Eagle Materials Inc (EXP) 2013 Q3 法說會逐字稿

Good day and welcome to the third-quarter 2013 Eagle Materials Incorporated earnings teleconference.

My name is Candace, and I will be your coordinator for today.

At this time all participants are in a listen only mode.

We will be facilitating a question and answer session towards the end of today's conference.

(Operator Instructions)

I will now turn the presentation over to your host for today's conference, Mr. Steven Rowley, President and Chief Executive Officer.

Sir, you may proceed.

Thank you and welcome to Eagle Materials' conference call for the third quarter fiscal year 2013.

Joining me today are Craig Kessler, our Chief Financial Officer; and Bob Stewart, Executive Vice President Strategy, Corporate Development and Communications.

There will be a slide presentation made in connection with this call.

To access it, please go to www.eaglematerials.com and click on the link to the webcast.

While you are accessing the slides, please note that the first slide covers our cautionary disclosure regarding forward-looking statements made during this call.

These statements are subject to risks and uncertainties that could cause results to differ from those discussed during the call.

For further information, please refer to this disclosure which is also included at the end of our press release.

Increased demand for our products combined with higher net sales prices during the second quarter resulted in a 33% year-over-year increase in Eagle's consolidated revenues.

Segment operating earnings and earnings-per-share were up sharply this quarter primarily because of improved wallboard net sale prices, strong sales volumes across all of our business lines and lower recycled fiber input costs.

As previously announced, we completed the acquisition of the Lafarge Target business on November 30, and the integration process has been going very well.

As we mentioned in the press release, during the quarter, we incurred non-routine costs associated with completing the acquisition, as well as litigation costs associated with our lawsuit against the IRS that impacted our quarterly EPS by approximately $0.06.

A 17% increase in our quarterly cement sales volumes and a 3% increase in our average net cement sales prices were the primary drivers of the increases in Eagle's quarterly cement, concrete and aggregate revenues.

During the quarter our cement operating costs were impacted by the replacement of a kiln gear, a portion of the kiln shell, the kiln riding range and kiln system support equipment at our Nevada cement facility.

Increased wallboard average net sales prices and increased sales volumes resulted in a 37% increase in our quarterly comparative of wallboard and paperboard revenues.

Operating earnings in our wallboard and paperboard business improved to $24.8 million for the third quarter versus $5.4 million a year ago.

The improvement was driven by improved wallboard pricing, improved wallboard and gypsum facing paper demand and a lower recycled paper input costs.

Our paper mill remains sold-out and continues to perform exceptionally well allowing them to report record high quarterly earnings.

Now let me turn this over to Craig for more details on the financials.

Thank you, Steve.

During the first nine months of the year we generated $107 million of cash flow from operations, a 147% increase from the prior year.

Cash flow from operations was used to -- utilized to fund $28.8 million of capital expenditures, acquisition spending of $448.4 million and dividends of $3.6 million (sic see slide 6 "$13.6 million").

In addition to the cash flow from operations, we funded the acquisition with proceeds from an equity offering completed on October 3, 2012 along with borrowings under our bank revolver.

Interest expense during the quarter declined 9% to $3.8 million reflecting lower average borrowing levels and lower borrowing costs under our bank credit facility.

After considering the impact of the acquisition funding, interest expense should run approximately $5.5 million per quarter.

Our effective tax rate for the quarter was 34% reflecting improved earnings.

This last slide reflects Eagle's balance sheet post the transaction.

Our balance sheet remained healthy at December 31 with $483 million of gross debt, $474 million of net debt and with a net debt to cap ratio of 41%.

Thank you for attending today's call.

Candace, we'll now move to the question and answer session.

Thank you, sir.

(Operator Instructions)

Kathryn Thompson, Thompson Research Group.

Would the implementation of a large wallboard price increase in January -- could you give us an update on the progression of wallboard shipments and how much an estimation -- there was some amount of pre-buy in Q4.

But where do we stand as we are in early February in terms of order trends for wallboard and your assessment of the acceptance of the price increase?

American Gypsum fully implemented the price increase January 1, and while our sales volumes are slower than December, they are currently greater than last January.

So our January sales volumes this year are slightly greater than they were a year ago.

However, price remains more important than volume for American Gypsum.

Have you seen any acceleration of trends once you've gotten into early February?

It is hard to really tell on a day by day basis or -- in the early February.

