Geo Group Inc (GEO) 2004 Q2 法說會逐字稿

Good day ladies and gentlemen and welcome to your Correctional Properties Trust conference call. At this time all participants are in a listen-only mode. Later, we will connect a question and answer session and instructions will follow at that time. If you should need operator assistance, you may press star then 0 on your touch tone telephone. As a reminder this conference call is being recorded. Now I'd like to turn the program over to your host, the Correctional Properties Trust.

Good afternoon and welcome to today's conference call by Correctional Properties Trust. This call will contain forward-looking statements regarding future events and future performance of the Companies that involve risks and uncertainties that could materially affect actual results. Please refer to our SEC filings for a description of risks, uncertainties and other factors that could cause actual results to vary from current expectations and forward-looking statements contained in this teleconference. At this time I would like to introduce Charles Jones, President and Chief Executive Officer and David Obernesser, Chief Financial Officer.

Thank you and good afternoon. I appreciate your participating in our quarterly conference call. I'm Chuck Jones. We will begin with Dave Obernesser, our Chief Financial Officer, who will provide details of our financial results and related matters. David?

Thank you, Chuck. Correctional Properties Trust reported net income for the second quarter 2004 of 41 cents per share with funds from operations, or FFO, of 58 cents per share. These earnings figures are based on diluted weighted-average shares outstanding during the period of 11,078,000 shares. In addition the Board of Trustees declared a quarterly dividend of 45 cents per share payable September 2, 2004, to shareholders of the company of record at the close of business on August 20, 2004. Total revenue for the second quarter 2004, was 8.4 million, as compared to 7.9 million for the second quarter 2003. This increase of 7% in revenue is primarily due to the acquisition of Delaney Hall in May 2003, which increased rental revenue by 420,000 in the quarter.

G&A expenses were 677,000 for the second quarter 2004, versus 487,000 for the second quarter 2003. This increase is primarily due to the increase in insurance, salaries and benefits, professional fees and trustee fees. Interest expense was 1.3 million for the second quarter 2004, as compared to 2.8 million for the second quarter 2003. The decrease in interest expense is primarily due to the reduction in the outstanding balance on the credit facility.

The company's debt at June 30, 2004, consisted of no amounts outstanding on the bank credit facility and 55.3 million of bond debt at a fixed rate of 7.15%. Therefore the company's capitalization at June 30, 2004, consisted of 55.3 million of debt and 212.2 million of book equity which equates to the capitalization structure of 21% debt and 79% equity. The current average remaining life on our leases is approximately 4.6 years. Although the McFarland facility and the Jena facility remain vacant, they are both subject to noncancellable triple net leases which expire in 2008 and 2010 respectively. Our leasee, the Geo Group, is obligated to pay the rent on these facilities regardless of whether or not they have an operating contract for the leased facility and has never been late in doing so.

Correction Correctional Properties Trust non-cash items during the second quarter 2004 included approximately 95,000 of revenue from straight lining in accordance with GAAP, and approximately 211,000 for the amortization of deferred financing fees. Chuck will now address other developments.

Thank you, Dave. I want to begin by providing an update on our two prisons currently leased to the state of North Carolina. In 2001 the Mountain View correctional facility and the Pamlico Correctional facility, both located in North Carolina, were owned by a private prison operator who had previously operated these two facilities under a contract with the state of North Carolina. The operational contract between the state and the operator had been terminated, yet the previous operator continued to own the two prisons which were leased to the state. With the encouragement and support of the state, Correctional Properties Trust acquired these two facilities from the previous operator. The first of these, the Mountain View correctional facility, was acquired on March 16, 2001 for approximately $25.2 million including transaction costs. The second, the Pamlico correctional facility was acquired on June 28, 2001, for approximately $24.3 million including transaction costs. It should be noted these two facilities were acquired subject to an existing triple net lease, adopted when the facilities were put in service in 1998. The existing leases included an option under which North Carolina could acquire each facility beginning annually in 2004 at a predetermined declining amount.

