Arq Inc (ARQ) 2008 Q4 法說會逐字稿

Good day, everyone, and welcome to the ADA-ES fourth-quarter 2008 financial results conference call. At this time I would like to inform you that this conference is being recorded and that all participants are currently in a listen-only mode. This conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which provides a Safe Harbor for such statements in certain circumstances. These statements are identified by prefatory words such as believe, will, hope, expect, anticipate, intend and plan, the negative expressions of these words or words of similar meaning.

Actual events or results could differ materially from those discussed in the forward-looking statements as a result of various factors, including factors discussed in ADA-ES's filings with the US Securities and Exchange Commission, with particular emphasis on the risk factor disclosures contained in those filings. Listeners are cautioned not to place undue reliance on the forward-looking statements and to carefully examine the information ADA-ES discloses publicly in its filings with the Securities and Exchange Commission or otherwise before deciding to invest in ADA-ES's securities. The forward-looking statements made during this conference call are presented as of today's date and ADA-ES disclaims any duty to update them unless otherwise required by law to do so.

Now I would like to turn the call over to Mark McKinnies, Chief Financial Officer. Please go ahead, sir.

Good morning, and thank you, Regina. Good morning, everyone, and thank you for joining us for the ADA-ES fourth-quarter and year-end 2008 conference call.

First, I would like to discuss the Company's financial performance, and then our President and CEO, Mike Durham, will update you on the Company's recent corporate developments and our future plans. After that, we will open the call for your questions.

Revenues amounted to $3.3 million for the fourth quarter as compared to $4.8 million in 2007, and $16.2 million for the year as compared to $19.2 million in 2007, due largely to decreases in our Mercury Emission Control, or MEC, segment. MEC revenues declined 29% during the fourth quarter and 12% for the year due to decreased revenues from our DOE and industry-supported demonstration contracts, which contributed $1.2 million in revenues in the fourth quarter of 2008 as compared with a contribution of $1.5 million in the fourth quarter of 2007; and decreased revenues from Activated Carbon Injection Systems, which contributed $1.7 million of MEC revenues in the fourth quarter of 2008 as compared to a contribution of $2.8 million in the fourth quarter of 2007.

ACI System sales generated approximately $9.4 million in revenues for the year, approximately the same level as in 2007. We had contracts in progress at year-end for ACI Systems totaling approximately $6.9 million, of which we expect to complete and realize as much as $5.9 million in 2009 and the balance in 2010. In addition, we have commenced work on three new systems thus far in 2009, and we expect several more to be awarded.

Various consent decrees, in-place state regulations and new plants are driving the current market in this portion of our business. We believe the eventual outcome of the EPA MACT process for mercury control or legislative action will accelerate and further expand that market.

For the year, our DOE and industry demonstration contract revenues totaled $4.7 million compared to $7.2 million in 2007, as our mercury programs are phasing out. The remaining unearned amount of the DOE contracts as of December 31 was $3.4 million, of which we expect to recognize $1.9 million in 2009, which amount includes cash contributions by other industry partners, the majority of which is related to our CO2 capture work.

Government-funded work for mercury demonstration projects has been diminishing since that market has moved into a commercial phase. We expect that increased funding for CO2 control technology will continue to replace that source of revenues in the future. The recently passed stimulus package included $3.4 billion for development of clean coal technologies to provide funding for the types of projects in which we are involved.

Our gross margin for the fourth quarter was 26%, the same as the fourth quarter last year. For the year, gross margin was 33% versus 31% for 2007, due primarily to cost reductions we realized in ACA system sales.

Research and develop expense in the fourth quarter decreased $37,000 over the same period in 2007 and decreased $417,000 for the year, reflecting the scale-back in mercury-related demonstration projects. We anticipate that our future R&D expenses will grow in direct proportion to DOE-funded CO2 work we perform for the next several years.

General and administrative expenses increased by $3.4 million to $4.6 million in the fourth quarter, primarily due to increased legal fees related to our litigation efforts and significant contract negotiations in the quarter, share-based compensation and other overhead. G&A expenses increased by nearly $4 million to $9.2 million for the year due to reasons just noted for the quarter and inclusion of costs related to the development of our activated carbon production and processing facility, a portion of which is now being recognized as expense.

We also recognized a non-cash impairment charge in the fourth quarter of approximately $1.6 million, as we wrote down the goodwill that we are carrying on the balance sheet related to our flue gas conditioning business.

