Heritage-Crystal Clean Inc (HCCI) 2020 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Heritage Crystal Clean, Inc. Fourth Quarter 2020 Earnings Conference Call. Today's call is being recorded. (Operator Instructions) Some of the comments we will make today are forward-looking. Generally, the words aim, anticipate, believe, could, estimate, expect, intend, may, plan, project, should, will be, will continue, will likely result, would and similar expressions identify forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements.

These risks and uncertainties include a variety of factors, some of which are beyond our control. These forward-looking statements speak as of today, should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. Please refer to our SEC filings, including our annual reports on Form 10-K as well as our earnings release posted on our website for a more detailed description of the risk factors that may affect our results. Copies of these documents may be obtained from the SEC or by visiting the Investor Relations section of our website.

Also, please note that certain financial measures we may use on this call, such as earnings before interest, taxes, depreciation, and amortization or EBITDA and adjusted EBITDA are non-GAAP measures. Please see our website for reconciliations of these non-GAAP financial measures to GAAP. For more information about our company, please visit our website at www.crystal-clean.com.

With us today from the company are President and Chief Executive Officer, Mr. Brian Recatto; and Chief Financial Officer, Mr. Mark DeVita. At this time, I'd like to turn the call over to Brian Recatto. Please go ahead, sir.

Thank you, Chris. Good morning, everyone, and thank you for joining us today. This morning, we'll begin with a quick update on the impact of the pandemic and a brief review of our fourth quarter results and full year 2020 performance.

During the fourth quarter, we continued executing the company's pandemic response plan to combat the COVID-19 outbreak-induced downturn and remained focused on ensuring the health and safety of our employees and their families as well as those customers we came in contact with. To safeguard the well-being of our employees and decreased the spread of the COVID-19 virus, we continue to execute the following steps during the fourth quarter: provided appropriate personal protective equipment and sanitizers, utilize staggered work schedules to increase social distancing, allowed high-risk or other impacted individuals to work from home when possible, thoroughly cleaned and disinfected our facilities as needed, and lastly, we closed facilities temporarily as needed to prevent contagion.

During the fourth quarter, total lost time from employees off the job due to COVID-19-related health issues, and potential exposure was almost 7,900 hours company-wide. On a normalized basis, this represents a 52% increase compared to our experience during the third quarter of 2020. Without the cooperation of our dedicated employees and the execution of the previously outlined preventive measures, it is highly likely the number of lost hours would have been even higher.

Despite increased COVID-19 infection rates, we saw increased activity at our customers' locations during the fourth quarter compared to the third quarter. This provides us the opportunity to exceed our expectations for the quarter and produce very positive results in both of our reporting segments compared to our performance in the third quarter.

In the Environmental Services segment, we experienced strong sequential growth as we continue to improve from the onset of the impact of the COVID-19 pandemic during the second quarter. Even after adjusting for the fact that our fourth quarter contained 20 additional workdays, our segment revenue growth was 8.7% compared to the third quarter. Our field services, containerized waste and antifreeze businesses led the way with solid growth. The continued top line growth allowed us to produce sequential improvement in our operating margin and operating margin percentage for the second straight quarter. Our fourth quarter operating margin dollar increased by $2.1 million on a normalized basis compared to the third quarter.

Let me now focus on the Oil Business. During the fourth quarter of fiscal 2020, Oil Business revenues decreased 2% to $41.1 million compared to the fourth quarter of fiscal 2019. The decrease in revenue was mainly due to lower revenue from base oil and re-refinery byproduct sales, partially offset by revenue generated from used oil collection charges. Within base oil, we were able to exceed fourth quarter 2019 sales volume during the fourth quarter of 2020, but we're unable to overcome significantly lower base oil selling prices compared to the prior year quarter.

On a sales-per-working day basis, our Oil Business segment revenue decreased approximately 4.4% compared to the prior year quarter. Oil Business segment operating margin improved 5.6 percentage points to 9.1% in the fourth quarter of 2020 compared to 3.5% during the same period of 2019. The increase in margin was mainly due to the fact that we were in a net charge for oil position during the fourth quarter of 2020 compared to being in the net pay-for-oil position during the prior year quarter. Our results also benefited from third-party used oil feedstock costs decreasing by $0.41 per gallon compared to the prior year quarter.