As you are aware the State of North Carolina has provided written notice to the company of the exercise of its option to acquire these two properties. In the case of the Pamlico facility the effective date of the purchase option is August 18, 2004, at a price of approximately $25.2 million. In the Mountain View case the effective date of the purchase option is November 30, 2004, at a purchase price of approximately 26.2 million. These are the dates the purchase options are effective, not the sale date. In each case the state’s optional purchase price is more than we paid for the properties in 2001. When we acquired these properties, the company issued mortgage revenue bonds totaling $57.5 million of which $55 million remained outstanding today. Because the properties, along with the rental revenue from the two facilities, secures these revenue bonds, the proceeds from the facility sale, plus the cash held by the bond trustee and the debt service reserve fund of $5.7 million must be used to pay off the outstanding revenue bond. The available proceeds will exceed the amount necessary to pay off the bond and the expenses of the transactions by approximately $2 million. For your financial modeling purposes, the combined twelve-month straight line rent from these two properties is approximately $6.7 million with cash basis rent of $6.5 million.

On a combined basis, these two properties provide 7 cents annually in GAAP EPS, or 3.5 cents each. The combined total annual contribution to FFO is 24 cents, or 12 cents for each of the properties. While the timing of the closing of the sale has not been set, it is reasonable to assume the sale of the properties will be completed in 2004 with the revenue bonds simultaneously paid off. Depending on the timing of completing the sales the company expects to realize a GAAP gain on the sale of approximately $5 million. The gain for tax purposes will be approximately $7 million.

Let's focus for a minute on our dividend and the impact of these sales. Including the earnings from these two North Carolina properties, our current dividend to FFO payout ratio is 78%. Following the sale of both properties, the dividend FFO payout ratio will be 86% on a pro forma basis. Comparable triple net companies payout an average of approximately 81%. As you can see, our FFO dividend coverage remains strong following the sale of the two North Carolina properties at 86%. Additionally it should be noted given the one time tax gain on the sale of these two properties, it may be necessary to pay an additional one time dividend. As you know, REITs must pay out as dividends 90% of ordinary taxable income.

Additionally the combined total amount paid as dividends must include 100% of any taxable gain. In looking at this requirement on a preliminary basis, it appears it may be necessary to pay a one time additional dividend to achieve the minimum required dividend pay out levels. This is still subject to review with our accountants and tax counsel. The dividend amount will be established by the Board of Trustees upon the completion of the sale of the North Carolina facilities. In speaking with the state officials, it appears that the motivation to exercise the option and acquire the properties is the financial savings. The very low interest rate at which the state may currently borrow, to acquire these facilities represent, I believe, the major motivation.

Our company did propose a significant restructuring of the existing lease and rental payment levels to the state. However, the state has rejected the restructured lease terms. As to the remainder of our portfolio please remember the two North Carolina properties were acquired subject to an existing lease. None of our other properties are subject to purchase options except Laughton, Oklahoma. The State of Oklahoma requires a purchase option on correctional facilities subject to operating contracts with private prison operators. The state does have an option to acquire the Laughton facility at fair market value. I consider the probability this option will be exercised to be remote.

I want to now look at the overall correction sector and our acquisition and growth strategy. We are aggressively pursuing growth in acquisitions on a dual track, and these two tracks are facilities leased to private correctional facilities operators, and facilities leased directly to government. Within the private operator segment there are three specific market dimensions. First, the sale by a private operator of an existing facility which is then leased back to the selling operator. This is a major component of our acquisition strategy. In many cases private operators need to access capital to compete for new management awards or meet other liquidity requirements. The low interest rate environment has made it attractive for operators to continue to own facilities. And in several recent cases we have seen private operators issue long-term bonds to meet liquidity needs. Rising interest rates combined with an expected increase in needs for liquidity may induce operators to sell and lease-back facilities. This is something we are actively pursuing with a number of operators. However forecasting the probability or timing of acquisitions remains very difficult.

There are a number of attractive facilities on the balance sheets of operators which represent potential acquisitions. We are seeing an increase in the new business opportunities for private corrections operators. There is little building of new prisons by government currently taking place, while the inmate population is increasing at a significant rate. We are seeing this need to additional bed space, reflected in the increase in procurements being issued or considered at the State and Federal level. These new procurements are one of the events which may cause operators to monetize existing facilities through sales and lease backs. This along with rising interest rates may reasonably be expected to impact operators’ continued financing of the facilities they own, and the further evaluation of sale lease-back opportunities and economics.

The second component of the private operator market is the development and construction of new facilities. There are currently opportunities where operators have received new government awards including the construction of a new facility the operator will then manage. Correctional Properties Trust can play an important role by providing a liquidity to construction new facilities which we would then own and lease to the operator. In addition to existing awards there are a number of procurements expected to be awarded in the coming months which will include the requirement to provide the capital for the construction and ownership of new facilities.

