Natural Gas Services Group, Inc. (NGS) Q4 2013 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to the Natural Gas Services Group Fourth Quarter 2013 Earnings Call. [Operator Instructions] Your call leader for today's call are Alicia Dada, IR Coordinator; Steve Taylor, Chairman, President and CEO. I will now hand the call over to Ms. Dada. You may begin.

Thank you, Erika, and good morning, listeners. Please allow me to take a moment to read the following forward-looking statement prior to commencing our earnings call. Except for the historical information contained herein, the statements in this morning's conference call are forward-looking and are made pursuant to the Safe Harbor provisions as outlined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements, as you may know, involve known and unknown risks and uncertainties, which may cause Natural Gas Services Group actual results in future periods to differ materially from forecasted results. Those risks include, among other things, the loss of market share through competition or otherwise; the introduction of competing technologies by other companies; and new governmental safety, health or environmental regulations, which could require Natural Gas Services Group to make significant capital expenditures. The forward-looking statements included in this conference call are made as of the date of this call, and Natural Gas Services undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include, but are not limited to, factors described in our recent press release and also under the caption Risk Factors in the company's annual report on Form 10-K filed with the Securities Exchange and Commission (sic) [Securities and Exchange Commission]. Having all that stated, I will turn the call over to Steve Taylor, who is President, Chairman and CEO of Natural Gas Services Group. Steve?

