Dana Inc (DAN) 2009 Q3 法說會逐字稿

Good morning and welcome to Dana Holding Corporation third quarter 2009 webcast and conference call. My name is Celeste and I will be your conference facilitator. Please be advised that our meeting today both the speakers remarks and the Q & A session will be recorded for replay purposes. All lines from been placed on mute to prevent any background noise. There will be a question and answer period after the speakers remarks and we will take questions from the telephone only. (Operator Instructions)

At this time, I would like to begin the presentation by turning the call over to Dana's Senior Director of Investor Relations, Lillian Etzkorn. Please go ahead Ms. Etzkorn.

Thank you, Celeste. Good morning ladies and gentlemen. Welcome to all of you who are joining us, either by phone or webcast. On behalf of the entire Dana management team, I'd like to thank you for spending time with us this morning. With me this morning are John Devine, Chairman, Gary Convis, Vice Chairman, Jim Sweetnam, President and CEO, Jim Yost, Chief Financial Officer and Jacqui Dedo, Senior Vice President, Strategy and Business Development.

Before we begin, I'd like to review a couple of items. Copies of this morning's earnings release and the slides that we will be using have been posted on Dana's investor web site for your reference. Today's call is being recorded and the supporting materials are the property of Dana Holding Corp. They may not be recorded, copied or rebroadcast without our written consent. Finally, today's presentation includes forward-looking statements about our expectations for Dana's future performance. Actual results could differ materially from those suggested by our comments here. Additional information about the factors that could affect results are summarized in our Safe Harbor statement. These risk factors are also detailed in our SEC filings including our annual, quarterly, and current reports with the SEC. With that, I would like to turn the presentation over to John Devine.

Thank you and good morning, everyone. Thanks for joining us. Just a couple of brief comments from me before I turn it over to Jim Sweetnam. We made good progress in the second quarter. We made better progress in the third quarter. We're pleased about that direction but make no mistake, the Dana management team recognizes we have more to do here. We have to continue to improve our performance, and I want to make sure we assure all of you that we're focused on doing just that. Jim Sweetnam will talk more about that today. You will hear more about that in the coming months. But make no mistake, we're focused on the future, what we have to do. How do we continue to drive our performance, no one is sitting here with our existing performance as good enough. With that let me turn it over to Jim Sweetnam, who's going to update on key issues and initiatives and then to Jim and Jacqui. Thanks.

Thank you John. Good morning, everyone. Welcome to Dana's third quarter 2009 earnings call. Thank you for joining us. I'm very pleased to say that we've continued to improve our business performance as evidenced by the results we just announced this morning. A very significant achievement in the third quarter was the successful equity raised that we had in late September. We raised $250 million in new equity, which has given Dana strong liquidity and a significantly strengthened balance sheet. This really positions us well for the future, allowing us to do additional restructuring and enabling us to make new investments in technology in our product portfolios and make investments in geographic growth opportunities like Asia Pacific.

We've had continued improvement in our revenues in Q3, and we've achieved sales revenues of $1,329 million, and that was $139 million higher than the second quarter of this year. Our EBITDA performance improved in the third quarter. We achieved $101 million of EBITDA, which was $7 million higher than the second quarter this year. I think very importantly, we achieved EBITDA performance of 7.6% on the sales revenues that were 31% lower than we had in the third quarter of last year. Just to remind everyone in the third quarter last year, our EBITDA was 2.4%.

We continue to make good progress on right sizing our operations, on cost reductions and on pricing. Very significantly, we achieved free cash flow of $145 million in this quarter. And also, we achieved our third quarter financial covenants even without the debt buyback that is related to our equity issuance.

I'll have you now turn to slide six in the deck. Our revenues did increase sequentially across most of our markets. As we've looked at the industry outlook globally, we see slight improvement in our markets across the globe. It gives us what I would describe as cautious optimism. Specifically as we look at the markets that we play in, the light vehicle market appears to be improving. Our commercial vehicle market has stabilized. Slight improvements are expected, and we see certainly with the North American truck OEMs that in the last two to three months, they've been experiencing increased orders, which is good news for everyone. Some of that obviously driven by the pre-buy to avoid more expensive trucks in 2010, but some of it obviously driven by demand increase because the fleets have been out of the market for such a long time.