Our operating loss was $6.7 million for 2008 as compared to a loss of $777,000 in 2007, due in large part to costs noted above and those related to the Company's growth initiatives. In the beginning of the fourth quarter, we formed what is now known as ADA Carbon Solutions, our Activated Carbon, or AC, supply business joint venture with Energy Capital Partners and its affiliates, to continue our development and construction activities for the manufacture and supply of AC for mercury control. The assets and financial results of Carbon Solutions have been consolidated in the financial statements we are reporting for 2008.

As a result of the above-noted figures, we reported a net loss of $3.6 million or $0.59 per share in the fourth quarter compared to a net loss of $12,000 or less than $0.01 per diluted share for the same period in 2007. For the year, our net loss was $4.1 million or $0.67 per diluted share as compared to net income of $247,000 or $0.05 per diluted share for 2007.

Cash flow used in operations was $4.4 million for the quarter compared to cash flow provided of [$882,000] for the same period in 2007. For the year, cash flow used by operations amounted to $4.4 million as compared to cash flow provided by operations of $1.6 million in 2007.

Our balance sheet as of December 31 reports working capital of $18.6 million. We have no long-term debt, and shareholders' equity totaled approximately $32 million at year-end. Our construction efforts through Carbon Solutions are on schedule with costs somewhat lower than estimated. Those activities are continuing to be funded by Energy Capital Partners, while we look to meet a significant portion of the total capital needs with project debt financing at an appropriate time. Mike will discuss the status and progress in the JV further. And now I would like to turn the call over to him.

Thank you, Mark. Let me start with the overall business environment for ADA and clean coal technologies. News articles relating to the difficulties in permitting new coal-fired plants have led some to believe that the country is moving away from coal. However, the realities are that coal is by far our cheapest source of energy and it reduces our reliance on foreign fuels. We have a tremendous infrastructure of over 1100 coal-fired plants that reliably will provide 50% of our electric power generation in the country.

While we expect to see significant growth in new renewable energy projects, this will not diminish our dependence on coal, and we well expect goal to be the foundation of our electrical supply system for generations to come.

However, there is a growing social and political mandate to burn coal cleaner, which creates increasing markets for our technologies.

In 2008, the industry experience several court rulings on regulation for power plant emissions that created significant uncertainty and delayed decisions and procurement of control equipment. While this did not negatively -- while it did negatively impact our revenues for 2008, it creates a need for the government to move quickly to resolve these issues with new federal regulations. EPA is moving forward on a MACT regulation for mercury and a fix to the rules for sulfur dioxide and nitrogen oxide emissions. In addition, we have been told that the Senate will introduce a bill next month to address these three pollutants.

Our analysis indicates that either of these two approaches would result in a market for activated carbon in excess of $1 billion per year. However, even without a federal regulation, the current mercury market continues to grow as a result of existing regulations in over 20 states and Canadian provinces. To serve this market, we are making great progress on our new activated carbon processing and production facilities in Louisiana. Construction on the new AC plant began last September and appears to be ahead of schedule to begin operation next spring.

In addition, we are able to take advantage of some cost reductions in the construction business. We are posting weekly construction pictures on our website so that you can track progress. You will see that the first two of four furnaces are already erected. We are funding construction with equity from ADA and our partnership with Energy Capital Partners. The resources provided by this partnership gives us the ability to wait for more favorable debt financing opportunities and still maintain our schedule.

We have already presold a third of the nameplate capacity of the plant with firm take-or-pay contracts. We are currently bidding on many RFPs for AC, with total contract values on the order of $500 million. As compliance deadlines are approaching, we are expecting to see contracts being finalized in the next several months.

With our existing processing plant in Texas, we are now providing AC to contract customers and potential customers who want to test our product, which is achieving excellent mercury removal results. Later this spring, our new larger AC processing plant in Louisiana will be completed, which will be used to prepare, store and ship AC to customers.

Let me move on to our work related to the capture of carbon dioxide from coal fired power plants. We are currently working on a contract to advance the development of our solid sorbent-based technology. This $3.2 million program is co-funded by DOE, as well as several elite power generators, including AEP, Southern Company, Luminant and Xcel Energy. We are making progress on the technology, and if you're interested in more details, we provide copies of technical papers and presentations downloadable from our website.

