Clean Energy Fuels Corp. (CLNE) Q2 2019 Earnings Report, Transcript and Summary

Greetings and welcome to Clean Energy Fuels Second Quarter 2019 Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.I would now like to turn the conference over to your host Mr. Bob Vreeland, Chief Financial Officer. Thank you. You may begin.

Thank you, operator. Earlier this afternoon, Clean Energy released financial results for the second quarter ending June 30, 2019. If you did not receive the release, it is available on the Investor Relations section of the Company's website at www.cleanenergyfuels.com where the call is also being webcast. There will be a replay available on the website for 30 days.Before we'll begin, we'd like to remind you that some of the information contained in the news release and on this conference call contains forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict. Words of expression reflecting optimism, satisfaction with current prospects as well as words such as believe, intend, expect, plan, should, anticipate and similar variations identify forward-looking statements, but their absence does not mean that the statement is not forward-looking.Such forward-looking statements are not a guarantee of performance and the Company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in the Risk Factors section of the Clean Energy's Form 10-Q filed today. These forward-looking statements speak only as the date of this release. The Company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this release.The Company's non-GAAP EPS and adjusted EBITDA will be reviewed on this call and exclude certain expenses that Company's management does not believe are indicative of the Company's core business operating results. Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for or superior to GAAP results.The directly comparable GAAP information, reasons why management uses non-GAAP information, a definition of non-GAAP EPS and adjusted EBITDA and a reconciliation between these non-GAAP and GAAP figures is provided in the Company's press release, which has been furnished to the SEC on Form 8-K today.With that, I will turn the call over to our President and Chief Executive Officer, Andrew Littlefair.

