FuelCell Energy, Inc. (FCEL) Q3 2011 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the FuelCell Energy Reports Third Quarter 2011 Results. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Kurt Goddard, Vice President of Investor Relations.

Good morning, and welcome to the Third Quarter 2011 Earnings Call for FuelCell Energy. Delivering remarks today will be Chip Bottone, President and Chief Executive Officer; and Mike Bishop, Senior Vice President and Chief Financial Officer. The earnings release is posted on our web site at www.fuelcellenergy.com, and a replay of this call will be posted 2 hours after its conclusion. The telephone numbers for the replay are listed in the press release. Before proceeding with the call, I would like to remind everyone that this call is being recorded and that the discussion today will contain forward-looking statements, including the company's plans and expectations for the continuing development and commercialization of our fuel cell technology. I would like to direct listeners to read the company's cautionary statement on forward-looking information and other risk factors in our filings with the U.S. Securities and Exchange Commission. Now I'd like to turn the call over to Chip Bottone. Chip?

Thank you, Kurt. Good morning, everyone, and welcome. As global energy demand and the need for the new sources of power grows, our intense focus on driving growth has generated increased order flow and produced the highest backlog of products and services in our history. Our team is executing on the production of this record backlog extremely well, and we are delivering strong financial results. For the first time since commercializing our fuel cell power plants, we achieved a gross profit from the third quarter of 2011. This is a great achievement for the entire FuelCell Energy team, and brings us closer to our goal of company profitability. As announced previously, during the third quarter, POSCO Power, our South Korean partner, placed a 2-year order for 70 megawatts of fuel cell kits, equipment and services valued at $129 million. This is POSCO's largest order to-date, and represents initial demand under South Korea's renewable portfolio standard. We're also pleased to announce further expansion into the Asia region by POSCO. Before discussing any results further, I want to introduce Michael Bishop, FuelCell Energy's Chief Financial Officer, who will present our financial results. Mike is a CPA and has an extensive experience with high-growth public companies, technology development and services deployment. I know his experience in financial leadership will serve us well. During his 8 years with us, Mike has built a solid team, ensuring that the finance, legal and information systems are well positioned to support and continue the growth of the company. Mike?

Thank you, Chip. Good morning, and thank you for joining our call today. FuelCell Energy reported total revenues for the third quarter of 2011 of $31.2 million, compared to $18.9 million in the same period last year. This 65% growth in quarterly revenue from one year ago is reflective of the increasing demand for our products and our current production rate, which now exceeds 50 megawatts on an annual basis. Product sales and revenues for the third quarter were $29.4 million, compared to $16.2 million in the prior year. The company's product sales and service backlog totaled $231 million as of July 31, 2011, compared to $80 million as of July 31, 2010. For the third quarter of 2011, product order backlog totaled $153 million, and backlog for service agreements totaled $78 million. Backlog is the highest in the company's history as a result of the $129 million order for 70 megawatts of fuel cell kits and other equipment and services received from our South Korean partner, POSCO Power. We generated gross profit in the third quarter of 2011. This is a significant milestone and the first growth profit since the company began commercializing our FuelCell product. Margins for product sales and revenues improved by $4.1 million compared to the third quarter of 2010, and the product cost-to-revenue ratio improved 0.99:1.00. Research and development contract revenue was $1.8 million for the third quarter of 2011, compared to $2.7 million in the prior-year quarter. The company's research and development backlog totaled $13.6 million as of July 31, 2011, compared to $7.4 million as of July 31, 2010. Net loss to common shareholders for the third quarter decreased by $8.6 million, or $0.07 per basic and diluted share, compared to $13.8 million or $0.15 per basic and diluted share for the third quarter of 2010. This is a 38% improvement over the prior year, as a result of improved product margins and lower operating costs. My discussion to follow on year-to-date results will exclude the charges related to the repair and upgrade program, and the revaluation of the Series I preferred shares recorded during the second quarter of 2011. Please note that there is a non-GAAP reconciliation included at the end of the earnings release that illustrates financial results fiscal year-to-date, excluding these items. For the 9 months ended July 31, 2011, the company reported total revenue of $87.8 million, which is a 75% increase over the $50.1 million recorded in the prior-year period. Product sales and revenues, which include services, were $81.8 million compared to $42 million in the prior year. Research and development contract revenue was $6 million compared to $8 million. Product sales and revenues improved by $11.1 million compared to the prior-year period, and cost-to-product revenue ratio improved to 1.05:1.00 from 1.36:1.00 on product cost reductions, including better labor efficiency and overhead absorption with higher production rates. Net loss to common shareholders declined for the 9 months ended July 31, 2011 to $32.3 million, or $0.26 per basic and diluted share, compared to $45.9 million, or $0.52 per basic and diluted share for the prior 9-month period. Total liquidity was $51.9 million as of July 31, 2011, including cash and investments in U.S. Treasuries of $49.5 million and revolver availability of $2.4 million. Net use of cash, cash equivalents and investments in the third quarter of 2011 was $5.5 million, consisting of $900,000 net cash used in operating activities, $1.1 million of net cash used in investing activities and $3.5 million of net cash used in financing activities. Total cash used for the 9 months ended July 31, 2011, was $25.4 million, excluding revolver borrowings and net proceeds from the registered direct offering of common stock, which was completed in January. We have previously discussed our expectations for full year fiscal '11 cash used to be in the range of $24 million to $32 million. We expect to be at the lower end of this range for the full fiscal year. We achieved a significant second milestone this quarter by generating gross profit, which illustrates our progress. We expect to build off of this and our forecasting improvement to gross margins for the fourth quarter of 2011 compared to the third quarter, based on our current production plan. We recognize that more work needs to be done as we push to profitability and beyond. Increased product sales and services, combined with continued cost reductions, will drive profitability. We continue to estimate company profitability at annual production rates in the range of 80 to 90 megawatts. Chip?