Okay. Thank you, Alicia, and thank you, Erika. Good morning, everybody, and welcome to the Natural Gas Services Group's 2013 full year and fourth quarter earnings review. 2013 was a good year for NGS, and I'm happy to report that it was a record-setter in a few ways. Rental revenues increased 22% over the year, and net income and EBITDA each rose 13%. This year, we recorded the highest levels of rental revenue, gross margin and EBITDA on the company's history. We did have some at the end of the year adjustments that affected our fourth quarter results, including a higher tax rate in the quarter and year-end inventory adjustments, and these had a cumulative, negative after-tax impact of approximately $0.04 per diluted share. I'll touch on these later, but we are optimistic going forward and anticipate steady growth in 2014. Looking at total revenue, 2013 full year revenues were $89.2 million, a decrease of 5% from $93.7 million in 2012. This decrease is attributable to the onetime sale in 2012 of $11 million worth of rental equipment. If, however, 2012 total revenues are adjusted for the one-time sale, full year revenues would've increased $5.5 million or nearly 7%. While compressor sales were down as part of it at nonrecurring sale, compressor rentals grew vigorously and are up 22% on a year-over-year basis. The sequential quarters of the fourth quarter of '13 compared to the third quarter of 2013, total revenues increased $1.3 million or 6%. In the year-over-year comparative fourth quarters, total revenues decreased $400,000 or 2% to $23.1 million, primarily due to a $2 million drop in compressor sales. Compressor rentals in the same year-over-year quarters, however, increased 24% from the fourth quarter of 2012. This dynamic demonstrates why I've mentioned in the past that since it is the volatile part of our business, we have generally reduced our reliance on compressor sales and opportunistically shift sales of fabrication space to rental fabrication as required. Looking at total gross margin and comparing the full years of 2012 to 2013, total gross margin increased $4.5 million or 10% to $48.3 million. Total gross margin percentage increased from 47% to 54%, primarily due to our shift to higher-margin compressor rentals. In the sequential quarters of Q3 and Q4 of 2013, gross margin was essentially flat while the year-over-year comparative fourth quarters grew 4%. SG&A continues to run in the 8% to 9% range for all applicable time periods. Comparing the operating income in the full years of 2012 and 2013, operating income increased 9% from $20 million to $22 million. In sequential quarters, operating income was down $140,000 with the year-over-year fourth quarter reflects a $570,000 decrease. This is largely driven by increased depreciation of almost $700,000 this quarter for rental fleet growth additions versus a year-ago quarter -- or no, this quarter, actually. Looking at net income, for the full comparative years, net income in 2013 was $14.4 million, which was a 13% increase from the $12.7 million earned in 2012. In the sequential quarters of the third quarter of 2013 to the fourth quarter of 2013, net income dropped by $240,000 to $3.2 million, with a comparative fourth quarter of the respective years shrank by 11.6%. These decreases were mainly driven by higher depreciation, which increased 16% for the year, and income tax rate that increased from 34.9% in the third quarter of 2013 to 38% in the fourth quarter of 2013. EBITDA increased 13% from $35.9 million in 2012 to $40.7 million in 2013, a record high and a 74% increase over the past 3 years. Sequentially, comparing the third and fourth quarters of 2013, EBITDA was essentially flat $9.9 million. While EBITDA grew 3% from the fourth quarter of 2012 compared to the same quarter in 2013. EBITDA of 2013 averaged 46% of revenue. On a fully diluted basis, earnings per share for the fourth quarter of 2013 was $0.25 per common share, with the full year finishing at $1.15 per share, a 12% increase compared to full year of 2012. As noted at the beginning of the call, we had a cumulative negative after-tax impact of approximately $0.04 per diluted share this quarter and a higher tax rate. Inventory adjustments led to slow-moving in non-stock inventories. Compressor rental revenue had a full year increase of $12.6 million or 22% from $56.5 million in 2012 to $69.1 million for this current year, bringing rental revenues again at a record level. Sequentially, compressor rentals grew over 4% between the third quarter of 2013 and the fourth quarter of 2013, while the year-over-year quarterly change experienced an increase of 24%. Gross margins were constant at 58% of revenue for both 2012 and 2013. Without the inventory adjustment impact, gross margins between the third quarter and fourth quarter were essentially flat, and that's the quarters of 2013. Our compressor overhaul expenses in both quarters continue to reflect cost at the higher end of our typical operating range. As we have seen in the past, we expect these to be recouped through future revenues as the overhauled units are rented. The fleet size at the end of the year was 2,556 compressors. This is a net addition of 277 compressors for the year. In the last 3 years, we've experienced rental fleet growth of 34%, with rental revenue growth of 70% with a combination of more units on rent, utilization growth and higher rental rates. Over 40% of our rental fleet is now deployed in the oil shale or liquids-oriented plays. We had the year of rental fleet utilization at 80% and horsepower utilization at 81%. This compares to unit utilization of 77%, again, in the year. While a 300-basis-point increase may seem nominal, this is on top of rental fleet growth of about 12%, which resulted in 17% more compressors on active rental, earning revenue at year end 2013 compared to year end 2012. If we look at utilization a little deeper, while unit and horsepower utilization both grew over the year, utilized fleet horsepower growth was relatively lower than total fleet horsepower growth. This means that we rented relatively more small horsepower units in 2013 than we did in 2012. It's a small change in a dozen initiated trend, but it's interesting because we are seeing some smaller units moving to VRU and other lower-horsepower applications. From a pricing perspective, monthly rental on an average utilized fleet unit increased 5.3% in 2013 and has gained 10% over the last 2 years. This is also evident from the 22% rental revenue increase in 2013 compared to our 12% rental growth -- rental fleet growth. If you recall, we started 2013 projecting our growth capital needs at between $30 million to $35 million, and