And then lastly on our off highway market, we expect that to flatten. But we continue to generate new business in all three product segments that we play in. We have secured profitable new business, including some very significant replacement business during the third quarter. And we will continue to work on winning new and profitable business while we continue to resize the Company.

If I can now get you to turn to slide seven on the future focus. We are going continue to make operational improvements and continue our restructuring efforts. Other focus will be on our manufacturing footprint and specifically further optimization of our manufacturing footprint. We're going to be focusing on our supply chain and materials cost. And we're going to continue focus on reducing complexity in our operations and complexity in our entire value chain.

We do plan to refocus our technical and marketing resources on reinvigorating our product portfolios across our business franchises in order to create clearly differentiated products, to help our customers compete in their respective marketplaces. In turn, we also plan to pursue what we deem as attractive business and growth opportunities primarily in Asia Pacific and we do plan to pursue specific opportunities that help to us grow geographically. All this with a strong focus on improving our margins and profits while maintaining a strong balance sheet. I will now turn this over to Jim Yost to cover our financial results for the third quarter. Jim?

Thanks, Jim. Overall we had another good quarter. On slide nine you can see a summary of our third quarter results. Sales topped $1.3 billion as Jim mentioned, although, sales were down from last year by $600 million. Adjusted EBITDA was significantly better than last year and is also up from the second quarter as Jim also mentioned. We'll cover both sales and EBITDA in more detail in the next few slides. Just as an aside, both of these items, sales and EBITDA were in line with the guidance that we issued as part of our equity offering that we recently completed.

Net income was significantly better than last year. It was down from second quarter, which benefited from the impact of the repurchase of our debt at below par. Free cash flow, as Jim mentioned, was very strong at $145 million and a dramatic improvement over both last year and second quarter of this year.

On slide 10, you can see the change in our sales for the quarter versus 2008. At $1.3 billion, we were down $600 million or about 31%, essentially all due to volume and mix. All product groups were lower with our two heavy groups down the most. Pricing was a favorable $45 million, including about $8 million for recovery of material cost increases. Currency was unfavorable due to the dollar strength compared with Q3 of last year, although we have seen the dollar weakened sequentially this year.

On slide number 11, you can see the change in our adjusted EBITDA for the quarter, which was up $54 million from last year to $101 million. Volume and mix were unfavorable by $113 million due to the sales decline I mentioned on the previous page of about $594 million. The currency impact on EBITDA was essentially neutral, and you can see there again the $45 million favorable pricing. Cost performance continued strong for the quarter with conversion costs at our plants down $73 million and material costs lower by $28 million. SG&A, warranty and other items were also favorable. Overall, a remarkable performance in weak industry conditions.

Some of you commented last quarter about our ability to repeat the quarter two EBITDA with the significant amount of one-time items we had in the second quarter. On slide 12, you can see how the $7 million quarter over quarter improvements was accomplished. The sales increase of $139 million contributed $27 million to EBITDA. Pricing was actually unfavorable primarily due to one-time items in the second quarter. Continued improvements in our cost structure in conversion costs and material costs largely offset the one-time cost items in the second quarter.

Turning to the year-to-date results, you can see that on slide number 13. Although not shown here, year-to-date sales were a total of $3.7 billion. That is down $2.8 billion or 43% from last year. Year-to-date EBITDA for this year totals $211 million, which is down $134 million, again, more than explained by $518 million volume in mix impact. Pricing has been favorable, $176 million with about half due to material cost recovery and lump sum adjustments and half due to margin improvements to correct some of the unfavorable contracts. Cost savings continued strong, including $133 million in conversion costs, $41 million in warranty, $13 million in material, and $41 million in SG&A and other. We are on track to meet our full year targets, which we'll highlight in a few minutes.

On slide 14, we have summarized our EBITDA margins over the last seven quarters. It is easy to see the significant change in our profitability starting in Q2 of this year. The improvement was driven by substantial restructuring that we carried out at the end of last year and the first few months of this year. In spite of the sales declines of over 40%, we've been able to increase our EBITDA margins by over 30% since the early part of 2009, and more dramatically since the end of 2008. It is a credit to the capabilities of all of our associates worldwide, and we thank them for their efforts and sacrifices.

