Stabilis Solutions, Inc. (SLNG) Q3 2014 Earnings Report, Transcript and Summary

Good day and welcome to this American Electric Technologies' to report Third Quarter 2014 Results and Conference Call. Today's conference is being recorded. This press release contains forward-looking statements, as defined in Section 27A of the Securities Exchange Act of 1934, concerning anticipated future demands for our products and future plans and objectives. While the Company believes that such forward-looking statements are based on reasonable assumptions, there can be no assurance that such future revenues, profits, plans and objectives will be achieved on the schedule or in the amounts indicated. Investors are cautioned that these forward-looking statements are not guarantees of future performance. Actual events or results may differ from the Company’s expectations, and are subject to various risks and uncertainties, including those listed on Item 1A of the Form 10-K filed with the Securities and Exchange Commission on March 28, 2014. The company assumes no obligation to publicly update or revise its forward-looking statements, even if experience or future events makes it clear that any of the projected results expressed or implied herein will not be realized. At this time, I would like to turn the conference over to Mr. Charles Dauber, President and CEO American Electric Technologies, please go ahead.

Thank you, [Shannon]. Good morning, everyone. I'd like to welcome you all for American Electric Technologies' third quarter 2014 earnings call. Joining me today is our Senior Vice President and Chief Financial Officer, Andy Puhala. For our call today, I'm going to start with a review of our third quarter results, and then I'll turn the call over to Andy for a more detailed financial review. I'll then come back and walk you all through more detail about our business and how we look heading into 2015. After that, we’ll move to a question and answer session coordinated by the moderator. In Q3, the company reported revenues of $14.3 million up 6% from Q2 of this year but down from Q3 last year. For the quarter, the company reported a net loss of $2.1 million which included a $1.5 million operating loss plus 600,000 of onetime expenses. I’d like to now walk you through more details on the quarter. As you all know from the past several quarters earnings calls, the company is making strong progress on executing our organic gross strategy which is to provide turnkey power delivery solutions of the global energy industry. This quarter, we continued to see increased break in customer wins for large energy companies, large power generation equipment manufacturers and oil and gas related engineering and construction companies. This is a significant continued step up in our client base and the foundation for the company’s long term growth. These new customer wins were enabled by the investments we’ve previously made in upgrading our sales team, our plant expansion which gives us not only more capacity but the new ability to build the large power distribution centers or what we call PDCs buildings in house and our new arc-resistant switchgear product lines. That sales progress resulted in record backlog for the company and record year-to-date total revenues for the first nine months of the year. The composition of that revenue was particularly interesting. The majority of that Q3 revenue came from turnkey power delivery project for the midstream and downstream oil and gas markets where our scope of supply included our custom designed power distribution equipment installed in a PDC building ranging from 60 to 80 plus feet long. In fact, we have seen an over 300% increase in the number of large, multimillion dollar mid and downstream projects versus last year. While this is great topline growth progress, it created some significant challenges in the quarter our engineering and operations teams in executing all of these large projects in parallel. First, this growth and size and volume of projects caused us to outpace our engineering capacity. Remember each of our custom designed projects requires specific engineering resources and with the number of simultaneous projects in-house our engineering teams got overloaded and fell behind their project schedules. Second, the wave of large PDC projects exceeded our welding and fabrication personal resources. And although we added additional ships overall schedules were still negatively impacted. The volume of projects with compressed scheduled also impacted some manufacturing productivity, and we experienced several projects that exceeded their estimated power budgets. For our business on engineering and fabrication stages are behind schedules, this creates significant challenges for our manufacturing, construction and quality control groups to meet the customers project schedules while delivering a quality product. In order to build long term relationships with those new customers, we made the decision in the quarter to expand overtime to keep their schedules which had the effect of decreasing the margins on those projects. We are working with our new Chief Operating Officer, Bill Miller on implementation of fixes to increase engineering and manufacturing capacity and reduce scheduled delays. With the majority of the delayed projects, shipping in Q4 and the implementation of the capacity and fixes we expect to start seeing project margin improvements going forward. In parallel with the significant project volume increase, we also brought in the market our new arc-resistant switchgear product line in Q3. We experienced some product introduction cost issues in our first production units. Those projects are shipping in Q4 and we feel like we’ve now got a high quality product at a market competitive price. When I add up the project delay related margin issues, the productivity issues and the new switchgear, product introduction related impact, our gross margins for the quarter fell from our traditional 16% to 18% down to 3% which is the primary driver for the company Q3 loss. We had negative impacts on our third quarter results related to the execution of the company strategic initiatives. We experienced a $200,000 loss in Q3 due to the start up of our M&I Electric Brazil subsidiary. M&I Electric Brazil is now fully up in running and the start up expenses are behind us. We now have 35 employees in our facilities in Rio and Macaé. M&I Brazil is focused primarily on the services and construction markets related to the Brazil offshore industry and as such we believe M&I Brazil is on their way to being a strong contribution with both our topline and bottom-line results in 2015. The other non-recurring expense we had in the quarter was the impairment of our renewal energy asset mainly our Integrated Solar Inversion Station. Project financing remains problematic for this market and our sales focus has shifted to the oil and gas and distributed power generation factors. As a result we wrote down the remaining renewable energy assets in Q3. With that, I‘ll now turn the call over to Andy to review our financial details and I’ll come back in a few minutes for some additional color on the markets in our business.