Thank you, Mike. FuelCell Energy's vision is to provide ultra-clean, efficient, distribute generation baseload power for less than the cost of grid-delivered electricity without incentives. We have positioned the company to participate in a very attractive and growing market space. The nexus of 3 closely related markets encompassing clean renewable energy, the smart grid and energy efficiency. To achieve our vision, we have established 3 strategic priorities: d-riving growth, operational excellence and customer satisfaction. Let's talk first about driving growth. FuelCell Energy is the world's leading producer of megawatt class fuel cells for clean and renewable baseload power generation. More than 80 of our power plants are generating ultra-clean power at more than 50 sites globally. Our install base and backlog now exceeds 180 megawatts. We sell into 2 growing primary markets. The first is ultra-clean power. FuelCell is operating on clean natural gas across 7 distinct and diversified vertical markets. The second is renewable power. Fuel cells operating on renewal biogas across 4 distinct and diversified vertical markets. Global demand for power continues to grow, and the need for distributed generation becomes more apparent with every unforeseen event that interrupts the electric grid, whether it's the hurricane or an issue with nuclear power generation. We have analyzed our markets and estimate that the near-term global potential for fuel cell power plants is about $6 billion, of which renewable energy represents about $2 billion. Services are growing part of our revenue stream, represent significant additional potential, but are not included in these estimates. Our worldwide business is growing because our Direct FuelCell solutions excel at solving in energy, environmental and business problems. Our DFC power plants are ultra-clean, efficient and reliable distribute generation solutions. The emissions profile virtually eliminates pollutants and helps customers reach their sustainability goals for high electrical efficiency results and more output for a given unit of fuel, reducing operating costs and carbon emissions. Our power plants generate electricity at the point of use without additional investments in transmission and distribution. Growing demand and our relentless focus on driving growth have resulted in increased order flow from our markets. During the third quarter, POSCO Power ordered 70 megawatts of FuelCell kits. Under this order, we will deliver 2.8 megawatts of FuelCell kits to POSCO every month for 2 years, from October 2011 through October 2013. This order almost doubled our product and service backlog to $230 million and 79 megawatts. We increased our production run rate to 56 megawatts during the third quarter of 2011, up from 22 megawatts in late 2010. We will maintain this 56-megawatt rate through 2011, and then increase it as needed to meet demand. We ramped up production very quickly, and I'm proud of the outstanding job our entire team of associates is doing to support this growth. Credit for achieving our recent operational milestones goes to Tony Rauseo and his talented associates. Tony is our Chief Operating Officer. Tony has been with FuelCell Energy since 2005, and has a strong track record of delivering results. Formerly Vice President of Engineering and Chief Engineer, Tony was appointed Chief Operating Officer in 2010, and has been instrumental in helping shorten product development times, improve product operational reliability, and most important, achieving significant cost reductions. Obtaining positive gross profit for the third quarter is a significant milestone for us. This achievement illustrates the operating leverage inherent in our business model. As our production volume grows, the absorption of our factory fixed overhead improves, as our production ramp involved a lot of hard work, but not a lot of costs other than additional direct labor. In addition, the large 2-year POSCO order provides a base level of production and material purchase plan. This operational predictability, combined with expanded global sourcing and higher volume purchasing is generating additional cost reductions. We remain on track to achieve company profitability and a run rate in the range of 80 to 90 megawatts annually. Let's look at some of our key market developments. In South Korea, POSCO Power's large order represents initial demand under the country's Renewable Portfolio Standard, which mandates 6,000 megawatts of new and renewable energy through 2022, including FuelCell's operating under natural gas or renewable biogas. The RPS, which goes into effect in 2012 will continue to drive demand for fuel cells in South Korea. POSCO has developed nearly 70 megawatts of projects already, and is developing a substantial pipeline of new projects and Memorandum of Understandings with key customers. We expect the order volume will grow in response to demand created by the RPS, and the potential exists for our partner to place incremental orders to satisfy market demand. The recently completed strategic planning discussions with POSCO. We've focused on expansion and penetration of other Asian markets, and plans to accelerate our business growth and alignment of our respective strengths and resources. There are substantial growth opportunities within Asia, supported by the need for ultra-clean baseload distributed generation. We are pleased to announce the initial step in POSCO's Asia expansion plans, as explained in our press release issued this morning regarding market expansion into Southeast Asia. POSCO Power's expanding outside of South Korea, with a high-profile installation in Indonesia. In addition, POSCO opened a sales and services location in Indonesia to support further growth in Southeast Asia. South Korea's green energy and economic policy is focused on clean distributed generation that is scalable, efficient and creates green jobs. Scalable distributed generation allows power to be added in cost-effective increments at the point of use, while minimizing costly investment in transmission and distribution. Fuel cells are an ideal distributive baseload solution for South Korea and