we raised that to $35 million to $40 million midyear. We finished the year spending a total of $41 million in 2013 for rental fleet growth. Looking forward to full year 2014, we anticipate spending between $45 million to $50 million, a 10% to 20% increase. To accomplish this level of build, we will need an added capacity. I've mentioned in the past that we look at the option of outsourcing some rental fabrication or possibly adding internal capacity through facility expansion. Based on our cost of outsourcing versus adding roofline, we have decided to move ahead with an expansion of our Midland fabrication facility. This will allow us to increase our potential throughput by 40 to 50 units this year and approximately 100 units in 2015. Construction will start within 30 days and should be completed midyear, probably early in the third quarter. Based on outsourcing cost versus this internal expansion, we will need only 12 to 18 months to achieve a break-even point to pay for this project. Since we started moving into oil shale basins in 2010, NGS has been one of the fastest, if not the fastest-growing rental companies in relative fleet size. This trend continues with the latest available figures, showing NGS as the second most active fabricator in the industry, as measured by units built, whether for rental or sales and in play in all of our North America and all export markets, markets we don't even participate in. This demonstrates our continued high relative rate of growth in the industry and corresponding market penetration. Looking at sales revenue for the full year comparison of 2012 versus 2013. Total sales revenue, which includes compressors, flares, parts and rebuilds, dropped from $36 million in 2012 to $19 million in 2013. But when we account for the onetime rental compressor sale in 2012, the decrease was equivalent to a $6 million drop to $19 million. This lower level of sale is not only due to the prior onetime sale, but it's also coincident with our emphasis on rentals and the use of more sales fabrication space in our Tulsa facility for rental fleet production. Total sales revenues increased a little over $500,000 sequentially and was off $4 million in the year-over-year quarters. Looking at compressor sales only, revenues decreased from $26.2 million in 2012 or approximately $15 million without the onetime sale to $10.7 million in 2013. In the year-over-year quarters, revenues were up $1.9 million, but up about $400,000 sequentially. Despite the revenue decreases, gross margins for compressor sales increased to 29% from 19% in 2013 compared to 2012. And we saw the same increasing trends for the comparative year-over-year sequential quarters. Our compressor sales backlog at the end of the year was approximately $3 million, which is about the level we expect going forward on a quarterly basis. However, since the end of the year, 2013 has grown to roughly $7 million presently due to additional contracts received in January and February. Just mentioned in the past, we expect our compressor sales revenues to run in the $10 million to $15 million annual range. Looking at the balance sheet, our cash position was approximately $24.4 million as of December 31, 2013. This is $3.7 million less than our cash on hand a year ago due to the deployment of cash in the rental fleet expansion. Our debt is less than $600,000 and cash flow from operations for the year was $39.3 million. Now referencing my comment about additional fleet capacity and our decision to expand our throughput, we obviously think that 2014 will be a growing year for the company. Proper equipment need will continue to be the wellhead gas-lift type units that we are currently building for the oil and liquids-oriented basins, and they continue to be utilized in the 95% to 100% rate. With any luck, we may also see some smaller units going out. We continue to see our largest opportunities in the Permian Basin, the Niobrara Shale, the Granite Wash and the Utica Shale. These are all areas that we are well established in and that should provide incremental growth to us. The Bakken is anticipated to grow, but we think we're still a year or 2 ahead of the curve there. So it would be a measured growth this year. Coming on the Quad O and VRU landscape, we see a little movement there, but not near what we thought it might be a year ago. I think this will be a growing market, but it remains to be seen how fast and by how much. Our custom fabrication sales business has had a strong start this year with our present backlog at about 50% of what we anticipate to be full year revenues. As you know, this is the unpredictable and variable part of the business, and we have been using the sales fabrication space as a swing component for rental fabrication. Our planned expansion will enable us to take advantage of both the rental and sales markets as required. We think our business looks positive over the year, and that commodity prices will generally hold on the oil side and potentially increase gas-wise towards the end of the year. As everyone is aware, natural gas prices have spiked recently due to the severe winter weather experienced across the country. But since it is weather-driven, there really hasn't been much of an increase in dry gas activity due to its temporary nature. However, we have seen significant draws from natural gas storage. We are presently 39% below the 5-year average level. And depending on the winter weather -- or I mean, summer weather, the hotter, the better. We may see a relatively low level of storage going into fall. If so, that may set us up for a better 2014 and 2015 winter from a dry gas activity perspective. EIA expects that the Henry Hub natural gas spot price, which averaged $3.73 per MMBtu in 2013, will average $4.44 per MMBtu in 2014, or 20% higher. This is an increase of $0.28 per MMBtu from the 2014 projection in EIA short-term energy outlook just from last month. WTI prices averaged in '13 $98 a barrel and EIA projects that it will average as little over $95 in 2014. This is, of course, good enough pricing to keep activity at an active level. We're encouraged by what we've seen here in the market and from our customers, and anticipate another growing year from NGS. That's the end of my prepared remarks. But I do want to -- I think I may have bobbled the depreciation number. I just want to give everybody that number again. For full year 2013, depreciation was $18.1 million. So that's a $2.4 million increase for the year. So yes, the $700,000 I mentioned before was an increase in the quarter. That's the end of my prepared remarks. I'm turning the call back over the Erika for questions that anyone might have.