Thank you, Bob. Good afternoon, everyone, and thank you for joining us. The second quarter of this year demonstrated that our continued focus on increasing our fuel volume proved to be fruitful with an 11% increase over the same quarter in 2018.We deliver just shy of 100 million gallons in the second quarter which equates to 1.1 million gallons of natural gas fuel being delivered to our customers across the country every day of the quarter.To put the growth and acceptance of natural gas fueling in perspective, we delivered 700,000 gallons of fuel in our first full year of business and almost entirely in one state. Our financial performance continues to improve through the second quarter as well with $72.3 million in revenue which is slightly up over a year ago.But what I would point out is that our operating results continue to improve as we add volumes on lower operating interest cost, which in the second quarter resulted in positive operating cash flow. What is propelling our fuel volume growth is that more, more customers are realizing the incredible benefits of renewable natural gas.You've heard me report multiple times that are Redeem branded RNG is an easy way for fleets to capture tremendous environmental benefits both long-term carbon reduction and short-term pollution at our existing natural gas fueling infrastructure while remaining highly competitive with fleets operating on diesel.One of the most significant advancements and the acceptance of RNG is the announcement that UPS made in the second quarter that they would be purchasing 170 million gallons of Redeem from us through 2026 making the largest RNG vehicle fuel purchased ever.The significance of this move by UPS, one of the largest logistics companies in the world and a company that has been at the forefront in aggressively finding ways to operate in a more environmentally sustainable way cannot be overstated.By expanding their use of the world's cleanest fuel to 18 existing UPS natural gas stations in 12 different states around the country, UPS should realize a reduction of 1,074,000 metric tons of greenhouse gases over the life of the agreement. This is the equivalent to planting 17 million trees or removing 228,000 cars off the road.It is important to note that all this additional RNG volume is in states outside of California, where UPS is already used 28 million gallons to operate their California fleets since switching to RNG in 2014.These significant environmental savings by UPS including major reductions in greenhouse gases are being achieved today, not years in the future like other alternatives such as electrical problems [ph].With this broad expansion of the use of RNG, UPS is demonstrating that a company can easily switch to a fuel to operate thousands of heavy-duty trucks around the country, while staying highly competitive in assuring quality and timely service for their customers. Most recent UPS deal is a great example of Redeem being used in a heavy-duty truck application, but all our transportation segments are embracing the fuel.During the last quarter we also signed a significant agreement was Santa Monica's Big Blue Bus to continue to supply the transit agencies 200 buses with Redeem in one of the most environmentally conscious cities in the country.The deal represents over $2.3 million gallons of Redeem a year. We have recently expanded the availability of Redeem to the New York City area by opening the City's first RNG publicly accessible station in the South Bronx.Redeem is now being used by a variety of vehicles including heavy-duty trucks, beverage delivery trucks and service vehicles. Los Angeles County Metropolitan Transportation Authority is recommitting to its use of Redeem by replacing older CNG buses with 100 CNG buses and upgrading another 125 with the new Commons new Zero engines.These new buses will be in operation for up to 12 years demonstrating that the transit agency likes their experience with RNG and the environmental benefits it brings. LA Metro has also announced that they will increase their use of RNG for their CNG buses from 50% to a 100% by next year.ABM aviation one of the country's largest aviation services companies expanded their fleet of natural gas vehicles to help move passengers around LAX, while the airport undergoes a massive remodel. Clean Energy is expected to provide ABM with 180,000 gallons Redeem for these new vehicles.Other transit agencies and solid waste companies continue to expand their use of Redeem or sign up for it for the first time during the second quarter allowing Redeem to get close to the 50% mark of Clean Energy's overall vehicle transportation fuel mix.This put us on track to achieve our goal of providing 100% of our vehicle fleet customers with redeem, which will translate into tremendous amount reduction in greenhouse gases, all at competitive price to diesel and no disruption in operation.I will also note that this impressive growth in our RNG product was done at a time when the prices of RINs, the environmental credits generated under the federal renewable fuel standard by dispensing RNG product in the vehicles was very low, over 70% lower than a year ago.We believe that RIN pricing will begin to strengthen later this year and in the next year as the EPA sets the upcoming renewable volume obligations or RVO. And if so the upside should be substantial.A segment that is expected to fuel the growth of our overall volume and Redeem in particular is a heavy-duty truck market. As I reported last quarter our new Zero Now Financing program has begun to show results. Orders for heavy-duty trucks began earlier this year and continue at a nice pace.We are in discussions with dozens of the country's largest trucking companies about how they can take advantage of this offer to expand their fleets with the new trucks equipped with the latest generation of the Cummins 12-litre engine, which reduces NOx by over 90%.I'm also pleased to announce that some of the companies have begun to take delivery of the first 100 trucks equipped with a new engine and will fuel a Clean Energy stations with Redeem. Many of these firms took part in a pilot program run at the Port of Los Angeles and Long Beach to test an early version of the new Cummins 12-liter new Zero engine.I'm pleased to say that the year-long test program was a success demonstrated by the fact that the companies that participated have the confidence in the performance of the engines to order more trucks. Another bit of information from the ports that I would like to pass along is that Clean Energy recently completed the station within the Port of Los Angeles to fuel terminal tractors equipped with the new Cummins engine.This is part of a program sponsored by the Port of LA and the California Energy Commission in their ongoing effort to clean up the dirtiest air in the country. Grant was given for the purchase of 20 new natural gas terminal trucks and for the fueling station. And by the way, grant of the same amount was given to a Chinese manufacturer of large electric vehicles for trucks and a charging station.And it's worth noting that with the same amount of money only three EV trucks will eventually be delivered once the charging station is operational versus 20 natural gas trucks that have been begun to fuel at our station.This is a great anecdote and helps to explain why there was a headline in the trucking trade publication earlier this week that said, "natural gas truck sales surge even as electric trucks get the high hype".With driver shortages, tariffs and other obstacles facing trucks in logistics firms, there was only one alternative they can choose that won't give them added cost and additional headache as they look for ways to meet stricter emission standards and that is natural gas.All-in-all, the second quarter was very productive. And the momentum continues in our business across the board as we improve our financial position. We are keeping our SG&A expense and capital level spending at levels that will allow us to exploit our volume growth with higher margins. Our interest expense is down 60% from year ago and our cash position is strong.And with that, I will turn the call over to Bob for more details.