other geographies because they are ultra-clean, efficient, quiet, easily sited in areas of high population density. POSCO has completed and begun production at its local stacking facility, which is annual capacity of 100 megawatts. Under a licensing agreement, POSCO assembles, complete power plants using fuel cell components produced by us in our proprietary balance of plant designs. POSCO assembled the first fuel cell to be stacked in their module assembly facility, and completed power plant has been installed at a customer site. Our manufacturing business model can be replicated in other markets globally to respond to market demand and the desire for high-quality, sustainable job growth. We control intellectual property, while leveraging our manufacturing capacity to support local markets. Our partners create market demand by developing policy and have delivered patents and jobs, creating both customer and market value in addition to economic development. Localization also ensures our products are adapted to local power needs. Another example of partner alignment and focusing our resources on an emerging opportunity is the building application market. FuelCell Energy and POSCO are developing a 100-kilowatt FuelCell power plant for the commercial buildings market that is being driven by the South Korean energy policy. This project is on schedule, and we expect to ship 200-kilowatt demonstration stacks to POSCO later this year. POSCO is designing the balance of plant, and we'll install the units in Seoul city. This product has strong market potential in South Korea and other regions globally. In California, recent installations in the process of commissioning, combined with the pending installations from backlog, will give rise to more than 12 megawatts of new plants coming online in the next several quarters in key market segments with more key customers. This increases our install base in California by more than 60%, and gives us momentum to increase our market penetration and deliver growing service revenue. Policy development continues to evolve and has a significant portion of our efforts. These developments include an increase of its Renewable Portfolio Standard from 20% to 33%, plans to deploy 12,000 megawatts of renewable distributed generation and a shift to performance-based fee and tariff policies. We have also had favorable results in the development of project and program financing, which will aid in the closure of new business. In August, Pacific Gas & Electric signed 2 multiyear service agreements under which FuelCell Energy will operate and maintain 2 DFC1500 power plants owned by the utility and recently installed on 2 California university campuses. They are efficiently and economically providing ultra-clean baseload power and usable heat, while helping these universities meet their sustainability goals. In Connecticut, we have made significant progress in the development financing for several projects. We'll be ready to announce the closure of some soon. The state recently adopted a comprehensive clean energy policy designed to increase energy efficiency and expand renewable power. The state created a long-term renewable energy credit program funded with $300 million over 20 years. Connecticut has begun taking the position of greater national leadership in clean distributed generation, and this legislation should be more effective in fostering the near-term adoption of clean energy than prior legislation. FuelCell Energy has more than doubled production in less than a year and added 50 good paying green jobs in 2011 to the state's economy. Finally, we're in the final stages of discussion with 2 potential major European partners. I expect you will hear some news prior to our next call. Europe is an attractive and underserved market for stationary fuel cell power plants. We are currently working on follow-up orders in the U.K. market from our previously announced order with the Crown Estates in the U.K. A sizable segment of our growing backlog, as you've heard, is comprised of multiyear service agreements, which all of our customers have executed. Service agreements are an increasingly important part of our focus on customer satisfaction. It helps us partner more closely with our customers to deliver expected value and provide us with the opportunity for additional and adjacent services. Service agreements generate predictable and stable recurring revenue, and as our install base continues to grow, it will begin to contribute materially to profitability and future sustainable revenues. We're focusing our advanced technology programs on strategic areas of research and technologies that have strong prospects for commercialization within a reasonable timeframe. Our research and development capabilities and strong intellectual property portfolio contribute value in many ways, including enhancement of our current product line and the development of adjacent markets for existing products. An excellent example of this is the recent inauguration of the world's first wastewater treatment base fuel cell power plant renewable hydrogen fueling station in Southern California. Our team modified one of our commercial power plants to provide renewable hydrogen for vehicle fueling, plus ultra-clean electricity, illustrating the versatility of our technology. Other contracts in areas of similar importance are expected to be announced in the next several weeks. We have a clear vision with 3 strategic priorities that can deliver profitability and sustainable growth. As we strive to meet the world's energy needs today, our strategic priorities of driving growth, operational excellence and customer satisfaction, are producing positive financial and operating results. We achieved quarterly gross profit. Our products are profitable, POSCO placed a large multiyear order, the largest in our history, and we're executing on the production of our record backlog. While more remains to be done, I would like to thank our talented associates for making excellent progress and for our investors with their confidence placed on us. Thank you for your continued support. Operator, we'll be happy to take questions at this time.

