DMC Global Inc (BOOM) 2010 Q2 法說會逐字稿

Good afternoon.

My name is Taprika, and I will be your conference operator today.

At this time I would like to welcome everyone to the Dynamic Materials Corporation second quarter earnings conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator instructions)

I would now like to turn the call over to Yvon Cariou.

Sir, you may begin.

Taprika, hi.

This is Geoff High.

I will actually be starting out here.

And first of all I like to welcome everybody to our second quarter conference call.

Presenting on behalf of the company will be President and CEO, Yvon Cariou, and Senior Vice President and Chief Financial Officer, Rick Santa.

I would like to remind everyone that matters discussed during this call may include forward-looking statements that are based on management's estimates, projections and assumptions as of today's date and are subject to risks and uncertainties that are disclosed in Dynamic Materials' filings with the Securities and Exchange Commission.

The Company's business is subject to certain risks that could cause actual results to differ materially from those anticipated in its forward-looking statements.

Dynamic Materials assumes no obligation to update forward-looking statements that become untrue because of subsequent events.

A webcast replay of today's call will be available at dynamicmaterials.com after the call.

In addition, a telephone replay will be made available beginning approximately two hours after the conclusion of this call.

Details for listening to today's replay or webcast are available in today's news release.

And with that, I will now turn the call over to Yvon.

Yvon?

Thanks, Geoff.

Our top-line performance during the second quarter surpassed our prior forecasts thanks to better than expected sales results within each of our business segments.

Shipments out of core Explosion-Welding business were slightly ahead of plan and we saw particularly strong results from our Oilfield Products and AMK Welding segments.

Oilfield Products is benefiting from increased activity in the exploration and production industry, as well as our strategic acquisition, Pogon, which has boldly expanded our global sales and distribution network.

Sales from this segment increased 116% compared with the second quarter last year.

Excluding our recent acquisitions in the US, Canada and Russia, this division still achieved top-line growth of 13% versus last year's second quarter.

We are currently projecting that full year sales for this segment will likely exceed $40 million.

This would compare with $21.8 million in 2009.

Second quarter sales at our AMK Welding business equaled the segment's all-time quarterly high.

We currently believe that AMK sales during the second of the year will be equivalent to those in the first half.

We saw a dip in our Explosion-Welding on the backlog which came in about $40 million at the end of the quarter, down from $51 million at the end of the first quarter.

This decline was a result of sizable shipments associated with the Gorgon auditor and continued sluggishness in bookings.

In spite of this pullback in backlog, we remain confident that all the volume will ultimately pick up, particularly in light of quoting levels we are seeing.

Our sales team in the United States reported that RFQs during June reached a four-year high.

European quoting activity has also been strong.

Upstream oil and gas remained an active explosion-welding end market and we continue to see growing interest from the chemical and petrochemical sector, a traditionally large market for us, but one that has been relatively quiet for many quarters.

Sales to the power generation and eliminating pollution markets have remained relatively strong and our initial from the transportation sector was actually larger than anticipated.

Because of uncertainty caused by the globalization, customers in many end markets have been preserving cash and investing very little on capital projects.

We think this situation has constrained a lot of basic maintenance work, not to mention new infrastructure projects.

We also believe this situation is leading to substantial buildup of unaddressed work and this may be part of the reason we are seeing the increase in quoting activity.

Of course, we have no way to predict when these prospective orders will start to flow but, as I have said, we are confident it will ultimately happen.

As the worldwide leader of an explosion-welding plate production, we are also confident DMC will benefit when infrastructure expanding improves.

I will now turn the call over to Rick for discussion of our financial performance.

Rick?

Thanks, Yvon.

Hello everyone.

Our second quarter sales of $38.3 million were up moderately from the $37.8 million we reported in last year's second quarter and our gross margin was flat at 234%.

Operating income was $2.1 million versus $3 million in the second quarter last year.

The decline was due primarily to increased selling, general and administrative expenses associated with our acquisitions of LRI, Austin Explosives and the Russian joint ventures.

Combined, these acquisitions added incremental SG&A of $1.1 million during the quarter versus the same period last year.

Without these incremental expense increases, SG&A would have been largely flat versus the year ago quarter.

Additional information regarding our expenses is available in our Form 10-Q which we are filing this afternoon with the SEC.