The third component in the private operator market is increasing the housing capacity of our existing portfolio of properties. One of the least expensive means by which housing capacity may be increased is through the expansion of the existing facilities. Similar to financing a construction of new facilities to be added to our portfolio providing the liquidity to expand housing capacity in our existing properties is an important component of our growth and I believe we will see increasing opportunities here.

Outside the private operator spectrum facilities leased directly to government represent the second market segment. This includes the sale and lease-back of existing government operated facilities as well as our company financing and in owning newly constructed properties. With the stress on state and county budgets combined with the need for new justice centers, prisons, and jails, I believe the direct lease market represents an attractive opportunity for the company. There are several current opportunities where a state or county government needs a new correctional facility or justice center, but cannot or does not want to issue public debt to fund the construction or own the facility. In such cases we are proposing to provide the capital for the construction of the facility, which the Company would then own and lease to the governmental authority. We have expanded our marketing scope and have dedicated resource to this sector which I believe holds opportunity for the Company. There is an elevated level of procurement activity in the corrections sector, including several states that have not previously contracted with the private sector for correctional related services. Our expanded capital base and liquidity position thus to pursue additions to our portfolio and the Company has expanded the scope of our growth strategy and marketing. However, the Company has not changed our property evaluation and acquisition criteria or credit standards. They remain high which at times has resulted in our withdrawing from acquisition opportunities that had previously held promise.

The overall level of activity in the corrections sector is high. The inmate population has continued to expand and needed new bed capacity has not been provided, creating a backlog which will have to be addressed. The need for capital is strong and we are targeting opportunities with private operators and directly with government. The decision framework within the public sector is very difficult to predict and as a result, acquisition timing is always an issue. We are in a favorable business climate and confident in our business plan and strategy. With that we would be pleased to turn it over for any questions. Operator?

(Operator Instructions) Our first question comes from Lisa Man from Heightman.

Hello?

Good afternoon.

I'm sorry. I didn't hit anything.

Oh, okay.

Okay.

Our next question comes from Jon Litt from Smith Barney.

Jon Litt , here with David Carlyle. Can you elaborate on the dividend? Is that going to be like a $1 plus dividend or do you think, if you have to pay one it will be -- do you have any order of magnitude?

We can scope it for you. We're obviously hesitant and I will do so with the caveat that it is under review but I think, Jon, that in order to meet the minimum requirements, which is to say there would be no return of capital but just the minimum, I think it's in the 17 cents per share range, that's just to hold our REIT standard.

And you could do a 1031 if you had something to buy with it. Is that correct.

We could do a 1031, that's right.

How much more time do you have until you have to identify it as a 1031 exchange?

We have until 90 days after the closing of the sale, I believe.

What's the date of the sale?

The closing has not been set. I think it will be late in the fourth quarter. So we would have, I believe it's either 60 or 90 days after the closing to identify the replacement property.

You should have probably at least three quarters to try to figure this out.

I think that's reasonable. We do have the potential to do a 1031 which would eliminate the taxability of the gain.

You alluded to the three areas where you might be able to do some acquisitions or some transactions but you didn't really assign any probabilities or timing to any one of the three. Maybe you could give us some color on that.

The three areas would be the direct sale lease-back with an operator. And we have -- we have had some frustrating discussions that have led to us withdrawing from some opportunities. There are several out there. I frankly have felt like and I still feel like there would be in the first half of the year some consolidation in the industry that would create some opportunities for us. And we kept some dry powder.

One of the difficulties in this business is not necessarily understanding what's going to happen, it's understanding when it will happen. And I still think that the consolidation within the private corrections sector is something to be anticipated and we are in a position to move quickly when that occurs. The second is the financing of new awards. There have been awards where operators need, in the near future, to develop existing facilities where we might provide the financing and own those facilities. There have been awards made in that arena so we are in discussions there.

The third and the one where I think there is considerable opportunity is the direct development and lease with government where we have states and counties that need facilities and either can't or don't want to issue bonds. And I think there's some imminent decisions that we've been working on for a considerable time in that area but I think all three of these we should have considerable input and decisions made, certainly early in the fourth quarter if not sooner. The election does cause some pause but only because the attention is obviously diverted.

