Globalstar Inc (GSAT) 2010 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Second Quarter 2010 Globalstar, Incorporated Earnings Conference Call. (Operator Instructions.)

As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to our host for today, Mr. Dean Hirasawa, Director of Public and Investor Relations for Globalstar. Please proceed.

Good afternoon, everyone. Thank you for joining us for today's conference call to discuss the results for Globalstar, Inc. for the quarter ended June 30, 2010.

Before we begin, please note the following. This call may contain certain forward-looking statements within the meaning of federal securities law. Factors that could cause results to differ materially are described in the Safe Harbor section of today's press release and in Globalstar's SEC filings, including the quarterly report on form 10-Q for the three months ended June 30, 2010, which will be filed in the upcoming days.

The press release, this conference call, and the associated slide presentation, which is available on the Investor Relations page of our Company website, include discussions of certain non-GAAP financial measures as defined under SEC rules. We have provided a reconciliation of each of those non-GAAP measures to the most comparable GAAP measure in the press release and presentation. Please note that the information in this call is accurate only as of today, which is Thursday, August 5, 2010.

Today's press release containing certain financial information is available on the Company's website at www.globalstar.com. Later this afternoon, an audio recording of this conference call will be available via telephone dial-in, and a webcast recording, along with a copy of the slide presentation, will also be made available on the Company website.

Today's call is being hosted by Mr. Peter Dalton, CEO of Globalstar, Inc. Joining Mr. Dalton is Mr. Fuad Ahmad, Senior Vice President and CFO, and from Rome, Italy, Mr. Tony Navarra, President of Global Operations. Each will be available, following their prepared remarks, to take questions.

At this time, I would like to turn the call over to Mr. Dalton.

Good afternoon, and thank you for joining us. Over the next few minutes, I will summarize our operational highlights for the recently completed quarter and share with you our combined vision for Globalstar.

I am happy to report that Globalstar recorded its highest number of SPOT Satellite GPS messenger activations in a quarter. Thanks to the success of Globalstar's recently enhanced new SPOT product, the Company activated almost 17,500 new units, finishing the three-month period ended June 30 with 412,295 total subscribers, or 40,812 more than it had on June 30, 2009.

Throughout the quarter, Globalstar further established its retail consumer market presence. As of today, Globalstar has received orders for more than 250,000 SPOT consumer units from the more than 10,000 retail points of distribution worldwide. This means the Company's consumer market presence with SPOT has now surpassed the quarter million unit mark.

Just to review, the Company roadmap for 2010 and beyond of course includes the SPOT Satellite GPS Messenger, the Marine Spot Hug, the just-released SPOT alarm satellite communicator, and SPOT Assist Roadside and Maritime Services. In addition, Globalstar is planning a host of future SPOT Simplex consumer devices. And of course, we are about to re-enter the market with the GSP 1700 Handset and a number of additional Duplex voice and data products.

Other second quarter highlights included the completion of a joint venture agreement with Korean-based maritime satellite services provider, Arion Communications Company, Limited. Globalstar Asia Pacific is now operating the Globalstar Gateway ground station in Korea and is able to provide Simplex and Duplex mobile satellite voice and data services, including SPOT Satellite GPS Messenger products and services to customers in Korea and surrounding maritime region.

Finally, Globalstar recently announced the relocation of its headquarters and other activities to Covington, Louisiana. Globalstar expects to take advantage of the state's reimbursement of relocation costs, plus a commercial lease subsidy for its new corporate headquarters, as well as future tax credits associated with a great number of state programs. The Company intends to maintain its software development and network operations, including its satellite and ground operations control centers, in California.

This move maximizes the benefits of the Company's 2009 acquisition of Covington-based satellite asset tracking and consumer messaging products manufacturer, Axonn. Globalstar will be the first vertically integrated mobile satellite company featuring decreased preproduction costs and shorter time to market for its integrated wireless and satellite-based consumer and commercial products.

In a few minutes, I will have more to say about the recent FCC-proposed broadband and spectrum initiatives, but at this time I will pass the call over to Tony so he can provide us with the latest information concerning Globalstar's current and second-generation satellites.

Thank you, Peter. Good afternoon, everyone.

Before I go in today's exciting news regarding our second generation satellite constellation, let me briefly update you on our current first-generation satellites.

