NPK International Inc. (NPKI) Q3 2015 Earnings Report, Transcript and Summary

Greetings and welcome to the Newpark Resources' Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. a brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Mr. Brian Feldott, Director of Investor Relations. Please go ahead sir.

Thank you, operator and good morning, everyone. We appreciate you joining us for the Newpark Resources conference call and webcast to review our third quarter 2015 results. With me today are Paul Howes, our President and Chief Executive Officer; Bruce Smith, President of our Fluids Systems Business; and Gregg Piontek, our Chief Financial Officer. Following my remarks, Paul will provide a high level commentary on the quarter, Bruce will provide an update on our Fluids business and Gregg will discuss the mats business as well as the consolidated financial results for the third quarter. Paul will then conclude with a discussion of our outlook before opening the call for Q&A. However, before I turn over the call, I have a few housekeeping items to cover. There will be a replay of today's call and it will be available by webcast on our website at www.newpark.com. There will also be a recorded replay available by phone which will be available until November 13, 2015 and that information is included in yesterday's release. Please note that the information reported on this call speaks only as of today, October 30, 2015 and therefore you are advised that time-sensitive information may no longer be accurate as of the time of the replay. In addition, the comments made by Management during this conference call may contain forward-looking statements within the meaning of the United States Federal Securities Laws. These forward-looking statements reflect the current views of Newpark's management. However, various risks, uncertainties and contingencies could cause our actual results, performance or achievements to differ materially from those expressed in the statements made by Management. The listener is encouraged to read our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K to understand certain of those risks, uncertainties and contingencies. And now with that said, I'd like to turn the call over to our President and CEO, Mr. Paul Howes.

Thank you Brian, and good morning to everyone. While we had another strong quarter in terms of cash flow the challenging market environment again provided a strong headwind to third quarter operating results. Fortunately, while the market conditions are proving to be more challenging than most expected from this cycle our balance sheet remains strong, which allows us to continue the execution of our long-term strategy. During the third quarter, we generated $25 million of operating cash flow and ended the period with $114 million of cash on hand. And while we expect working capital reductions to continue to provide positive cash flow in the near term, we've also taken additional step to further modify our cost structure going forward. To that point, we initiated additional workforce reduction late in the quarter including an early retirement program within certain business units. Turning to the divisional performance, the fluid segment was relatively in line with market activity in the third quarter with Canada and the EMEA regions being the bright spots and the U.S. market being the most challenged. Adjusting for the charges associated with workforce reductions and inter-company debt restructuring, we were pleased that the segments remained above breakeven. And while the North American market continues to be challenging, we're making meaningful progress in our efforts to expand our fluids business outside of North America. Last quarter we announced a multi-year contract with E&I in the Republic of Congo and I'm pleased to report that the project is progressing ahead of schedule. Also as announced last month we were awarded the Ultra deep water contract for Total in Uruguay which expands our relationship with this value customers and provides an expansion of our Latin American footprint but more importantly this award underscores our increasing credibility in the global deepwater market. Turning to the maps business consistent with our previous announcement we saw considerable softening in North America rental and service activity driven by the weak commodity prices. With the expectation of continued weakness in North American drilling activity we're increasing our efforts to penetrate new markets most notably the utility and pipeline segments. While we've yet to see meaningful revenue contribution from these new markets we're continuing to gain insight into the mechanics of the tendering process and remain confident in the differentiated value that our Durabase matting solution provide. That said it's important to highlight that these markets operate much differently than the oil field. Tender processes for these large scale projects have much longer lead time from the oil field. So it will take time to see a meaningful ramp up in activity. With that, let me now turn the call over to Bruce Smith, who will review the performance of our fluid's business. Bruce?