Our net income came in at $3 million or $0.23 per diluted share, compared with $1.5 million or $0.12 per diluted share in the second quarter last year.

Our net income was positively affected by our stronger than expected sales, but more so by a $2.1 million onetime gain related to the Russian joint venture acquisitions we announced during the quarter.

Net income also benefited from the tax treatment of the gain.

Second quarter adjusted EBITDA was $5.5 million versus $6.4 million in the second quarter a year ago.

As always, please see the section in our news release regarding our use of adjusted EBITDA, which is a non-GAAP measure.

At the mid-year mark we had generated operating cash flow of $9.7 million versus $12.4 million through the first six months of 2009.

We ended the quarter with a cash position of $9.8 million and of working capital of approximately $35 million.

Turning to guidance, we are now anticipating that our 2010 sales will be down roughly 5% versus fiscal 2009.

You will recall that previously we projected sales would be flat to down 5%.

We are not changing our prior full year gross margin forecast of between 22% and 24%.

For the third quarter we are expecting sales to increase 5% to 10% from the second quarter.

I noted earlier that our tax treatment of the gain on Russian joint venture acquisition benefited our second quarter earnings.

The impact of that acquisition actually reduced our effective tax rate for the first six months of the year to 11.8%.

Excluding the impact of that gain, our effective tax rate on the remaining ordinary pretax income for the first six months of the year was 34%.

Beginning in the third quarter we expect to return to a normalized effective tax rate of 33% to 35% and we anticipate a blended effective tax rate for the entire year in a range of 25% to 28%.

A more detailed explanation of the onetime gain and the associated tax consequences is available in today's 10-Q filing and I also can address any questions during the q-and-a, speaking of which, we are now ready to take questions.

Taprika?

(Operator Instructions).

Your first question comes from the line of Mark Parr with KeyBanc Capital Markets.

Hey, gentlemen, good afternoon.

Good afternoon, Mark.

Mark, how are you doing?

Hey, Yvon.

Hey, Rick, how are you?

Great.

Great.

Well, that's good.

It is -- boy, it has been a busy week.

So anyway, Rick, I am -- I would be really delighted -- again, we can -- we will check it out in the 10-Q, but to the extent you could give some more color on how this tax treatment worked around the acquisition, that would really be helpful.

Okay, yes.

First off thing, the reason for the gain is that we had to value the interest that we held immediately prior to acquiring the minority shares.

We had to value our shares the same way that the minority shares that we were acquiring were being valued.

Okay.

And that generated the $2.1 million gain.

And a portion of one of the Russian joint ventures, the interest was held by a second Russian joint venture, but most of the ownership was in a German entity and under the German tax law there is no tax on the gain.

It is a permanent difference, which is somewhat unusual.

And we did a lot of research with Ernst & Young as they were in to perform their quarterly review.

So the tax effect on that total $2 million, $117,000 gain was a $59,000 tax provision that was required for the Russian portion of the gain.

The rest is not taxed.

So I have to say that is a pretty low effective tax rate against a $2 million plus gain.

Oh, yes.

Okay.

And then that goes away in the future obviously, but we expect as a result of the low year-to-date effective tax rate to have a rate of 25% to 29%, or 28% for the full year and an effective rate for Q3 and Q4 of 33% to 35%.

And then we expect that 33% to 35% to be a normalized rate in 2011.

Okay, all right.

So the -- another -- I appreciate that color.

Thanks.

Another question I had, Yvon, if you could just give us some color and an update on the competitive environment, particularly related to roll farmers and how they may be more aggressive given the fact that plate mills are not being fully utilized right now in Europe and in North America.

Yes, the market mix that we are quoting and we are the most active in remains upstream oil and gas.

And that is where our friends from the Arbonne industry have also the most opportunity, so we are still meeting them.

We are still competing and as a result there is still pressure on the price and the margins.

We have seen over the past few months a few signs that delivery time may be where has started to increase on their part, giving maybe an education that they are filling up somewhat.

But they still have a ways to go, so we are in a game of trying to pick and choose.

In general, the thicker the conditions the more nickel in the corrosion-resistant alloy is used, the more chances we have to be in competition.

And we are certainly extremely active across the spectrum from Far East to Middle East and everywhere else competing against those guys.

But definitely they are around and we can feel it.

All right, so this potentially has implications then for profitability in fiscal '11 as well, doesn't it?