[Operator Instructions] Our first question comes from Rob Brown from Lake Street Capital.

I'm wondering if you could give us a little more background on your decision to expand capacity. Sort of do you see the demand environment maybe ramping a little faster than you thought? Or do you have a little more confidence that it's going to last longer? Maybe just give us an understanding of your thoughts on expanding capacity.

Well, we -- if you look at '13, we felt like we weren't able to probably address all the markets -- the present markets we're in fully, and there are still some other markets we want to move into a little bit. So we're going to have to look again in throughput at one way, either externally or internally. And then just going back through our fourth quarter projections, trying to get us called on '14 going forward, it looks like the projections will come in fairly strong enough to let us take a look at the additional capacity. What kind of swung at here in the last 30 days is the sales market has started up pretty strong for us, and we have anticipated a little more activity there. And we're about $7 million backlog now. So we started looking at that. That was going to start taking maybe a little rental space that we're using and up until -- so which are our traditional sales facility. And so that might have started impacting the rental a little. So, yes, all that, just what our customers are telling us, what we saw last year and then some of the sales piece of it. And then again, as I mentioned, we don't see it really more than the 12- to 18-month payout. That's what drove us to go ahead and pull the trigger.

Talk a little bit about gas price dynamics and things of that color. How does -- or sort of how and when does that start to impact maybe some of the smaller units you have? Will -- when do people start to sort of feel comfortable that, that price environment is stabilizing and sort of when do you start to see rental units come out of inventory?

Well that's a great question, and it's a difficult one to really get a good handle on. I mean, every operators going to be a little different. Every basin is a little different. It's a -- with gas price still at relatively low level, I think you tend to generally think of -- maybe if you can get in there to $4.50, $5 and hold. Hence, the "and hold" piece of it, that's the hard part. Because again, you can get spikes, but unless the operator in fact just going to hold in there for a little bit or he can afford to either install compression equipment and/or drill something, now it doesn't make too much difference from an activity standpoint. So yes, I've seen surveys that mentioned operators felt like they might see additional activity on a $5-plus handle that they felt might last. My gut feeling is, again, gas is -- the swings in gas price are weather-driven. So if we get a hot summer, we've already had excellent winter from our perspective, not -- sorry not from the people in the cold weather's perspective. If we hold $4 to the year and start going in the fall at that or a little higher, then I'll think, they have decent winter next winter. I think we can probably see some activity. But for example, you go to Barnett and they've really got their costs under control quite a bit, that's more of a mature area. They can price -- see a little more activity in lower price than some of the other areas. So highly dependent, but I would guess if we go into fall $4.50 to $5, we might have a chance of seeing some movement.

Our next question comes from Joe Gibney from Capital One.

Just a quick question on your build profile into next year. So the incremental units from the capacity understood. Is your base level of building going to be commensurate with '13 levels kind of in the 250 bandwidth? Or is that exceptionally high? Just trying to understand base level before you build on the capacity side.

Yes. No, I think that's -- the additional I mentioned was incremental additional. So that will be on top of, yes, the 250, 270 range we hit this year or in '13. So we're sort of anticipating a 300 and 320 range here. And some of that's from -- sorry, we can't get the plan online until by Q3.

And any shift in the sort of average horsepower per unit that you're targeting with the capacity expansion? Or it's all going to be centered as it has been mostly on liquid units, 200 and 250 horse or is it going to be a little bit of a shift in focus?

Right now, we anticipate being in the same sort of oil shale gas lift, 200, 250 higher-pressure units. And again, like I mentioned, that is not -- I don't want to miss it too much, because everybody might think it is more important than what it is right now. But, we've seen a little shift in some smaller stuff. Now we haven't really -- and actually, we're -- we've built just few units on a small size because we've actually run out of some of the smaller sizes. I don't want to put any credence to that yet because I think we're still a ways from even saying that, that market is starting to move back, but there may be a little movement towards that. But predominantly, it's going to be the oil shale type stuff.

Okay. And then just last one for me. Just curious, as expansion has ramped up a little bit more industry-wide, not just you guys, but where are we on, like, component lead times, in particular, I guess, engine lead time? Is that creeping to the point where it's becoming onerous or is it still within manageable ranges around 6 months or so?

No, it's about the same. You'll get some truth or we could shift some stuff, but it's as manageable or as unmanageable as it has been in the last 6 months. Now we made a decision in Q4 to go ahead and increase our engine orders for this year. And granted, it's probably a little more of a gamble back then than now because as we get into, we think there's going to be homes for them. But -- yes, so we've been able -- until we saw more of a -- we saw a bump in deliveries towards end of last year. So we want to get a little ahead of that. So right now, for us, we're still into that 6- or 7-month sort of cycle and you don't have to project out that far, but it's about same as what it has been.