[Operator Instructions] And first in line, we have John Quealy with Canaccord Genuity.

It's Mark Sigal for John. Recognizing that South Korea has the strong renewable portfolio standard in place, have any of your conversations with POSCO divulged any sense of a digestion period after the next 70 megawatts are delivered? Or can you just talk about how they're thinking about that?

This is Chip. Yes, in fact, we just had a kind of a strategic review meeting, which I alluded to in my script. I would say they've installed about 70 megawatts, and that really was the showcase and digestion period. The RPS program really starts to take effect in 2012. They've got a lot of activities, some of which the customers have actually visited us here, we visited them. And I think the demand is going to be so large that they easily consume that 70 megawatts certainly over that 2-year period. They've got expectations significantly beyond that. So I don't see a kind of a stop and go effect here. I think it's kind of crossed over that, now it's in the go phase, Mark.

Okay. And then just moving on to Indonesia. Can you talk a bit about some of the similarities and differences you might see between Korea and Indonesia? And how do you see sales cycles shaping up in Indonesia? Any color there?

Yes. First of all, there's kind of 2 drivers there. #1, POSCO wants to export, if you will, to some of the other opportunities, specifically in Asia. They've targeted Southeast Asia. Indonesia have to be the first place in Southeast Asia they went to. But they have strong ties, obviously, to the construction business, and they have strong export bank financing support. So that's the motivation there. As far as the markets itself, the reason that Southeast Asia is interesting it's twofold, one, there's demand, given the GDP growth over there, but secondly, particularly Indonesia, has some very high population density issues, coupled with the demand for capacity and obviously, they're a significant producer of oil and gas supplies. So they have some pretty good economic dynamics of which that we can help them with. So that's -- I think it's kind of 2-phased. POSCO is motivated, and I think the economics from their side would work very well with our products.

Okay, great. And then just lastly, given the strong showing that fuel cell technology had in Connecticut 150, is there any reason to believe that fuel cells wouldn't enjoy a similar showing under the new long-term renewable energy credit? Any early indications there, just from a technology standpoint and a relative market share?