Turning to free cash flow on slide 15, you can see another strong story for quarter three. Free cash flow was a positive $145 million, and was driven by both EBITDA and working capital improvements. The results were almost $300 million better than last year, and we have generated a positive free cash flow year-to-date of $14 million. Besides EBITDA, the most significant element of the year-to-date positive free cash flow is inventory. On slide 16, we've shown the $265 million reduction in inventory at constant exchange rates versus year end 2008. Although we had not planned it, we finished last year with about 90 days of inventory on a forward-looking basis due to the dramatic reduction in sales at the end of last year. At the end of the third quarter of this year, it stood at about 55 days. Still too high. We expect this trend to continue this year and into next. That is the reduction in both days supply and absolute level of inventory.

As we previously announced and Jim mentioned earlier, our equity offering was very successful. Some of the highlights are shown on slide number 16. During the road show, we upsized the offering by 25% and experienced a 22% share price increase, a delightful response to the offering. As Jim said we did not need the debt paydown to make our third quarter covenants.

With the proceeds from the offering and the strong free cash flow, we were able to reduce our net debt by $364 million in the third quarter. We show that on slide number 18. We finished the quarter with $814 million of cash and a total debt of just under $1 billion. Net debt stood at $182 million.

On slide number 19, we've outlined our present capital structure at quarter three and on a pro forma basis including the impact of the green shoe, which did not close until after the end of the quarter. Net debt compared with our last 12-month EBITDA was about 0.85 times at the end of the quarter. On a pro forma basis, net debt was $150 million and leverage declines to 0.7 times. On a Q3 annualized basis, leverage declines to about 0.37 times. On the right-hand side of the slide, you can see the overall reduction in net debt this year from $474 million at the beginning of 2009 to $150 million on a pro forma basis.

Liquidity is also strong as shown on slide 20. Standing at $920 million globally at the end of the quarter and even better on a pro forma basis. Now I'll turn it over to Jacqui for a market and sales update.

Thank you, Jim. Good morning, good afternoon, good evening to everyone. On page 21, in the global market segments we serve, as Jim mentioned, we now have cautious optimism in the light vehicle and medium heavy truck markets where we expect to see slight growth moving into fourth quarter and next year. In the off highway market, we are seeing a flattening of the market in total after a year of large decreases.

Page 22 shows our customer split with a continued growing balance between automotive and non-automotive customers in our top ten. Moving to page 23, you will find our net new business. This chart, as mentioned before, reflects the cumulative total of the net of all wins and losses versus 2008 through the third quarter of this year. We continue to see strong year-over-year growth in our targeted regions with important wins at improved margins.

Since our last update, the net cumulative total is down $200 million due to two factors. First, the reduced Navistar share discussed last quarter assumed to be $60 million impact over three years. And second, program cancellations from GM and Chrysler as they redefine their portfolios coming out of Chapter 11. However, the total net new business impact for 2010 is essentially unchanged from our last report at about $200 million with a significant improved margin mix of wins versus losses. This is also underpinned by a strong, high confidence, new business pipeline of potential new wins with an annual value of over $1 billion on which we'll continue to update you. Thank you. Jim, back to you.

Thanks, Jacqui. Slide number 24 outlines our 2009 outlook. The only significant changes here are that we now expect our Cap Ex to come in at less than $120 million for the full-year based on the year-to-date run rate. We're continuing to be frugal on our spending, although, spending where we need to to support our customers and plants. We also now expect positive free cash flow both for the fourth quarter and full year again based on our very strong third quarter results. We're presently working on our plan for 2010 and expect to provide our outlook for the next year in a conference call we will schedule in mid-December.

Finally on slide 25, I'd just like to summarize by saying we are focused on executing our 2009 plan after a strong performance in Q3 and we're in the process of developing a strong plan for 2010 to build on the success we've had this year. I'll now turn the call over to our moderator, Celeste, for the Q&A session.

Ladies and gentlemen, at this time, we would like to begin the Q & A session. (Operator Instructions) Your first question comes from the line of Brian Johnson with Barclays Capital.

Hi. This is Emmanuel in for Brian Johnson today.

Okay.

I had a quick question about your net new business charts. I know you just went over it, but could you just come back to it and break it into the different component? I did catch that Navistar business loss was $60 million. How much was the cancellation from businesses? How much was the actual portfolio pruning for unprofitable programs? And more generally are you concerned by the fact that North America is a net negative over the next four years? And is there any potential for that improving as you go into 2010?

Thank you, Emmanuel. This is Jacqui. Yes in terms of the components of it we said Navistar was $60 million and the remainder for all but about $10 million is canceled programs due to largely General Motors and Chrysler changing their portfolio like the GMT560 and the Chrysler Jeep Liberty announced last week.