I would think by 2011 we will still be in that kind of game.

I don't see why it would be drastically different, by then what will happen, hopefully that our traditional segments will have come back somewhat.

We have seen signs of that in the chemical and petrochemical segments and of course we have oil segments where we don't compete with the Arbonne people that much, not at all in aluminum or even in power generation.

Okay, all right.

Is there anything new on the permitting side or in terms of potential for consolidation in some of the explosion fields that you have in Europe that could result in meaningful cost reductions or headcount reductions, given the slower level of demand?

Mark, you are very pertinent.

Actually, we have embarked into a rationalization of our oil positions in Europe and we will very likely curtail operations in Sweden.

We will keep, however, our shooting site and shooting license and land lease, but we will have a redistribution of some of the equipment, particularly to our German divisions.

So that is in process as we speak and there will be some headcount reduction, yes.

Do you have any estimate of the potential severance costs that you might have to incur to make this happen?

It will actually be extremely minimal because there is a six month notice requirement to the Swedish workforce and we are going to keep those people busy during the six month period, finishing the shooting on their existing inventory, mostly shipboard product.

And then they will help dismantle equipment and get it ready to ship to our German or French facilities and then clean up the site, so no provision is required for the plant shut, or the temporary closure of that facility.

I would like to add, Mark, that while this takes place today in 2010 it is not just the result of having some slowdown in activity.

It is a longer term plan of normal industry rationalization when you have multi sites in a region like that.

Okay.

Yes, it seemed like something like that was possible given what you have accomplished with the acquisition activity, so it is good to see that your --

Yes, we were as you know very sensitive to redundancy of shipping sites and we still are.

Okay.

But now that we have three sites in Europe we can use two and we keep a third one reserve if we need it one day.

Okay.

Any -- can you give us a sense of the cost savings on a go forward basis from this consolidation?

It should amount to somewhat more than EUR1 million per year.

And again, we won't see that until 2011.

Yes, okay, all right.

Any other sorts of similar activity that might be going that would help enhance the '11 profitability metrics?

We have done quite a bit of that already through the second part of '09.

We have some more that we will be doing, but we also, Mark, are very sensitive to preserving the human platform, human assets that we have.

We have a great team in place.

We are going to rebound one of these soon quarters and we are going to need those good people that we have, so we are cautious at this stage of the game in going too far down, too deep.

Okay, well, Yvon, I really appreciate that.

Rick, thank you very much and I will pass.

I may have a few other questions, but I will let somebody else get in here because I am monopolizing things.

Thanks.

Thank you.

Thank you.

Your next question comes from the line of Avinash Kant with D.

A.

Davidson.

Hi, Yvon and Rick.

Hi, Avinash.

Hi, Avinash, how are you?

Very good, very good, a few quick questions, first a few housekeeping things.

I was just looking at my model and when I put the net income I am getting like close to $0.24.

Is that -- or is it $0.23.

I am getting $0.237 and rounding off to $0.24.

Yes.

If you look at our 10-Q we have some restricted stock awards that received dividends so we have to two separate earnings per share calculations.

Yes.

And because of that it ends up being $0.23 at the end of the day because one cent gets allocated to those restricted shares.

For restricted shares.

Could you give us the exact amount that is going for those?

Hang on just a second.

Because then it will make the numbers work right.

If I can find the right page here.

There is too many notes these days, even in the 10-Q.

I can ask something in the meantime and --

Okay, go ahead.

Yes, now I have got it here, so it is $0.23 and let's see, 61.

Actually we don't do the calculation for the other one, but I think it comes out to one cent.

Okay.

That's the dip on the right, because it is $61,000 of net income gets allocated to the restricted stock awards for the quarter, or actually for the six months, for those three months of this year, $31,000 for the three months of last year and then it was $54,000 for the quarter so, yes, it is less than a penny, but it rounds out to a penny so it is $0.23 and one.

So you said $61,000 for this quarter or for the --?

$61,000 of net income for the quarter was allocated to the restricted stock.

Quarter, okay, for the quarter, okay.

$2.975 million for the --

Okay.

-- rest of the shareholders.

I thought there was something like that.

I just wanted to get the number.

Good.

With that, the second question I had was you are talking about '10 guidance now, talking the news being down 5% year-over-year.

Could you give us some idea what is your expectation of the clad business avenues in that guidance because if I look at clearly it is becoming a smaller percentage of overall as your other businesses have been growing.

