Republic Airways Holdings Inc. (RJET) Q2 2021 Earnings Report, Transcript and Summary

Thank you for standing by, and welcome to the Mesa Airlines Quarter Two Investor Conference Call. All participants are on a listen-only mode until the question-and-answer session. [Operator Instructions] This call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to, CEO and Chairman, Jonathan Ornstein. Thank you, sir. You may begin.

Thank you, operator, good afternoon and thank you for standing-by everyone on the call. I'd like to welcome you to the second quarter fiscal year 2021 earnings call. It is now my pleasure to turn the conference over to me. This is Jonathan Ornstein. I'm the Chairman and Chief Executive Officer of Mesa Airlines. On the call with me today is, Mike Lotz, our President and Chief Financial Officer; Brian Gillman, our Executive VP and General Counsel; and Brad Rich, our Chief Operating Officer; and Torque Zubeck, our new Senior Vice President of Finance. You may have seen the announcement. But to reiterate, Torque brings 20 years of industry experience from Alaska Airlines, and will be a terrific asset on both the operational and financial side of our business. I'd like to open up with our forward-looking statements, before the presentation and comments begin, Mesa would like to remind you that our press release comments made on the conference call and responses to your questions during this call may include forward-looking statements, as defined under the Private Securities Litigation Reform Act of 1995. As such, they are subject to future events and uncertainties that could also reflect our results to differ materially from those statements. Also please note, the company undertakes no obligation and makes no commitment to update or revise these forward-looking statements. Any forward-looking statements should be considered in conjunction with the cautionary statements in our press release and the risk factors, included in our filings with the SEC, which Mesa encourages you to read. In addition, please refer to our press release in the Investors section of the Mesa Airlines' website to find additional disclosure and reconciliations of non-GAAP financial measures that will be used on today's call. Okay. I'd like to begin with my usual way by thanking all of our people in the field for their dedication and hard work throughout what is clearly one of the most, if not the most challenging period for our industry. Thank you, everybody. In spite of this tough environment, I'd like to cover a number of highlights from the quarter. On the financial side, we reported the pretax profit of $7.6 million, which included a $4.5 million non-cash adjustment for the purchase of a previously leased CRJ-900, resulting in an adjusted pretax profit of $12.1 million or $0.23 per share. At American, after reaching an agreement to extend our capacity purchase agreement in November 2020, for five years for 40 aircraft, American increased that number about five additional aircrafts starting in January and extending through the summer months. At United, we added two more of the 20 new Embraer 175 LL aircraft roughly, with the last two deliveries expected next month, bringing the total Embraer 175 fleet to 80. In our cargo operation, we are adding third 737-400, which we expect to be in service in July to support the existing operation. As a reminder, we are the first and only regional airlines to operate narrow body cargo aircraft and will continue to pursue additional cargo opportunities. We announced our LOI with Gramercy Associates to begin regional jet operations in Europe, with some of our surplus CRJ-900s. Gramercy is a private company, founded by Tony Davis. Tony is the former CEO of Tiger Airlines in Singapore and Australia and bmibaby. He is also the former COO of Irelandia Aviation. Importantly, we are making significant strides in our adoption of new technology and decarbonization of air travel. This quarter we announced our investment in Archer Aviation's eVTOL aircraft alongside United Airlines. In the transaction, Mesa United receive equity in Archer Aviation in the form of warrants and will purchase up to 200, that’s 160 for United and 40 for Mesa subject to certain conditions. During the quarter, Mesa recorded initial 40% vesting awards at $16.3 million. So, it may seem cutting edge, we are essentially going back to our roots, operating smaller, efficient aircraft. We are excited to be at the forefront of this eVTOL technology, continue to pursue other opportunities in the area of sustainability and eco-friendly flying. We are also proud to be named to the Forbes List of America's Best Mid-Sized Employees for 2021. Our relationship with our employees is of critical importance to us and we're pleased to see our efforts recognized. Once again, I'd like to thank all of our people for making this possible. With that, I'd like to turn the call over to Brad Rich, our Chief Operating Officer to give you an update on our level of operations as well as our American United and DHL operational performance. Brad, thank you.

