Eagle Bulk Shipping Inc (EGLE) 2006 Q2 法說會逐字稿

Good day ladies and gentlemen and welcome to the second quarter 2006 Eagle Bulk Shipping Inc. Earnings Conference Call. My name is Amanda and I'll be your coordinator for today.

At this time I'd like to turn the call to our presenter for today Mr. Sophocles Zoullas. Please proceed, sir.

Thank you and good morning everyone. I would like to welcome everyone to Eagle Bulk Shipping's second quarter 2006 earnings call. A slide presentation is available on our new, improved website at www.eagleships.com. Please note that part of our discussion today will include forward-looking statements. These statements are not guarantees of future performance and our inherently subject to risk and uncertainties. You should not place undue reliance on these forward-looking statements. We refer all of you to our filings with the Securities and Exchange Commission for a more detailed discussion of our results and risks and uncertainties that may have a direct bearing on our operating results, our performance and our financial condition.

Please note on slide 2 that the format for the call will follow the same format as our previous calls. After my opening remarks I will discuss the second quarter highlights and provide a detailed discussion of our fleet and the industry. I will explain what we believe is our differentiated and competitive strategy that gives Eagle Bulk a very strong position in the shipping market. Our CFO Alan Ginsburg will discuss the company's financial performance. I will then close the management discussion before inviting participants to ask questions. Turning now to the slide presentation, slide 4.

The second quarter of 2006 was a very active one for Eagle Bulk and one in which we made notable progress advancing key corporate growth objectives. The company continued to deliver strong, stable financial results with 100% of the fleet fully chartered for the quarter. Gross time charter revenues were 26.2 million. Net income was 11.3 million including a non-dilutive non-cash compensation charge of 1.9 million. Adjusting for these charges net income was $0.34 per share. EBITDA as defined in our credit agreement was 19.2 million for the quarter.

On August 3rd we paid a Q2 dividend to our shareholders at $0.50 per share. During the second quarter Eagle Bulk made significant strides growing the company and building shareholder value. First we purchased three very modern Supramax vessels, two built in 2004 and one built in 2003 for $105 million. Second, we chartered the three vessels prior to their delivery. Third, we successfully raised $33 million in an equity offering and fourth we increased the credit facility with Royal Bank of Scotland from $330 million to $450 million.

As of June 30th Eagle Bulk had approximately $250 million in liquidity which gives the company the strong financial capability to continue to fund growth. We are pleased to announce that we have activated a dividend reinvestment plan for our shareholders that allows everyone who owns our stock to buy additional shares by reinvesting the dividends or by making direct purchases of additional shares through optional cash deposits into the plan. Slide 5.

We believe the acquisition of the three Supramax vessels in June once again demonstrates the operational and strategic superiority of Eagle Bulk Shipping which is very beneficial to our shareholders. Similar to most of our other deals Eagle Bulk negotiated this private off-market deal with no competitive bidding from other buyers at a time when charter rates had improved but asset values had not yet increased. We believe the values of the three ships in our well-timed acquisition has already increased by 5 to 8% since the end of June.

Of equal significance unlike most shipping deals where the buyer has to wait several weeks or several months for the ships to be delivered Eagle Bulk chartered and took delivery of all three ships within approximately two weeks from the purchase contracts were signed. This means that shareholders benefit from the immediate cash flow generation that the new ships contribute to the company.

Eagle Bulk continues its strategy of bringing accretive deals to shareholders while maintaining the cash flow, predictability, and stability that is consistent with prior transactions. To this effect all three ships are chartered for 12 to 20 months at rates that are approximately 2.5 times each ship's cash breakeven level including a reserve for dry docking. This acquisition, the charters and the new revolving facility have all been achieved while still maintaining a conservative 36% net debt to cap ratio which gives Eagle Bulk liquidity of approximately $250 million to fund additional purchases.

Turning now to the operational benefits of this deal. First we increased our fleet from 13 to 16 vessels and improved our industry-leading position in the new Supramax asset class. As we increased the Supramax component of our fleet from 9 to 12 ships. Second, this acquisition increases the cargo carrying capacity of the fleet by 24% to 796,663 tons. Third, we continue to focus on buying high quality, very young, complementary ships to our existing fleet and this acquisition achieves these objectives by decreasing the average age of our fleet from 6.8 to 5.7 years and increases the number of sister ships from six to eight.