Thank you, Andrew. Our volume growth and financial results for the second quarter of 2019 were in line with our expectations and we maintain our volume and financial outlook for the full year 2019.This assumes RIN pricing recovers from the more recent significant decline that occurred in June and that LCFS pricing remains consistent with what we've seen so far in 2019. Our volume growth of 11% in the second quarter compared to last year came principally from CNG, while LNG volumes were slightly ahead of last year.We continue to benefit from our growth in the delivery of Redeem related to our expanded relationship with BP and beginning in the second quarter deliveries of Redeem under our new UPS contract.Redeem volume grew 62% in the second quarter to 39 million gallons versus 24 million gallons a year ago. Our revenue for the second quarter 2019 was $72.3 million which included a $600,000 non-cash gain on our Zero Now fuel hedge. Last year second quarter revenue was $70.5 million which included $1.4 million in alternative fuel tax credits.Our volume related revenue exclusive of the fuel hedge gain increased $3.2 million or 5% year-over-year due principally to our volume growth, partially offset by a lower effective price per gallon due to following natural gas prices which is a benefit on the cost side of the equation, a decline in RIN prices and the mix of fuel sales.Our effective price per gallon in second quarter of 2019 for all volumes delivered was $0.66 per gallon compared to an effective price of $0.70 per gallon delivered in the second quarter of 2018 and $0.84 per gallon in the first quarter 2019.But again, to the extent that our revenue has lowered by the effective following natural gas prices, we also see a benefit in our commodity cost of goods sold. Considering today's market conditions and looking forward we see an effective price per gallon on all volumes delivered to be in a range between $0.66 and $0.68 per gallon assuming a recovery in RIN pricing and consistent LCFS pricing as I mentioned previously.Our station project sales of $5.9 million for the second quarter 2019 were slightly ahead of the year ago and up significantly from the first quarter of 2019. Station project revenues for the third and fourth quarters are expected to trend similar as what we saw in the second quarter thus taking the total for 2019 to approximately $21 million without changing our expected net results for 2019.We're seeing steady activity in station projects and a continued steady backlog. Our overall gross profit margin in second quarter of 2019 was $24.7 million which benefited from the $600,000 non-cash Zero Now fuel hedge gain. Gross margin in the second quarter 2018 was $24.8 million which benefited from $1.4 million in alternative fuel tax credit income.Exclusive of these gains, our 2019 gross profit margin increased $700,000 or 3% from a year ago. This increase is principally attributed to our volume growth. Our effective margin per gallon was $0.0246 [ph] per gallon for the second quarter 2019 compared to last year at $0.0265 [ph] per gallon in the first quarter of this year at $0.0257 [ph] per gallon.It's important to note here that our volume growth is driving incremental gross profit margin dollars and volume growth momentum is a key element to our improved financial performance and being able to exploit our existing natural gas fueling infrastructure. We are expecting year-over-year accretive gross profit margin dollars for 2019 as a result of our volume growth.We also expect to finish the year within our effective gross profit margin per gallon range of $0.24 to $0.28 per gallon. Our SG&A in the second quarter of 2019 was $17.9 million versus $19.9 million a year ago.Looking forward we still anticipate being within our expected range of $73 million to $79 million, although we are trending favorably toward the bottom half of that range. Our GAAP net loss for the second quarter of 2019 was $5.4 million compared to a GAAP net loss of $12 million a year ago, noting again that last year included the favorable impact of $1.4 million in alternative fuel tax credit income.And 2019 was favorably impacted by the non-cash gain of $600,000 from the Zero Now fuel hedge. This improvement in our net results was driven principally by better operating margins and lower interest expense. Our interest expense declined by $2.7 million for the second quarter compared to a year ago bringing the year to-date decline in interest expense to $5.3 million compared to last year, which is the direct result of our improved capital structure.Our adjusted net loss for the second quarter of 2019 was $5 million compared to an adjusted net loss of $10.1 million in 2018. And our adjusted EBITDA for the second quarter of 2019 was $8.9 million compared to $7.4 million in 2018, noting again that the adjusted net loss and adjusted EBITDA for 2018 included $1.4 million in alternative fuel tax credit income.We ended the second quarter of 2019 with $107.5 million in cash and investments, up $13.4 million from $94.1 million at the end of the first quarter. The increase in cash during the second quarter was principally from cash provided by operations of $17 million. Purchases of property and equipment were $3.4 million during the second quarter of 2019.Our convertible debt due in June 2020 is unchanged at $50 million and our equipment and facility financing debt principally held that NG Advantage is at $34 million. As I mentioned on our last call, we see growth in our Zero Now truck program and expansions at NG Advantage to support increased gas flow capabilities. So we'll likely see an increase in our capital expenditures and debt balances during the second half of 2019. Keeping in mind this debt will be directly attributed to contracted volume growth.And with that, operator, we'll now open the call to questions.Thank you. Our first question comes from the line of Eric Stein with Craig-Hallum. Please proceed with your question.