The first generation Constellation continues to perform as expected. As many of you are aware, our Simplex data and SPOT Satellite GPS Messenger customers are unaffected by our S-band satellite issues, so they continue to enjoy a high level of messaging quality and reliability. Our call times tool, or CTT, also continues to function well for our two-way voice and Duplex data customers who demand the ability to forecast when they can reliably place high quality voice and process Duplex data calls on a given day.

As I mentioned on our previous call, we have completed the first phase of the repositioning of our first-generation constellation, but I need to emphasize this is an ongoing process that will continue till we fully deploy our second generation constellation. During this process, certain first-generation satellites have been positioned for de-orbiting or moved within their orbital planes in preparation for insertion of the second-generation satellites from our first launch.

Now, on to the exciting news regarding our second generation satellites. As many of you know, the first of our second-generation satellites have been undergoing final assembly, integration and testing, or AIT procedures, at the Thales Alenia space facility in Rome. I am extremely pleased to announce that I am in Italy to oversee and authorize final delivery and acceptance of the first batch of three second-generation satellites -- and enjoy the Italian cuisine and Vino Rossos. Delivery of these satellites is a major milestone achievement and the culmination of more than five years of planning by Globalstar and our satellite manufacturer, Thales Alenia Space.

The delivery of these satellites would not have been possible without the diligent efforts of all of our technical and financing partners. We also wish to acknowledge International Space Brokers, a division of Aon Risk Services, and all the participating space risk insurers that we have come to know over the last 12 years for all their support.

Finally, we would also like to specifically acknowledge the tireless work and commitment of all of our employees around the world, as well as those at Thales Alenia Space and Arianespace, who have made the delivery of satellites this week a reality. Let me remind you, it has been almost five years since we established a plan to replace our constellation. While there are the critical launch activities ahead of us, from a pure timeline perspective, we're over 95% of the way through the process of planning, designing, manufacturing and launching the first of our new satellites.

Our second-generation constellation, which was contracted to Thales way back in 2006, will not only return our current and fully backwards-compatible products and services to the high level of quality and reliable coverage our customers expect, but we expect it will also secure our space segment through 2025.

Once we've authorized the acceptance of our satellites, they will be packed in specialized environmentally controlled containers and be shipped to the Arianespace launch facility at the Baikonur Cosmodrome in Kazakhstan. Once all six satellites are unloaded and thoroughly tested, they will then be integrated with the six satellite upper stage dispenser. Once installation of the upper stage protective fairing and shroud is complete, the entire assembly will be mated to the launch vehicle, which is then transported to the launch pad.

Globalstar's contracted with Arianespace for four launches of six satellites each using the highly reliable Soyuz launch vehicle. The Soyuz has been previously used on eight occasions to successfully launch Globalstar's first-generation satellites. It is also the launch vehicle used to send astronauts and cosmonauts to the International Space Station.

The first 90-day launch window for six new Globalstar second-generation satellites opened on July 5, and we expect the first launch to take place in October. As we have said in the past, although this process of delivering and launching a state-of-the-art satellite network is truly space and rocket science, which may seem overwhelming, we are simply continuing to execute on a detailed plan that we began to implement back in 2005. When we speak again in the next quarter, we expect our Globalstar satellite control center personnel to be testing and orbit-raising our first six second-generation satellites.

I will now pass the call to Fuad, who will discuss the financial performance and operating highlights from our first quarter.

Thank you, Tony. And now, I will go through the second quarter 2010 financial highlights.

With the completion of our $738 million financing, we remain in a strong financial position as we near the launch of our second-generation constellation. With this funding, the Company has sufficient liquidity to continue the deployment of our second-generation constellation network and the upgrade of our [grounds] infrastructure.

We believe that this is the beginning of an exciting period for Globalstar from both product portfolio and operating cash flow perspective. We remain committed to improving our operating structure and concentrating on investing in areas offering the highest returns on invested capital. We believe that the Company's recent announcement regarding the relocation of our corporate headquarters to Louisiana is indicative of our focus on optimizing the cost structure.