Lastly and importantly, our 2006 contract coverage increased to 97.5% on an available days basis. On slide 7 you can see the homogeneous complementary character of the Eagle Bulk fleet. Some key points, our fleet is almost one-third the age of the world fleet. The young age and high built quality of our fleet makes Eagle Bulk ships very desirable to our charters and provides us with the greatest opportunity for uninterrupted revenue streams. Furthermore, the acquisition of the three new ships which we have named Jaeger, Kestrel I and Tern are assisting to strategically transform Eagle from a Handymax company to a Supramax company as 12 of our 16 ships are Supramax class vessels.

On slide 8 this chart demonstrates that Eagle Bulk has increased contract coverage on the entire fleet to almost 98% for 2006 at a very strong $21,600 per ship per day. We continue to maintain our strategy of delivering strong cash flow to our shareholders without having to enter the spot market and subject Eagle Bulk to the unstable and unpredictable cash flows associated with very short-term contracts. The best example of our effective chartering strategy is to look at the Peregrine which we have recently chartered for two years at $20,500 per day. It is very important to point out that this ship is not due to conclude her current charter until the fourth quarter of this year or the beginning of 2007.

This charter will generate approximately $15 million for the Peregrine against approximately $5 million of expenses and may potentially employ the ship until the first quarter of 2009. Lastly the willingness of charters to take on two-year commitments almost half a year before the ship may be delivered to them demonstrated the very strong market demand that exists for Supramax ships today. We believe our young and flexible Supramax and Handymax fleet allows us to generate 100% of our revenues from medium to long-term time charters at very profitable charter rates.

This policy limits our exposure to the spot market seasonality and volatility and gives us stable and visible cash flows which provides a firm base for stable dividends and planning future vessel acquisitions. Slide 9, we will continue to provide investors with quarterly data on the cargoes carried by the Eagle Bulk fleet. As you can see our fleet can carry many more types of cargo than Panamaxes or Cape-size ships. This flexibility makes our ships very attractive to our charters, and we believe gives the Handymax market typically more stable revenues than the larger ships. In fact this year the Supramaxes have proven their ability to outperform Panamaxes even though the ships cost several million dollars less.

Handymaxes, especially Supramaxes compete in the iron ore, coal and grain markets of the Panamaxes yet also compete in the 850 million ton protected market of minor bulks and the major bulk markets where larger ships are restricted by the vessels' draft, length, cargo size or cranes. Slide 10 clearly demonstrates two very important factors about the Supramax ship compared to the larger Panamax. First there are long periods of time in which the Supramax will generate more revenues than a larger Panamax.

Second, the revenue-generating profile of the Supramax is much more stable than the more volatile Panamax ship. I want to reiterate for everyone the call today that Eagle Bulk is purely in the Handymax/Supramax market by choice because we believe the operating superiority of our ships positions them to realize the demand growth around the world that will continue to drive the dry bulk market for the next several years.

Turning to the industry on slide 12 we have provided updated figures for ship supply in the dry bulk tanker and container markets. The message clearly remains the same. Dry bulk has by far the lowest supply coming into the market and the only declining supply of ships through 2008. In fact many ship owners now are placing orders for 2010 and beyond and are struggling to find 2009 berths. On the upper right section of this slide you will see that tanker ordering has increased from January 1 to July 1 of this year from 25% to 31%. And the container order book still stands at 50% while the dry bulk order book remains the most stable. This low, stable order book translates into a fundamentally sound, dry bulk market from the supply side for the next three years.

On slide 13 we provide a similar analysis focusing only on the dry bulk market. Once again the message remains the same. The Handymax market has the lowest order book relative to the larger ships with 16% on order relative to the Panamaxes at 19% on order and Cape sizes with 24% on order. However, even more compelling is the fact that the Handymax market not only has a smaller supply of ships coming into the market than Panamaxes and Cape size ships but also has a much older fleet than the larger ships with approximately 32% of the current trading world fleet over 20 years old.

In summary the Handymax fleet is aging faster than the Panamax and Cape size world fleets which means there should be increased scrapping even if the market remains strong in the coming years. In short we believe that the Handymax market has the most attractive supply profile over the next three years relative to the larger ship types. We provide new supply data for you today on slide 14 which illustrates the relative balance of the dry bulk market. There are 100 million dead weight tons of capacity that is currently trading of which approximately 66 million tons will reach their financially and operationally onerous fifth special surveys during the next five years.