We're pleased with where we are, and again, remain committed to the price increase.

Could you give any updates as far as the Lafarge integration goes?

What additional costs should we expect to see going forward?

And in general, not only the cost, but what are some of the savings we should also see once you chew through some of the integration costs?

I will let Craig speak briefly about the transition or purchase accounting, which certainly has some impact both this -- the one month that we had it last quarter and this quarter.

It should be flush through this quarter; but, in general, we are very pleased with how the integration is going and should see the full -- the impact of the purchase to our earnings in the first quarter of next year.

So, Katherine, this is Craig.

When we performed the purchase accounting, obviously there is a step up in the value of the property, plant, and equipment.

You also write up inventory to its fair value.

And so your first couple of sales out of the facilities post the transaction will be at a much lower margin.

And, as Steve mentioned, that impacted us here in the December quarter.

It was about $1 million.

There is a little left to be flushed in the March quarter.

But, then once you get through that initial inventory quantity, you'll be back to a normal operating margin for those assets.

And it is just a function of the valuation accounting.

But the March quarter won't have as great of an impact as the December quarter?

Correct.

And could you give an update on well grade cement demand, not only in Texas, but any updates for your Illinois facility?

So the demand remains about the same here in Texas; about half of our business is manufactured product is going to our well customers in the Texas market.

And the product that we are producing is of a high quality in Illinois.

We are just starting to get that into the marketplace there.

Continue to look at the ability; a few little capital projects that we have to put in place at the new facilities to be to produce the product at those facilities.

Okay.

And any update on the Lafarge assets and progress getting those up to making well grade cement?

That's what I say -- we are making progress.

Like I said, there is some capital that we need to spend at both those plants, and those plans are well underway.

Thanks for taking my questions today.

Trey Grooms, Stephens.

Steve, I might have missed this, but you touched on replacement of a kiln gear, there, in one of your plants.

Can you quantify what the impact was there?

I think you said there was an impact from purchase accounting of about $1 million.

What was the impact of replacing the kiln gear?

Forgive me if I missed that.

We had at Nevada Cement a 50-year-old kiln gear box that it was finally time to replace -- or not a gearbox, but an actual main gear.

I think we had turned that gear about 25 years ago, so we got the useful life out of it.

We knew it was coming.

We were not sure.

We were hoping it would wait until a normal outage a little later in the year, but it hit a little early on us.

So, when you shut it down, you take advantage of -- because it is a long process to put the new gear on the kiln.

You take advantage, and you fix some kiln shell, and you put a new riding ring in and a few other large maintenance items that we had.

And then you go through a full maintenance and repair of the rest of the kiln system.

So the impact of that was significant, which is really probably the difference that we see in what we anticipated in our earnings for this quarter.

Excluding all of these one-time things or extraordinary things with the kiln, and with the purchase accounting and others things there, what -- so you are thinking that margins would have been, you said, as planned, but is that similar to the year-ago period?

How do we think about that?

Yes.

That is correct.

Perfect, thanks for that color.

And then you guys are -- I think you should be getting pretty close to having your plant up and running in Corpus, your frac sand plant.

I am hoping you can give us some color there.

What is the size of the plant?

And annual output of the Corpus plant there?

If you could give us color on that?

Construction of the plant is very nearly complete.

In fact, shakedown and startup will commence by the end of this month.

The plant is rated at about 1.5 million tons per year, and so we are excited to get that up and running.

And we should anticipate really hitting the market sometime this spring, early summer with product out of that plant.

We want to make sure the plant is producing the highest quality product before we sell anything.

So we will have an extended startup period just to assure quality control at that facility.

And with the 1.5 million tons a year, is that something that takes quite a bit of time to come up to full capacity?

Or is there any way we can think about the timing on something like that?

From an operational perspective, there is not a lot.

Once we get through the shakedown period, the plant should be able to operate at that level.

So then it is just a function of all of the dynamics being a new entrant into the marketplace.

Okay.

I appreciate that color.

And on the same note, is there something beyond Corpus?

I guess this is -- I have heard you guys refer to it as a phase 1. Is there anything beyond that in your mind, and, if so, what would that entail?

Sure.

We continue to make significant progress with our plan, which is really to deliver high quality northern white sand to all major shale plays in North America, and to be the low cost producer while we do it.

And those plans continue to be put in place.