A year ago this time you felt fairly optimistic you would have made some transactions by now.

I did, Jon.

And I guess the question is on the ones that haven't happened, is it a price issue, are you just not willing to go to the price?

It hasn't been price, it's been credit. It has not been price. We've been able to arrive at prices that we were quite comfortable with on the yields, particularly. It's been credit. It's been credit and the lease structures.

So the operator was a credit which you just didn't feel like you can go with?

Or we couldn't get the credit into the lease the way we wanted it. It's either the underlying credit itself or it's insulating our access to that credit by the way the lease is structured. Those have, that has been frustrating. And the second one that I did mention briefly that should be noted is in a couple of instances where sale and lease backs might have otherwise occurred, and I thought it was reasonable to think that they might, those operator did some high yield bonds instead.

Was the pricing of the bonds inside of what you could have done in the transaction?

No, it was outside. It was higher than we could have done the transaction otherwise.

Why do you think the operators pursued the high yield versus?

Credit.

What do you mean credit?

Credit in that, by doing the bonds, by issuing the bonds, they, the companies are able to hold on to the collateral and they are issuing high yield debt that is non-recourse or unsecured to the company. So they have a stronger collateral pool, they access the liquidity through the unsecured bonds and then they have a higher collateral pool for their bank. And we measure not just the yield that they pay on the bonds against what we were offering the capital on a pure capital to capital cost, but in addition to that we considered the depreciation that the operator has to continue to recognize on the properties that they hold. So that's another 250 basis points, assuming a 40-year life on a facility which is fairly standard, that's 2.5% a year. So you take the capital costs, and add the 2.5% to it and that's where you get the impact on the balance sheet, so it hasn't been pricing, it's been credit.

Okay. I think David Carlyle had a question, David?

Hi, Chuck. I just wanted to follow up on your opening comments about the Laughton, Oklahoma facility, is that an annual provision that Oklahoma has to buy it back? And given the state of Oklahoma's lower cost of capital, why do you think they would not pursue that and have the same incentive that North Carolina had?

A few years ago I think it's probably in the four or five years ago range, Oklahoma found itself in a position where it had a four or five facilities operated by private operators where the operators also owned the facility. And it put the state in a very difficult negotiating standpoint because when you are negotiating with an operator who also owns the facility, obviously there's some leverage there that the state didn't want. So the state took the position that before they would enter into any operating agreement with a particular operator, they had to have an option under which they could acquire that lease. So that in the negotiations they couldn't come to terms with the operator, they could still access the facility by exercising their option. And that's why, it's in there for that reason for negotiating purposes, and it's why I consider it highly remote that they would ever exercise it. It's strictly from a negotiating leverage standpoint.

Is it annual like in North Carolina or is it ongoing?

It is, yes. It's fair market value it's not at a set schedule.

The Broward County facilities, the occupancy there fell to 52 %, I was wondering what was going on there?

I think it's a budgetary item within vice, perhaps. I frankly don't know but it's not uncommon to see some of the occupancies fall right at the end of the last quarter of a budget year, depending on allocation of resources.

Okay. And that Broward facility, the operating agreement expires in September as does the Aurora facility. Is there any reason to believe that those would not be renewed?

No there's not. Those are high demands facilities and we are very comfortable that the occupancy there will continue.

Okay. Finally, any update on getting a new tenant into either the Jena or McFarland facilities?

No, I did visit McFarland earlier in the quarter, took a tour of it, had a look at it. Geo has always done a nice job of maintaining the facilities. While it's empty they are doing quite a bit of work on it, painting it, cleaning it, bringing it up. But I think the demand for that facility, we will see it filled soon. Jena is, Jena is also a very attractive facility that I know there's a number of proposals out on. We did see in the last 30 days we saw where the Department of Corrections in Texas is in the planning phase where they are going to need a considerable number of private beds over the coming 18 months or so. I think there is some prospect there but Geo is directly handling that.

Okay. That's all I have.

Thank you sir. Our next question comes from Ed Sirville from REMS Group.

Good afternoon. Just a question, could you cover what the probable range of cash lease returns would be in the different type of opportunities that you've been discussing?