These statistics compare very favorably to approximately 65 million dead weight tons that are scheduled for delivery through 2010. In summary there's a huge and growing balloon of old ships that are currently trading that will need to be scrapped in the next few years. This fact should lead to a very favorable balance of supply for dry bulk ship owners with modern fleets for the foreseeable future.

Turning to demand on slide 15 we see a market where demand easily absorbs the ship supply and creates an environment for high profitability through Eagle Bulk. Chinese GDP growth has continued to increase in the last six months and is now projected to reach 11% for 2006. This demand has helped all ship classes of the dry bulk market. India has also been a meaningful contributor to demand within the last 12 to 18 months. A new trend that has particularly benefited the Handymax market that has developed within the last six months is the strong growing demand in the Persian Gulf region.

Recent information points to a $100 billion infrastructure development plan in this region. We believe that Handymaxes and more specifically Supramaxes are best positioned to benefit from this new demand growth and much of the cargo has been imported to the region, cement and aggregates, an ingredient of cement are carried by Handymaxes. Finally, ton mile demand is increasing as trade between the BRIC countries of Brazil, Russia, India and China increases. This results in an increase in long-haul trades which increases dry bulk ship utilization rates.

Alan will now go into detail of Eagle Bulk's second quarter financial results.

Thank you, Soph. Let me start by stating that we turned in another financially quarter. Our on-hire performance for the quarter was a sterling 99.9% and stands at 99.5% for the six months. As we've already taken delivery of the three vessels in our recent acquisition we've added two columns to show our available days for the rest of the year. One final point on this slide is that we have one dry docking scheduled for each of the final two quarters. Slide 18.

Just a few comments on our income statement. Our goal is to report consistent operating results. Net revenue for the quarter was 24.1 million. Total operating expenses were 12.9 million including non-cash and non-dilutive compensation expense of 1.9 million. We incurred 1.8 million in net interest expense. Taken together net income per share adjusted for non-cash compensation expense was $0.34 for the quarter.

Soph took you through the revenue slide. On the next slide I'll take you through the expense side of our business, slide 19. On this slide is our cost structure for 2006. We estimate our daily breakeven cash costs at $6,907 per vessel per day. The breakdown of this amount is $3,700 per vessel per day for operating expenses principally crew wages, insurance, basic repairs and maintenance.

Next we pay [V-ships], our technical manager, a fixed $103,000 per vessel per year which works back to $284 per vessel per day. Then we estimate it costs us $350,000 to drydock one of our vessels. This occurs once every 2.5 years. This equates to $384 per vessel per day. We believe our general and administrative expense will decline from $819 to $806 per day as a result of the increased number of vessel operating days associated with our growing fleet.

Finally, our net interest expense of $1,733 per vessel per day has increased by $52 as a result of the additional debt we took on with our acquisition. The average interest rate on our debt is presently 5.83% inclusive of our margin and commitment fees. I'll talk about our new bank facility later on in the presentation. Slide 20.

We are presenting our pro forma balance sheet which has been adjusted to reflect the two vessels which we took delivery of in early July. The first takeaway here is that our built-out indebtedness stands at $214.8 million. Second, our total book capitalization is now in excess of $500 million. Third, our pro forma net debt to capitalization stands at 36.4% which is squarely in the middle of the 30 to 40% band that we want to maintain. Finally, our available liquidity is just a tick under $250 million. Next slide.

As Soph mentioned earlier we amended and expanded our facility with the Royal Bank of Scotland in London. The new facility is now in place. On this slide I'll touch on the key points. First we increased the size from $330 million to $450 million. Second, we extended the maturity of the facility by another year to 2016. More importantly we've increased the number of years of interest payments only from a remaining four years to a fresh six years.

Next we've lowered the interest margin from 95 basis points to a 75 to 85 point grid. We've also lowered the commitment fee on undrawn amounts from 40 basis points to 25 basis points. The new facility is available in full for the next six years. Beginning in year seven availability under the facility declines by $50 million per year down to a $250 million balloon. With our current level of debt at $214.8 million we could conceivably go all the way to 2016 without a principal payment.

Finally, we want to stress that the Royal Bank of Scotland has provided this facility to us on an un-syndicated basis which we see as a significant vote of confidence from one of the largest lenders in the shipping industry.