Thanks, Charles. As Charles mentioned in Q3 the company reported revenues of $14.3 million a 6% increase from the second quarter but down from the $16.2 million we reported in Q3 of last year. Due to the increasing size of our contracts, our quarterly revenues remain somewhat lumpy. Breaking down our Q3 business by reporting segment technical products and services was up 5% and our construction business was up 20% compared to the second quarter. As Charles mentioned, gross margins for the quarter fell to a combined 3% due to the operational challenges Charles talked about in his opening remarks including the large number of power distribution centers and new products currently running through the plant. Also impacting the gross margins for the quarter was a $200,000 loss on the start up of our Brazilian operations, our new Brazilian subsidiary M&I Electric generated $185,000 of revenue in the third quarter, its first quarter of operations and as Charles mentioned it incurred a $200,000 loss on the start up. M&I Electric Brazil are serving a wide variety of international drilling customers and they have a strong pipeline of opportunities heading into 2015. Additionally the company booked a $400,000 onetime non-cash charge to write down our remaining renewable energy assets during the quarter. While we maintain our capabilities to provide a one megawatt and 1.5 megawatt solar invertors, our outlook for this business has changed substantially. We are not actively focusing on the alternative energy markets. Our international joint ventures delivered net equity income after expenses of $0.2 million in the third quarter down from the $0.4 million in Q2. This decline reflects a typical seasonality of our Chinese joint venture, BOMAY that we have seen in the past several years. Revenues with our joint ventures were $11.4 million in the quarter versus $40.3 million in Q2. These revenues are not consolidated in our results as these investments are reported using equity metrics. We expect our equity income from joint ventures to be minimal in the fourth quarter and increase again in the first quarter of 2015. Moving down to income statement. We reported a net loss from continuing operations of $2 million during the quarter or $0.25 per fully diluted share. Net loss attributable to common share holders was $2.1 million or $0.26 per fully diluted share. And after this quarter that we completed the sale of a non real estate assets of American Access Technologies or AAT to an undisclosed buyer. We treated this business as discontinued and impaired to AAT assets to the net realizable value in Q2, but the transaction had an immaterial impact on the third quarter results. As Charles described, we ended the quarter with a record backlog of $27.9 million up 67% from the second quarter levels. Of this amount, $25.1 million relates to our technical products and service to segment, approximately 80% of our backlog at the end of the quarter relates to projects in the oil and gas sector which highlights the success we have had in shifting the focus of the company to a solution provider for the energy industry. I’ll now turn to balance sheet and the cash flow. We were slightly positive on operational cash flow during the quarter as our reduction in networking capital offset our third quarter loss. We spent $1.1 million during the quarter on capital expenditures primarily the final payments on the expansion of our Beaumont manufacturing plant and the engineering workspace that we completed in the second quarter as well as some capital expenditures that were related to our Brazilian start up. Additionally we received $2.25 million in cash during the quarter from the sale of our AAT assets. We ended the quarter with $2.4 million of cash on the balance sheet down about $500,000 from the second quarter. The company successfully financed its Beaumont expansion using only operating cash flows and the repatriation of earnings from our foreign joint ventures without incurring any additional debt. As we shift to larger projects with longer production cycles and grow the top line our working capital needs are expected to increase. Our cash on hand and credit availability remains sufficient for us to execute our organic growth strategy. With that, I’ll turn the call back over to Charles for some more color on the business.