Hi Bob. Hi, Andrew, hi, Bob.

Hi, Eric.

Hey first. So on the Zero Now Financing program, I'm just curious as you think about end of 2019, is that something where we should still thinks about a couple thousand trucks rolling out for that, and then also just a follow on. Just curious what the conversations are like with fleets. I know that earlier this year you really had to educate people about the program and that they could have a fixed discount to diesel. Just maybe where that stands now?

Thanks Eric. When we talked about the number of a couple thousand trucks, 2500 trucks, we were kind of doing the math on the facility that we -- the $100 million facility that we put in place with -- hold on one second we have errand phone here. That was really the math that we did through the facility that we rent with Total. But I still think that number is a good number.Now as Eric, we've talked to you before. It's -- we won't see the volume on a couple of thousand trucks by the end of this year. But I'd still like to think that toward the latter part of this year and probably the early rolling into January I still like to think that couple thousand trucks little more would still be a number that we'd like to move on. As I said just roughly in my remarks, I mean we're -- our sales force is literally contacting dozens and dozens. We've contacted really about 100 of the largest fleets and we're in ongoing negotiations with dozens of those.We've literally had of those 100 please just a handful, so they really rather not go forward right now. So, as I described in a call a couple of times ago that this is a -- this does take a while and I get a lot of questions on just what is the process. There is education involved. There's education on understanding the portion of their fleet that might be -- might be ready to work overlaying that on our fueling network, then going out and specking a truck, getting a price on the truck then becoming educated on the fuel hedge, which by the way they really like. Most of the fleets out they are not hedging their fuel. And so this is a little something new that they have to get comfortable with that they have to sign on to a fuel tank.But we're able to lock them into a fuel discount, less than diesel for several years the length of the lease. And that is very appealing to them. So it's kind of an eight-step four, five month process. We're asking them spend real money. And we're really working with fleets, Eric that it's more than 1z, 2z. So we're past this test stage. We're actually asking fleets and what fleets are interested in is beginning to get a number of 20, 40, 50 trucks to get real experience and then it's our hope that in 2020/2021 as we move more you'll begin to see the procurement cycle much like what we saw in the refuse cycle.When we started in 2008 when we got the first heavy-duty engines warranted from the factory from Cummins for the refuse segment. In that year there were only 300 trash trucks and fleets -- a handful of fleets tried a few trucks and it took about two or three years till we really got into procurement into their normal procurement cycle where we went from 3% to 8% to 10%. And as you well know the story, 16% of every trash trucks sold in America today is natural gas.So I think that's what will happen here in the heavy-duty segment. We're in the early days of that. The reception has been good. As I said in my remarks the first 100 of those Zero Now trucks are hitting the roads now, beginning to fuel. So we're seeing the progress. And so we feel pretty good about it.

Good. And maybe I'll just stick with heavy-duty trucking. But in terms of Redeem just curious, obviously a pretty significant announcement from UPS, and has that -- have you noticed any uptick in terms of trucking interest because of that. And I would also and just to follow-up there, just love to hear any thoughts on maybe year-over-year comparisons in terms of number of fleets using Redeem versus last year?

Okay. Well, the UPS. Announcement, UPS is proud of what they've done here. And they as you know in the announcement it was UPS. So, look, UPS is a worldwide leader in logistics and transportation. And so, what they are doing people watch. And so, I'd say, the answer to your question is yes. We've had a lot and it's why I talk to so much about the Redeem and today's remarks, our customers are interested in getting the Redeem.It is really for us. That's a good thing because it's a differentiated fuel for us, and we're leader in it. And it's really captured the attention of a lot of fleets. Yes. We talk about natural gas. But we more often not end up getting them over to the renewable, because they see they get it kind of a double bang for their buck. And the U.P.S. announcements really helped. Eric I know you pay attention to this but a lot of our listeners maybe don't, but there's been a lot of trade stories about UPS and their renewable RNG purchase that they did.And 170 million gallons of any fuel is a lot of fuel. And so it was significant and people have noticed it. Yes. More fleets today than last year are using Redeem and we see it -- we see the uptick and I guess as Bob said in our remarks I mean our Redeem volumes up 60% or so year-over-year. So it's a good. It's a bright spot in our business and good margin business. And so, we'd like to make sure everybody understand. And what? The reason I keep talking about is because there is confusion. There is focus on electric that that somehow is the Holy Grail, but what people are beginning to understand and this UPS. thing makes them understand. It is -- wait a minute there's something else here and it's available today it's actually cheaper. And it's a drop in fuel into the existing network of fueling stations that are out they're not, but ours but others.So that the renewable fuel which is better than electric and lower on carbon, and so we need to tell that story because it's a strong one and it's good for America's who got a lot of renewable fuel out there.