There are a number of discussions ongoing in Washington that are expected to impact this business opportunity. Congress is likely to introduce regulations on carbon emissions that will create a future commercial market for this technology. In the near term, we expect to see increased federal funding for clean coal technology. The newly-enacted American Recovery Reinvestment Act allocated $3.4 billion to support development of demonstration of technology to capture and store carbon dioxide from coal-fired power plants.

This is important, because we will need funding on the order of $50 million to $100 million to perform a scale-up of this technology. We expect that funding for larger scale demonstrations will soon be made available from the stimulus bill through competitive DOE procurement activity. ADA has been successful in this arena in the past with awards of approximately $80 million that support a development of mercury control work.

Finally, let me update you on our refined coal product, CyClean. Last fall, Congress extended the placed-in-service deadline until the end of the year and eliminated the requirement for a 50% increase in the market value of the refined coal. These removed major hurdles for qualifying for the $6.00 per ton tax credit and gives us another year to sell the product. We are currently negotiating with several companies for demonstration projects that are a necessary step in the sales process. If successful, the equipment can be installed in 60 days to meet the very tight time schedule.

So let me summarize by stating that we are excited about the growing markets for clean coal technology. We are making great progress on the construction of a very important asset for the Company with our AC plant. Our partnership with a well-capitalized company like ECP has allowed us to stay on schedule in difficult economic times, while we await the right time to complete the financing.

We will continue to execute our aggressive business strategy. By doing so, we believe the equity markets will eventually reward ADA shareholders with a valuation that reflects the Company's prospects for substantial earnings growth.

Thank you, and let me open up the call for your questions.

(Operator Instructions) Graham Mattison, Lazard Capital Markets.

Good morning, guys. I'm wondering if you could just give us sort of overview in terms of your outlook for demand for activated carbon injection systems as it stands right now versus a year ago.

Well, it is surprisingly coming out the way we had expected and announced several years ago, that when we look at the number of new power plants that need it, the number of state regulations and consent decrees, we had said it was about a total market of about 150 units. I think awarded to date have been on the order of about 110 or 115 units. And so we look at that there is probably another 30-ish out there that needs to be sold before 2010.

Okay, great. And then in terms of the timing for the financing of the plant, could you give a little more color on that in terms of when the latest you might need to do that or how that might affect anything?

You know, that is the advantage of having a partner like ECP in this, well-capitalized. There is no magic date. In fact, what you will see is in all of our material contracts, we are taking out -- we are modifying all these contracts and taking out any reference to date, because there is no date. So we are keeping in language that allows either customer or our relationship with ECP that we've already filed that agreement, that extends it out to the end of June with a 90-day evergreen provision. Because there is no magic date to focus on. We are just continuing to build the plant.

Great. And then just a quick question on the SG&A. What is a good run rate going forward, once you take out the one-time non-cash charges for the quarter? Is it still about that 1.6, 1.8 in previous quarters, or a little higher?

Yes, Graham, I think -- you know, there is a couple items that impact that. So in the run rate, you would look at the ongoing kind of core business of ADA that -- apart from the AC manufacturing. As we continue to consolidate -- excuse me -- the Carbon Solutions results, there are going to be significant G&A costs that we are going to be including for them. So those will skew the consolidated numbers quite a bit for this next year. So something to look at is about a 25% to 30% of G&A -- or of revenues as a percentage going out into the future.

Okay, great. Thank you very much.

John Quealy, Canaccord Adams.

Good morning, guys. This is [Mark Thiele] for John. I was just wondering if you could provide us an update with, perhaps in dollar terms, how much is left in offtake agreements for you guys to secure to get to the requisite levels for the debt financing.

Well, again, just as there is no magic date, there is no magic number. With what we have now, we can qualify for debt. So it is a spectrum -- almost a three-dimensional spectrum of how much debt and what the terms of those debt. The more additional offtake contracts we have, the more favorable the debt conditions will be, once there is debt available from the market. But there is no -- it is not a digital situation that if we achieve a certain level, there is debt and if we don't achieve that, there is no debt.

Okay, and can you talk a little bit about how you feel or what recourse might be? I think there is an upcoming deadline for one of your previously announced supply contracts with a customer coming due, perhaps this week. Can you talk about what the steps might be there to address that? Does the date get pushed forward going forward, or how do you think about that?