With that I will turn it back to Sophocles who will complete the presentation.

Thank you Alan. Slide 23 please. In conclusion, the second quarter of 2006 demonstrates the strong and stable financial performance of Eagle Bulk. However, more importantly the purchase of the new ships including the charters in addition to the amended revolving facility with Royal Bank of Scotland positions Eagle Bulk for continued growth and profitability into the future. We continue to modernize our fleet, increase our charter contract coverage at highly profitable rates, maintain a low and predictable cash break even per ship and keep our debt at a very conservative level of 36% while maintaining liquidity of approximately $250 million to fund future growth.

These attributes are the building blocks of our strategy that has allowed our shareholders to participate in the strength of the company and the strength of the Handymax dry bulk market with dividends paid, since September last year, in excess of $68 million representing $2.11 a share and continues to demonstrate a strong yield.

Thank you very much for your time this morning.

We would now like to turn over the call to the Operator for questions.

Thank you sir.

[OPERATOR INSTRUCTIONS].

Your first question comes from the line of Scott Burk of Bear Stearns. Please proceed sir.

Good morning Sophocles and Alan, how are you guys doing today?

Great, good morning Scott.

I was interested that you did the contract on her, got the plan chart on the Peregrine already, for two years. Kind of two questions about that. First of all you have a lot of contracts rolling over next spring and basically the first half of next year. Are you able to get some of those locked up all ready or would you consider using the FFA market to get some of those locked up in the current strong rate environment.

I'll actually answer that in the reverse order. We are a rather simple company in the sense that we do not want to get into derivative hedging products because as we have seen with many other shipping companies the hedging or fixing, if you will, of your cash flow in the FFA market doesn't purposely mirror the physical markets. So the short answer is no, we do not intend to use FFAs.

Regarding fixing forward our '07 open positions I think that is a little too far forward to be able to get an effective charter rate that we would find good enough for our cash flow, to lock in. I think one of the reasons we went ahead with the Peregrine and we actually did book the ship even though its about six months early, is as you said, we have several ships open in '07 so as we have this rolling chartering strategy we're going to have ships coming on and off charter continuously. We thought the Perregrine locking it in and over two years for over 20,000 was a good thing.

The duration of that contract, of two years, a little bit longer than some of the more recent contracts that you've done, is that -- are you just trying to line up the rolling impact or is that more you just think it's a nice straight, you wanted to lock in a longer time frame? And would you consider to going to three years on some future ones?

I -- well I think if -- and this is what we've consistently told investors, if you were to map Eagle on a grid relative to some of the other dry bulk, publicly listed companies, Eagle Bulk would probably be one of the most conservative companies on the grid. We will consistently stay true to our strategy of locking in very visible revenues and not go into a strategy that is in the spot market or a divergent of that.

So I think what you should look for from Eagle Bulk is to consistently charter ships in -- we had said in the prior call that high-teens to low 20's, we thought with a $6,900 cash break even per ship was a very high level of profitability to lock in. So the three-year rate, right now, we feel is too big of a discount to the two-year rate and we feel the two-year is the sweet spot as represented by the recent Perregrine charter.

Okay, it sounds good. I'll get out of the way for now. Thanks.

Thanks Scott.

Your next question comes from the line of John Kartsonas of Citigroup. Please proceed sir.

Good morning. Just one question, obviously you have some of the lowest cost in the industry, both on the administrative front and the operating expense front. Where do you see your advantage, or maybe put it another way, where do you think your competitors both on the dry bulk side and maybe on the wet side, is overspending, as you see the industry?

Well I think John you hit the nail on the head. Having a low costs is a key to locking in an ensuring the profitability of a dry bulk company in what's traditionally a very volatile industry. Within our cost structure there are certain areas where we are very frugal.

For example, our G&A expense is extremely, extremely low. We have one of the leanest G&A expenses of any US-listed dry bulk company. In fact, if you look at our G&A expense as being based here in New York, at a level of about $800 per ship, it's extremely competitive.

There are certain areas however, that we spend money because we feel it's a very, very good use of money for example, we've always said that we feel saving money on crew is a very foolish place to save money. So we have very intentionally decided to have top-to-bottom Ukrainian officers and crew on our ships. And we actually have a reputation for paying very well on our ships.