Our next question comes from Gary Farber from CL King. Gary Farber - CL King & Associates, Inc., Research Division: Just a -- a couple questions on the -- you said 40% of the -- is it that rental fleet is in the liquids or shale plays? Can you just take a guess or an estimate of what -- how you think it might play out when we get to the end of this year?

I would say -- and again, it depends on if we get a movement on the smaller stuff because that would tend to damp down that percentage growth on the oil have been the larger stuff. Yes, some of the targets, say, could be in the 45 to 50 range, probably closer to the 45 than the 50. Gary Farber - CL King & Associates, Inc., Research Division: Right. And it was 2 years ago, you would say it would be what?

10 to 20. Gary Farber - CL King & Associates, Inc., Research Division: Right. And I don't know if you -- I might have missed this on the call, the overall sort of utilization rate of the total fleet is now what?

Yes, 80% by unit count, 81% by horsepower. Gary Farber - CL King & Associates, Inc., Research Division: Okay, and -- you're adding capacity, there is obviously a fair amount of players in the space, but at the end of the day, sort of a finite amount, do you get the sense that others are also sort of seeing the same dynamic that there's -- that they don't have enough capacity?

Well, I -- it's a good question. As I mentioned, we got some instrument data a couple of weeks ago that showed us as the second-largest fabricator, which is, we've -- which is kind of significant from the point that we're not the second-largest fleet. And if you want to go down the list, you would think the #1, 2, 3, 4, 5 sized fleets build that same commensurate units. So knowing that and seeing that and also seeing that same data probably a couple of years ago, where we were one of the big -- still one of the biggest fabricators, I think we're still gaining share from that standpoint. And I don't know -- there's a little more capacity going into industry, not a whole heck of a lot. And again, we're not doubling or something like that. We're doing a very, very measured tones and we'll add some this year and then for the full year next year, we'll have more capacity we can take advantage of. So I think we're still on the -- I think we're still gaining share in that perspective and now it's showing up in that fabrication number. Gary Farber - CL King & Associates, Inc., Research Division: Right. And then just on the VRU side, it sounds like maybe it's possible you added some contracts in the quarter or just things picked up a little bit. Is that accurate? Or...

I think we're getting a little of both. We're getting some VRU activity and again, a caution, everybody, because that's -- we sort of -- oh, that is going to be more active last year than it's -- it turned out to be. I think, as I mentioned, it's going to be a -- it's a market there. It's going to be a growing market. We just don't how fast yet. So we've seen some of that. But we're also seeing just some of the smaller, lower-pressure, lower-volume units go out on -- actually on some associated gas applications, where they're not doing gas lift and they just need to sell some gas. So you're seeing a little mix of stuff. It's just the first time we've seen something to show up the numbers a little that you could comment on. And again, if anybody's writing anything down, I want you to write in pencil because that can change quarter-to-quarter to what's moving out. But this is just kind of interesting. Gary Farber - CL King & Associates, Inc., Research Division: And then just one last question. If you're going to be adding units and you have been at a pretty good rate, is the utilization rate still a -- is still as relevant a metric as it was a couple of years ago? Or is that less of a focus because your denominator is growing?

Yes, well, we watch it, but it's not as direct an indicator of what's going on because, as you correctly pointed out, when you're adding 10%, 12% of the fleet each year, you tend to tamp down that calculation because that denominator is going pretty quick, too. So we watch it and we track and we track above model. It's not -- I'm not as worried about quarter by quarter moving up or down a little as we were before when it was just indicating pure growth. Now it's combination of some growth and utilization. I think we just have to -- you have to look at that now in conjunction with what is moving, what are revenues doing and things like that. Gary Farber - CL King & Associates, Inc., Research Division: And then just one last one. I'm just sort of curious, the weather in the first quarter, did that have any impact on anything that was going on in your business at all? And besides the pricing, just sort of operationally, did that make any difference?