I'm pleased to announce that, driven by our aggressive cost management initiatives and continued success in adoption of our Simplex and SPOT products, the Company has again been able to significantly improve its operating results versus the prior period with adjusted EBITDA approaching break-even. The Company's adjusted EBITDA for the latest quarter improved to a loss of mere $300,000 versus a $3.3 million loss for the same period in 2009, over 90% improvement. The successful right-sizing of our operations over the past few quarters is bearing fruit, as evidenced by the significant improvement in adjusted EBITDA.

Total revenue of $17.6 million for the second quarter of 2010 represents a year-over-year increase of 12.1%. As demonstrated in our subscriber growth statistics, we have continued to grow our Simplex and SPOT subscriber base while remaining well positioned for the growth in our Duplex business as we begin the launch of our second-generation satellite constellation.

The Company remains confident that the improved operating structure, substantial liquidity position, exciting pipeline of products, and the soon-to-be improved Duplex service will enable us to capitalize on the significant opportunities that exist in this business.

The continued resilience of our Duplex business is highlighted by low retail churn rate and ARPU stability. This is primarily due to the stability of our satellite constellation and the fact that we are approaching the launch of our second-generation system. In fact, the Q2 retail churn level was only .9%, which is approaching the best churn statistic in our history.

Additionally, we expect the continued stability of retail ARPU prior to our second-generation launch, and then gradual expansion to the level consistent with our performance, prior to the satellite degradation issues. Additionally, we expect near-term improvement of Simplex and SPOT ARPU concurrent with the additions of an expanding service offering. We believe that the competitive advantage inherent in our business model will allow for increasing ARPU as we continue to offer additional services to our subscribers for a value proposition that is extremely more compelling than all of our competitors.

With the launch of our second-generation constellation only months away, our Duplex subscriber base is expected to remain generally stable. This base of over 105,000 subscribers provide us with a solid platform to capitalize on the soon-to-be improved service availability.

We are also very excited about our growing Simplex and SPOT subscriber base of approximately 245,000 today. We believe that the new product pipeline represents opportunities for significant growth in this area, and we continue to focus on growing our points of distribution to meet increasing demand for our innovative Simplex-based products.

In closing, our principal aim remains the improvement of our Duplex business while aggressively pursuing growth opportunities for our Simplex and SPOT business worldwide. Importantly, we will continue to explore opportunities to realize additional value from our spectrum assets. We are very excited about our near- and long-term prospects and remain disciplined with regard to improving the operating structure to best position the Company for strong future growth.

I will now pass the call to Peter.

Thank you, [Fuan].

Before closing, I would like to make a few remarks regarding the FCC's proposed broadband and spectrum initiatives. First of all, Globalstar has authority for more than 25 megahertz of global satellite spectrum, plus more than 19 megahertz of ATC spectrum. And with new wireless products and services being introduced on a regular basis, as well as increased demands for wireless broadband, we are seeing a heightened awareness of the current domestic shortage of wireless spectrum.

As you can see in the accompanying chart, Globalstar has authority in L-band of 8.275 megahertz of spectrum, and in S-band, Globalstar has up to 16.5 megahertz of spectrum. In July, the Federal Communications Commission initiated proceedings to make wireless spectrum available for mobile broadband networks using mobile satellite services, or MSS spectrum.

On July 15, the FCC announced it was taking steps, quote, "To make additional spectrum available for new investment in mobile broadband networks by promoting flexible use and removing barriers while ensuring robust mobile satellite capabilities," end of quote. In his recent notice of proposed rulemaking and notice of inquiry, the FCC also stated three frequency bands that are allocated to the MSS are capable of supporting broadband service, including the Big LEO band from 1610 to 1626.5 megahertz and 2483.5 to 2500 megahertz.

Globalstar already provides services to more than 412,000 subscribers in the US, and over 120 other countries around the world, using the Big LEO band. Therefore, Globalstar is encouraged by the FCC's initiation of proceedings to make wireless spectrum available for mobile broadband networks using MSS spectrum.

In closing, please be reminded of our key core value drivers, first our MSS core business, which in the past has generated significant EBITDA. Secondly, our consumer retail business, where we have now received orders for more than a quarter of a million units worldwide. Third, our global spectrum business initiatives, and fourth, our next generation of enhanced products and services.

Thank you, and I look forward to speaking with you again in about 90 day's time.

Thank you, Peter.

That concludes the prepared portion of the presentation. We will now take the opportunity to answer questions. Operator, can you please proceed with the first question?