Thanks, Andy. Now that we’ve gone through our financial results, I’m going to share more of my thoughts about the business and where we fit in the market heading into 2015. As I said earlier, we continue to make strong progress on becoming a market leader for our target energy industry sectors, but we have to work through our growth related project execution challenges and make more money. Our oil and gas related business continues to be our primary revenue driver representing 63% or $9.1 million of our revenue. For the first nine months of the year oil and gas related business represented 75% of our revenue versus 66% last year. The margins for oil and gas were 3% in the quarter impacted by all the causes I discussed previously on the call. Oil and gas related backlog for the quarter was up 128% from the end of Q2 and is up over 300% from Q1 ending backlog reflective of the growth I’ve discussed in our larger oil and gas related projects. In the quarter, we were excited to continue to see more break in strategic customer wins in the oil and gas market. In addition to additional orders for our largest existing EPC customer, we hit our first project orders at two of the largest oil and gas related engineering procurement and construction firms in our industry. We also had our first ever order one of the largest integrated energy companies in the U.S. and booked project orders at two Fortune 100 Energy companies. All-in-all it was a good quarter for bookings for the oil and gas part of our business. [indiscernible] and I’ve already discussed our M&I Electric Brazil subsidiary I’ll now turn my attention to our international related oil and gas joint ventures. First I’ll talk about China. As Andy mentioned, BOMAY showed its historical slowing trend in the third quarter with revenues of $10 million compared with $38 million in Q2 and $18 million in the same quarter last year. So they are continuing their second half slow down historical profile. It looks like the internal political issues between the Chinese government and CNPCs leadership are over and in addition it looks like China and Japan seemed to have reached afar in their relationship, so from a political perspective China looks pretty good on a go-forward basis. With that said, we still think the Chinese economy will be generally down next year and we still expect to see the same seasonality in the BOMAY business as we’ve seen over the past several years with a good first half of the year followed by lower results for the second half. We do see further growth opportunities in China outside of our land drilling focus joint venture and we’ll continue to update you along in the future. Moving under our MIEFE joint venture in Singapore, although MIEFE was profitable in Q3, we have work to do with our joint venture partner Sonepar on our way to drive incremental business under MIEFE. We both agree that MIEFE needs to get back to the $10 million plus annual revenue size and are working together create and execute in appropriate go-forward growth plan. There are good market opportunities in Singapore and in Southeast Asia. We just need the team to improve their sales and product offerings to affectively pursue that business. Before I leave the oil and gas sector I want to discuss the outlook for oil and gas business as we head towards 2015. So first, you heard me already talk about the midstream and the downstream market as a big driver of our business. And we think the midstream and downstream oil and gas market has a strong future. An industry analyst first IHS forecast $80 billion per year in midstream and downstream capital spending through 2020, which will put all market opportunity for that sector in North America at approximately $800 million a year. And we think there’s good opportunity there. Second, people ask me what’s the impact on the company if oil stays below $75 or $70 a barrel and that’s a good question? I just want everybody to remember part of our strategy a longer term strategy is been to have energy industry counter cyclicality, first between the oil and gas and power generation sections factors and to be balanced between domestic and international oil and gas and finally to have counter cyclicality between the upstream, midstream and downstream portions of the oil and gas market. Oil and gas below $70 put serious strain on marginally producing assets starting with land drillers and less productive offshore drilling. We’d expect to see some softening on our land drilling segment in the U.S. and would see a decline in offshore Gulf of Mexico new build drilling rigs. I would really think that this dynamic would generate increased opportunity for our land and offshore drilling upgrade business or owners who are trying to get more productivity out of their existing assets. We are not traditionally heavily weighted offshore drilling new builds other than the recent Drill Mac offshore drilling projects. So based on our current market mix we think that this would not significantly impact our North American business. Internationally our global markets inch up slightly different energy policies and priorities most of them as much around internal demand as compared with exporting so we will continue to watch those international customers heading into 2015. Impact of $70 oil in the midstream and downstream market was also interesting. As lower oil prices could impact larger pipelines for example the Canadian and the U.S. type crude pipeline, but actually is traditionally good for refiners who get lower cost of oil to refine and turn into gasoline. We’ll know more this in the next month or so as our large energy customer announce their 2015 capital budget but we feel pretty good at this point. So to summarize, we feel good about our continued growth opportunities in the oil and gas markets and we’ll continue to improve our execution capacity and capabilities to financially capitalize on that growth. Turning towards the power generation and distribution market segment, that was 8% of our revenue for the quarter of $1.1 million. That revenue was down from Q3 last year and down from Q2 primarily due to the lumpy nature of that business. If you remember last year and earlier this year we have significant revenue and backlog from a large Canadian Power Generation project. Gross margin for this sector was a loss for the quarter driven by the $400,000 write down of our solar inverter asset which hits here and some additional cost related to the Canadian Power Generation Project commissioning that was completed in the quarter. Backlog for that business was down versus Q2 but up about 28% versus Q3 last year. Just like in the oil and gas markets, our sales team is really making strong progress. We are seeing a significant increase in opportunities in this distributed power generation market. In the quarter, we booked we had our first customer break in win and booked our first project with one of the largest power generation equipment manufacturers in the world and if we can succeed with this project and do a good job with it, we have many more just like it that could follow. Moving into our non-energy related marine and industrial sector, revenues were $4 million in this quarter up 65% compared to last quarter. This primarily comes from follow-on marine vessel business that started in 2013 and also some of switchgear for customer that using it in an industrial project. Now interestingly enough, with our progress in our penetration of the larger engineering procurement and construction firms, we are starting to see an increasing opportunities related with the chemical in the Greater Gulf Coast which are not direct tied to oil and gas. So we put those in this marine and industrial sector. I expect to see that sector have growth related to those types of projects has we have into 2015. Combining all these market sectors, the company ended the quarter with the backlog increases of 68% from the second quarter of 2014. Before I go into the Q&A session I’d like to close my comments with this. One, the company is executing on the strategic growth and we’ve discussed over the last two years, that plan is working. Investments we’ve made have resulted in the record nine-month revenue record backlog and have positioned the company especially well for long term growth. Two, the project execution which are being addressed, it’s great to see our new Chief Operating Officer Bill Miller and his team focusing on helping us scale our business and closing that project execution gap to get our profitability where it needs to be. The team is bullish on the company as we’re really turning to a major player in our market and are excited about our prospect heading into 2015. I’d like reiterate my appreciation for support we’ve received from our shareholders, employees and customers. This concludes the prepared portion of my comments and I’ll turn the call back over to [Sheehan] to coordinate the question and answer session.

