Clean Energy Fuels Corp (CLNE) 2017 Q2 法說會逐字稿

Greetings, and welcome to Clean Energy Fuels' Second Quarter 2017 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Tony Kritzer, Director of Investor Relations for Clean Energy Fuels. Thank you, Mr. Kritzer. You may begin.

Thank you, operator. Earlier this afternoon, Clean Energy released financial results for the second quarter ending June 30, 2017. If you did not receive the release, it is available on the Investor Relations section of the company's website at www.cleanenergyfuels.com, where the call is also being webcast. There will be a replay available on the website for 30 days.

Before we begin, we'd like to remind you that some of the information contained in the news release and on this conference call contains forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict. Words of expression reflecting optimism, satisfaction with current prospects as well as words such as believe, intend, expect, plan, should, anticipate and similar variations identify forward-looking statements, but their absence does not mean that the statement is not forward-looking.

Such forward-looking statements are not a guarantee of performance, and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in the risk factors section of Clean Energy's Form 10-Q filed August 3, 2017.

These forward-looking statements speak only as of the date of this release. The company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this release. The company's non-GAAP EPS and adjusted EBITDA will be reviewed on the call and it excludes certain expenses that the company's management does not believe are indicative of the company's core business operating results.

Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for or superior to GAAP results. The directly comparable GAAP information, reasons why management uses non-GAAP information, a definition of non-GAAP EPS and adjusted EBITDA and a reconciliation between these non-GAAP and GAAP figures is provided in the company's press release, which has been furnished to the SEC on Form 8-K today.

Participating on today's call from the company is President and Chief Executive Officer, Andrew Littlefair; and Chief Financial Officer, Bob Vreeland. And with that, I will turn the call over to Andrew.

Thank you, Tony. Good afternoon, everyone, and thank you for joining us. I'm pleased to review our second quarter 2017 results. We delivered 88.4 million gallons to our customers in the second quarter, a 7% increase over the 83 million gallons we delivered in the second quarter of 2016.

Revenue in the second quarter was $81 million and we generated $3 million of adjusted EBITDA, our eighth consecutive positive quarter. This quarter did not include any VETC contribution, and our environmental credit contribution was lower as the result of the BP transaction that was finalized in early April and brought our cash and investments to $201 million at the end of June.

The BP deal was a valuable and strategic sale of our upstream renewable biogas assets, which solidified our long-term supply with an ideal partner. It allows us to focus our efforts on selling our renewable biogas through our national station network to our customers who are looking to benefit from operating their fleets on the cleanest renewable fuel available.

We understand that the future of transportation, and heavy duty transportation in particular, is moving towards renewable energy solutions. Since we introduced Redeem 3 years ago, it has grown in every year as a percentage of our overall volume, including last year when it accounted for nearly 20%. Renewable fuel will continue to be an increasingly larger portion of the gallons that we deliver to our customers, especially in California, where 135 of our stations deliver Redeem.

We see ourselves as innovators in cleaner transportation solutions and are responsible for moving more freight and more people in vehicles powered by the clean renewable fuel that we deliver. The 60 million gallons of Redeem we delivered last year is the equivalent of removing close to 3,000 polluting diesel buses or close to 80,000 cars from the road.

I'm proud to highlight that in the second quarter, we announced the signing of the 2 largest renewable deals in the company's history. At the end of April, we signed an agreement with our longtime customer, Republic Services, who will expand their use of Redeem to fuel over 2,700 garbage trucks located across 28 of their facilities in 18 states. This increases Clean Energy's Redeem network to a total of 20 states. By switching an anticipated 23 million gallons of fuel a year to Redeem, Republic is expected to reduce their greenhouse gas emissions by over 141,000 metric tons a year.

Additionally, at the end of May, we announced that we were awarded a multiyear contract to deliver Redeem to LA County Metro transit authority, which operates the largest CNG bus fleet in the country. Once fully implemented, this will be the largest renewable natural gas supply deal we have ever done, with anticipated delivery of close to 40 million gallons each year.

Over the life of the contract, the gallons of Redeem delivered to LA Metro will have the same greenhouse gas reduction impact of removing close to 7,500 dirty diesel buses from the road. There's been a lot of attention focused on LA Metro purchasing 95 electric buses, but somewhat lost in all the hype is that LA Metro also recently committed to investing over $100 million for the procurement of 360 new CNG buses powered by Zero NOx Engines from Cummins Westport.