Second point, in terms of the makeup of the reduction of North America, we're not concerned. We have a pipeline that is quite positive. I mentioned well over a billion dollars. The reduction is in the later years where we're still quoting business. We are being choosy as you can see from all the work we've done there this year in quoting, as Jim said, business where we well differentiate. So both the customer and we are satisfied with the business equation. And we feel a pipeline that's sufficient to continue to have net year-over-year positive growth.

So just to clarify, what do you call pipeline? Is that the business you're quoting on?

Right. That's correct. The pipeline or all the quotes that we're going to quote in the future that is well beyond the net new business. Net new business is only that business which has been awarded less any business that we've lost from the base.

Okay. Can you give an indication in terms of what's an expected or historical win rate on this sort of pipeline?

The recent historical win rate is over 75% because we now have a strong screening process where we only quote on business that we feel we have a strong technical and commercial match to.

Okay. That's very helpful. Now, I guess on a related topic, your light vehicle sales were, I guess, a little bit weaker than we had expected based on the way we think we understand your top platforms. Would you be able to give some high level insight into what's your updated top platforms are just so that for future modeling we're a bit more accurate?

This is Jim. I think our revenue numbers were totally in line with what we had projected both last quarter as well as during our road shows. So I'm not sure where your numbers might have come from. I think we gave an indication last quarter of our top platforms. They're fundamentally the same as we see today. No significant change in our platforms.

Okay. So let's say going into, for example, the Chrysler Day tomorrow, where they will obviously give some update into what product lineup could be. What would be Chrysler specifically the ones where you have meaningful content.

Our major content on Chrysler's platforms are in their Jeep brand. We also support their Ram truck. That's the major business that we have with them.

Okay. Thank you.

Your next question comes from the line of Jeff Rosenbaum with York Capital.

Good morning. I had two questions. One, high level on slide 24 where you talk about EBITDA in '09 being higher than 2008 depending upon market factors. If you look at year-to-date EBITDA, are you where you thought you would be?

To answer that question I think as we've said in prior quarters, we were expecting revenues when we started the year and when we put this plan together substantially higher. Quite honestly at the top end of the $6 billion range is what our expectations were and that was the basis on which we set the expectation internally as well as externally that EBITDA would beat last year. Subsequent to that, we've seen our revenue drop very, very substantially as we've discussed. We no longer see a very likely opportunity for us to beat last year's number, which is 349. Does that answer your question?

Okay. He did go out of queue. Your next question comes from the line of Ryan Brinkman with JPMorgan

Hi it's Himanshu Patel of JPMorgan.

Hi Himanshu.

Hi guys. Couple questions, it looks like in the quarter contribution margin just on a sequential basis came in at 19%. I'm just taking your reported quarter to quarter impact on the EBITDA line from volume mix of $27 million dividing it by the sequential revenue change. Is that the kind of number we should use going forward as well for Q4?

Well, we've said previously probably around 20% is a reasonable number. Obviously, as we get farther along and we improve our profitability, we hope that increases. Right now that's probably not a bad number to use.

Okay. The pricing gains that you guys have been seeing on a year-over-year basis this quarter, I think it was $45 million in Q3 and $130 million or so in the first half, what's the outlook for that line item, just conceptually if you were to look in '10? Is pricing flattish year-over-year? Do you wind up giving some of this back? Are there still further gains in '10?

Himanshu, this is Jacqui. There will be further gains in 2010 as we finish going through the contracts as they come up. We will be giving back material as material fluctuates, but that will fluctuate with our costs as well.

Just to help us a little bit, orders of magnitude, it is fair to say the amount of pricing you would get next year it's positive but maybe less so than what you got in '09?

It should be less so because we were able to handle the majority of our contracts this year.

This is Jim. In that number which has been dependent a lot on the hard work of our business development people, there are three components; one's a material, two we did have some lump sums this year and had some changes in some of the contracts. We've had some lags in the material cost recovery. As you know, some of our contracts do carry lags in terms of recovery. So that will be negative for next year most likely. We probably won't see a huge repetition on the lump sum improvements. So I think it's going to -- we'll have to see how we come out on the specific contracts that we renegotiate. I would not expect it to be a significant number like we had this year.

And our intent, Himanshu, as we stated in the net new business piece, is to move from repricing existing contracts to pricing new contracts profitably at better margins.