Thank you. (Operator Instructions) And we’ll go ahead and move to our first question. Caller, please go ahead.

Bill Dezellem. I’m sorry that was Bill. I’m sorry that was the recorded message part of this, and while I’m failing on the technology this morning, my apologies.

Good morning.

So let’s talk about your breaking wins that you’re referencing. What is leading to too lows? What’s different today versus when you were not those breaking wins please?

Yes. Good question. This is really – I didn’t tell you the combination of a number of years of putting together and executing this growth strategy. Number one, the breaking wins are result of significantly upgrading our sales team in the 2013 and beginning of 2014 timeframe while we move to –we’re highly professional sales organization. We expanded the sales organization and let them loose. That’s number one. Number two is, the profile of our ability to deliver on these on these projects has also significantly increased. The plant expansion that we completed in Q2, our ability to build our own power distribution centers in house is a significant change. Customers can come see, we’re building those things. And the introduction of this arc-resistant switchgear product line really put us in a completely different light now than we’ve ever been as a company. So, when we go to these large companies who traditional use some of our larger competitors, we really give them up more flexible additional option for their business and they are enthusiastic about that and giving us a try.

That’s helpful. And I’m away from the office, so I don’t the ability to go back and look. But where does that $28 million backlog, you mentioned that’s a record. Would you scale that for us relative to prior peaks in your backlog?

Yes. So the ones I know of the top of my head was we’re up 128% from last quarter and 300% for oil and gas in Q1, My CFO and controller are looking at chart right now to give you some historical reference on the backlog.

Bill, the highest we’ve ever been is 25 million and that’s exactly Q1 of 2013. Earlier this year we had lower levels of backlog. We had $13 million in Q1 and about $17 million in the Q2. So, we mentioned on some earlier calls there’s been a softening of the mid downstream market early in the year, which resulted in as lower as backlog, so it seem to be well through that now.