Well, that is what we are doing on all of our material contracts, is taking those dates out, because there was no magic date. Those dates were just put in there when we originally negotiated a contact as kind of a placeholder, assuming that it would get done by then; not necessarily that it had to get done by then. And so with the current state of the banking -- lack of liquidity in the banking, there is no need for us to go after bad debt. So in all of our material contracts, those are being changed so that, for example, it gives the customer the ability to see the same thing that you are seeing, the continued progress and funding of the construction of the plant with no reference to a date.

Okay. And then just building on your comments earlier about the potential for the introduction of a federal mercury rule or a multi-pollutant bill, what is your level of confidence that something gets introduced and progresses towards potential passing, perhaps as early as this year?

The EPA -- there are two parallel processes, which is very good. The EPA process is a little more timely. EPA right now is negotiating with an environmental group that sued them that required that they announce the results of the MACT ruling by the end of this year and implement it within a year. So that is kind of the timeframe that you are likely to see the MACT standard. They have to collect data and analyze it.

In parallel, the Clean Air subcommittee of the Environment and Public Works has told us that they are going to be starting hearings next month, with likelihood of introducing a three-pollutant bill for SOx, NOx and Mercury. That could move significantly faster than an EPA -- the EPA MACT process. It could be better for all involved. It takes out the pinch for legal challenges. So that would be our preference.

So I think we will see something happening this year that lays out the schedule for that. So the response to that is going to be quite varied. When we were kind of back to where we were in 2000, when EPA announced at that time they were going to go through a MACT process, we started seeing funding from the more progressive utilities immediately at that time, even though the schedule they put out for the MACT process in 2000 was that they would have it by the end of 2004; so well ahead. So we expect the more visibility -- we are hearing this from customers -- just the fact that they see this is definitely going to happen, EPA is moving forward on this, that we will start to see, again, the spectrum, the momentum of business picking up as that happens.

Okay. That's helpful. And then just lastly, are there any updates on the litigation front?

Both cases are in discovery, and hopefully we will see some more detail than where we are there by the end of the summer.

Okay, great. Thanks so much.

Dan Mannes, Avondale.

Good morning, everybody. A couple quick questions. Just on the contracts, you note 32% of nameplates. What is currently the expected nameplate? Is it 125 or 150 or 175?

Well, we are using a number of 150 as the best in there. Obviously, it is permitted to be higher, but all of our decisions now are around a 150.

Okay, and that -- because previously, you had sort of put it in a range. So now you're sort of picking the midpoint of the range?

Yes, as we get further along, as we've got pilot plant data, as we've gotten a lot of other information, we are tightening the range.

Okay. Briefly, on the joint venture, you're currently consolidating for accounting. Can you just give me a little bit of an update on how much of the plant you expect to own, given the current financing plan? And if you can just explain the consolidation. And then lastly, what's sort of the cash position at the parent company versus what is actually at the project?

Let me start with the long-term future of this, Dan, and then Mark could provide the details on where we are and how we are consolidating this year. Basically, we have a pretty good feel on what the ownership of this first unit is going to be, and that is based on the fact that we had two pieces of which how much equity ADA is bringing to this, and that was the $25 million from the sale of the --

-- previous pipes and working capital we had on our balance sheet prior to the joint venture with ECP.

Plus $18 million that we raised through the sale of 3.6 million shares. So that gives us --

Well, that you will raise. That hasn't happened yet, right?

That's correct.

Well, that's -- well, once the debt placement is there, that money will be paid in. But that defines $44 million of ADA equity, in fact. Well, the numerator is approximated at about 140 -- denominator is about $140 million of total equity. That could change. That could change from a couple reasons. If we get more debt than we expect; if the terms of the debt are better than expected; and as we are seeing some cost reductions in the construction, more favorable construction conditions. But what we are looking at is something on the order of 30% plus for our ownership of that first unit.

So how are we consolidating this year, and I'll let Mark address that.

Dan, the consolidation requirements, there is -- with the controlling interest or significant control over the management, then we would be continuing to consolidate that. Certainly at a 30% level, we would not consolidate the operations of the first line here. And we would be accounting for that on an equity method, which basically is a single line on the balance sheet and likely just a single line in the income statement that has our equity in their earnings and loss of this unconsolidated subsidiary. But it is probably our expectation now that certainly through the first quarter and perhaps through the end of the second quarter we will continue to consolidate these results.