We believe that helps contribute to a 99.9% utilization rate that we achieved this quarter, and contributes to not having breakdowns and not having stoppages or interruptions of our cash flow. So if you look at it in the aggregate I would say that the one place where we feel there is fat, if you will, in the peer group is probably in the G&A expense and that's where we've been very lean.

Do you still think that outsourcing operations is still the right way to go?

It's been a very effective and very cost effective part of our strategy. It's also helped us grow very quickly and grow very effectively while maintaining high utilization rates and high quality maintenance on the crews and the ships.

So the short answer again, is if the strategy has been working as effectively as it has we don't see any reason to change it.

And also just to follow-up on what you said on the about the three year and a three-year contract. Could you give a little bit more color on that, why you think that is happening? Is there less demand there or what is the reason for the three-year contract to be so lower compared to the two year contract?

Well I think what's happening is -- just to give some color to everyone on the call, the discount rates if you will, between one, two and three years tends to be about $2,000 per year. So for example, if we were to get that third year, probably we would be looking at about an $18,500 charter rate.

Now, it's not at all a coincidence that we've chartered this ship and actually the prior ships from the acquisition so that we'll have ships open in '08 or '09 because we believe beginning in '08 where you have a very low, relative level of ships coming into the market with a full order book, that '08 and '09 could be very, very strong years.

So we would not want to take a discount for the third year in what we believe may be a very strong year.

I see. Okay, thank you very much.

Thank you John.

Your next question comes from the line of Seth Glickenhaus. Please proceed sir.

Gentlemen, I want to congratulate you and your team for a great performance. Having shown great insight into just which ships to purchase and also the periods for which you've chartered them. The only question I really have is what are the general prospects for more additions of Supermaxes and what are your opportunities specifically, looking ahead? Do you see that you will add to your fleet?

Seth, thank you very much. The -- well as the Supermax market and the dry bulk market is very tight right now. What's happened is that demand has exploded, rates are up. I think the best way for me to explain what Eagle intends to do going forward is to look at our recent deal. The recent deal which I think surprised everyone because it literally, the week after we announced the deal, asset prices started to climb. Is a deal we had been focusing on for months.

We were focused on this fleet. We identified these ships. We waited until the seller was ready to sell and then we negotiated in a very private off-market manner with no competitive bidding. So I think that gives everyone a good blueprint that even in a tight supply market where there are -- sellers are -- it's a sellers market, there are always special situations. And Eagle Bulk with our growing visibility and reputation in the Handymax, Supermax market we believe we will continue to deliver to shareholders an unlocked value of vessel acquisitions in the future.

Now, if you look from the last deal to this deal it was about eight months. So we can't guarantee that we can do this every quarter, but we're going to opportunistically look to deliver similar types of deals to our shareholders in the next half year to year. And we're going to -- we're not -- we don't have to buy. So we can sit back and really chose the best deals possible for the company.

Thank you. That gives me a good picture.

Thank you, Seth.

[OPERATOR INSTRUCTIONS].

Your next question comes from the line of Michael [Safransky] of [Harbridge] Capital. Please proceed sir.

Morning Soph, morning Alan.

Morning.

As I look at your -- what's coming up this year I see the Condor is coming up in the fourth quarter. Now with the Perregrine coming down off a 24 to 20 to 20.5 and with Shikra coming down, am I going to see next year the average charter rate actually go down a little bit?

I think the way we've represented our view of the market to people on the prior call and to investors in general, is that we think the next year or two will be a market of high profitability for dry bulk ship owners that have young ships and low-cash break evens like Eagle. We feel that we will be in a market where we will see charter rates in the sort of high teens to low 20's. So I think looking at Eagle for '07 and beyond, look for -- look to see a blended rate, if you will, much like an investor would blend a bond portfolio.

So for example the Perregrine we did for two years at $20,500, you're very correct in saying that the Condor is sort of next up for bat either Q4 of this year or Q1 of next year. We're going to look at the market and look at not only the market for the Condor but specifically the way the Condor acts within the cash flow generation of the entire fleet.

Depending on what the market is at that time may be we'd put it on a one-year charter or maybe a two-year charter. If the market continues to strengthen significantly from here, which is possible we may even consider a three year. So I think look to have our view of the market in the high teens to low 20's.

Okay. Now, can you articulate your company-specific exposure to the Chinese and Persian Gulf and brick demands that's coming on?