In addition to these fleets, other Los Angeles Area transit customers like Big Blue Bus in Santa Monica, Foothill Transit and Culver City have switched to our Redeem renewable fuel.

Another example of the growth of investments being made into renewable natural gas production and distribution is CR&R, a private regional refuse customer and fueling partner of ours. They recently completed construction of an impressive organic waste processing facility, which will produce renewable natural gas that is captured and processed from the organic waste they collect on their service routes.

In addition to the Redeem renewable natural gas that we deliver to their trucks, they will soon be powering the rest of their fleet of waste collection vehicles with their own organic renewable natural gas, completing their sustainability loop. CR&R's $52 million investment in their own renewable gas production facility is another strong confirmation about the unmatched economic and environmental benefits of RNG as a transportation fuel.

The latest signal of California's continued investment in a low-carbon future is that California state legislature recently extended the state's Cap-and-Trade Program through 2030. Together with the recent law codifying the Low Carbon Fuel Standard, this makes California's drive to a low-carbon economy the most comprehensive and far-reaching in the country and possibly the world.

Cap-and-Trade Program will no doubt drive investments by the private and public sectors to promote low-carbon transportation. It also strengthens and gives positive market signals for the increased development of low carbon fuel production. Finally, the funds generated through this program are partially earmarked for low carbon transportation projects in California, including Zero NOx natural gas vehicles and infrastructure.

Moving on to the Clean Air Action Plan that is being drafted by the Ports of LA and Long Beach, we believe ultimately that any final plan must immediately address the horrendous air quality by requiring the thousands of trucks that operate on dirty diesel at the ports to be replaced with new Zero NOx engines fueled by renewable natural gas.

Let's remember that Los Angeles still has the worst air pollution in the country, and the area around the ports has the worst air pollution in Los Angeles. Adopting new Low NOx natural gas trucks will have an immediate impact on the air quality while keeping the ports economically competitive. There is no other immediate solution currently available or even proposed that can make that claim.

In our trucking sector, we have been actively working with the United States Postal Service and their contracted carriers to help them achieve their greenhouse gas reduction goals. In the second quarter, we signed up 3 different USPS carriers operating in Texas, Oklahoma and Florida, totaling 47 new CNG trucks that are expected to consume 545,000 gallons per year. The addition of these 3 fleets brings the total number of USPS carriers fueled by Clean Energy to 13.

Last week, we extended our service agreement with Dallas Area Rapid Transit for another 4 years. Since 2011, DART has been a valuable partner and a clear leader among U.S. large transit operators with their unwavering commitment to sustainability. Their fleet of 660 buses and a pair of transit vehicles runs entirely on CNG, consuming close to 10 million gallons annually.

In our compression business last week, we announced the signing of an agreement with Seranco, a large Spanish construction company, to supply 60 new clean CNG compressors. These compressors will be put into service at 3 large municipal transit fueling facilities across Madrid that Seranco is expanding for EMT, the Madrid Municipal Transit Agency. EMT currently has 600 CNG buses and by 2019, has a goal of running their entire fleet of close to 2,000 buses on natural gas. Madrid has joined other global cities like Paris, London and Mexico City in committing to plans to clean up their air quality by aggressively phasing out diesel in their cities within the next 5 to 10 years.

For 2017, we remain on track with our CapEx budget of $22 million for our core business. Through the second quarter, we have completed 19 station projects and are on schedule to complete 43 projects for the year. We continue to be disciplined with our SG&A, which is down 8% over the same period last year. We also terminated our ATM program because we feel that our balance sheet is on very strong footing.

All in all, we continue to add to our recurring volume and revenue base. Our customers continue to make long-term investments in natural gas fueling stations, and our compression business has seen some good opportunities with the European market. We also recognize that we continue to be in an environment where the price of oil, the commodity that we compete against, will probably remain at current level for the foreseeable future, which we believe has caused the pace of heavy-duty natural gas truck adoption to fall short of our expectations. Consequently, our volume is growing but less than we would like.