Yeah, I will. And you did say cash, we'll talk some straight lining too, but from a pure cash standpoint the going in rates with the private operators we've expected in the 10% going in rate. There are a couple of instances where we would go in, perhaps, 30 basis points lower than that, given some of the circumstances that are out there. So anywhere from the very high 9s into the 10s with the private operators, with the direct lease to government, I think it's more in the 9% range. And in each instance, certainly with the privates, we would either have a CPI or a fixed rate escalator. And with the governments that may not necessarily be the case. We may not have escalators there.

Okay. And most governments should be able to borrow well below that 9% number. Is it just that their capacity to borrow is completely exhausted?

It is. It's either statutory where they just cannot borrow and we have two states right now that are in that situation, with strong needs that have to be met but statutorily they have limitations and they can't, they can't incur bond indebtedness to meet it. And there are some counties that face that, also, where there are taxpayer Bill of Rights or there is a limited ability to raise taxes, but yet the cash-flow is available to them. In those instances they want to save what bonding capacity they have for schools, roads, infrastructure that is a little more politically acceptable using bonding capacity for prisons, those are awfully tough referendums to get passed, as opposed to schools and whatnot. There is little doubt that in most every circumstances the government can access capital on a less expensive basis. But it is those circumstances that statutorily they can't or they want to apply what capacity they have to other needs.

Okay. And, do I understand this correctly at the closing of the North Carolina sale, that would eliminate the debt on your balance sheet, you actually would not have any debt on the balance sheet?

You are correct.

Okay. Then what is the capital capacity to do new projects and what's the approximate size of some of these projects in a range?

Okay, first off from a liquidity standpoint, we currently have a $95 million credit facility that is available for draw. That can be used with certain limitations for construction or without limitation for sale lease-back. So there's 95 million. That is the current commitment. We have a credit facility document allowing for 200 million. And so we could use that same document by increasing our capacity. So to answer your question, it's 95 million right now in availability, with the ability to increase the commitment subject to syndication to 200 million.

So your balance sheet would have approximately 50% leverage then, 50% debt, 50% liquidity in capital structure if you went that far.

That's correct, and I think it's reasonable to assume that we would go that far. 50/50 or one to one is where we'd like to be. The second question on a scoping size standpoint we are looking at facilities from a $3 million to an $80 million range, and most everywhere in between. But those are the book ends. Those would be the extremes.

Okay. Alright. Thank you very much.

And further on that point that doesn't include necessarily expansions. We have considered some expansions that would be less capital than that but from a new property standpoint, 3 to 80 million is the range.

And a per bed cost to build today is about what?

On a dormitory -- on a prison dormitory it's about 30,000 per bed. On a prison cell bed, it's about 50,000 to 55,000. And on a work release or a low security dormitory it's in the $18,000 to $20,000 range.

Thank you.

Thank you.

Thank you, sir. Again, ladies and gentlemen, should you have a questions, please press the 1 key on your touch tone telephone. Mr. Jones, I am showing no further questions -- Actually, we do have one more question from Ross Nussbaum from Bank of America.

Hey, Chuck, how are you?

Good, Ross.

A couple questions. First, can you give me a sense of how many sale leasebacks of Correctional Properties have occurred, say in the last year? I'm trying to get a sense really of what the size of this market has been?

In the last year? I don't think there's been any on a straight sale leaseback there has been funded with private capital. If you broke down a couple of the bond issues that have been done, they include a sale lease-back document that sets up the stream of cash-flow between the trustee and the bondholders. But on a straight sale lease-back from a private capital standpoint the way we are looking to do it there has been none to my knowledge.

If I had to count the number of bond deals that were done to finance facilities, are we talking --?

Two. Two, possibly if you -- two that were direct collateral using facilities and there were another two that were just general proceeds available. So a total of four, two which were directly secured by facilities that might otherwise have been sale lease-back opportunities.

I want to follow up on Jon's question from earlier regarding credit, and I guess the question is, you said in the past that one of the key criteria that you look at on a facility is the necessity of it to the state, the government, the Federal Government. Why would the credit of the operator be so crucial to you if you were convinced that the facility was absolutely necessary? Wouldn't you be willing to take a little risk on the operator?

You're exactly right. And the reason, Ross, the reason to boil it right down, usually centers on step-in rights where we have to stands still. If an operator for any reason failed to pay us, bankruptcy or otherwise, we have to have the ability to step in and preserve the occupancy and the tenant in that facility. And if we are in a position where we can't do that, no matter how essential the facility is, we are not getting paid, and we can't move in and apply our remedy, and that's typically where the credit issues really come into play, and that is the priority on the step-in rights and the assignment of the operating agreements.