All right. Thank you, Jonathan and good afternoon to everyone. Thank you for joining us today. I'd like to begin with highlighting some of our main priorities. First, the health and safety of our employees and passengers remain at the top of our priority list. As you would expect, we're in constant contact with our partners and the CDC on the latest guidance and protocols. We're also committed to improving our operational performance as a high priority. Our collective work with our partners continues to strengthen these relationships and we're committed to continuous improvement of our performance. Now, while all of the new things going on and the new ventures at the company are exciting, I would like to reemphasize that the key to maintaining these long-term relationships is delivering consistently strong operational performance and producing industry-leading economics. By way of review of the March quarter, we generated 73,942 block hours, which was down 32% from last year, but 6.8% from the December quarter and that's despite flying fewer aircraft in the American operation. Based on current guidance from our partners, we expect the June quarter utilization in United operation to be at about 75% to 80% of pre-COVID levels and in the American operation at approximately 100% of pre-COVID. The September quarter is projected to be 85% to 90% at United and a little over 100% in our American operation. If recent demand trends continue, we anticipate a steady increase in block hours as we progress towards a strong recovery in capacity. As far as operational performance, we continue to see improvements in our key operational performance metrics. During the March quarter, our controllable completion factor was 99.9%, which is consistent with 99.9% a year ago, but we've seen very good improvement in our controllable on-time departures, which was 91.1% versus 81.3% a year ago. As I said, focus on continual improvement in operational performance will remain one of our highest priorities. I'd now like to provide an update on our American operation. As Jonathan stated, we previously announced both a five-year extension that was finalized in the December quarter, as well as an agreement with American to add five additional CRJ aircraft above those CPA levels. Subsequent to quarter end, we formalize the agreement to operate those five additional aircraft through mid August of 2021, and we believe there maybe additional future opportunities. As a reminder, our current fleet consists of 64 CRJ-900s. Of these 64 aircraft, we own 49 and 41 of those are financed under our previously announced US treasury loans. And seven are financed with EDC, Export Development Bank Canada. We also have 15 aircraft leased through 2024. We will be using the majority of these aircraft to support the American operation. However, we are still reviewing several new opportunities that would productively utilize some of these aircraft. Given the attractive financing and low debt balance on the majority of the fleet, we believe these aircraft are valuable assets and will remain productive. We are making a number of investments in our CRJ fleet, designed to improve the overall fleet help, enhance long-term value and strengthen operational reliability. These investments include cabin interior refurbishment and a significant increase in the volume of aircraft heavy checks. We have a historically high level of heavy check lines due to bringing aircraft online as demand continues to strengthen and to create additional operational spare support to enhance performance. Access to and productivity of the heavy check providers has been challenging, but we're working very aggressively to add additional providers to bring aircraft back into operation as quickly as possible. Due to all the investments in the fleet and our focus on performance, we do remain confident in our ability to meet the operational requirements of the new agreement with American. Now moving to an update of our United operation. Our relationship with United remains strong and productive. We continue to work collectively on many strategic and operational initiatives that we feel will create additional value in our relationship. We are proud to be one of few airlines taking delivery of new aircraft in today's difficult environment. And by way about date, we currently have 18 new E-175 LR aircraft that have been placed into service between November of 2020 and May of 2021. The last two will be delivered by the end of June 21. We have removed all of the CRJ-700 from our fleet. And we continue to the transition process of leasing these 20 CRJ- 700 aircraft to GoJet airlines as part of the previously announced agreement, which ends in 2030. We are in the final month of retraining the current CRJ-700 pilots in Washington Dulles on the Embraer 175s and most of that training expense will be covered by the training credits that are part of the Embraer 175 purchase agreement. Now that we are upgrading a single fleet of Embraer E-175 for United, we are seeing not only an improvement in cost reductions, but anticipate consistent strong performance and enhance network efficiencies through aircraft flow and increase utilization. In regards to our DHL operation, we have two 737-400 cargo aircraft in service with DHL. We have secured the third 737 that we anticipate to be available in July of ’21 that will provide additional support for this operation. So far, we have been pleased with the operation and believe we are well positioned to grow this line of business. I'd now like to make some comments on a topic that is getting a lot of attention recently, which is the anticipated hiring requirements for airline industry labor. First of all, I too would like to express my appreciation to all of the aviation professionals that Mesa that have demonstrated their commitment and dedication to this difficult time. And we do greatly appreciate each one of them. We remain focused on hiring and training to meet increasing staffing requirements in nearly all of our operational divisions. Our applicant pools are strong, and in the case of pilots, stronger than we have seen in recent history, and we believe in our ability to hire across the airline. We remain active in the hiring of mechanics, flight attendants, and other operational support positions. And we are bringing back the pilots that were in training at the beginning of the pandemic. Furthermore, we feel like we are very well positioned to be an industry leading option for regional airline pilots through opportunities such as the United Aviate program. We are one of few airlines able to offer a direct pathway for our pilots to become a career pilot for United Airlines. We also have the 7 -- 737 aircraft on certificate, we are the only regional airline offering the ability to fly larger aircraft and earn the highest pay in the regional industry. We're also well positioned with crew domiciles across the country that allow our pilots the opportunity to live where they desire and commute easily to work. We are also currently offering upgrade opportunities and we are actively recruiting from hundreds of aviation schools across the country. With that, I'd now like to turn the time over to Torque to walk through our financial performance.