Milestones that we have set continue to be met.

You are starting to develop something in many different areas, so you have to acquire land.

You have to get land zoned.

You have to get permitting done.

All of those things are in place to make sure that this process continues and we continue to grow this over the next couple of years.

Okay, well, thank a lot for all that color and good luck.

I will jump back in queue.

Thanks.

Todd Vencil, Sterne, Agee.

Steve, you mentioned that the wallboard plant remains sold out, and I think it was sold out a whole bunch of tons ago as well; and I know that is partly due to the shift towards making more wallboard facing paper as opposed to other things.

Can you give us some color on where you think volumes at the plant are likely to go?

And how fast you think we are going to be shifting around to the sale of wallboard facing paper?

I think you're talking about the paper mill.

Yes.

So the answer is, there was a huge shift this year, quarter over quarter.

Our gypsum liner sales were up 67% versus a year ago.

So the shift, as wallboard demand continues to improve as, again, producing a very high quality gypsum liner, more and more of our competitors realize the advantage of using that gypsum liner, we are able to sell more and more of that outside as well as inside.

So there has been a very nice turnaround at that paper mill as noted by the increase in outside -- primarily in sales of gypsum liner to outside customers.

As we go forward, I certainly thought we'd hit a wall on what the shipments were going to look like.

And then when you had a nice step-up due to, as you say, the third-party sales of gypsum liner, do you have a feel for how many tons you might sell out of that plant this year?

There is still a lot of room to improve there, and this paper mill actually has a lot more capacity.

So when you think about paper mills, you are always talking about on a ton basis and the ton per year.

And when we're making gypsum liner, it is at a higher basis weight than we are making the liner for our sack sales.

So it is about twice -- you get twice the tonnage when you're making gypsum liner versus when you're selling into the sack market.

Got it.

That makes sense.

And sticking on the wallboard -- at least wallboard/paperboard side -- are you guys looking at adding shifts this year?

Are you getting to the point at any plants where you're thinking about taking the one plant you closed out of mothballs or adding shifts at any of your other plants?

And have you seen any of your competitors start adding shifts yet?

I really can't speak for what our competitors are doing, just knowing that during the past year we just made a few tweaks as needed to meet demand.

We might have added two or three employees here and then worked a few extra hours additional on a weekly basis just to balance what our customer demands are with what our production capabilities are.

And during the course of that, we have a couple of our plants that are really -- the lines they're running very close to being fully utilized.

A couple of plants we probably still have a few little tweaks left.

But, unless there is a huge increase in demand, the idea of starting a mothball plant doesn't make sense unless you know that it is going to be for an extended period of time, because it is very costly to start up a new plant.

And if you start it up and then demand softens a little bit, and you have to shut it back down, then you have to incur a big closing cost as well.

So we would have to see homebuilding improve dramatically from where it is now before we would consider that.

Got it.

Switching over to cement on you -- can you remind us where we stand early 2013 on cement price increases, both ones that we have seen put in and the ones that are yet to come?

Sure.

Winter sales price increases of about $5 to $8 per ton are currently being implemented in all of our markets.

And some of the early indications in the early price increases early winter -- they are very positive.

And in many of those cases, we are actually starting to see price increase letters for next summer come up.

Same kind of magnitude?

$5-ish.

Yes.

Okay.

And just on the question of maintenance, which is always a little bit of an interesting wrinkle for you guys -- is there any outlook you can share for major maintenance costs at your plants in the next quarter or two, in cement?

Yes, we are going to have some major maintenance at the new Lafarge facilities this quarter.

The rest we've pretty well taken care of now, but what we're looking at is some maintenance at both, at least one of the lines in Tulsa and a major maintenance in Kansas City this quarter.

Any guess or guidance on how much that might run you?

Yes, I don't -- it is a little early for me to give those.

This is the first time that we've owned these assets and gone through it, so it would be a little hard for me, until I go through an outage, to give you any detail.

I got it.

Well, I'm sure if you are running short of people, you can get Craig up there swinging a hammer.

Thanks a lot for that, guys.

Jerry Revich, Goldman Sachs.

I am wondering if you could talk about the seasonality that you expect out of your Lafarge cement and concrete businesses compared to the legacy Eagle assets?

Just give us a sense for what the seasonal pattern from an earnings standpoint might look like?

You mentioned you've got some maintenance coming up this quarter.