Okay. Then I think at the start of the call you guys mentioned that there was, you secured significant replacement business during the quarter. Can you elaborate on that? Whatever color you can shed. Is that on the commercial side, light vehicle side, North America, any customer comments you can give on that?

It's all markets and all customers. It's a little over $700 million of our base. As you know, in the auto heavy and off highway business, they have sourcing cycles, and we are competing for our replacement as those sourcing cycles come up. You will note from our net new business discussion that the losses other than the small share at Navistar have been program cancellations, not losing our position with customers.

Then last question for me. Jim, the net new backlog that is coming on stream, I know you guys have been explicit in saying it's more profitable than the stuff it's replacing. I think on the road show, you guys talked about normalized EBITDA margins in the 12% range or so. How should we think about the profitability of the new business compared to that 12% corporate average? Is it above that or does it come in line at that level?

I think you should assume it probably comes in line with that level. Obviously a lot higher than where we are today. Most of the business is rolling off as at very unattractive margins. The new business is coming in at those levels that we discussed, double digit EBITDA.

Thank you.

Your next question comes from the line of Patrick Bartels with Monarch.

Is my line open?

Yes, sir.

Just a quick question. You talked about the $150 million of CapEx. Where do you see CapEx going in the out years, 2010 and on to actually sustain some of this Asian expansion that you're talking about?

CapEx is going to be -- I mean, obviously, we have to continue to spend Cap Ex on our manufacturing operations, but we'll do that in a very strategic basis. CapEx is also going to be on the key investments we want to make in Asia Pacific and growing new business. And also we're going to be focusing CapEx with respect to new product portfolio investments, what we have to do on a technical side.

Can you quantify a level in the out years and what's the specific level investment that you're looking to target over, call it the next three to five years in Asia?

We're presently working on those plans. I hesitate to give you any specific number at this point in time. We'll give you some guidance later on at the end of this year for next year. Clearly, the number will go up. It will not go up to the kind of levels we saw previously in the mid-years of this decade.

Thank you.

Thanks, Patrick.

Your next question comes from the line of Derek Wagner of Jefferies & Company.

Two questions. Just with respect to the bank lines that are available. What are the total size and what are the letter credits against that and availability?

Overall, we actually have a nominal $650 million line associated with our US operations, and right now, the availability under that line is obviously constrained basically by the amount of receivables that we are currently carrying. We have about $180 million of letters of credit outstanding--$185 million letters of credit outstanding. Our total assets about $360 million or so available.

So in theory, we've got capacity of about $175 million dollars on our US lines but we are constrained at the end of the third quarter based on covenant week. We couldn't borrow the full amount and still comply with our leverage tests. We have about $50 million or so available in Europe under our GE credit facility there.

So $175 million available in the US and $50 million in Europe, is that right?

That's the nominal amount. So we've got about $225 million available. As you can see on slide number 20, we've only indicated available to use of about $136 million so that we stay within our leverage covenants.

Okay. And the $650 million total size, how's that broken out in terms of the US --

That's all US.

$650 million all US?

Correct. Yes.

Okay. So what's the size of the European?

That, as I said, about $50 million. That depends 100% on the availability securitization.

Okay. But that's the total size of it, $50 million.

It can go substantially higher than that. It's not fixed per se.

Okay. And then the repurchase of the debt in the quarter, is that the term loan? And at what price? How do you affect that?

The repurchase, we said in previous quarters, we repurchased a significant amount of our debt in the second quarter which was part of our Dutch auction as well as open market purchases. And then we repurchased about $15 million of our debt in August to complete the 10% repurchase of debt that we announced during the second quarter.

Yes, but then you also had the offering, right?

Well, that differentiates between the pay down which was required, 50% pay down, use of the proceeds to pay down debt. That's separate from the repurchase. In terms of the repayment, we repaid that debt at a 1% premium to par as required under our credit agreement.

On the term loan, right?

Correct, yes.

Right. Then you repurchased an additional $15 million at market rates?

That's correct. We did that in August, as we announced on our second quarter call.

Okay. Great. Thank you.

You're welcome.

Your next question comes from the line of Steven Carlson with Highland.

Hey, guys. Thanks for the call. Congratulations on a great quarter. Just a few questions today. Jim, you had mentioned at a conference I guess a month and a half or so ago the concept of, I think you said topping up a little bit now with new equity and then doing some more later. Can you elaborate on what your thoughts are on potentially adding some more equity?