With much of our balance sheet improvement efforts complete, we're looking at all aspects of our business with an aim to improve our operating results. Essentially, we plan to thrive in the alternative vehicle fuel environment. We've accumulated the critical mass of product offerings and customer base that affords us the opportunity to optimize and eliminate underperforming sites or operations without disrupting our core business model.

We have an immediate low-cost 0 emission solution, which we believe is the most attractive option for heavy-duty truck, transit and refuse markets as they are pressured to move away from dirty diesel. It is also a profitable solution that can benefit our shareholders and the environment. We look forward to driving this effort of improving our operating results for the balance of 2017 and beyond.

And now I'll turn the call over to Bob.

Thank you, Andrew, and good afternoon to everyone. Overall, our second quarter financial results were in line with our expectations. Keeping in mind, this was our first quarter subsequent to the sale of our upstream biomethane assets to BP for $155 million.

As I pointed out in our last earnings call, as a result of the BP transaction, we expected an $8 million to $10 million reduction in quarterly revenue, with an expected margin per gasoline gallon equivalent of $0.25 to $0.29, along with additional reductions in SG&A of approximately $500,000 per quarter compared to our first quarter SG&A. We were within those parameters for the second quarter and should trend within those same parameters looking to the next 2 quarters of 2017, not considering any unusual or unforeseen events.

Our volume growth in the second quarter of 7% compared to a year ago resulted from growth in CNG, offset partially by lower bulk LNG gallons, while nonvehicle RNG gallons were flat. For CNG, we saw 11% volume growth led by our refuse and transit sectors.

Redeemed volume for the second quarter was 19.7 million gallons. Our revenue for the second quarter of 2017 was $81 million versus $108 million in 2016. In 2017, our revenue was lower, partially due to lower environmental credit revenue in the amount of $9 million as a result of the BP transaction. Also, 2017 doesn't include VETC revenue and 2016 had $6.5 million of VETC revenue. Our construction revenues were down $9 million from a year ago due to fewer large full station projects in 2017.

Our compression revenues were down from a year ago but relatively flat to the first quarter of 2017. As Andrew pointed out, there have been some positive signs emerging in Europe, including the recent compressor order out of Spain, although compressor revenues overall are expected to remain relatively flat to the second quarter.

When comparing our gross profit margin for the second quarter of 2017 to 2016, keep in mind 2017 did not include VETC and had lower environmental credit revenues, which resulted in a lower gross profit margin in 2017.

Our margin per gasoline gallon equivalent was $0.25 for the second quarter of 2017, which was at the low end of our expected range, partly due to lower LCFS pricing. LCFS pricing was moved up more recently, which would be an upside to our margin in the third quarter.

In the second quarter of 2016, our margin per gasoline gallon equivalent was $0.36, which benefited from higher environmental credits. Gross margin was also lower than when compared to a year ago due to the lower construction revenue.

Our SG&A of $23.3 million for the second quarter of 2017 was $2 million or 8% lower than a year ago and also represents further savings from more recent quarters, including the additional savings realized from the BP transaction.

Our GAAP net loss for the second quarter of 2017 was $17.8 million compared to GAAP net income of $1.5 million in 2016, keeping in mind 2016 had $6.5 million of VETC, $10.1 million of debt repurchase gains and approximately $9 million in higher environmental credit revenues, as I mentioned previously.

Our adjusted EBITDA for the second quarter of 2017 was $3.2 million compared to $26.7 million in 2016, again noting that 2016 benefited from the VETC revenue, the debt repurchase gains and higher environmental credit revenues.

As Andrew mentioned, we ended the second quarter with $201 million in cash and investments. Our debt balance was $256 million at the end of the second quarter with $4 million due in the next 12 months.

And with that, operator, we'll open the call to questions.

(Operator Instructions) The first question comes from Eric Stine with Craig-Hallum.

I was wondering if we could just start with Redeem and BP. I mean, I know it's been a few months, but maybe how your view of their commitment has evolved here over time. And I'm also curious with Cap-and-Trade and then LCFS extended to 2030, I mean, how do you think that impacts their investment? I mean, have they discussed some sort of acceleration as a result?