(Operator Instructions.)

Ryan Esposto with KKS Securities.

Hello, can you hear me?

Yes, we can.

Okay, sorry about that. I just wanted to check on total debt, and also there's a slide usually on you guys' quarterly presentations that talks about liquidity available and total liquidity. Last time it was close to $110 million. So if you can explain that, or give me that number?

Let me answer the second question first, Ryan. That slide is still in our deck, but that number now is approximately $100 million of available liquidity. In the last quarter, that number was $104 million. And then, with respect to your total long-term debt, total debt as of June 30 is $620.7 million.

Okay. And were there any -- I know that the eights had been -- were getting converted. Were there any eights that were converted in the quarter?

Not in Q2.

Not in Q2. Okay.

And then, just with respect to the launch of the service, can you guys give some color of the new satellite system, and then the new Duplex, or the re-enhanced Duplex business? Can you give us a sense of the timing of that, and the costs and when we can expect to see announcements of the new phone and all that type of thing?

Tony, you want to take that question?

Yes, I'd be pleased to. Let me respond to the first part, and maybe Fuad can speak -- some of the cost aspect.

As soon as we launch the first satellites, we will see an immediate improvement in service within four to six weeks, because those first two satellites will be placed into the orbits necessary to improve our Duplex services. Then, as the next three months or so continue, we will place each of the next four satellites into service, which will allow our subscribers to have, again, a very high quality of service for both their voice and data. And this is a plan process that we have very well laid out based upon the date that each launch is put into place, and then specifically which areas of the world and gateways will receive those best services for the subscribers that are using our phones currently.

With regards to the first- and second-generation ground segment products themselves, both are fully compatible and will continue to operate normally so that all of our subscribers that currently have the service will be unaffected. And when we put the new services into place in each of the ground stations, we will be advising all of our subscribers how they can either transition their service to the second-generation service or for what period of time they can continue to use the current products and services for operations.

With regards to the costs and timing, I think I'd pass that back to Fuad. He's got a little better handle on the dates in front of him.

Ryan, currently, as Tony mentioned, the second-generation constellation is backward-compatible, so all the users we currently have on the system will see seamless transition to the new satellite, so that would not be an issue. In addition, we have substantial inventory of Qualcomm phones that were purchased prior to satellite degradation issues, and the goal for the Company is to monetize those immediately following the launch of our -- beginning to monetize them immediately following the launch of those satellites.

So for some period of time following the launch, we will be utilizing the Qualcomm -- what we call the second-generation phones on our network. Some time beginning in 2012, we will begin to roll out -- towards the end of 2012, begin to roll out our second-generation ground infrastructure. And that would require rollout of new third-generation phones and related equipment.

And as you know, we have a contract with Hughes and Ericsson, which we are executing on. The total cost of that contract is approximately $130 million, and to date we have spent about $44 million on that contract. And the remaining $85 million or so will be spent between now and through end of 2012, and we will fund those from our operations.

Very good. The SPOT business in the quarter was pretty robust. When you guys say "orders," that's not how many you ship, that's how many have been -- how many did you ship -- how many units were shipped in the quarter?

We do not break that number out separately, but I can tell you it's in tens of thousands of units that were shipped during the quarter. And it was one of the busiest quarter in terms of shipments we've had since inception.

Got it. Okay. Well, very good quarter and good job executing, and look forward to these launches.

Thank you very much, Ryan.

Lilly Wu with TGRA Capital.

Yes, hi, thanks. Following up on the excellent SPOT sales, I was wondering, was there anything in particular in the second quarter in terms of your marketing activities to really stimulate the SPOT sales? Were there prices or promotions or anything that would give us an indication that the very strong sales in second quarter can be sustainable into the second half?

And is there any outlook that that $4.7 million level of equipment sales that you enjoyed in the second quarter, is that part of a bigger weight of sales, again due to marketing initiatives that you may have done to carry over into the second half?

Lilly, thank you for the question.

From a financial incentive standpoint on SPOT promotions, there were none occurring during the second quarter. It's probably the first time in a long time that we did not take advantage of financial incentives for SPOT sales.

However, we have begun to change some of the ways that we go to market with all of our products, but leading with SPOT, and that is our Web presence has increased dramatically. And we've gone from under 2,000 hits a day to over 5,000 hits a day on average, and we've begun promoting through the Web. And that's a significant change for Globalstar.