Okay. And can you give me a breakout of what is the relative cash positions? I mean, what is at the JV versus what is at the parent company?

Yes, of the cash that was shown on the balance sheet at year-end, which is this 18. -- I'm sorry -- $28.2 million, a little over $3 million of that is at the ADA level, and the other $25 million is in the joint venture.

Got it. Just one other quick accounting question. You noted it looked like a write-off of about $1.2 million related to the JV or related to your development plans. Can you explain what happened there?

Yes, real briefly, as we had -- the accounting rules for this are as you've got a development project going on, it is appropriate to capitalize and to segregate any incremental direct costs that you incur that are related to that effort. And that is what we've been doing on our balance sheet and that is how we had accumulated the cost and the value that we were contributing to this joint venture.

Once that shifts into an operating mode, as it did after the formation on October 1, there is a number of those costs and ongoing costs that you no longer capitalize, but then are more of a period expense cost. So those were some that we had capitalized in accumulating on our -- the value that we were contributing to the venture but that we would expense in an operational -- from an operational mode.

So these were expenses from maybe the last two years that you had been capitalizing that you expensed all in one period?

Well, they were -- some of those, yes. And some of those that were incurred in the fourth quarter, as well.

Got it. And just two last ones. You currently -- it looks like the total PP&E on your books are around $35 million. The plant, including capitalizing (inaudible), is supposed to be $350 million. I assume the vast majority of that $35 million relates to the plant.

Can you give -- given that this should be physically complete in about a year, can you maybe walk through what the timing of incremental capital requirements are and how that spend is going to happen?

I think if you just go back and look at -- you know, we've announced $280 million in contracts. Our BE&K contract was $240 million, our [Furnace] contract was $40 million, and it is a 20 month construction period.

Right. But I guess -- and maybe I'm just saying it seems like it is back-end loaded a bit, just given the fact that you've been doing this for six months or more.

One thing I can say, in that $350 million, there is a fair amount of working capital and other operating costs that very much are backended in that, and buildup of inventory and things like that. The actual capital build, the contract we have with BE&K and for the multi-hearth furnaces, there is a fairly even spend throughout this year for those costs that total -- it's around $250 million of hard capital assets that are in there in those two contracts.

But there is no big sort of lump at one point that you're going to have to spend, whether it's Q3 of this year or something like that?

No, it is pretty even throughout. And that is governed by the contract we have with BE&K primarily.

Okay, and then just final question. Any update on the feedstock contract for the plant? Have you guys finalized an agreement for coal?

We've made great progress on that. It hadn't come to a point that we can totally announce our plans. These agreements require a lot of confidentiality agreement. So we are very pleased with what we have there.

Okay, thanks.

[Josh Silverstein,] SIG Partners.

Good morning, guys. I would just curious on the RFP contracts you were talking about, you put out a number of roughly $500 million there. I was kind of assuming if you guys said roughly a third of the $150 million plant was contracted for roughly $160 million, am I just ball parking that the roughly two thirds remaining is going to get you to that $500 million? Is that kind of how you guys were thinking about that?

No, the $500 million is total [ops] that had been unawarded. So that first $160 million, $170 million that we have in contract is independent of that additional $500 million that is out for bid.

I got you. Okay, and as far as the regulatory deadlines that are approaching, which dates are you guys looking at for the deadlines?

Well, there is Illinois has -- theirs is the middle of this year. Several on the East Coast that are already in play, and a couple more that are coming up in January 2010. And then you have about 20 new power plants that they will need, and when they come online, and they are not a deadline. It is just when the plants start up, so they are kind of spread out over maybe a 24-month period.

Go you. So that $500 million is pretty much going to be determined over the next, you would say, year or so?

We think that what -- we are bidding on in that $500 million, I think all should be in place by the end of the year.

Okay, that was it for me. Thank you.

(Operator Instructions) [Rufus Cox], a shareholder.

I am disgusted with the performance and management of this company. The market is speaking loudly, no confidence. How many times can you cry wolf and expect to be believed? The saga of the ever-extending deadline for the financing is beyond pathetic.

Dan Mannes, Avondale.

Just one more follow-up on the $500 million of contracts. How much of that, if any, is in Pennsylvania, where obviously there has been a bit of a change in the regulatory environment?

I'm not so sure that that is in there now, Dan, of the $500 million.

-- any of the $500 million is for supply in Pennsylvania.