Great, thanks, Brad. Appreciate that. Let me do a quick recap on earnings. For the second quarter of fiscal year 2021, we reported net income of $5.7 million or $0.14 per share. This compares favorably to net income of $1.9 million for the same quarter last year, or $0.05 per diluted share. As noted in our press release, the primary reason for the increase in earnings from Q2, 2020, to Q2, 2021 is due to the combination of a $56 million pretax benefit received through PSP2 under the Cares Act, largely offset by temporarily reduced rates offered to our partners related to the PSP program, and the deferral of $4.9 million of revenue, all of which was built and paid by American and United during the quarter and will be recognized over the remaining terms of the contracts. We reported $1.9 million of income tax expense for the quarter. However, we do not pay any cash taxes, as we have over $500 million of valuable NOL carry forward. So let me review where we are in cash and liquidity. We ended Q2 at $148 million compared to $181 million in Q1. As we have pointed out last quarter, $181 million for Q1 included $48 million of United CPA prepayments for future months, which was reduced to zero in Q2. During the quarter, we also made $21 million in scheduled principal payments and so the PSP program we received $48.7 million for PSP2 and $7.3 million top offer PSP2 in Q3. For PSP3 we have allocated $52.2 million, half of which was received in April with the balance expected in Q3. So there was no CapEx in the quarter, although, we did make a $7 million deposit to GE on five engines to be delivered in calendar year 2021. CapEx for the remainder of fiscal year 2021 is one GE engine, with remaining nine in fiscal year 2022 and 2023. Going forward on cash, although, we booked reduced rates to our partners for PSP2 in Q2, the actual cash credit to roughly $30 million will be given in Q3. And as we look to the end of fiscal year 2021, we expect cash to be in the $100 million $110 million range. As for our debt total debt of $725 million, down from $746 million at the end of Q1 2021. We have debt payments of $14 million in Q3, and 45 million in Q4, of which $18 million was previously deferred. Assuming no new debt, fiscal year end debt will be $666 million, down from almost $900 million just two years ago. Now let me turn to guidance. We are still operating in an uncertain environment, but we are getting better visibility, as we have hopefully moved past the worst of the pandemic. We are expecting a gradual improvement of block hours throughout the remainder of the fiscal year. For fiscal year 2021, we expect 85,000 block hours in Q3, and 89,000 in Q4. We are approaching pre-COVID levels and expect further progress as the vaccine rollout continues. On heavy maintenance which is engine and C-checks, we provided our estimates. These amounts are higher than we would consider normal run rate. Much of this work, as Brad pointed out is related to C-checks, which were previously deferred, and we are catching up on them through the end of the calendar year, as well as enhancing our aircraft interiors. And now, I'd like to turn it back over to Jonathan for closing remarks.

Thank you very much Torque. The last year is obviously been very difficult for the entire industry, for the entire countries, entire world. However, we are pleased that Mesa has been able to remain profitable, perform well for our partners, and importantly, protect our people fully employed. This is due to our operational performance, our industry leading economics and the tremendous reports we've received from our people in the field and here in the office. These factors divisions well for growth, and we will continue to look at new opportunities as the industry evolves. I'd like to now open this up for other questions that we might be able to help you with.

Yes, sir. It is now time for the question-and-answer session of today's call. [Operator Instructions] The first question comes from Savi Syth from Raymond James. Thank you. Your line is open.