What do you expect explosion clad to contribute to revenues in '10, roughly?

Okay.

Backing into it, if you take the 5% down and we said $40 million for the oil field products, $10 million for AMK, that leaves about $105 million for the cladding.

Okay.

So you said $40 million for the oil and $10 million you said?

$40 million for the oil field for the full year, $10 million for AMK and the rest is cladding.

Okay.

And clearly bookings in the cladding side have been an issue.

I think your bookings have been down quite a bit.

Now you have some color there when you say July, or June was a very high quotation month.

But what confidence do you -- or now what would say about bookings going forward?

Based on the quotation activity that you have seen do you expect a clear pick up in bookings in the explosion clad in the current quarter?

Yes, it is a tough call to make, Avinash.

As you know we have been quoting at a decent level well past quarters, of three quarters, four quarters.

And the conversion has not happened that much.

All we can say is that June was a particularly good month of quoting.

Also what we have seen is orders coming through to us without having been on the radar screen at all.

So they look there is a short time span between some new projects coming through and us having a chance to capture them.

We can also say that July has been a good month so far.

It doesn't necessarily fall from, follow from the June quoting.

Typically from the months of quoting, results would be several months later.

So what we are seeing in July is the result of quotes we made in '03 for six months before.

So, again, the certainty of seeing an uptick, we are looking for signs obviously.

Some of the signs I was indicating to Mark before is that in the chemical petrochemical industry, although there have plenty of capacity, left in those industries we see uptick.

The fact that people have not invested in maintenance puts some pressure on them and maybe we are starting to see some movement there.

Power generation has been good.

Aluminum has been good and oil and gas is very active and, again, in a world where price war is pretty much alive.

So all of that gives us the confidence that Rick expressed in his guidance there for the end of the year which means we are counting on some decent booking activity between now and before the end of the year because some of that will convert into sales in 2010, but can't certainly cannot give you guarantees here of bookings.

So when you talk about counting on decent bookings do you have specific projects in mind which are about coming online or --?

Yes.

We, as always, we have our hot list and we are certainly scrubbing that list with more and more attention.

We probably are getting better at it and so we have the quality of that list in all the events of good quality, of good content.

And we are counting on that to help us through and we are seeing some of it July.

Okay, and one final question.

Margins, on the new businesses that you have acquired, how do you think they are tracking compared to the corporate average?

Rick will color of that a little more, but we have two floors of orders.

One is in that upstream oil and gas, we have Arbonne competition and prices tend to be depressed margin our oil.

And then we have our traditional core business.

It is not as big as we would like, but we are able to sustain a very decent margin in that and the margin that we are going to produce is the result of those two currents.

Rick?

Yes.

On the margin side were you asking about the new acquisitions, Avinash?

Yes.

And it is a little bit hard to isolate those acquisitions because the majority of the sales that are made by LRI, by the Russian joint ventures and by Austin Explosives relate to product that is produced by DYNAenergetics, so there is intercompany sales.

Yes.

So we are capturing the incremental margin.

So a better way to look at things is now that we have acquired those companies we expect the oil field products margin to hopefully to be close to what was achieved, what we reported for the second quarter, 34.7%.

Right.

We said 32% to 35% in our guidance because there is product mix issues with the oil field products as well.

And AMK reported very strong 37.4% margin in the quarter, 31.3% year-to-date.

So we expect both of those businesses to have margins going forward in the low to mid-30s.

And that is where the clad business played a couple years ago, but because of the environment today our clad operations generated a margin percent of 19.7% in the second quarter and year-to-date 20.7%.

And when we, at the end of the first quarter, we had hoped that things would start to turn and that we would start to book a better blend of business, that has not occurred.

So instead of the 22% to 24% margin expectation for that segment for the full year we now think it will be in the 19% to 21% range.

But the overall margin for the Company will be maintained at the -- our guidance is being maintained at 22% to 24% because of the way that AMK and, more importantly, oil field products are blending in.

And that in Q3 and Q4 you said something like 33%?

The tax rate?

Yes.

Yes.

We expect the tax rate to be back to a normalized level of 33% to 35% in Q3 and Q4, which is also our expectation for 2011.

Okay, so excluding the charges this year, this quarter, operating EPS would have been somewhere close to $0.07?