Eric, thanks. I mean, I think that the cooperation in the early going here with BP has been excellent. This new deal that we have with LAMTA really extended and increased, without giving too much detail, the deal that we did because it required even more volume. And we've done that through BP. We're working closely with BP as they've worked on some new supply arrangements that we've been very involved with. And so, so far, it's been a very nice partnership. Remember, what made so much sense to us is that having them invest and be responsible for the upstream and invest that capital really pairs nicely with us on the downstream. I mean, with all the supply they have and with the supply that we lined up that now we avail ourself to, remember, without the downstream, without our stations really, it doesn't work. That's how you monetize it. So we -- so far, it's been an excellent partnership. As it relates to -- I think, if I got all your question, on Cap-and-Trade. There's a recent study out, and we can get it for you, Eric, by someone that follows a lot of this on the biomethane business and renewables in the state of California. Over time, it looks like there's potential for there to be 2 billion gallons of biomethane annually produced from different sources, and this will be all kinds of sources in the state of California. And having the Cap-and-Trade Program and frankly the Low Carbon Fuel Standard, which is sort of part and parcel with -- although it is in separate pieces of legislation. Having those 2 pieces be extended by the legislature until 2030, I think, really gives certainty that this is going to be the de-carbonizing of -- California's going to continue. You'll remember, you don't have to go back but a year ago when the prices were a little wobbly of the Low Carbon Fuel Standard because people weren't sure if it was going to be re-upped or not. So this gives stability for those looking to make investments on the transportation side and certainly on the production side. So I think it bodes well. In fact, if you look -- I don't want to say this is -- this could be a fluke, but since that's happened, the prices of Low Carbon Fuel Standard have actually firmed here in the last week or so, last 4, 5 days as some of the most recent trends have been up. So I think it's probably a good thing for the stability of the business going forward.

Yes, good. And then just thinking about customers. I mean, I guess I ask this, I don't know if you're able to share. But for context for how it's grown but also something that we can just track going forward, but number of customers on Redeem today versus maybe what it was a year ago?

It's one that -- we have a list, Eric, and in fact, I've tried to mention -- I don't know if I mentioned it in my formal remarks, maybe I meant to or I have it ready now. I ask the same thing is to break out our fleet customers. Now remember, today -- and people are surprised by this. I was in a meeting just the other day with the mayor of a major city here in the Southern California area, and he was unaware that all of our customers in Southern -- in California receive Redeem. So it's at 135 of our stations, and so this would pick up many fleets. But separate fleet contracts in California today is about 25 and they're very large, right? So they're from some of our largest refuse customers to some of the largest municipals to UPS and FedEx and others. So if you go back about a year, I can remember one of the goals for our renewable division 2 years ago was to have 2 major customers under contract. And now we have 25 and I imagine if you add in all of our public vehicles that fuel taxicab fleets and others that are getting our renewable fuel, it would be 4, 5x more than that, probably closer to 100 fleets. So it's getting to be something that's more normal for us and it's certainly sought out by our customers. That's why we mentioned it quite a bit today because as we look out in the future, we see the handwriting in the wall. We see what's going on in terms of electric and sustainability efforts. And the great news for natural gas is we have a product that's here today that can do the nation's work, but can do it a renewable way, really cleaner than really anything else.

Right, got it. And maybe last one for me and I've obviously been following the Clean Air Action Plan at the ports pretty closely. And what came out recently, there's been a lot of talk about SB1 in the ports saying that it limits, to some extent, what they can to through 2023 and CARB saying no, it does not. I'm just curious how you think -- or where that stands today and how you think that plays out here between now and, say, November 1, I think they're supposed to finalize the plan?

Yes. It's a good question. And for those on the call that aren't quite as steeped in it, I mean, SB1 was a piece of legislation that got passed that had some provisions in it that said that the state Air Resources Board couldn't do -- couldn't add certain equipment to trucks for the next several years. And that was done as part of a legislative recipe in order to pass the gas tax, the increased fuel tax here in California. And some -- but what's very clear in the law in Senate Bill 1 is that while CARB can't, for instance, mandate new traps, new heated catalysts on trucks for the next frankly 18 years, it doesn't stop anybody from passing a new -- it doesn't even stop CARB from passing a new emissions standard. And it certainly doesn't encumber the local air districts or even CARB from passing different local rules. And it doesn't impede the Port of LA or other local jurisdictions from passing indirect source rules or other things to be able to clean up their air. So what we're seeing, and I want to be a little careful here, we're seeing somewhat of a confusion and we're seeing some that would rather not maybe be aggressive hiding behind SB1, saying that they're -- it's -- they're unclear as to how it might apply. But the California Air Resources Board has said verbally and has been quoted in the newspaper as saying SB1 does not prohibit them from adopting local. It doesn't negate their authority. There have been several different air quality regulators asked for that in writing, and we expect to see that from ARB. I think that'll help maybe give some comfort to the Port of LA and Long Beach as they begin -- as they continue to work on their plan down there.