Thanks Paul and good morning everyone. In the third quarter, the fluid system segment generated total revenues of $139 million reflecting a slight decrease from the second quarter and a 45% decrease year-over-year. In the U.S. revenues were again impacted by the solid decline in rig tank. U.S. revenues were $65 million down 13% sequentially reflecting a modestly sharper drop rig tank decline over this period. The sequential decline was largely concentrated in two regions West Texas and the Northeast where key customers in both regions laid down rigs during the quarter and returned access product. Third quarter revenues were also impacted somewhat by operator's efforts to minimize expenditures through reduced well complexity and drilling debt. On a year-over-year basis, the U.S. revenues were down 59% compared to the 54% reduction in rig count. In Canada, despite the tepid seasonal recovery in activity, the revenues rebounded nicely from spring break-up more than doubling to $16 million in third quarter outpacing the Canadian rig count improvement. On a year-over-year basis, revenues were down 30% fueling significant better than the 51% rig count decline attributable to our continued gains in market share. Our EMEA region posted revenues of $41 million flat sequentially, as the market share gain in Kuwait was largely offset by a slowdown in the deepwater Black Sea project driven by the timing of customer drilling. Activity in Algeria also increased modestly in the third quarter as we continue to transition to the new contract. On a year-over-year basis, revenues from the EMEA region were up modestly despite the $9 million headwind from currency translation driven by the surge in U.S. dollar. Adjusting for currency, the region's revenue increased 27% over the last year’s third quarter roughly driven by revenue gains from new contracts. Our Latin America region posted revenues of $12 million in the third quarter relatively flat sequentially and down 39% year-over-year driven primarily by the strengthening US dollar against the Brazilian real. Currency translation contributed a $2 million revenue decline sequentially and a $7 million decline over the third quarter of last year. Although activity levels in Brazil remains soft, our Brazilian business unit was above breakeven for both the third quarter and year-to-date 2015. In the Asia Pacific region third quarter revenues were $4 million with a modest decline driven primarily by the strength in the U.S. dollar as customer activity levels have remained relatively flat. On a year-over-year basis the Asia Pacific region declined 42%, which includes a combination of customer activity declines driven by the weak commodity prices along with the headwind of a stronger U.S. dollar. The lower revenue levels have resulted in a small operating loss in this region for both the third quarter and year-to-date periods. On the technology front, while operators are continuing to favor low cost product offerings rather than value added technology, we’re seeing modest improvement in the North American market. Revenues from our family of Evolution Systems were at $25 million in the third quarter, including $24 million in North America. In addition, and in response to our customer's lean to drive efficiency, we have recently introduced fusion and new low solids brand based system into the Canadian marketplace. The early results are showing significant improvements in the rate of penetration as compared to more conventional fluids and we are encouraged and optimistic about the potential for this new water-based technology. As discussed previously, we expect the market for value added technology to remain soft until we see some improvement in commodity prices. As highlighted in yesterday’s press release, the third quarter included $2 million of employee separation cost as we continue to right size our North American workforce. In addition, we incurred a $400,000 charge associated with our Brazil inter-company debt restructuring. Adjusting for these charges, segment operating income was $1.2 million for the quarter just short of our 1% operating margin. Turning to our near-term outlook, we don’t see any meaningful changes and current activity levels over the next quarter. In the North American market, while October revenues are running modestly ahead of Q3 levels, we expect to continuing rig count declines as well as the typical seasonal slowdown in November and December to ultimately bring revenues to Q3 levels or below. Also in North America, we also expect activities to remain fairly stable. In our EMEA region we expect activity to continue ramping up in Algeria and we expect to see research revenue contribution from completion product sales in the Republic of Congo. These anticipated top line gains however should be largely offset by a continued slowdown in Petrobras activity in Brazil as well as softness in the Asia Pacific markets. In terms of operating income, we expect fluids to remain new of the breakeven mark to the fourth quarter. Depending upon the severity of the UN slowdown in North America that could commit at a small loss. And finally, I would like to take a moment to comment on our progress in expanding our fluids business into new markets. Strengthening U.S. dollar has served to reduce our international revenue by approximately $50 million to the first nine months of 2015 it’s important to highlight the underlying growth in several international markets which are key to diversifying and stabilizing our revenue stream. Despite the weakness in commodity prices globally, we’ve generated nice year-over-over growth in several key markets including Kuwait, the deepwater Black Sea and Algeria. In addition, over the past quarter, we’ve announced two awards which will drive further growth going forward. As I touched on a moment ago, the multi-year contract in the Republic of Congo is progressing ahead of schedule with our first product sales into this market expected during the fourth quarter. Meanwhile, the – well with – provides the unique opportunity to showcase our capabilities on a while that will set a – for ultra-deepwater drilling in the water debt of over 11 size in feet. As another step in our long-term strategy, I’d like to highlight a key addition to our team. As noted in the yesterday’s press release, we’re pleased to announce that that Tim Armand recently joined recently joined us as Vice President of US Offshore Operations. Mr. Armand joins Newpark with nearly 30 of experience. Tim's expertise particularly in deep water as a valuable assets as we look to continue our expansion into the deep water Gulf of Mexico. With that I'll now turn the call over to our CFO Gregg Piontek.