No, I actually feel we're going to get some of the other ones in the 150 project done, as I mentioned. But going forward, the programs a little bit different. And actually, I think it actually works better. It's more of a predictable rec value. There were some not fluid [ph] recs on the previous programs. So it depends on how you look at it, but I'm quite confident on the program going forward, Mark.

Our next question comes from Sanjay Shrestha with Lazard.

Two questions, please. How should we think about the gross margin embedded in the current backlog? And what does that mean in terms of sort of cost reduction potential over the next 12 months?

It's Mike Bishop. Our profitability is tied to our current production levels, Sanjay. Our backlog is profitable. We expect to generate profitability in the fourth quarter, as I've described in my script. As long as our production remains at our current run rates and increasing over time, we'll continue to generate gross profit.

Just one quick follow-up here. In terms of the European markets, how should we think about -- can you provide us any update on the distribution offers already in that market?

Sanjay, your question, this is Chip, was somewhat garbled. Could you repeat that, please?

Could you provide us an update on the distribution offers already within the European market?

This is Chip. I can answer that, Sanjay. I alluded to in my comments, we've been in discussion with several players, and we've been very cautious to obviously pick the right partners. I mean, POSCO was a great partner. We understand what the right partner looks like. So Europe, I can't comment on the specifics of who they are other than to say we've done on lot of due diligence. We're in pretty advanced discussions with multiple parties, and I'm pleased that we're going to finally be able to do something in Europe because it's an underserved market just based on some of the things that were done before. So I'll just have to defer a little bit to the further news flow before I can comment any further on that.

Our next question comes from Walter Nasdeo with Ardour Capital.

I'd like to touch on the 100 kilowatt product that you're developing with POSCO now for commercial use over there. Can you kind of give us a little idea on what, if any technological challenges, you're facing on scaling back down again as far as efficiencies go, and any designs issues that you're dealing with? And then off of that, what sort of kind of overall cost per kilowatt are we looking at now in the completed units?

Okay. Wish that I could remember all that, Walter. Let me first start with what the program is because I don't think it will help kind of frame what the opportunity is. The government, obviously, imports a majority of their fuel from outside the country, so they're very keen to put in place long-term strategies of efficiency, et cetera, et cetera. And this is really a compulsory program, starting first with all federal buildings. They need to have a -- 5% of their power demand has to come from renewable or new sources, and that's a fuel cell effectively because that's really all that fits in there. You can't do solar or anything like that. So we're developing this product based on our current design. Basically, Walter, if you will, it's just 1/3 the stack size. POSCOs developing the balance of plant based on the balance of plant that they've developed, they've localized, if you will, on their own. So I mean, I think there's very low technical risk, and they think this is going to be a very, very large market. And in fact, they think it's going to then be applied to commercial buildings. In fact, we're having some discussions that any buildings over x size in Seoul would basically have to have the same kind of thing, and they might even increase the percentage. And if the building's bigger, therefore, then the baseload will be different. So they're really keen on this program. As far as per dollars per kilowatt, we're not at the point that we can comment on that right now. I mean, we're literally in the development phase of this. But I think it's less sensitive to pricing, given the compulsory nature of the opportunity.

What's the expected footprint, then, of this unit?

Walter, I don't have that. I can get that to you on e-mail. We have some layouts for it, but I don't know it off the top of my head. It's probably similar in size to our original 300 kilowatt, maybe a little bit smaller.

Okay. So this would be -- but this will be installed outside the building then, correct? Like in the parking lot or...

Outside or inside, Walter. Probably inside. And it's both a power electricity as well. They're going to use the heat as well for hot water.

Our next question comes from Matthew Crews with Noble Financial.

A question, to kind of stay on that topic real quick, on the JV development. Is that program -- the announcement back in November was $5.8 million. You said you did about $5.5 million in the quarter. What are expectations from a revenue perspective on this program moving forward?

I'll take that one, Matthew. This is Mike. Yes, the total program about $5.5 million, that has come through during the fiscal year. In this quarter, we probably had about $2 million of revenue related to that. The other revenue coming through was related to other components and construction activities and installation activities for other projects. We expect that, that program will wrap up here in fourth quarter and first quarter of 2012.