Hi. Thank you. Good afternoon, everyone. Just a quick question on the block hours, it looks like maybe block hours down slightly versus the guidance provided last quarter, even though you're kind of extending the aircraft with the Americans. Just curious if you can provide any color around that?

Brad or Mike?

This is my guess. So I think -- is it fairly close to where we were? I think we're probably just being a little bit more conservative as you know, these schedules -- they're changing week-to-week. So I think we're just being a little bit more conservative with our estimate.

That make sense.

Yeah. Hey Mike, Brad here. Second that completely. It's just -- we're just trying to be a little cautious in the projections.

Okay. And just around the CRJ purchase off lease, I was curious, the thinking around that, if you can provide any color on how attractive that deal was, and any update on the European JV. The conversations you're having there and the timing of when we might hear more on that front?

Yeah, so I'll take this one Jon. So on the lease purchase, look, we have made it clear, we're trying to buyout all of our leases and take them on as owned aircraft. We had 18 leases, we're down now to 17. This particular aircraft was just one of the unusual ones in our fleet, as we -- it’s the only aircraft we were paying, like supplemental maintenance, rent for. So net-net, we ended up having to return, forego getting the maintenance reserves on it. So we picked up from a cash standpoint, we picked up the aircraft for very little cash and avoided return conditions. But the way the accounting works based on fair market value, we ended up being a non-cat write off. As far as the European JV, we're still moving along with it. We had the LOI, we intend to probably give a better update next quarter. I don't know if Jonathan you want to add anything to that?

Well, yeah, I mean, I think that as some of you know, Mike and I have some experience over in Europe. We had known Tony for awhile, he'd actually advise us on a couple of other deals that we've looked at. He -- I think he's probably the most knowledgeable guy in Europe when it comes to regional operations. He has had tremendous experience in Europe, and with real serious players in the industry who respect him. And so the fact that they were willing to invest alongside of us was very attractive. And I think this could be a good opportunity for Mesa to put to use a few aircrafts that are tailing the water. There has been a significant restructuring in regional operations in Europe as a result of COVID. And I think this could be a really good example of being in the right place at the right time.

Appreciate the comments. Thank you.

Thank you. Our next question comes from Helane Becker from Cowen. Your line is open.

Thanks very much operator. Thanks for the time, guys. So on CapEx, I missed the number. I think you said, Torque, one GE engine, and then nine in fiscal 2022 and 2023, or do I think of that as calendar year. So do you have just a single point number four, I guess fiscal 2021 and fiscal 22?

Yeah, this is Mike, I’ll jump in for Torque here. For fiscal 2021, it's just one aircraft for fiscal 2021, one engine for fiscal 2021. And then it would be four in fiscal 2022.

Yes. And the remaining five.

And the remaining five in 2022.

Yeah, 2033…

In 2023.

It's correct. Okay, that's perfect. And then, do you have an estimate for how the storm and power outages in Texas? And how they impacted your operations?

You want to?

Yeah. Yeah. Helane, we estimated it was roughly a factor of about $3 million net-net at the end of the day.

Okay. Do you have to cover that or do your partners?

Well. We -- this is Mike -- we cover the crew after that right, because it means now our crews have a guarantee flying and the extent that flying is cancelled and then we still have to pay the crews. The maintenance costs we're not burning engines. We're not burning expense.

All right.

So it's kind of a mix. But we still got the crew cost.

Got you. And then my final question,…

I think, what we're saying is that the net impact after what our partners pay us and what we pay in fact for that $3 million.

Okay. Got you.

…of net income.

…Net. Okay, that's perfectly understandable. Thanks, Jonathan. And then my last question,…

Yeah.

… how long will you give your partner's lower contract rates? Is it just when you're receiving PSP, or just that continue after PSP?

Well, I'll answer it, then Mike if you want to give some more technical views. But the lower contract rates clearly were around what was going on with COVID and PSP. So I don't think that anyone would expect us to continue to have lower rates in the absence of PSP. You want to add anything to that Mike?

No, I think that's fairly accurate. I mean, we got to offer the rates through PSP three, which is through September of this year. And if there's a PSP four we'll address that and probably do something along those as well. But right now, it's just through September.

Got you. Okay, thanks, everybody. That's all very helpful.

Thank you. [Operator Instructions] Our next question comes from Michael Linenberg from Deutsche Bank. Your line is open.