Absolutely. Okay. Thanks for all the detail.

You bet.

Our next question comes from line of Rob Rowe with Lake Street Capital Markets. Please proceed with your question.

Hi. Good afternoon.

Hey, Rob.

Just sticking with UPS contract, when does that start to rollout and how does that ramp impact volume going forward?

We've started already and it started really last month…

Kind of late April late.

Late April. So it's been in process. We're seeing those volumes hitting now. It ramps up, I'm going to have to defer to Bob here. I think we get it about 17 million gallons of it so this year. And then it goes up to next year to around 25 million to 27 million gallons. So it's in that range and then it kind of rolls at about that level for the next few years.

Yes. And so those -- I mean those gallons are in. Those gallons are in our are fuel gallons if you will.

Okay, great. Thank you. And then on the RIN situation, what sort of your pricing expectations in the guidance? Or how do you view that market kind of playing out over the next four months?

Well, let me start and then Bob can talk about how he have it in there. So,there's two pieces that are important for us is the RIN, right, which is the federal. And the reason Clean Energy is in a pretty good position here is because you don't get the RIN unless you get it in the fuel, if you get this bio methane into the fuel tank, right? And that's how we, so, why we're an important component with our partner BP on this renewable fuels, because we have the filling infrastructure and the customers.So there's the federal piece which is the RINs and then there's the low carbon fuel standard credit which is out here in California. And I guess in Washington and Oregon and other states we're looking at it. RIN pricing has gone down quite a bit. There's an oversupply and it's gone down. We don't -- you don't see it all the numbers in the second quarter because it started out higher. But it's come down from $1.50, $1.60 to $0.70. So it's cut by 60% or 70%. So we're watching that really closely.We think that will take care of itself in the latter part of the year and early next year as we believe the EPA will adopt a RVO number that will better balance the supply and demand. And so we think the RIN pricing will go back up. In the meantime, the low carbon fuel standards at historic high, and so we benefit from that. Now we get more RINs when we do lose low carbon fuel standard. But it's kind of it's a nice balance for us. Bob, I don't know if you have any thing that you'd give.

Yes. I mean just kind of specifically, first, I mean there's a lot of variables within our delivery of Redeem, and so it's hard to just pinpoint one element, one variable and when we deliver Redeem. But from a pricing, a RIN pricing in the first quarter we saw averages between dollar -- closer to $1.80. The second quarter that number was closer to maybe a $1.30. But now we've also seen $0.80. And looking forward in my comments, I'm factoring in something kind of between that average of Q2 and Q1. It starts to take in $1.50 or so is really kind of an estimate on the pricing.But again, we have a number of decisions that we go through on the delivery of Redeem and with the volume, with optimizing it in the best locations, all the various stations as .well as what the different splits are with the supplies. And all of that factors into how we ultimately perform on delivering our Redeem..

Okay. Great. Thank you for that. I'll turn it over.

Our next question comes from the line of Pavel Molchanov with Raymond James. Please proceed with your question.

Thanks for taking my question. Let me start off with one about the income statement, revenue specifically. I know that the linkage between gallons and product revenue is always rather loose because of different mix issues. But it feels like this quarter kind of the product revenue per gallon was on the low side relative to what it has been historically. Is that a fair statement?