Sure, right now I would say over half of our fleet is in the Pacific Ocean. We had one of our ships specifically doing ten continuous back-to-back aggregates deliveries to the Persian Gulf Region. The Persian Gulf is right now I think the prime beneficiary of high oil prices where a lot of that profit is being put back into that region in terms of infrastructure growth.

In terms of just this point on brick trade we see growing sort of trans-oceanic trade patterns where -- and this is not new, we've seen this for the last two years. Massive amounts of raw materials moving from the Atlantic to the Pacific, from South America to Asia. A very new phenomenon which I touched on in the last call is actually the big movement of Handymax-type commodities from Asia into the Atlantic, specifically North Chinese cement exports into the Atlantic.

This is unheard of, you never -- you used to usually have what's called a front-haul cargo of say grain out of the US Gulf to Asia and then a ship owner would try and cover its costs to get back into the Atlantic. Now you have huge rates being paid for Handymax's loading cement out of North China back into the Atlantic. Also just to touch on India, I mean India has really come onto the scene in the last sort of year, year and a half. Just to throw a figure out at everyone today, 500 million people in India currently don't have access to electricity. This is putting a huge strain on the government to build basic supplies for that country.

There are five new power complexes that are being developed in India today that will be coal powered and will require between 20 to 30 million-tons per year to fuel them. Which is the equivalent to almost all of the existing imports into India today. So what we're seeing is the heating up of these brick regions, that is stimulating the drive bulk market.

Okay. And just one question for Alan. Alan, I know we always discuss that the beauty of the business is that it's a cash flow business not necessarily a net income business. So, now that we're looking at the dividend as we go forward, just based on the first two of the year can you tell us what percentage of that is out of net income? What percentage is going to be considered return on capital and what is your -- what was your cash dividend coverage for the quarter and for the six months?

Coverage of what, Mike?

Of the $0.50 did you cover that completely on your cash flow?

Yes. The -- well we don't -- Mike, as you know we don't give guidance with regard to the return of capital portion, you also know that it's only calculated once a year at the end of the year. The best guidance that I think we can give is to basically take the earnings per share divided by the dividend per share and the reciprocal of that would be the most likely to be the best return of capital percentage that I could give you today.

Okay. Great quarter guys.

Thank you.

And your next question comes from the line of [Tom Wesenthorn] of UBS. Please proceed sir.

Morning guys, congratulations on a great quarter.

Thank you Tom.

My question surrounds Soph, the sister vessels that you've acquired. I think you -- if I read the chart right you've got about eight of them now?

Yes, yes, half the fleet exactly.

Could you talk a little bit about that strategy in terms of how that impacts the expenses and possibly whether or not you can actually lease sister vessels or charter them rather for more than the other vessels?

Sure, the benefits of a sister vessel fleet impacts both the revenue side of our business and the expense side of our business. Starting with expenses, first of all, even before expenses from an operating standpoint, having our crews be able to walk off one ship and go onto another and have all of the machinery and equipment be the same makes the operational management of the Eagle Bulk fleet very simple, if you will.

In terms of expenses, since we have half the fleet are exact sister ships it means that our sea stock, in other words the amount of spare parts we need are less because we don't have to buy, for example one piece for each of the ships -- if they were all different they can kind of share spare parts inventory.

Moving to the revenue side, the ships in the aggregate have a huge presence in the market but also Eagle Bulk is known now for charters. If they want ships that can service a specific contract they can come to us because they know we have multiple ship types that are the same, which from a charters perspective is very, very attractive. So we can have charters that will come from us and want two or three of our sisters because it gives them the ability to generate more revenues.

In acquiring ships, going forward, how do you identify other sister ships and is that a part of your strategy to continue to add to the sister ships?

The strategy is to very much continue to build out the fleet and it is very homogenous nature that you can see on the slide with the fleet profile. Its getting more difficult because as you continue to acquire production lines out of a specific ship yard you're exhausting that shipyard's production line for that specific ship type.

So I think for 2001 we've taken a huge share of Mitsui's Supermax production. We will continue to try and build this out but I cannot promise that it will be easy.

Okay, thanks guys. Congratulations again.

There are no more questions at this time.

Okay, well thank you very much. I would just like to conclude by once again thanking all of the participants for joining us on our Second Quarter 2006 Earnings Call. And I look forward to keeping you all updated on our developments throughout the year. Thank you very much.