Hi, this is Hilary on from life. Thanks for taking my question. I guess in terms of the JV of renewal Gramsci, how would that be recorded? Would that be recorded as earnings from an affiliate given that you will be, owning, less than 50%? And if that's the case, I guess, we probably won't see an expense coming out of the operating P&L, right, or will it be?

Yeah. This is Mike. Depending upon the final structure, we're not sure what the accounting will look like. But there is -- not expected to be anything in this fiscal year that would be significant.

Okay. Got you. Thank you. And then, I just, I guess, a longer term question, you've been doing a great job of paying down debt, and just wanting to get your thoughts on what your longer term capital structure will look like? And I guess, over the next year or so, will we be focused more on paying down debt or maintaining liquidity? If you have a target debt to cap number and target liquidity, I guess over the next year or so?

Well, I'll say so that if anybody wants to add in, I mean, the government loan has helped us significantly in terms of liquidity. And, you know, while there is obviously, we repaid United some of the money that they had given us, in terms of an advance. The benefit of that loan will become apparent as we continue to receive payments, and we are not making principal payments. So, in my view that would, that will more than suffice for the liquidity that we will require or at least the next few years. I think that we will continue to pay down all the other debt that we have. And we'll focus on continuing to purchase aircraft off of lease, which we find, obviously, we find attractive. The likelihood of us taking on any additional debt, which, of course, we have a somewhat different view sometimes in the street and that when we take on debt, it means we're getting new orders for aircraft and that debt is effectively a pass-through to the partner that takes on that aircraft. So, if we were to take on additional debt, in all probability that would be associated with the addition of aircraft or potentially down the road, you know, some of the engines that we have to purchase. Mike, Torque, you want to add anything to that?

No, I think that's – that's my writing. You know, we, like Jonathan said, taking on debt to buy aircraft to expand our operation, but our partners is good debt for us. There is no better debt for us. And, you know, after that we're still on – we're still like Torque alluded to, I think we end the year at 650 rough million, and with – we are not having new debt. I think we're scheduled next year to pay off, the next fiscal year over 100 million and close to 100 million in 2023. So we're starting to pay down the principal payments pretty significantly.

Okay, great. That's very helpful. Thank you so much.

Thank you. Our next question comes from Savi Syth from Raymond James. Your line is open.

Hey, thanks for the follow up. Just a couple of questions for me. One, a bit of a longer term question. What do you think Jonathan is kind of the normalized margins of this business coming out at COVID? And when do you think you'd get there?

Normalize margin? That's the interesting question for sure. You know, there's always been so much that impacted our margins and earnings. That it's just as hard to say, as we, I think. I mean, you know, because for us, obviously, the timing of maintenance events always plays a big a big role in that, as well as what our partners. I think as we get through this next period, where we do have, as we mentioned, there are a fair amount of heavy checking work that we have to do. Moving forward to that, Mike or Torque, do you want to comment where we think margins will be 2022, 2023, 2024, given the existing fleet.

I mean, look, we generally don't project our margins, but look, they should return to the levels they were at pre-COVID by fiscal 2022. This year is still a transition year. Some of that our heavy maintenance will roll out maybe into the first quarter of 2022 for us and beyond that it should be back to traditional levels.

That's helpful. And if I may, just a clarification on the PSP, is it kind of roughly half and half over the next couple of quarters, or is it – how should we think about how that PSP3 shows up in from a timing perspective? Since it goes out through September?

Sorry. So yes, so it goes from April through September, so six months for this last round. So if you think about, we got 52 million in change for this one, that's going to be spread over six months versus that PSP2 was over four months. So we're going to be getting net less every quarter compared to where we were in PSP2. That makes sense?

And it'll be split about 50-50.

Yes. Yes.

Okay. I think that's helpful. And actually, if I may -- just some of the commentary on the maintenance. Is that kind of tied to -- are you seeing that both on the ERJ side and the CRJ side, or is that kind of tied to more on the Bombardier side with that not being an aircraft that's manufactured much and people's willingness to support that that aircraft such.

You thrown that on this, the speed check issue?

Yes. It's definitely more so on the almost exclusively on the CRJ side. Remember, the E-Jet, United owns 42 of them. So that expense really a pass through, doesn't really impact our bottom line. We own 18 of them. And then the new 20 we got aren't scheduled for a few years before they're in E-Jet. It's really CRJ-900 cost item.

Yes.