And so given what you see today relative to future project opportunities or future win opportunities directionally or you anticipating the backlog to increase again in the fourth quarter or not?

So what I would say as a couple of things. One is we see lots and lots of opportunities, it’s actually exciting to see all the new customers and the growth in the exciting customers on the project that we’re bidding. Well, I can tell you is that our business -- these projects aren’t regularly scheduled in terms of book and so bookings ends of being sort of lumpy depending on particular project schedule. So I can’t necessary tell you backlog is going to up or down in Q4. We don’t necessarily give that kind of guidance. But I can tell you that the opportunities that we see, we look good and we expect to continue booking lots more of these projects going forward.

That’s helpful. And I’m still going to push on this slight more and who is asking about next quarter. When we look out let’s say one or two years from now, do you see any reason why your backlog could not be up significantly from this level. So I’m trying to grasp because you mentioned there’s an $800 million market opportunity out there, it just seems there is a lot of runway and the ability for you to be much larger with leading corporate much larger backlog at some future points?

No question. We would be disappointed that backlogs are not significantly higher over the next several years as we continue growing the business. That’s why we made investments, so that’s why we made the investment and the plan. All the infrastructure investments, our new Chief Operating Officer sales the whole thing as all around executing on this growth opportunities which we’re starting to do from a sales side, which – or work it out and scaling up the capacity to go and execute that large number of parallel projects in parallel.

Thank you, both.

And that was Bill.

It’s Bill Dezellem with Titan Capital.

Thank you, Bill.

(Operator Instructions) And we’ll go ahead into our next caller, please go ahead.

Good morning gentlemen. Thanks for taking my call.

Good morning.

This is George [Brown] with [indiscernible]. The situation looks to me like you sort of put the cart before the horse rather the other way around. Would you give me an idea about way you are in learning curve of receiving contracts and completing them profitably for shareholders?

Yes. So, we’ve talked in previous calls that there’s two parts of the business that we’ve got to scale, one is the sales side. One is the project execution side. So last year when I look at our projects that we had, we had a couple of larger – with large power gen project in a large offshore drilling project and those are sort of the big thing. And then our midstream and downstream we had about 10 projects or so. All of them were sort of the $1 million size and then one or two that were truly larger. This year the profile of the business on the midstream and downstream has dramatically changes which is that we’ve tripled the amount of large $1 million plus project in that midstream and downstream market. So, we know how to execute these projects. We’ve had history of executing these projects over time and we know how to do them, where we failed in Q3 was ramping the engineering capacity and ramping the fabrication capacity fast enough to handle not only the volume of this projects, but the introduction of this new building our power distribution center in house, okay. So in the past we were buying out these power distribution centers which impacted margin, impacted our ability to price competitively in the market. Now that we build these things ourselves we got to deal within Q3 and increasing the total amount of projects and increasing the size of the project and the implementation of his new PDC building that we did – that we have to go build ourselves. And so, we feel like we’re through the majority of those challenges, those projects that we had issues on in Q3 we’ll ship in Q4 and the implementation of the improvement plan is in process and we feel good about it going forward.

And I guess the completion of the expansion in Beaumont will also help you meeting your production schedules?

So, the Beaumont plant expansion actually finished in Q2. If you go to Beaumont you’d actually see the entire plant filled with the large buildings that it’s incredible from a square footage perspective it’s sold, right. So that’s not our only capacity limitation or capacity really has been around engineering and fabrication, getting the cycle times of these projects down, so we can continue increasing capacity through the [staff]. So, from the capacity perspective and the new sharp perspective what this really let us do is get more of these projects be an improved suppliers for the large integrated oil companies and get that bookings number up. Now we have to go execute the project. But it’s not – it’s really not around the plant size, it’s really on engineering resources and fabrication resources.

And you feel that your staff adequately has enough engineers on staff to complete the projects profitably.

We’ve increased our engineer staff over the quarter and we’ve move engineering under the new Chief Operating Officer, Bill Miller, so we had some reorganization there. There are some programmatic changes there. We think we’ve got the right number of engineering resources for the projects that we’ve got in house right now. But have got to continue to evaluate engineering capacity as it relates to the rest of the capacity and the lumpiness of the older bookings and to make sure we cannot have these issues going forward.

Okay.