You are pretty good at your math.

Okay, perfect.

Thank you so much.

You're welcome.

Thanks, Avinash.

Your next question comes from the line of Dan Whalen with Capstone Investments.

Great, thank you.

Just wanted to actually follow up on the quoting question discussed earlier, so quoting levels are at four-year highs and backlog is a little lower.

Are you trying to implement price increases throughout this process and maybe that is a little pushback, or is it just timing of projects?

It is -- the quoting four-year high happened in June.

This is not a linear phenomenon.

It doesn't go up and up and up month after month.

It goes up and down, so but we view that softening as a good sign.

We always try to get the optimum price in everything we do.

It is the culture of the Company.

When we play in the segment for upstream oil and gas we face the competition and we do what we have to do to get business.

And when we play in other arenas we try to optimize always margin and prices.

But we do not have a -- there is no need for a price increase philosophy.

We always try to capture the best price we can.

And then, I am sure it bounces around a bit, but is there a general rule of thumb in terms of conversion rates to quotes, conversions to orders from quotes?

Is it to get sort of a general rule of thumb you can kind of ballpark it?

No.

The way it works we quote the process out with budget quotes and we go from a number of iterations, and at that state of the process the conversion rate is low.

Then when it gets really close we have a very high conversion rate.

So when you look at the so-called hot list, or list of projects, typically projects which are far down in time, six months, nine months, they have a lower renewal conversion rate probability, while the ones that are very close we know better where we are, what is going on.

And some of them are rated at like 90% or more.

So, but we don't have a general rule of thumb, no.

It is project specific I would say.

Gotcha.

Can you add any color in terms of how your hot list has changed in the past?

Pick a time period, in the past month or last quarter.

It has remained reasonably steady.

It is hard to speak in terms of volume with all our hot list.

We track those numbers obviously.

What is maybe more important is the quality of the projects that compose the hot list and the mix, the market mix of the hot list.

So it has been reasonably steady, I would say, with the big oil and gas upstream components, significant power generation, and aluminum business, and shipboards and the beginning or rebound in chemical and petrochemical.

And it is still weak in our metallurgy and it seems like metallurgy and maybe even alternative energy where it is very spiky.

So you could have a quarter or two with nothing and then you get that big project coming through.

So I would describe the variation over the last quarter as steady.

There is very no, very little variation in the quality of the list.

Okay.

And then, just lastly in terms of the oil field products business, in terms of your success in gaining new market share, can you just review with us your tactics in terms of how you are doing that, just --?

Yes.

It is -- the nature of that business is to have the right product at the right place at the right time.

So it has a lot to do with distribution and of course a lot to do with production being able to feed the distribution center.

It is one of the assets, core competency of the DYNAenergetics, the world logistics to get the right product around the world on time.

And that certainly is one factor in their success.

They have been successful also bidding on some government tenders in the general Middle East region and although we do not have the official paperwork we know we have won a couple of those and they are significant.

Two of those add up to about $7 million in a recent case.

The general structure of DYNAenergetics sales team -- nowadays I suppose any sales team in the world is aggressive, but they are really aggressive.

They know their business.

They have great quality products and we are all over the world promoting those products.

Okay.

Thanks for the added color.

You're welcome.

(Operator Instructions).

Your next question comes from the line of Phil Gibbs with KeyBanc Capital Markets.

Hey, gentlemen.

Hi, Phil.

Hello, Phil.

I had a question on the AMK, well, and I actually found the pick up in that business pretty interesting.

Was that some business from looks like some business that may have run into the second quarter that may have been completed in the first, because it looks like the first quarter was light and the second quarter was bit stronger.

How should we be looking at that?

Yes.

There was a little bit of that.

There was also a little bit that was kind of carried over from 2009 as GE was postponing some of the work on certain ground turbine programs.

But now they are going full and we expect that to continue in the second half of the year.

So we don't expect the next two quarters to be quite as strong as Q2, but we expect the second half to be as strong as the first half of the year at AMK.

Okay, that makes sense.

And are you guys more exposed to the maintenance side of things versus the OE side?

No.

We are more in the OE side in AMK business, whether it is gas turbine or aircraft engines.

Okay, okay.

Rick, I just have a couple housekeeping questions for you.

What is your full year outlook for D&A?

It should be the amortization piece.