I'm wondering if you could just flesh that out for us?

And also, can you comment on how the performance of the asset has been going since you have gotten your operating folks involved?

It looks like, based on the 8-K you filed, it looks like the operations had been running a little bit ahead of expectations right prior to closing.

So I am wondering if you could give just us an update there as well?

Sure, as far as seasonality -- it's going to be about an average.

One plant is a little further to the north in Kansas City, which gives a little bit greater winter seasonality than a plant down South.

And the plant in Tulsa is going to be a little bit closer to the Sunbelt and have less seasonality.

So they are not quite as far North as a plant in Wyoming or Illinois, but the Kansas City is in the Midwest and will behave accordingly.

Whereas the Tulsa plant will behave closer to our plants in the Sunbelt.

On average we would say the seasonality would be about the same that we see out at the legacy plants.

So that's as far as sales and how that works.

As far as the operations -- we are very pleased with these operations -- very pleased with the how the integration is taking place and how the plants are operating.

And looking forward to getting these plants fully sold out within the next year or so.

And in terms of -- I am wondering, Craig, if you would be able to share with us the earnings of the legacy Eagle cement, concrete, and aggregates business, excluding the Lafarge -- the purchase accounting charges with those?

Can you flesh that out a bit more what would have been legacy EBIT for cement and concrete and aggregates?

Sure.

I will talk revenues as well.

You will see this in the 10-Q that will be filed here in the next day or so.

For the three months ending December 31, for the quarter, about $6 million in revenues related to the cement business from the Lafarge assets and approximately $1.9 million in concrete and aggregate revenues.

And really, we're just talking about the one month.

Profitability-wise it added about $600,000 to the cement EBIT line, and the concrete and aggregate business was a small piece of that.

Okay.

And, in terms of the paperboard business, you mentioned you're getting some nice uptake on additional external sales for the wallboard industry.

I am wondering if you think you have more room to go from a penetration standpoint?

Or are you pretty much in place with existing customer base, so the mix that we're looking at this quarter should be the right mix going forward?

It is actually steadily improving, and, as wallboard demand increases, and as homebuilding improves, it would be nice to see more and more of that -- of the paper mill converted to gypsum liner sales -- production and sales.

There is still plenty of room to improve there.

And so you have got margins through a quarterly record for the paperboard business at 25% here.

I am wondering if you could frame for us what the ultimate margin opportunity is in this cycle; operationally you change the business around a bit.

And I am wondering if you could help us know how your thinking about the margin profile once you get past the transition the wallboard content here?

We are near, at this point in the cycle, really pleased with all the effort that has been put into the machine to improve its efficiency and performance,.

But we are nowhere near the ultimate profitability of that machine.

We have a lot of room to go as far as switching sales over to the more profitable gypsum liners, increasing sales tons through more sales of gypsum liner.

There is a lot of upside to this machine.

And, lastly -- obviously the price increases in wallboard are sticking, but I am wondering if you could comment on how we should be thinking about mix over the next couple of quarters compared to what we saw in the December quarter here?

Mix?

What are you referring to?

Any different product grades?

Or any variations from a regional standpoint -- anything at all that might skew the reported price for thousand as you have seen it?

I have not seen any significant change.

Whether it is our regional sales or product mix, it should be the same.

Thank you.

Neil Frohnapple, Northcoast Research.

Last year, I believe it was in the month of March when you announced a wallboard price increase for 2013 to give customers with longer lead times more clarity.

Are you planning on announcing an additional price increase in the spring for 2014?

We really have not decided that.

Last year that occurred when we had a lot of our customers requesting that.

They just needed something to go to bid with; and have not really had a lot of requests for that this year.

Okay.

As a follow-up to Trey's question regarding frac sand -- any sense of price per ton at this point that you can lead us to?

Little bit early for that.

Okay.

Any then final one for me -- have you been able to begin converting production to oil well cement at your new cement plants?

And if not, what do you think the timing will look like here?

We are currently wrapping our arms around some capital projects needed to go forward to do that.

That should -- we will finally have that beyond us in this quarter, and we will start putting those capital projects in place, or at least on order by the end of this quarter.

And then sometimes during the course of the next year have that all put in place to where I feel comfortable that we could produce a uniform high-quality product by next year.

Great, thank you very much.

Jim Barrett, CL King and Associates.