Yes, I think the only thing -- I mean, you always get a little jump in overtime and things like that just because -- and we get so cold when something goes down, it just stays down. You've got to go out there and warm it up and just take some time. So over time, always jumps in winter where there's Q4 or Q1. And then we have had some delays in moving equipment out into the field. From the point of operators holding off and things like that weather-wise. So yes, that'll self-correct itself, of course, now as we go forward.

Our next question comes from Peter Van Roden from Spitfire Capital.

Can you talk a little bit about pricing trends in the new equipment that you're putting out?

It's -- the equipment -- the gas lift equivalent, which is also the oil shale stuff, is our highest priced stuff and what we'd call our premium-price offering and actually higher than the market. We run about 5% to 10% higher rental price than the general market from what we can tell. That price is going to stay the same. We push that pricing every chance we get. And it's typically not through -- over price increases. Even on active stuff, those things tend to not be well received. So we tend to push them more by models, by geographies and/or even down to individual applications. So things -- if things are little more distant or more difficult. So I think that's where you've seen our pricing come up, mainly driven by these oil shale units because they do -- we do get a higher pricing because of the utilization, and we price off utilization quite a bit. That's not the sole factor, but we use utilization to set that pricing. So when you got equipment that's 95%, 100% utilized, it goes at a premium price. And that's how we'll stay going forward.

Got it. And if you think about kind of you're on track to add kind of 320 units next year, assuming you've got the new fabrication capacity up and running, how much of that do you think is kind of spoken for now versus you have to go out and sell?

I would guess -- we haven't tracked it that close, but I would guess probably 1/3 of it. So now that's pretty decent amount.

Yes. And then on the gross margin side, they've been kind of ticking down pretty significantly over the past couple of quarters. How much of that $0.04 impact in the quarter was allocated on the inventory side versus taxes?

Taxes is lower $0.01. So the balance was towards a gross margin. And on top of that in terms of that, just a little more. The -- as we saw in -- of course, Q4, we had the inventory adjustment. But also, we've had -- our overhaul expenses, our rental equipment overhaul expenses have been at a relatively higher level in Q3 and Q4, still in kind of what we call an operating range, but relatively high. And in some quarters, seems like this might be the first time we've gotten 2 in a row like that, seems like sometimes we'll have overhaul expenses in one quarter. The next quarter, they'll slow down. So, yes, we get a difference in gross margins. We've had both Q3, Q4 relatively higher overhaul expenses. But again, that always is followed by that equipment going out all around. We don't overhaul just to have a constant flow of overhauls or as they come in or something like that. We overhaul if we get a contract on a piece of equipment. So there is, by definition, revenue coming after that. So it's a -- it's a double-edged sword. We'd rather not have that expense, but that expense predicts future revenue, too.

Our next question comes from Craig Hoagland from Anderson Hoagland. Craig Hoagland - Anderson Hoagland & Co.: Yes, on the inventory adjustment, Steve, can you help us to break that down between the sales and rental and the dollar impact or the gross margin point impact on the rental side?

Yes. The majority of it was rentals. It was a combination of some slow-moving and some nonstock inventory adjustments. So majority being rental in a tad. I don't have -- I know the after-tax amount. I don't remember the -- but you can kind of back-calculate with the tax rate being about $0.01, at least, about $0.03 on the inventory adjustment. Craig Hoagland - Anderson Hoagland & Co.: Okay. And then the overhaul expense, can you tell us how much that was? Or...

That was running about -- I want to be careful because that's -- we don't release those numbers and those might be a little competitive. Let's see if I can think of some way to characterize it. I guess, what I'd ask you to do is, and not to put more work on it, but go back and look at Q2 and Q3, you'll see a difference there and the majority of that is probably overhaul expense. Craig Hoagland - Anderson Hoagland & Co.: And the cost of the manufacturing expansion, of planned expansion?

It's going to run probably at total of -- with building and the -- equipping it because you've got to buy welding machines, stations and stuff like that, around $2 million. Craig Hoagland - Anderson Hoagland & Co.: $2 million, okay. And do you expect that -- the new equipment to reduce your manufacturing cost at all? Or will there not be much...

Yes. No, we think it will. We think we can -- not necessarily the equivalent, but kind of how we're going to man it and staff and things like that. So yes, we think we will get some operating -- well, it's not really operating cost because it's all capitalized, but we'll get some advantage there.

[Operator Instructions] At this time, there are no further questions.