If the tenant is at default you are saying they are basically trying to keep their noses in the game in not letting you take over operations or assign it to anybody else?

That's right.

How is that an obstacle that you are going to get past?

It's an obstacle that I think has recently appeared, that I think in a little more motivated situation, I think it's very reasonable to expect that under a sale lease-back we would have the step-in rights with a very brief -- we've looked at a lot of leases and it's very common to have a 7 to 10-day stand still period and we can live with that. It's when they get out into the 60 to 90-day range that we won't live with it.

Have you reconsidered doing any deals with Geo, in light of the lack of investments over the last year.

Yes, we have. We have reconsidered it and it's still -- our first priority is still -- and by the way we haven't had those credit issues with Geo.

Right. That's why I asked.

We have not had those credit issues with Geo. It's been more a capital lien on Geo's basis. I think right now they have about 80 million in the bank and they haven't had the need to monetize.

Thank you.

Thank you sir. Our next question comes from Todd Van Fleet from First Analysis.

Hi, guys. Chuck, I know you talk about the dual track that you're pursuing for new opportunities. I know you've been disappointed a couple times here over the past couple of quarters. I'm just curious to get your thoughts on if you are able to quantify in some sense, the amount of, or level of private versus public type opportunities that you're looking at at this point? And David, if you can update us and give us your most recent thoughts on pricing looking ahead to 2005?

Yeah, Todd, first off, there is a fundamental difference between the sale lease backs with the private operators and that is that there has to be a forcing function before those transactions are initiated. And so to some extent, it's out of our control. So our approach to the private operators is, we obviously have good relations with all of them. They know we are here. They know our terms. We know their properties. There's a high level of communication. And in some sense it's a matter of waiting for them to need the capital and then they will evaluate what we can or cannot do for them. So when we look at the private operators, we have the exposure there I think that we need. There is a high level of communication and to some sense we are waiting for one of those forcing functions, either the need to monetize or the concern about rising interest rates. So while there is maintenance there and a high level of communication it's out there and we have those relationships. So when we then look at the direct to lease business that's all new relationships and that's where Stuart and I are spending 90% of our time is on the new relationships directly with government under sale lease backs. So on one hand we are waiting by the phone from a sale lease-back with existing operators or to finance properties that they have out there, and on the other hand we are out there meeting with county commissioners and state agencies and presenting our materials and why they should consider doing business with us.

There are, I know there are timing issues, but have you been able to quantify the magnitude of the opportunities that you are looking at over the next couple of quarters. So on the private side, I know you have the ongoing dialogue, maybe that's X million in terms of immediate, or in terms of opportunities that you've identified versus the public side where you are looking at Y amount.

I stated early in the year that 75 million deployed this year was a reasonable expectation and it still is. It's -- this bulge that is building, when and if it breaks lose I think it's going to be significant, this width and so scoping it, it is still in the $75 million range, but we have proposals that in and of themselves are greater than that. It's very difficult to scope it other than it is lumpy and they range from 3 million to just right under 80 million.

Dave, on the pricing?

Would you repeat the question, Todd?

I'm curious about the pricing increases that you're looking at this year and then possibly heading into 2005.

From a CPI perspective?

Yes.

Yeah. We just had our original eight properties, those had a CPI increase effective May 1, and those came in at about, a little over 3%, about 3.05%.

Okay. Thanks, guys.

Thank you, sir. Our next question comes from Ted Hillenmeyer from Largemon.

Hi, for expansion opportunities with Wackenhut, if you own the facility and they want to expand that facility, they have to go through you?

They do not have to go through us, no.

So if they have cash they could do the expansion by themselves?

They could. I think from an accounting and a P&L impact of course if we do it, they don't have to depreciate it at all. If they do it, it's a lease hold improvement and has to be amortized over the remaining life of the lease, so it does have some pretty significant consequences, irrespective of the cost of capital.

Okay. Got you. Thanks guys.

Thanks Ted.

I am showing no further questions in the queue at this time. I would like to turn the program back to you, Mr. Jones.

Well, we appreciate the questions and your participating in the call. We'll look forward to next quarter. Thank you.

Ladies and gentlemen, this does conclude today's presentation. Everyone have a nice day. You may now disconnect. Good day.