We've also seen a commensurate improvement in our industrial Simplex sales, and that is because of our new personnel who came on board late last year have really begun to perform, and perform dramatically. And so, these improvements account for the sales increases that we experienced in the second quarter.

Okay, great. And the increased Web presence, is that mostly informational and then the customers are still driven to your point-of-sales retailers, or can they actually -- is SPOT actually being transacted on the Web as well now?

Well, right now it is mostly informational. Our e-cart business has not changed yet. And so, it's our dealer network that is enjoying all of the sales at the present time.

Okay, great. Another question was we saw with interest the press release you made on the FCC initiation of proceedings, and you mentioned it again today. And I just wanted to be clear, what is the long-term implication to Globalstar specifically for your revenue model?

I mean, if the FCC is making more -- or encouraging mobile broadband networks to use MSS spectrum, how can Globalstar monetize that specifically? Is that through something like the Open Range, or through your core business?

Although we're not making any financial projections based on the FCC announcements, Tony, maybe you can give some perspective.

Yes, Lilly, and let me start into this by saying that the specific monetization I believe that Fuad can give you a good summary quickly on what we've been doing with Open Range. But Globalstar has, from the very beginning, established an architecture that would allow us to work closely with the FCC and license the use of the L- and the S-band spectrum, as Peter suggested up earlier, as much as 19 megahertz to another carrier, or to expand the service that Open Range is currently offering.

This would allow Globalstar to have ultimately a ubiquitous service, providing broadband services across the entire United States for both RSAs, which are the rural service areas, and the MSAs, which are metropolitan service areas serving hundreds of millions of people. We have chosen, by working with Open Range since 2008, to first serve the very, very small towns and the very small markets to demonstrate the technology that can best use satellite license frequencies both in L and S.

In this case, Open Range has chosen to use S-band for their particular products and services, and have just begun rolling out services. We would expect to do that much more in the future, and that's why we plan to work very closely in what's called the NOI, which is a request for information from the FCC.

And during that request, we will be providing specific requirements changes that we're currently working under with the Open Range organization. And again, with that, we would hope to see more use of the Globalstar spectrum licensed to other carriers.

With that, I'll pass it back to Fuad.

Okay. So to summarize, then, it's primarily that your architecture and the way your bandwidth is set up will enable you to basically license or lease out, either to new carriers or to somebody like Open Range in the future? And so, it's not that you're going into those service provision, but that you will be able to license or lease out your capacity with actual operators?

Yes, that's correct, Lilly. We would have to work with another partner or another service provider, because the expense to really roll out a service independent of another installed base with the necessary electronics on towers and radios is pretty expensive. So we would work with someone similar to Open Range, or another large carrier, to monetize our spectrum.

Okay. And those service providers, they don't need the same line-of-sight type of situation that your current Duplex services require with satellite phones?

The difference in service would be, where our service requires the line of sight from space where the satellites are passing overhead, the rural users for this broadband service would essentially be communicating to a tall tower, or multiple towers that are located within the rural or the metropolitan areas.

Okay. Okay, great. And what would be the timing of something like this, the extent to which -- if the regulatory hurdles are all addressed, that we realistically can be marketing our bandwidth to a service provider? Is this a 2011 or 2012 situation, or further out?

Well, it would clearly be some time probably in 2011, and there's a little bit of guessing in the sense that we know that the federal register will be putting out for comment -- this is an FCC putting request to industry to ask for comment -- that will probably occur within the next 30 days or so. Then industry will comment as to how the spectrum can best be used for the public good for security first responders and providing broadband services to the rural markets.

Approximately 45 days after the registry has been put into place is how much time is minimally required to comment back to the FCC. Then they can take as many as another 45, or even 90 days to come back to industry. So that's why we're thinking it's a year-end kind of -- year-end 2010, early 2011 before you could really jump into any new detailed arrangements with other companies.

Okay, great. Thanks. And the final--.

--Sorry, Lilly, just to clarify what Tony was saying is -- what Tony was describing is the series of events that have to take place before our MSS spectrum is essentially -- potentially cleansed of some of the requirements that it currently has on it. He was not describing a monetization event.