And thus we start work to go to and making sure we can handle not only the growth, but in some ways the lumpier elements of our growth that we experienced this year so far.

Okay. Next question, concerning your subsidiary for the Brazilian market, you use to have a joint venture, was it down, now you own it basically 100%. What type of revenue deal foresee us achieving in the Brazilian market and could you comment on the recent election where you see the market developing there in particular with the Brazilian oil Company, Petrobras?

Yes. Okay. I’m just writing down so I’ll not forget in the time. So, George you follow the company for while, you remember that we were bullish on the Brazil market opportunity, we went into Brazil with the minority joint venture position. We were doing 95% of the work and getting 49% of financial reward and exhibited that earlier this year. The new M&I Electric Brazil is our first wholly-owned international subsidiary. It’s got operations in both Rio and Macaé. And what’s happened is, we basically went and got all the customers that we already had and they were all excited to work with us in this new entity. So that group did I think the 100,000 plus revenue in the first quarter of operations.

185,000

185,000 in the first quarter of operations, which is a great start in are expecting significant growth from there. I think that its maximum the joint venture did $8 million to $10 million a year in sales sort of in that range probably in the 2012, 2013 time frame and we expect in the near term next several years to be well beyond that number otherwise we wouldn’t gone and invested – reinvested in that market. I think the market is slightly different now than it was though. Couple of years ago, which is that the Brazil economy is in a different situation in terms of new builds building on in Brazil, that’s why we’re focusing on the construction and services part of our market which we know is a consistent area of opportunity for us versus focusing on building products for projects in Brazil. In terms of the…

If you looking for significant growth there.

We think over time Brazil has a change to be a very good market for us and we would certainly be looking to exceed what there – what the original joint venture done at its peak over the next several years.

George, the Brazilian joint venture in 2013 is 10.5 million of revenues and we’ve basically retired all the management and team in that joint venture. So we certainly have a skills and right people in place to replicate what we’ve done through joint venture.

Yes. And then obviously consolidating all that revenue income from there.

Do you actually produced or manufactured in Brazil or is it all is done in the U.S. and shift over?

Now at this point Brazil is all in country services and construction work. So its people, it’s the general manager of all joint ventures now is the manager of the M&I Brazil. I’m on my way back right tonight to Brazil to go down and meet with customers and the teams, its – we don’t – we’re not building anything in Brazil at this point. This is all construction and services but relatively low capital investment.

On the other hand, the Brazilian Real currency does help you that instance?

We watch the Brazilian currency fluctuation and did impact from quarter to quarter. I’m sure what I’ve say there.

And George in terms of your question on the election, I mean, we don’t have the formal opinion. I think that we are seeing more opportunities from Petrobras. We’re actually seeing opportunities from Petrobras in the U.S as well or there U.S. ARM we starting to work with the U.S. ARM on projects in Brazil. So we’re feeling better about Brazil now than we were let’s say, six months ago. But we’re in Brazil for the long-term its being one of the larger energy markets globally and we’ll have good position there for the long-term.

Okay. Last question if I may, Petroleos Mexicanos Pemex, is suppose to open up some offshore contracts drilling et cetera in the first quarter here. What kind of opportunity does that represent for you if any? And are you possibly considering doing a say, Mexican joint venture?

Great question. In turns out you actually look at our revenue for a lot of our customers that are now on midstream and downstream market. A lot of that revenue actually has some ties to Mexico already. So the Drill Mac project for examples to offer drilling platforms are build for drilling contractor that’s hired by Pemex to drill in the Bay of Campeche and the Gulf of Mexico right next to Mexico. Similarly, our work that we do in Power Gen market some of it with the company called Solar Turbines and that’s for offshore production platforms in the Gulf of Mexico, so I would tell you we have an interesting portion of our business that’s tied to Mexico indirectly already today and we do see increasing opportunities. We are interested in Mexico as an additional market expansion. We have our hands fold right this minute, executing our domestic business in addition to managing China and Singapore and Brazil entities, but I would tell you Mexico is next on the list of tough target for us configure what we want to do there. Obviously it’s right next to us, so that helps on the lot on the management and the oversight integration perspective.

Okay. Great. Thanks very much for answering the questions. And keep in mind revenues should also drive profitability.

Thank you, George.

(Operator Instructions) And with no further questions in queue, at this time, I would like to thank you participation. You may now disconnect. Have a great rest of your day.