The next question is from Pavel Molchanov with Raymond James.

Same question as I asked 3 months ago, which is we're getting into kind of tax reform discussion in D.C. and VETC, I'm sure, will come up. What is the latest that you are hearing on how the VETC will go into the broader reform conversation?

Yes, Pavel, as you know, we follow that pretty closely. And this legislation and some of the items on the administration's agenda, it's been a wild ride. And as you know now, we're focusing on tax reform. I think it's becoming more clear to many that grand tax reform is probably not in the cards, but that some reduction of rates and perhaps reduction of repatriation of dollars is likely to be the majority piece of legislation in what's being called tax reform as via reduction of rates. And I don't believe -- and of course, I don't know, maybe it will happen. But we -- our people in Washington and others don't really believe that you're going to see kind of grand tax reform, in which case those that we're talking to and we're working with think that there's a chance and there's probably a likelihood that some of the tax extenders, which VETC happens to be one of many, would likely continue on, that it would probably late in this session would need to be addressed. There's always been a sense that things weren't really handled correctly, that they should probably be addressed. That would mean they'd get redone and retroactive to 20 -- this year, and then prospectively as well. That's kind of what I think if you were to handicap it today, it's a real dangerous business doing that, but I think we're probably, Pavel, in a situation where it's more likely today than it was 3 months ago, that it will be dealt with and extended and passed.

Okay. And then kind of turning to the electric bus question. A lot of headlines regarding the LA Metro starting to diversify their fleet. And I think back in June, they talked about kind of a transformative plan through 2030. What's the latest on how you understand that to be?

Yes. We've been, as you know, involved in that and we're watching that closely and making sure that people understand how clean natural gas is as well as part of that. They did go ahead. And the way understand it, Pavel here a couple of weeks ago, they went out and let 2 different buses, I think, one for some 60 footers and some 40 footers on natural -- pardon me, electric. About 95 buses, I think, out of their 2,200 or so. And these will be, I believe -- you probably know better than I do, I believe BYD and Proterra, the electric bus manufacturers. They're going to go into kind of a test fleet here over the next -- I think soon. I don't know when they take delivery, 6 months or so. And the way that I understand it, those will be on certain routes and certain of their operations for the next few years. And they'll be looked at to see how they perform. Now last week, I believe that they did pass something that said was a little more open ended, that said that eventually, they like to move to an electric future in 2030. But there'll be a lot -- there's a lot here to -- I don't know that I'd go to the bank today and say that by 2030, you're going to have an entire electric fleet. There is a requirement, by the way, when you put a vehicle on the road today is, the way the FTA works, I think it has to stay in service for 12 years. So I happen to think, Pavel -- and you and I talked about this a little bit, is that eventually -- and most people don't realize that federal transit -- that the buses are paid in large part by the federal government. And so while 85% to 90% of a bus is paid for by the feds, it makes it a little easier to pay the upcharge that today that electric has. And so we'll see how that -- but there's still limited funding for these big transit agencies. And so that's something that's going to have to -- either the electric buses have to get dramatically cheaper or they're going to have to figure out how to be more efficient because the pool of dollars that they have won't necessarily spread over the substantial increase of the cost of these electric buses. We make the case that our renewable -- our natural gas Low NOx engine, which they just took 300 -- bought 360 of, at the same time, they bought the 95 electrics, is cleaner than electric bus today in Los Angeles. So it's cheaper, it's cleaner and we think it has a better duty cycle and will operate just as well. So nothing against my friends in the electric business, but I think the jury's out on how that's all going to roll out. And then one other, thing while I've got an open line, I guess, is that I think it's one thing for electric to do -- to be able to participate in a federally funded fleet like the federal transit. I think it's a totally different thing to look at the private sector long-haul trucking or regional trucking or certainly, refuse trucking -- I mean, refuse trucks. I mean, now you're down to a private sector, there is no funding like this and you just can't have 40%, 50%, 60%, or in the case of an over-the-road truck, 200% incremental. It doesn't fly. And so I think we have the best near-term immediate solution with natural gas in the Low NOx engine.