Thanks you, Bruce and good morning everyone. I'll begin by discussing our mats business before finishing with our consolidated results. The mat business reported third quarter revenues of $15 million down 34% from the second quarter and 66% year-over-year with substantially all of the sequential and year-over-year declines driven by lower rental and service revenues. Sequentially the $8 million decline is largely attributable to lower rental fleet utilization driven by the further softening in E&P markets in the weak commodity price environment. Our largest rental market in the North East region was negatively impacted by several factors including a 16% decline in rig count, a sharp slowdown in completions activity as well as some weather-related headwinds as the North East expense drive weather in the quarter further reducing the demand for mat. While the North East region was the largest contributor to the sequential decline our gulf coast E&P activities also experienced a meaningful decline in the third quarter. The revenue contribution from non-exploration market also decline to $5 million. The third quarter decline was primarily driven by the completion of a few large scale projects in the North American market which benefited the previous quarter. As we noted previously and as Paul touched on we are still very early in our commercial entry into the non-exploration market, resulting in an increase level of quarter-to-quarter revenue variability impacted by the timing of customer projects. Meanwhile mat sales activity improves slightly on a sequential basis coming in at $3 million for the third quarter. As international sales activity also remain soft in the current weak commodity price environment. With the weakness in rental utilization and in international mat sale activity would reduce their production rate at our manufacturing facility which has further reduced our operating profit. As a result the mat segment came in slightly below breakeven for the third quarter down from the 28% operating margin last quarter and the 45% operating margin year ago. Adjusting for the $200,000 and severance charges the segment remain slightly above breakeven for the third quarter. Looking ahead to the fourth quarter we expect the softness in rental activity and mat sales with E&P customers to continue until we see some improvement in commodity prices and customer spending. Meanwhile with the continuing weakness and exploration activity we've increased efforts to accelerate expansion into other markets both domestically and internationally. And while we are seeing an increase in tendering activity most of these tenders are for 2016 projects. As a result we expect fourth quarter revenues to remain in the mid teens. Further with the increase in unabsorbed cost associated with our loan production levels margins are likely to be below breakeven. That said, however, visibility in this business remains very limited and as we've seen in the past few quarters the environment can change quickly. Now moving on to our consolidated results. For the third quarter of 2015 we reported total revenues of $154 million down 6% sequentially and 48% year-over-year. SG&A cost were $26 million up 8% sequentially but down 10% year-over-year. This sequential increase in SG&A is primarily attributable to third quarter charges associated with North American workforce reductions and the forgiveness of inter-company balances due from our Brazilian subsidiaries. Corporate office expenses were $8 million in the third quarter down slightly from the prior quarter as reduced spending on strategic planning efforts was largely offset by higher expenditures related to ongoing litigation including the wage in our litigation matters disclosed in our most recent Form 10-Q. Consolidated operating was $9.3 million in the third quarter compared to an operating loss of $1.7 million in the second quarter and operating income of $39.4 million in the third quarter of last year. Foreign currency exchange netted to a $3.2 million loss in the third quarter compared to a $400,000 gain in the second quarter and a $1.2 million loss in the third quarter of last year. The third quarter loss largely reflects the revaluation of U.S. dollar-denominated balances due from our Brazilian subsidiaries as the Brazilian Real devalued by more than 20% during the quarter. As highlighted in yesterday's press release during September our portion of inter-company balance due from Brazil was forgiven which will serve to reduce our P&L volatility from Brazil currency exposure by roughly 70% going forward. The third quarter tax provision reflected a benefit of $10 million as we highlighted in yesterday's press release that third quarter provision includes a $3.3 million benefit from the Brazilian inter-company debt forgiveness along with the $2.2 million benefit from the release of U.S. tax reserves following the third quarter exploration of statute of limitation. Adjusting for these two items, the tax provision was $4.7 million benefit in the third quarter reflecting a tax rate of 33%. Net loss for the third quarter was $4.5 million or $0.05 per share compared to a loss of $0.05 per share in the previous quarter and net income of $0.25 per diluted share in the third quarter of last year. As noted in yesterday's press release the unfavorable EPS impact of the employee separation cost and currency exchange losses were largely offset by the tax benefit from the forgiveness of the intercompany balances and the release of US tax reserves. Now let me discuss our balance sheet and liquidity position. During the third quarter operating activities provided a net cash of $25 million including $23 million from reductions in working capital. We used $17 million to fund capital expenditures including $13 million spend on facility and expansion projects that we've outlined previously while maintenance capital requirements have been minimal. Also I'd like to highlight that during the third quarter, we set $16 million of cash aside to serve as collateral on outstanding ladders of credit in the U.S. leading us with no current obligations outstanding against our US revolving credit facility. Previously, outstanding ladders of credit were collateralized buyer and US revolving credit facility which is then incurred higher interest charges. As if the end of the third quarter, borrowings under our forward lines of credit were $6 million in addition to our $172 million of convertible bonds that matured in Q4 of 2017. We ended the third quarter with cash of $114 million and a total debt balance of $178 million resulting in the total debt to capitalization ratio of 22.8% and a net debt to capitalization ratio of 9.7%. for the full year 2015, our capital expenditure expectation is now in the range of $65 million to $75 million with the majority of the spending focused on the completion of our fluid blending facility and our Fourchon Deepwater shore base as well as expenditures associated with our recent international contract rewards. As we discussed on last quarter's call, while we've seen the majority of our anticipated receivables reductions work through our cash flow. We do expect to see modest reductions in inventory to continue through the next several quarters. During the third quarter, we begin to see the benefit from inventory reductions which contributed $8 million of operating cash flow. Looking forward, we expect US inventory reductions will be the primary driver of further working capital improvements over the next several quarters which should help us remain free cash flow positive through the cycle. Now let's turn the back over to Paul for his concluding remarks.