We have got some comments in the 10-K in terms of what we expect it to be for -- maybe it is easier just to go there, or the 10-Q, excuse me, and give you that information.

And speaking of which, while he is doing that, the 10-Q is now available at the SEC site.

The increased order inquiries in the last month or two, has that been you believe broad-based, or is there a particular segment of the segment of your book that you are maybe seeing that from?

Is that a lot neglected maintenance driven?

It has been, I would say, it has been broad-based, both in the US and in Europe.

Now, is that pent up maintenance activity?

Is that what comes back first, rather than the new builds?

Would the maintenance activity come back first?

The maintenance activity will come back first.

We see a few signs of that because people have not spent any money.

Even the refinery, refiners, they do not spend much on new CapEx and at some point they do have to something on maintenance, so that is a good statement.

That comes first, yes.

Now where would you put your international business right now relative to your US business as far as your fabricator customer base right now?

Where are you guys US versus international?

And where would you be seeing differences at level of strength?

Well, growing economies are more active and certainly we quote a lot to the Far East region and Middle East, following what is going on in the general economy.

Just lastly here, what -- how much of NAFTA is your business right now would you guess, relative to other economies?

I would not give a number on sales to the NAFTA region.

It has not been particularly high, but it is active and it is a particularly active in 2010 in terms of quoting.

But the end use of that region, they go around the world to procure their equipment so we may very well be quoting in Korea and for quarters that will end up there.

It doesn't necessarily go to a US fabricator.

Okay.

But your sense is your orders at present a lot of that would be international versus domestic.

Yes.

That is correct, yes.

Okay, perfect guys.

Thank you.

Oh, yes, getting back to your question on the depreciation amortization.

We probably expect it to be around $10.3 million for the full year.

And that varies obviously with exchange rates in the second half of the year, so not too much of an increase from last year.

So that is base D&A plus your amortization from your best acquisitions?

Yes.

The amortization expense, I will give you some breakdowns there.

For the DYNAenergetics acquisition it is about EUR3.6 million per year.

For the LRI acquisition it is about CAD80 per year.

And then for seven months of Austin Explosives it is -- there is 249 for the year for Austin Explosives.

That is seven months.

That is about 35 a month, so run rate of about 425 for a full year.

And then the Russian it is 185 for eight months which would get to up to about a 275,000.

It is EUR185 for eight months which would get down to about EUR275 for the full year.

Okay.

This might help you if you model 2011.

Okay.

Thanks guys, appreciate it.

Your next question comes from the line of Mike Shonstrom with DVC Capital.

Yes, hi, just a quick question on the generation business.

It is an industry that is really struggling right now in terms of new construction and what not and yet it is a strong part of your business and just curious to whether that is skewed by the GE relationship, and is that primarily coming from there or is there other areas of --?

Mike, you are talking mainly about AMK here, right?

Well, yes.

In your comments you are talking about the strength of your end user markets and power generation --

Well, Mike, we have two things there.

We have in the clad explosion with being our core business, we supply material which is going to be used to build tube sheets for condenser units for the power generation industry.

And, yes, that has been a segment that has resisted reasonably well to the downturn.

And we are pretty active.

It is very global and there again the growing economies pull their share.

We may be quoting in Europe, in the US or elsewhere in the world to fabricators who will deliver condenser units in China or in the Middle East, somewhere or in India.

In terms of the power generation business, we participate into at AMK welding, there is definitely a significant component of GE Power related business there.

And we have been successful with them.

They appreciate our service and despite the overall state of the industry we have been able to receive enough volume of business to grow in 2010 compared to '09.

They have -- my understanding was your relationship with GE had to do with the age system --

Not only.

Not only?

That has evolved.

Not only.

We do other things and we have other also accounts at GE today.

But GE is still or GE related accounts remain significant for to AMK welding, but it is not just age anymore.

Great.

That's it, thank you.

You're welcome.

At this time there are no further questions.

I would like to turn the call back over to Mr.

Cariou for final remarks.

Thank you, Taprika.

Thank you all for joining us for today's call.

I want to assure you that the entire DMC team has been working very hard over the summer to ensure we capitalize on every available opportunity.

I can also tell you that we are as optimistic as ever about our prospects for continued success.

So we look forward to speaking with you again after the third quarter.

I wish you all a good end of the summer and talk to you soon.

Take care.

This concludes today's teleconference.

You may now disconnect.