Okay. Okay, great. And a final housekeeping question is, without a detailed balance sheet in the press release, can I just clarify that our cash availability and credit availability is sufficient to get us all the way through our launches, and so there's no additional fundraising, I guess, needed before we've got the first launch, and even the second launch up?

Lilly, we can confirm that to you. Currently, all of the available liquidity on the balance sheet, as well as undrawn credit facility, is sufficient to fund the second-generation constellation launch.

Okay. The whole second generation, all the launches?

That would include four launches of 24 satellites.

Okay. Okay, great. Thanks very much.

Thank you, Lilly.

[Etai Linnberger] with Eastern Advisors.

Hey, thanks for taking my question, and good job on a great quarter.

Just a quick question. Assuming you start seeing meaningful proceeds from spectrum leasing in 2011, do you have any NOLs to offset against such potential proceeds?

Absolutely, [Etai]. I mean, I'm -- currently have over $400 million of NOLs that I currently have, primarily through the basis difference. And so, I can apply future earnings against those NOLs.

All right, perfect. Thank you. This is it.

Thank you very much.

Tony Low-Beer with Scarsdale Equities.

Congratulations for a better quarter. Hopefully we continue to have more of those.

I have two questions. First of all, is there any more clarity about when we can expect the launch, other than what has been so far indicated, which I think was late September, early October? And secondly, I'm quite unhappy about the fact that there's absolutely no Wall Street coverage of this company despite what I think is an outstanding future.

And I'm particularly perplexed at the fact that Lazard Freres, which did our convertible offering, hasn't taken up coverage. Now, the fact they not-so-long ago recommended Sirius Satellite Radio, so you could -- which sells at a (inaudible) -- at that point sold at a lower price per share than we did, so the stock price would not be the impediment for their recommendations.

So I would like to know why there is no -- why it is so difficult to get Wall Street coverage and why Lazard is not following the company. Now, one thing I want to make clear, I know we can't require or believe that Lazard should recommend the stock, but it seems to me that, given that they did this big banking deal, that they should at least cover us.

Yes. Tony, we appreciate the sentiment, and we completely agree with you in that. I think we believe that we have a great story to tell, and we are at the cusp of doing something remarkable after four years of development. And I think we do believe that we should have more coverage.

However, with the new rules on Wall Street, where the Chinese wall that exists between the research and really the business generation activities, it's hard. I mean, the companies have to make those decisions independent, independently, and in addition there's been obviously a lot of turmoil on the Street and research has been slow for a lot of companies to come about.

But we are working on it. Peter and I and Tony have a goal to bring the Globalstar story back, and we will continue to work on that. But I cannot tell you when that will happen and how quickly, but that's a goal that we -- as a company, we do have to get the story out, because we do believe we have a remarkable business here.

And on the first question that you had about the launch in terms of the clarity, currently we're projecting launch to occur in October, and that's all the clarity we can give you. Tony can tell you that these are very complicated processes, and to give you more certainty, within a day, is not appropriate. There's a lot of moving pieces here. But we can tell you that it's going to be in October at this point.

Fuad, if I may, and Tony -- this is Tony -- let me give you the confidence and the assurances that we have a day-by-day schedule between now and the date in October that we intend to launch.

As mentioned earlier, I am currently in Rome, and we are going through the final purchasing of the first six satellites, and we will be shipping as early as next week the first three to begin fueling and integration with the upper stage. We've just chosen to wait about 30 days before the actual launch date to tell everyone so that we keep all investors and all of the shared parties that have interest in the company to know the major milestones, which we've been very diligent to tell everyone when we've hit a major milestone, such as shipping.

Next will be the actual shipment to the launch facility, which we will announce formally. You will see photographs of that stage on our website and in our press releases. In addition, you will next know when they're fueled. And then, as we get very close to the launch, we'll be giving you that specific date. And I can assure you my entire team is focused on keeping all of our shareholders informed.

Operator, is there any more questions?

At this time, there are no further questions in queue, sir.

Okay. With that, we'll bring the conference call to an end. Thank you again, everyone, for joining us, and please be reminded that, later this afternoon, an audio recording of the conference call will become available via telephone dial-in, and a webcast recording and a copy of the presentation will also be available on the Globalstar website.

Thank you, and good afternoon.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.