Thank you, Greg. In summary not unlike the broader E&P service sector, the North American market environment proved to be challenging yet again in the third quarter for Newpark. However, there were several positive items in the quarter including our continued strong cash flow and the award of the ultradeep water offshore contract in Uruguay. I'm also pleased with the steps we have taken to improve our cost position for the current North American market reality. Similar to the views of the other service companies, we expect this current cycle to be lower for longer with the fourth quarter having a higher level of uncertainty related to E&P activity levels. Longer term, we remain well positioned to weather the strong and emerge a stronger company. To do so let's continue to execute on our long-term strategy completing key investments and adding to our organizational capabilities. Several capital projects outlined at the beginning of the year are near in completion including the map technology center our fluid blending facilities and our purchase of silence-control equipment for the Sonatrach contract in Algeria. Looking ahead our highest priority for our fluids business remains the diversification beyond the U.S. land which includes continued international expansion and a meaningful penetration to the deepwater Gulf of Mexico. And while the deepwater gulf is proving that it's not isolated from the impacts of the current cycle it remains a very attractive market and it's our believe that we will be successful in gaining share in this market. To that end we are committed to making the capital and organizational investments through the current cycle to achieve our long-term objectives. In our maps business, while the rate of decline in the Northeast E&P market has clearly provided it's challenges. We are taking this time to accelerate our efforts to diversify into the markets less dependent on drilling activity. We remain very confident in our ability to penetrate these markets longer term, which will ultimately lead to greater diversification in the revenue stream and improve stability to earnings through the commodity cycles. As I stated on our last quarter call, the change in the global competitive landscape continues to provide additional opportunities particularly in the international drilling fluids market as IOC seek out Newpark to participate in their projects. So although we’re preparing for a continued bumpy ride over the next few quarters we remain confident that we’ll emerge from the current cycle as significantly stronger company. I’d also like to take a moment and thank the entire Newpark team of employees. Down cycles are off to more demanding on the employees and I’d like to comment each and every member of the Newpark team for their outstanding performance and commitment during this difficult period. With that, we'll now take your questions. Operator?

Thank you. We will now be conducting a question-and-answer session [Operator Instructions] Our first question comes from Marshall Adkins with Raymond James. Please proceed with your question.