Yes. Are you expecting that to be issue going forward, Mike or is this more of a COVID-related recovery pains?

If I can just think that I think that there's two issues. There is some amount of COVID-related, but there is also the impact of Bombardier. They acquired by MHI. And, obviously, in any transition there, it's not always as smooth as one would like. I do having -- had extensive conversations with the MHI Bombardier team that they're working very hard to correct any deficiencies that we've had over the last few months in terms of parts availability or timing. So, I think that has probably played as much role as anything else. And knowing Mitsubishi, I think that there is a high probability there's all that will be behind us as we go out six months. Mike, do you want -- or Torque or Brad, want to add anything to that.

Jonathan, this is Brad. I think you've covered it pretty well. I mean the issue primarily 900, the issues of there are some COVID related, labour issues at the respective heavy check providers. Their ability to support parts is becoming an issue. But look, we're -- we've got very high levels of leadership attention on this issue. We're bringing on new providers. We're opening new lines. I mean, we've got a lot of just attention and focus on this issue. And we got to a kind of a bubble here to get through as we're bringing these additional aircraft back up that have been down during COVID. And once we get that behind us, I expect this to be in relatively good shape. So…

Yeah. And if I could add something, which -- I mean, American has been very good in terms of understanding is, there was a -- as you can tell by our numbers that American have rapid screw up of the American hours, I mean, they are now at 100% and going over 100%. They came to us asking for us five additional aircraft that we had not planned on flying. That's -- we accommodated that request, obviously because a, we want to be good partners, b, we think we can make more money flying more aircraft. But that certainly impacted some of these items, because we had to keep five additional airplanes flying and again, move around our C-checks schedule. So, there's a lot of good news to this is the fact that our partners want more flying, and we've been able to provide it. And as a result, we've had to make some accommodations in terms of C-checks. So I don't want to give the impression that this was something that was unplanned, it's something that happened in large part due to the fact that we took on additional flying.

Make sense. All right. Appreciate the answers. Thanks.

Thank you. I'm showing no further questions in queue at this time.

Okay, operator. I'd like to just make a couple comments that I think I'm a little bit surprised that no one asked us more about what we're doing in terms of decarburization, and electric, because I want to make sure that people appreciate that this is going to be a very significant emphasis for the company going forward. We fully intend to be the leader in decarburization and ecofriendly flying. We see how important this has become around the world lead of course in Europe. It's one of the reasons why we're beginning a European certificate. We are already now invested with United with Archer, which we think is the leading developer of urban mobility vehicles, which technology changed so rapidly, even since, I began in the industry, which it didn't seem like that long ago, but I tell the story that the first aircraft that I loaded back at AirLA was a chartered DC-3 built in the 1940s. Now we're flying regional jets to Havana. The idea that electric aircraft are not going to be a big deal, I think is wrong. I think there's a huge opportunity in front of us. I am really delighted that United has chosen us to be their partner. And we had worked very closely with them on this deal. I think there are more deals down the road that we are working on today that we feel have a high probability of coming to fruition. And that -- we call it’s just the beginning, as we’ve seen this technology really emerge into what I think is going to be the wave of the future. And we are really dedicated to make that happen. In addition, one of the areas that we think provides us still to be a big opportunity is our cargo. We’re taking on this third 737 to support the operation. We think it will find a lot of business to that aircraft. We are looking at putting on additional fleet types. And I think we're -- in that discussions with our partner in that will provide some additional opportunities as we move going forward. But to do that, the area that has our biggest focus is in operation performance, which to-date, given the fact that we're operating over two aircraft with no spares. I think they've been excellent and has been beyond our expectations. When you think about the fact we're offering a new fleet type remotely with no spares. I think it really does bode well for the future for us. So those are two big areas of opportunity that I think the company is going to excel at. And I think it's something that people will begin to focus on when they realize exactly how big the opportunities are which I think they are expensive.

So, with that, if no other questions, I'm happy to conclude. I want to thank everybody at the company again for a great job in spite of the difficulty out there. It's nice to see things beginning to look like they're getting better. And I would like to thank everybody for their support out on the street and an investment community -- the industry is a tough industry. We appreciate you hanging in with us. And again, if you have any additional questions, please feel free to call any of us privately and we'll be glad to answer them as best we can.

That does conclude today's conference. You may disconnect at this time and thank you for joining. Have a great rest of your day.

Thank you.