The Texas Lehigh facility -- the 11% increase in tonnage -- how much of that was your ability to increase production?

Or does that partly reflect purchases from third parties?

That really reflects the [bird] for a number of years, so the increased sales are all from purchased product.

Okay.

And, Steve on a related point, I understand that [is a maybe]; has there been any preliminary discussions to expand capacity at that facility, given how robust the Texas market is?

There have not -- we have a very large import terminal -- or at least a joint venture piece of a large import terminal -- that we have not fully utilized in Houston.

And we also have an import terminal in Corpus Christi.

So our plans are really, as things grow, to bring products in as they are needed.

But, in the near term, as some of our competitors have some excess capacity, our preference has been to buy from some of our competitors in the local market.

Makes sense.

And, with your overall cement pricing up 3%, directionally is the Austin market significantly healthier than that?

No, the Austin market, and even in concrete and aggregates, we are starting to see a lot of improvement in demand and in pricing; certainly with the concrete as well as the cement.

Okay.

Thank you very much.

Chris Olin, Cleveland Research.

I just wanted to talk a little bit more on the big picture side.

In terms of the wallboard demand environment, can you give me your thoughts on where you see total consumption for 2013?

And does that include some type of positive impact from the East Coast hurricane rebuilds?

I really don't know about the impact.

That is a market that we really don't play in, up in the Northeast.

But it is really totally a function of housing demand, and it looks like the trend for housing demand is up.

And, if the trend for housing demand continues to go up, wallboard will follow it just exactly as the housing demand improves.

Is there a number you use in terms of starts for your planning purposes?

No, we haven't.

We have kind of looked at it.

We were about 19 billion square feet this last year, which is about 10% up from the year before.

The trend is along the same path right now for this year.

Okay; and then just lastly -- looking at commercial construction, I was just wondering if there is any better demand data points west of the Mississippi that would suggest maybe you are a little bit better positioned versus being in the East.

The commercial construction really has been kind of slow in most markets; just starting to improve.

Where you have a lot of growth, really, primarily for us, associated around these energy plates, in the Texas market and in the Mountain region.

That is where we are starting to see just the overall construction markets picking up.

In fact, I think, as far as cement is concerned, year-over-year, cement demand was up 9% in the US, but in Colorado and Texas it was up about double that.

Thanks a lot.

Garik Shmois, Longbow Research

A couple of questions on cement, to start with.

I was wondering first off, in Texas, if you are increasing imports, is there a potential risk to margins, given that the leverage to the purchased product would theoretically be less than your produced product?

The answer is, the margin on the purchased product is always less than on the manufactured product.

Absolutely.

But it is all incremental and all very positive, and we are excited to have it.

But we shouldn't expect some structural degradation to margin going forward?

No.

(multiple speakers) accelerate.

Okay.

And then I guess, on the last quarter -- can you walk us through what you saw in volumes in your cement markets on a year-over-year basis, and maybe help us understand what the Lafarge assets also did on a year-over-year basis just in the one month that you had it?

If you just look -- so the answer I would look at some of the PCA data.

As I mentioned, the demand in Texas and Colorado is almost double what the demand increase was for the nation.

And if you look at the other markets, they are just slightly below the national average.

So, if the national average is 9%, we are ranging 6% or maybe 5% in a couple of markets as far as the demand increase year-over-year in those markets.

And that was pretty consistent in the third quarter?

I really don't -- we have some temporary numbers with cement because things can be seasonal, and some of the work was pulled forward earlier in the year, because we had such a mild winter.

It is really hard to look at that quarterly number.

I don't want to beat this point too much, but can you help us understand -- you did on the wallboard side with early indications into January volume trends.

But can you provide a little bit of an outlook on the cement side, as well, into January, recognizing that you did have some tough compares, particularly in the Northern market?

So the answer is, while this winter is not as mild as last winter, on average, it is still a pretty mild winter, so our sales volumes are pretty strong.

Okay.

Okay?

No, that is good.

And I guess my last question -- I guess two more questions.

Real quick on the tax -- it was higher in the last quarter; should we use that 34% run rate going forward, Craig, given that your sales and profitability outlook has improved?

Yes, that is not a bad rate to use going forward.

Just on the wallboard, I remember in the year-ago period, you were, I believe, taking your plants down in December, in part to control the pre-buy.

I would imagine you did not do that again this year.