The next question is from Rob Brown with Lake Street Capital Markets.

Just wanted to talk a little bit about your compression order in Spain. What's the sort of European market development for natural gas? And is that the start of more orders on the compression side in Europe?

Yes. Thanks, Rob. It's been interesting. We've -- as you know, we've been on the compression business. We've done a lot of stuff in China, with South America and Colombia, Peru, also recently in North Africa. And so we've seen these kind of markets kind of ebb and flow. The latest one is Europe. And what's interesting to me, and I was talking this morning to the CEO of Westport, is this diesel -- this realization that diesel has gotten to be a real problem in Europe is -- I think has given a lot of people pause and a lot of these countries pause, but it's really ignited another look, more robust look at natural gas. And of course, with imported -- with LNG imports on the rise, more gas available in Europe today and their idea to move away from diesel, we're seeing a lot of activity in Europe which we're very happy with. We've competed well on that first deal with -- in Spain. They're -- we've competed with 2 other compressor companies. We were favorable, and this was a big package. If we do well, we hope that in Spain, we'd get a chance to have some more with them. We're seeing other activity in Germany and in France and Great Britain. So it's a western market for us that we like. We compete well with our Canadian compressor -- compressors. It's a little bit more familiar to us than Southeast Asia or Indonesia and some other places where we've sold. And so we're pretty upbeat about what we're seeing there. Now the compression, as you'll note in numbers we're still challenged in parts of the world. And so I guess, the good news is we're seeing a nice uptick in Europe.

Great. Then on the margin per gallon, I think you said it's $0.25 in the quarter but, if you could just talk about the trends in that number and where you see that sort of the remainder of the year and into next year?

Okay, Rob. Yes, so -- well, I'll say that we'll stay within that expected range, which was $0.25 to $0.29. But I do believe that the $0.25 really has an opportunity for upside because there were some items, one in particular, was lower LCFS pricing that depressed that a little bit. So I'm pretty hopeful that, that could move up within that range as we go forward.

Okay. Okay, good. And then, Andrew, maybe could you elaborate a little bit more about your kind of thoughts about relooking at the business in areas that are maybe not performing as well, and your thoughts there?

Right. Thanks. So we look at, just like any business person does, we look at our business ongoing. And for us, it's really looking at our networks, our customers, how our networks are hanging together, how our stations are operating. That changes over time, airport vehicles -- I mean, look, we've had to rationalize and look at our airport stations and change our business model a little bit because taxicabs went out of business for the most part with Uber. And they were one of our biggest customers a few years ago. So this is something that's ongoing for us. We bought stations 20 years ago from the Southern California Gas Company, from SoCalGas, and over time, we closed a lot of those stations just because we needed stations in different places. I think we're at a point, though, with the low oil environment and, frankly, the strength of our business and recurring revenue stream, that probably it's a really good time to look a little bit more closely at our stations and look to see where we might optimize, where we may close. Rationalize some of our operations. We don't want to do anything and it's -- when you're introducing a new market, you want to be careful you don't kill the golden goose here. So we don't want to ruin the business, but we're going to embark really in the second half of this year on looking really closely at a couple of our business units and how we've got them structured and also our stations. We're doing a very careful review of the stations, wouldn't surprise me that we closed some, that they just aren't operating like we think, we'll relocate some. And so it's something to stay tuned for in the third and fourth quarters. But we're going to take a really tough look. We understand we have to get to operating income at some point here. And so we're in a position to be able to do it. It's going to take a little bit, and looking at our operations could be -- and our expense side is going to be key to that.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back over to Andrew Littlefair for closing remarks.

Thank you, operator, and thank you, everyone, for joining us this afternoon. We look forward to updating you all in our progress for -- next quarter. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.