So that is not a market you guys were looking to participate in or you had just -- ?

Well, that wasn't active RFPs. There was a smaller one in Pennsylvania that we had actually won, but then turned down because it required too much early delivery.

Okay, got it. And if you can say, how much of this are for awards that would actually begin in '09 rather than in 2010?

How much? You know, a lot of it begins in some form in '09. And where we are there, we are -- we had it -- oh, maybe six months ago we were at a point, because of deliveries we had with our first two major contracts, and the uncertainties around where we were on our processing facility, we quit taking orders that required a 2009 delivery.

Now that that interim facility is in place, we are well along in the construction, probably need to start posting some pictures on where we are in the construction of our new interim facility in Natchitoches, Louisiana -- that is going to be up and running here in a month or so -- we are much more comfortable about deliveries we are getting. We've seen some relaxation on early deliveries on our other contracts. So we have more product available in 2009, so we are more aggressively bidding on contracts that have significant 2009 requirements.

And has there been better availability of imported product that you can put through the processing facility, or is it more a relaxation of demand from your existing customers?

On our comfort level, it is more -- until we start importing it and we see the deliveries on the water and being received, it's kind of all theoretical. Once the deliveries start coming in and seeing them getting on ships, we've gotten more comfortable, and we are starting to store material and build an inventory. So it is more of our comfort level with the realities of it.

Okay. Thanks.

Michael Cox, Piper Jaffray.

Thanks for taking my question, gentlemen. And I appreciate the color on the expectation on the federal standard. I would be curious when you would expect that could go into effect. We've been hearing maybe 2014, but I'd be curious what your thoughts are there.

Well, the -- again, that would depend on whether it is legislatively or the MACT process. And I think people will try to push away from the MACT process, because one of the nuances of MACT -- the ruling around MACT was not a mercury ruling. It was whether the utilities were subject to the list of 189 hazardous air pollutants.

So right now, EPA is developing a regulation for not only coal-fired boilers, but for oil-fired boilers as well, that includes 189 different materials. So this is a pretty onerous regulation for EPA relative to the power generators. And so if we look at just the MACT process, that could be a year to pass, a year to fully define the rules and then three-year implementation. Whereas a legislative rule addressing only, say, SOx, NOx and mercury that they are looking at, could go in much faster. And in the past, they've talked two- to three-year implementation on that.

Okay, that's helpful. And on the $500 million in contract value, could you remind me the duration of that? Is that over a three-year span, or what type of timeframe is that?

All of those are three- to five-year contracts.

Three- to five-year contracts. So that would be -- so in an annual basis, it would be --.

$100 million to $150 million a year.

Okay, great. Thank you very much.

(Operator Instructions) [Steve Santos], Royal Bank of Canada.

Hello, Mike, Mark. Just a couple of real quick questions. Where are you seeing currently on the going prices on activated carbon? And also, are you seeing any implementation of capacity expansion coming from the likes of Norit and Calgon on the horizon?

There has been no change there. The pricing has risen significantly on the water side, and I think there's a number of analysts probably on this call that cover the water side that are reporting pricing increases on the water side that are staying high. And it is kind of reflecting the similar kind of pricing we are seeing on the power side.

So everything we are bidding is well above the pro forma levels that we had looking at financing the plant on.

As far as expansion, it is the same. Norit has a furnace going up, a single furnace going up for 30 million pounds at the Marshall plant. A JV in Canada talk about another 30 million pounds. And Calgon has talked about bringing online their B-line at Big Sandy for 60 million pounds. So those are the only expansions we've seen.

Okay. And can you say again when you expect to see any kind of revenue increase from the offshore supplies -- coming, I'm assuming, sometime in '09 here, we'll begin to see --.

We are delivering product today, Steve.

Oh, good.

And again, this is a business that as long as we are consolidating, we will show those revenues on a consolidated basis. And I think what we have announced is that coming into the JV, it is going to be about $10 million to $15 million this year in sales.

Okay, good. So it is a good start.

We are in the business.

Very good. Okay, thanks, fellas.

At this time, there are no further questions. I will now turn the conference back to management.

Thank you for joining us today and your continued interest and investment in ADA. We hope to keep you posted on progress through pictures, weekly pictures on our website. So thank you very much.

Ladies and gentlemen, this concludes our conference for today. Thank you all for participating, and have a nice day. All parties may now disconnect.