Now, is there any plans to take your wallboard facilities down for maintenance in the first quarter, just given some of the seasonality in the business?

The answer is, last year we did it, as we do every winter, we do our maintenance over the holiday period.

So it was just planned maintenance that we do every year.

And we did it last year over the holidays because there's not a lot of construction work going on Christmas through New Year.

And we did the exact same this year.

So we did take our plants down.

Okay, great.

Nothing really different there.

Okay; thank you.

Glenn Wortman, Sidoti & Company.

Can you just comment on the pricing and volume picture for your concrete and aggregates business going forward?

And then, just any level of confidence on returning that business to profitability over the next year?

Things are really improving in Austin.

Things are just very slow in Northern California.

So in one market, we are really starting to see things improve, but it's offset by continued weakness in Northern California.

Okay.

And, Craig, what should we be modeling for interest expense?

About $5.5 million a quarter.

All right.

Thank you.

Ivan Sacks, Institutional Equities.

Congratulations about the results.

I just wanted to get a clearer picture of the macro side of the business.

When we look at peak in 2008, or around about there, we had approximately $350 million in EBITDA.

And now we are running at approximately, if we took this last quarter, at $160 million.

So it looks like we still have quite a long way to go in terms of earnings generation going forward.

And then plus you've got the fracking side.

How would one be able to picture (technical difficulties) going forward?

If we had $160 million right now and we did $350 million before, we have obviously got a long way to go.

We (technical difficulties) in the cycle.

That is correct, and we also have the Lafarge assets.

And, as we added our Lafarge assets in, and I think we filed the stuff accordingly, that adds about another $50 million of EBITDA.

So, if you look at the trailing 12, it is over $200 million now, with the acquisition of Lafarge.

So we're sitting at about that level, and really, just at the bottom end of the cycle, ready to go up.

We have always wanted to look at our business and look at growing our business to the point where cycle to cycle we have the ability to dramatically increase earnings.

And we feel we are doing a good job if we are able to double peak to peak the earnings potential of the Company.

Right.

And then, Steve, didn't you add additional capacity as well, where for example, even if you went to $350 million from before, and then you add $50 million for the Lafarge, that would put you like at $400 million.

And then you have got the fracking sand as well.

So --

And we have added another wallboard plant, and we have modernized the cement plant in Illinois.

So, yes, we have been putting pieces in place to steadily grow this business.

So that would probably be more like $450 million or somewhere around there.

And then I want to just get an idea -- did you say 1.5 tons of fracking sand per annum?

1.5 million tons per annum.

Okay.

1.5 million tons per annum.

Because I thought, wow, that's too little.

Because -- have I heard correctly, approximately 22 trucks is what you need to fill one horizontal well?

That really is on a case-by-case basis; a very broad range depending on how many stages of the well is being fracked.

Right.

If you would not mind a ballpark figure, and I know it's probably -- 22 trucks of fracking sand, how much is that?

How many tons?

Approximately?

A truck is about 25 tons, but that sounds a little bit light to me for an average well.

Okay.

I see.

Very good.

And finally, Steve -- in terms of supply of the fracking sand itself, if you have 1.5 million tons per year, what supply do we have?

Do you have an idea of the supply that we have?

I think it is next to the Illinois plant that you found this?

Yes, we have greater than 50 years' supply.

And finally I believe there are two kinds of fracking sand.

One is a mono, and one is a poly, and one is of a higher grade than the other?

Yes, so this is all northern white sand, and it is all mono crystalline.

That is at the high end?

The highest quality.

Excellent.

Thank you so much.

Kathryn Thompson.

Some of the answers were already addressed, but it was primarily on the frac sand opportunity.

A two-part question.

On a 12 month basis, once you are up and selling product, how much do you think you can sell in the first 12 months?

And then for incremental, did you want to sell beyond 1.5 million capacity that you currently have?

What would be the CapEx spend, and what would be the incremental volumes gained from that CapEx spend?

We just really have not gotten into those details yet.

And we have been in startups before, and we know these things just take a little while to work through.

We are very comfortable with the amount of CapEx that we have spent to date and very comfortable that the CapEx going forward is something we can handle.

Okay, great.

Thank you.

Thank you for your questions.

I will now turn the call back to Management for any closing remarks.

Thank you.

We look forward to talking to you again next quarter.

We thank you for your participation.

You may now disconnect.