I think the response. My comment was in response to a question of what we were going to use the $500 million that we identified in the shelf registration for. I said our first priority would be to go out into the equity markets to raise some capital at that time we hadn't made a decision to do it, but subsequently we did. And as I mentioned, we we're very favorably received on that. I then said obviously looking into the future that shelf registration would remain in place into the future and we would have the opportunity to reaccess that shelf for additional capital if we need it. Quite honestly, we ended up with about $100 million more in the equity offering than we originally expected. So we have no plans at the present time to go out and access the equity markets again.

Okay. Okay. Just a couple other things. How are the conversations going with the rating agencies? Do you guys see an upgrade particularly from Moody's to get you out of CCC land in the near term or what's your thoughts there?

There's a big difference between the Moody's and S & P ratings.

Yes, I know.

We are in contact with Moody's and obviously we're encouraging them to re-look at our credit based on year-to-date performance and we'll continue to have those conversations.

Then, are you -- I know pre-bankruptcy, you guys have, like, six or seven public analysts covering you guys. Are you trying to increase that number or what is--do you have like a target number in mind that you'd like?

We presently have two.

Right.

And we expect once we complete this announcement that we'll be picked up by Goldman. We are also looking and in contact with a couple of others that will pick us up in the near term. Obviously we'd like to have significantly more than we have right now. No specific target in mind but at least doubling or tripling the number of analysts we have.

That'd be great. Just one final question I caught earlier on some of the discussions you'd mentioned that some of the pricing depends on the material cost. How much of that is set up as a pass through arrangement and -- in other words, if raw materials, say, spiked 50%, how much of that do you get hit with? And how much is just kind of set up as a pass through arrangement?

I bit it into about three buckets. One is contractual pass through. I include in that the resale programs that we he have with both Ford and General Motors on steel particularly for our structures business. There is quite a bit that is under contract which is automatic. Some with lag, some a little bit less. We also, in some places with some customers and some locations in the world, it's routine and automatic that as our costs go up, we get recovery. If I lump those together, that number's probably 70%, 75% of our overall business obviously then there's another 25%, 30% where go in and negotiate one off deals depending upon the fluctuation in the underlying commodity.

Got you. Okay. Thanks again. Congratulations on a great quarter. Keep it up.

Thank you very much. Appreciate it.

Your next question comes from the line of Jeff Rosenbaum.

Sorry I cut off before. Last question regarding modeling cash flow going forward, what's the Company's current expectation for the preferred dividend going cash pay?

Well as you probably know, we are precluded based on the amendment we got with our creditors back November from paying any cash preferred dividends until our leverage drops below 3.25. At the rate year going we would expect that to happen sometime in the first half of next year. And quite honestly, it's up to the Board as to what they would decide to do and how they would handle that. So it would be difficult to comment on that at this point in time. I think sometime during the first half of next year, that decision will be made.

And the initial payment would be a true up payment?

Again that's up to the Board to decide how they want to handle that. I think they've got a couple of options. One would be spreading it out over time.

Thank you.

Your next question comes from the line of Tyler Greif with PSAM.

Hi, guys. On the topic of the pref and then I have another questions. What's the new conversion price on those prefs as opposed to the equity offering?

We'll be publishing something very specific shortly sending a note out to our holders. But the number is $11.93.

Okay. Thank you. Second question is on page 12, under pricing, there's the quarter two lump sum of negative $14 million and under there cost saving/other, you've got one-time items of negative $34 million. Is it accurate to assume that if I exclude those one-time items which are part of the difference between the second and third quarter, the differential's not $7 million but $55 million in EBITDA?

That is probably directionally correct. We obviously had some one timers in the third quarter, also, which would affect that a little bit. But somewhere around $50 million is probably not an unreasonable guess.

So you're really, excluding the one timers and obviously accounting for those small items that you said are one time that's not included in the third quarter, it went up by about $50 million?

That's correct.

Okay. Okay. Great. Good quarter. Thanks, guys.

Thanks.

We have no further questions. I'll now turn the call back over to management for closing remarks.

Thank you very much. We appreciate all of the participation on the call. We thank you and we will be talking to you soon. Thank you.

Thank you all.

Thank you.

Ladies and gentlemen this concludes today's conference call. You may now disconnect.