Good morning, guys. Let's spend a minute on the mat side in the release you mentioned $8 million sequential decline in mat revenue. It sounded like there was -- the way I read it was all non-E&P rental. Could you just clarify that and then probably more importantly what is the outlook for that non-E&P rental stuff for next year?

Sure this is Gregg I’ll take that. Yeah to clarify no, the majority of the decline the $8 million decline was in the E&P side actually the non-E&P came in at $5 million. So that was down modestly from last quarter. So the majority of it was in the E&P space and it’s really utilization driven. We noted that the Northeast market was the most significant contributor to that decline. But the other regions Gulf Coast where we long had at present has also impacted during the period.

Yeah and longer term Marshall this is Paul, in the utility sector some of those tenders are much longer term six months, nine months so we would expect more in the second half of ’16 before we would see any meaningful revenue growth in the utility or non-E&P markets.

Right and it sounds like to get margins back heading in the right direction it’s really more utilization driven for next year and first clarify that and secondly what -- has pricing stabilized in that arena it’s really just more throughput from here on?

I think that’s a good way of putting it. Absolutely it’s really a utilization issue at this point. Pricing pressure continues but not to the extent that we saw early in the year that one is a pretty modest contributor at this point.

Okay. Just last quick on the mat the older facility last quarter I believe you had talked about shutting that down I assume that’s been shut down and we're on the new facility now or just help up on that.

No that is correct Marshall, the older facility has been shut down and the new facility is operational.

Great, thank you.

Thank you, sir.

Thank you. Our next question comes from James Wicklund with Credit Suisse. Please proceed with your question.

Good morning, guys.

Good morning.

Can you talk to me about what your debt covenants are, I know that we went through the cash and how you can probably say cash flow positive through the cycle and wish the best on that? But just for curiosity sake what are your biggest most onerous most worrisome however you want to put it I don't care, covenants in your debt?

I think as a starting point it’s important to highlight that we currently don’t have anything outstanding on our U.S. revolving credit facility, but that said, the most challenging covenant if you will is the total leverage ratio of four times, which obviously your converts come into that. So to that point obviously we’re currently very much in a cash preservation mode. $114 million of cash on hand as we noted, we cash collateralized our outstanding letters of credit, so that we have no obligations and obviously we'll be continuing to monitor that closely and working with the banks.

Okay, okay that’s helpful and international are you starting to catch the attention I would have to think six projects internationally, that’s an obvious market share gain, how if you keep this -- do you manage the stay independent?

That's an excellent question.

Seriously you guys are going to continue to gain market share like this. I know you didn't have any wins this quarter, but you've grown from zero to six in a short period of time, like you said in Uruguay project you improved.

James we’ve been working for a long time at cutting our teeth in deepwater that's why we want to Brazil initially and Bruce and his entire team have done an amazing job. So we continue to get more attention, the opportunities are out there. In a way we look at it's really the strength of focus. We're focused on drilling fluid. We're focused on brining differentiated technology that is meaningful to our customers and Bruce and his team had done a amazing job, Bruce any comments you like to add to that.

Yeah, just a couple I think in the international marketplace we're getting people who are interested and perhaps five years ago who didn’t even who we were. So we've made significant strides in terms of getting our name out there and people understanding the value that we bring through the focus we have.

Well, I congratulate you. I still think that’s an interesting part of the story. Thanks guys appreciate it.

Thank you sir.

Thank you. Our next question comes from Stephen Gengaro with Sterne, Agee. Please proceed with your question.

Thanks. Good morning guys.

Good morning.

I guess to follow up on Jim’s questions, as we think about the international businesses going forward I guess a two part of question one is the contracts that you have in place how should, when do they hit and when do we start seeing sort of the full revenue impact them as we move through '16?

We'll take them piece by piece I guess. On the Congo we expect the first revenue to come in the fourth quarter on the Congo contract but in terms of ramping up on a consistent basis that will begin first quarter of '16 and will ramp up through the year. In terms of the deepwater Uruguay contract because of the lengthy planning cycles associated with deepwater it's very difficult to hone in on a date but currently we’re expecting that to begin somewhere in the second quarter of '16.

Great, thank you and then as I think about the U.S. side of the fluid business where do you stand from a pricing perspective currently are we still seeing a downdraft that we have and then has there been and how much of a decline really has there been as we think about margins going forward?