It is a fair statement. And -- so I kind of brought out the reasons behind that really. And there's a number of things. I mean most of the time we're impacted by what's going on with natural gas prices. So, you kind of get the product impact, but you also get a favorable impact on the cost side of the equation. You have that in there. Then we did see some decline in the RIN values as we -- as Andrew noted, it wasn't a full extent, but certainly it was lower. And then the mix just kind of the fuel mix can you know where the fuel is delivered and the type of fuel drives it.But overall, our net performance is better. So I mean we continue to really look at our margin per gallon. I know the revenue number is kind of a -- is a difficult one to always peg, but ultimately it's what we're making on all the gallons that we're selling. And our and our financial-- our operating margins are improving, because we're adding more volume. And that all starts with volume. You don't do much without the volume. So that's what our focus has been and making sure the economics are improving.

Okay. That's fair. You commented about the high cost of electric trucks. If we broaden the conversation to buses that economics make maybe comparable, but clearly there are more and more bus fleets, municipal bus fleets that are pursuing a partial or a full electrification. I think L.A. Metro would be a notable one within your sales mix which particular or maybe you can give an overall percentage of customers have a policy of shifting their fleet towards electric buses? I'm specifically referring to transit fleets.

Right. So as I look at the future of our business it's not transit for us, Pavel. You and I've kind of adjusted on this before. That's not the future of this business. These just everybody on the call, transit properties are funded 90% by the federal government. So the reason you're seeing electric buses being produced and being sold into federal transit fleets because of the economics of the transit bus. You couldn't force that on the public on the private sector. So it's being done in transit properties where the federal government's pick up the 90% tariff. So the other day, Pavel, I was talking to senior administration officials that fund transit buses,And just wanted to make sure that I understood and they understood what that all means. Is that today you can -- the federal government pays roughly 90% of a $925,000 electric bus or a $450,000 CNG bus. But the feds are picking up the difference. So guess what? States now, California has decided that they want to push a rule to require transit properties to go all electric because that's really their thing their mantra. And so I was telling the administration that said guess this is an unfunded mandate in the reverse order. The state now is forcing Los Angeles to go to electric buses by 2035 and you guys, you the federal government get ready to pick up the tab for.And I have a feeling, Pavel, I'll watch out, because I don't think this is good policy. I don't think its good government. I don't think it's going to work. But here's what I do know is it won't work in the private sector with trucks. So as I look at our future it's over the road trucking, that's the 35 billion gallon market, that's where the economics make sense, that's where the pollution is. And the Federal Transit deal that you and I talk about a lot. It's kind of – yes, it's a good business for us. It's a good margin for us. But it gets easily eclipsed here in the future as we begin to put more and more trucks on the road.Just like it has moved the refuse industry, starting back a few years ago. Transit overwhelmed what we did. The refuge now is right at the size in our company of where transit is. And you'll see it eclipse transit here eventually. To answer your specific question I would guess of our properties. We -- I want to say, I may be a little -- I'll be close here I think we do about 28 transit properties, 30 transit properties. Now I would think four or five of those are fooling around with electric buses or have some sort of six maybe seven. I do know some about L.A. Metro. There was a big competition about it and the Mayor of Los Angeles forced them to do I guess 100 transit buses a while ago. They haven't taken delivery of any of them yet, but they have gone ahead and ordered more CNG buses.So all I can say is as you look at the future of transit and electric and you think that's where the money is going to be made. Watch out. Because I don't think the economics hold up. And I don't think the operating characteristics of those buses will end up being very good.

Yes. I appreciate the perspective. What portion of your current gallons go to transit customers?

Well, let's say, it's about 100 million gallons, since about 100 million for a refuge. It's kind of in that sort of breaks down that way. If you kind of look at our gallons. And those are service gallons for us. But it's in that kind of size, a little more of them.

Okay.

Yes. I'd say it's a little more. I mean maybe 115, but it's kind of in that -- it's sort of in that range. But once upon a time it was a larger it was a larger percentage, but these other markets will end up eclipsing it.

Because buses -- they keep their buses 12 years. They buy on order of the FTA and they just don't turn over the fleet as fast.

Okay. Appreciate it.

You bet.

Thank you.

There seems to be no further questions left in the queue. And I'd like to pass the floor back over to management for any closing remarks.

Well, thank you everyone. We want to thank you for listening today on this call this afternoon and look forward to updating you on our progress on the next quarter. Good afternoon.

This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.