And just to add to what Mike said, Matthew, as far as production -- because don't forget, these are the first 2 units they're putting in. They're going to test these out. Like I said, there's pretty low technical risk here, Real production demand will probably come in the form of kits, similar to our bigger unit kits probably hitting some time in 2013, based on the market demand that POSCO then foresees.

Okay. What's the competitive -- I mean, a lot of the literature out there has shown that the solid oxide fuel cell technology has been promoted both by POSCO, I believe, as well as South Korea. Is POSCO looking at the molten carbonate fuel cell as obviously, an alternative, attractive technology based on what you just said, the low technology risk?

Yes, I mean, that's the -- I mean, there's a couple of things. One, it's ready now and it's low technology risk as compared to others. I think that's the 2 main driver because this program takes effect now, I would say 2012. But they're looking at putting the molten carbonate fuel cell in lots of different applications. I mean, we've talked about power plants and now we're talking about building applications. There's discussions going on about different types of buildings. There's discussions going on about onboard ships and things like that. So technology itself is pretty versatile. And finding the right opportunities, when you put them all together, can create a pretty substantial market opportunity.

And if my understanding is correct, that technology or a stack size that you can use in the U.S. as well?

You could use in the U.S. Again, some of our cities are a little bit different laid out, and some of the grid requirements are a little different that we have here and some of the economics are a little different. But in their case, it's a compulsory program, which really drives it. Which means it's almost like a fire alarm system; you've got to have one, right?

Okay. And just on the -- could you explain again just the general idea of what you're looking for, for the partnership in Europe? Obviously, you said you need to find someone there local, if you're looking at a country like Germany. But is this one of those ones where you're looking for a POSCO-type, someone to actually do a bulk of the manufacturing? Could you just kind of -- what's an ideal layout? Is it identical to POSCO or any differences?

It's a little different. Let me just explain my comment about partners first. What we found is a couple of things are attractive in a partner. One, that they understand the power generation business. I mean, even though POSCO Power is in the fuel business, they had a POSCO Power business that understood how to run a power generation business. They didn't have any other things competing with. They're all in on fuel cells or power plants, so they didn't own any core technology. Second is they have the ability to create market opportunities, both in their brand recognition and ability to set some policies. Those are 2 main drivers that we look at in trying to find a partner. We have several different options on the table where we may pick up somebody else's assets, but the plan here is to partner with somebody, in this case, sizable names that can give us both the access and the reputation that we're talking about. And probably, in Europe, it was a little more fragmented than Korea was, actually, in terms of its efforts. We'll probably do something whereby we're involved in some sort of a joint venture type of arrangement. Whereas with POSCO, it's not a joint venture per se.

Okay. And then just lastly and I'll hop back in the queue. It looks like legislation in the SUIP program is progressing. It looks like they're getting financing squared away for, hopefully, '12. Any update there? Because it seems like you've been a little quiet on the front for California orders?

Yes, it's a great question. Yes, in fact, the proposed decision just came out yesterday, and they're going to vote on that, I think, tomorrow, actually, the Public Utility Commission. Yes, what's happened on that was even though we have people that have reservations that could still use those, the whole discussion centered around almost stopping because people were concerned at, "Well, maybe I can get a better deal," or something like that. So you're right. I mean, we did see activity other than stuff that we had going on not close. But we have 2 types of customers going forward. We have the ones that have reservations that are teed up and ready to go, and then we have ones that would apply for a new application as soon as the rules, in fact, are done and get those ready to go. So over the next quarter or so, you'll see some activity in California pick back up again. But it really came to somewhat of a standstill while the administration was coming and putting their changes in place. I would also say, though, that also, what's coming is some other tools, which we didn't have before, we're kind of the final phases of the CHP feed-in tariff, which is, in fact, an add-on aspect of SGIP. If you looked at it closely, you can now apply for 25% export, which will help economics. And then the other one that's also in the works is the renewable feed-in tariff. And then, of course, the IPC federal grant is still out there as well. So there's other tools, but some of this was a little bit emotional for some people. But it'll start to get going again now.

At this time, I'm showing no further questions, and I'd like to turn it over to our speakers for any closing remarks.

Okay. Well, if there's no further questions. I would just to thank everybody for calling in, and we look forward to speaking with you on the next call. Have a great day. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may all disconnect. Everyone, have a great day.