We've managed recently the hold margin quite steady and part of that I think is the customer base looking again at ways to drive operational efficiency. So evolution is playing again or beginning to play again and that helps obviously stabilize margins against any pricing pressure, but we've been fairly consistent now with the margins over the past two quarters.

Yeah and even at the worst part of the cycle Q1 is when we saw the most significant impact and even in that period we were only talking a mid single digit pricing during that period and it's kind of flatten out since.

Very good. Thank you.

Thank you. Our next question comes from George O'Leary with Tudor, Pickering, Holt. Please proceed with your question.

Good morning, guys.

Good morning.

We’ve heard from a couple of folks out there both on the E&P and the large Cap services side that activity could bleed down fairly harshly maybe more than seasonally normal in the last five, six weeks of the year as something akin to what happened in 2012. If that happens is there a risk that margins take a leg down just as volumes go down and fixed cost absorption issues arise or can you hold a line even if you get a 15% to 20% decline in activity.

Yeah, if we and we're expecting that same thing that late in the holiday season and the December I think they're going to come down pretty hard. We certainly are going to take a margin hit we wouldn’t be able to maintain the current margins and the industries are going to tilt down 15% to 20%

Yes and with that level of uncertainty again going back to our comments a few moments ago our expectations are to be below the breakeven point in both the businesses because you really can't do anything to your cost structure than that short term basis.

Okay. That’s very helpful color and then maybe second question, if you think historically about the business coming out of a down cycle what typically gets pricing to improve and what signals are out there that we should be looking for, for pricing improvement. Is it simply oil prices rising, is it coincident with activity increasing is there some sort of a lag once activity increases it takes a while for activity to get back to a level where there is pricing power. What historically have you seen and maybe what could be different just go around.

Well certainly from our perspective and what we are looking at would be product mix right in terms of differentiated technology, which has significantly higher margins. So that’s what we would expect to see hopefully as the cycle starts to turn back up and certainly you get kind of a C change lift with volume as well in terms of our overhead costs. So I will be mostly on the mixed side and again I’d say that we are somewhat of unique position today in this cycle for our company that are international business continues to grow part of that is the consolidations occurring in that large integrated service base. So we are getting more opportunities in this cycle than we have seen in prior cycles.

Okay. Great. That’s was helpful color. Thanks guys.

Thank you. Our next question comes from Bill Dezellman with Titan Capital. Please proceed with your question.

Thank you. A couple of questions, first of all you had referenced a new system that you launched in Canada and I even missed the name, I am hoping that you can provide us some more detail around that and the long term significance you see of that system and then secondarily I’d like you to discus in more detail also the addition of Tim relative to the Off-shore Gulf of Mexico.

Let's take the Canadian new brand first that's called Fusion and it’s a system that’s being specifically designed for the Canadian market because the Canadian market has a sort of different for regulatory environment than we do them here. So this one is designed specifically for the Canadian market, but it functions along the same premise as evolution in terms of speeding up the rates of penetration thereby reducing overall days on well, reducing well count, well cost, so it's similar to that. In regard to Tim currently Tim's focus is on settling into new product getting to know its team and getting up the speed with all sorts of things and getting up the speed with new technologies and different things like that. So Tim is very much at the stage of just getting to know everyone and they were happy to have.

And just to add on to that a little bit. Tim really is the beginning of the formation of a larger deep water team that we are going to bringing into the company over the next forcible future. So as we continue to build on creditability in deep water and hopefully leverage those relationships with large IOCs around the world.

And if I may follow-up relative to Fusion how large ultimately do you see that potentially being, does it move beyond Canada or is it really going to be Canadian specific given the special regulatory requirements that they have?

It certainly plays well in Canada and like anything new as we discover with evolution you find other areas where things play as you develop these products in the system. So we expect it to play it well in Canada, but it's at the very early stages of its development. And I am sure we'll find other areas around the world where this technology will also play.

Thank you, both.

Thank you.

Thank you. This concludes today’s teleconference. I’d like to turn the call back over to management for closing comments.

We’d like to thank you once again for joining us on the call and for your interest in Newpark Resources. We look forward to talking to you again next quarter. Good bye.

Thank you this does concludes today’s teleconference. You may disconnect your lines at this time and have a great day.