an average of 10% to 12%. And we’re starting to see that take hold right now. The conservative guidance has to do with the completions themselves being down.

Okay. That number of guns per string, is that unique to you or do you see that in the industry?

I believe it’s in the industry. I think that we’re in the forefront of enabling that with our product lines because of the optimized length of our perforating guns. And so, I would put us at the forefront of that. And as our Trinity starts to take hold as the year progresses, we could see that accelerate dramatically. I would like to note too, that the new products that we’re forecasting were already in the market with today and we’re just being conservative on how fast they take hold.

Right. So how far – so you’re way beyond pilot on some of these new products. You’re expanding that into the marketplace, not just beyond a handful of customers. This is now expanding and it’s just a matter of – your conservatism is a matter of the overall uptake from a completions not so much the technology.

Correct. I mean, we look at the EIA information on completions, which is proved to be fairly accurate. And completions were still down in January compared to where they were in December. And the EIA information had completions down 13% in the fourth quarter compared to the 2019 third quarter. And so we – and that’s really the – if you will, the line of sight that we have going into the beginning of the year. And as I’m sure everybody on the phone is well aware, oil has pulled back from where it was at the beginning of the year. And you add in the concern on some of the balance sheets and all activity. And I think this is a time to be conservative in terms of how we look at the growth of the year and how it accelerates.

Okay, great. Thank you.

[Operator Instructions] And Jim your line is open again, sorry.

Okay. Thank you. You said that there’s some growth opportunities that you’re looking at is, you care to expand on that or is that something you’re not willing to do anything?

We actually – we’ll be introducing some new products as the year goes on that are new product markets, so it’s really organic growth and some of the investments we need to make for capacity at the time that those products are ready.

Okay. And would that be above and beyond that 20% to 25% or is that inclusive – included in that estimate?

It’s included in that estimate. And they have to do with the completion spring from a ballistic release tools to setting tools. And these products are already in the market too being trialed.

Okay. And so when would you expect those to go beyond trials and be available to the general market?

Third quarter.

Q3, okay. And what kind of market – addressable market would that be addressing?

The ballistic release tools, it’s actually a very small market, which we’ve made smaller through the operating efficiency of our products. So that’s not going to be necessarily meaningful from a revenue standpoint. However, it’s an important tool as part of the completion string and the design of our products that we feel that would be a good value for our customers. The setting tool is probably a larger market and we’ll see a greater impact in our revenues probably beginning in the fourth quarter as we introduce it in the third quarter. Regarding the size of the market, I would hold off on that until we have the data that comes back from our trial.

Okay. Fair enough. Okay. Thank you.

And we’ll move next to Tommy Moll with Stephens. And Tommy your line is open.

Good afternoon and thank you for taking my questions.

Yes. Hi, Tommy.

Yes. So wanted to start on the perforating market. For the full year Kevin, as you have come to arrive at your outlook for DynaEnergetics, there’s some offsetting factors in the underlying market for perforating equipment, where you’ve got capital discipline from the end user. But then conversely you have perforating intensity increasing. So underlying your outlook, is the market flat up or down for perforating volumes for the industry overall, not specific to you guys?

Yes. I think we would say that it’s flat. You’ve got completions that are – it’s going to be down in the 10% to 15% range and then you have a pickup in perforating intensity in the 15% range. They kind of offset one another. And so the variable in terms of the dollar value of the market and it’s pricing. And while I said earlier, I don’t see further declines. The average price going into 2020 has been lower than the average price going into 2019. And so that would have impacted that market for most companies in the – probably the 5% to 7% range. And so that would be impacting the dollar value. And we expect our share to stay relatively constant and we price our products based on our margin expectations as well as, but we are influenced by the relative premium over other products in the marketplace. So it does have an impact on our revenue. But we feel – we’ve seen that. And so this market is really more about when does the completion start to kick back in. We saw a greater drop in the fourth quarter and in January and we expect for the full year. And the gun intensity increasing and in order to see the revenue come back at the operating area that we were for 2019. And you can actually see that if you took the following three quarters of 2020, from what we’ve guided for the first quarter, and you can see a pickup that we’re forecasting in the balance of the year.

And that’s exactly where I wanted to follow-up, was on the cadence throughout this year. I want to make sure, Kevin that embedded in the outlook, you’re assuming a pickup from some of the product introductions that are already in the market. But that those are separate from what you referenced a minute ago is the growth opportunities from ballistics and setting tools, which won’t have a meaningful impact until 2021. Did I hear you correctly on that?

You did.

Okay. I wanted to ask about China and potential coronavirus impacts. You referenced it in your earnings release and I presume you meant as they may pertain to oil demand. I was just curious from a supply chain standpoint for either NobelClad or DynaEnergetics, do you see any risk there?

Not in our guidance, no. And we’re fairly self sufficient in terms of our production. There is a large order that we’re working on in NobelClad for China, but we don’t feel that that’s going to be negatively impacted by the coronavirus. So it’s really as you mentioned, it’s the macro impact on demand and oil pricing and what that does to drilling and completion. That’s just an uncertain at this point in time.

Okay. That is all for me. Thank you for taking my questions and I’ll turn it back.

And Mr. Longe it appears we have no other questions holding.

Okay. I appreciate the interest that everybody has in our company and joining us on today’s call. I would like to thank our employees for just an outstanding year in 2019 and the technology and opportunities that we have going into 2020 and beyond. Actually believe with our strong balance sheet and the work that we’re doing across both companies from specifying our products, it’s going to serve us well going forward. And so we look forward to updating everybody’s on the phone and our employees as the year goes on. So thank you.

Ladies and gentlemen, that will conclude today’s conference. We thank you for your participation. You may disconnect at this time and have a great day.