Mark will provide more detail regarding cost improvements in a few minutes. During the fourth quarter and throughout fiscal 2020, we continue to benefit from excellent execution from our re-refinery team. While we made the decision to shut down the re-refinery for most of the month of May, 2020, due to the drop in demand for the impact of the COVID-19 pandemic, we did not incur any significant additional unplanned downtime as we had in the previous 2 years. This is a direct result of mechanical integrity and critical spare parts program, we have worked hard to put in place over the past 2 years.

While re-refineries are complicated operations, we believe our performance during 2020 demonstrates that we're in a better position than ever before to run the facility in a safe and consistent manner. As more people receive COVID-19 vaccines, we believe our customers' businesses as well as ours will continue to recover from the negative impacts caused by the pandemic. We're optimistic this positive momentum will continue in both of our reporting segments for the remainder of 2021.

In our Environmental Services segment, while we expect to see continued sequential improvement from a revenue standpoint, we believe our results in the current quarter will still trail our record performance from the first quarter of 2020. From an operating margin percentage standpoint, during the first quarter, we will likely experience normal seasonal headwinds of a couple of percentage points compared to our results in the fourth quarter due to the impact of winter weather in many parts of the country. However, beyond the first quarter, we expect to see quarterly revenue growth on a year-over-year basis for the remainder of 2021. We also expect to see our operating margin approach 27% in this segment by the end of the year.

From an Oil Business segment perspective, we are very excited about the start of 2021. This year began with base oil prices on the rise due to continued tight supplies as a result of less distillate demand and production. More recently, supply tightness was compounded by weather-related challenges in many Gulf Coast production facilities. Unless there is a significant increase in the production of distillate products such jet fuel, we believe the tight base oil supply conditions will continue for most of the first half of 2021, which should provide support for higher base oil prices.

While we've experienced downward pressure on used oil collection charges during the fourth quarter, as the price of crude oil has continued to rise, we expect to remain in a net charge for oil position for at least the first half of 2021. These improved spread dynamics should allow us to produce Oil Business segment operating margin percentages in the mid-teens during the first half of 2021.

Before I turn things over to Mark, I want to highlight a few items related to our ESG initiatives: First, during the fourth quarter, we accepted the Board challenge to add a black director to our Board. And last month, we completed that challenge. As a result, we welcome Tony Chase to our Board of Directors. Tony already participated in his first board meeting last week, and we look forward to many future contributions from him; second, earlier this year, we launched a formal sustainability program.

While the foundation of our company was built on sustainability with activities such as turning used oil, waste antifreeze and waste solvent into reasonable products, we realized the need to create a formal program to better inform our stakeholders and the general public about the sustainability aspects of our business. As a result of the launch of this program, we plan on issuing our first sustainability report during the second half of this year. We truly believe we have a great story to tell and look forward to sharing it with everyone.

With that, Mark will walk us through our fourth quarter financial results.

Thanks, Brian. It's great to be with everyone this morning. In 2020, we generated $406 million in revenue compared to prior year revenue of $444.4 million, a decrease of $38.4 million or 8.7%. The company's 2020 fiscal year was comprised of 256 working days compared to 253 working days in fiscal 2019. On a sales-per-working day basis, revenue decreased approximately 9.7% in fiscal 2020 compared to the prior year. The decrease in revenue was primarily driven by a negative impact of the COVID-19 pandemic and related shelter-in-place orders. Since experiencing a 24.3% revenue decline on a year-over-year basis during the second quarter amid the depth of the pandemic, our year-over-year revenue deficit shrank to 16.9% in the third quarter and only 4.9% in the fourth quarter.

Net income attributable to common shareholders was $5.3 million or $0.23 per diluted share for the fourth quarter of 2020. This compares to a net loss attributable to common shareholders of $2.2 million or $0.09 per diluted share in the year-earlier quarter, which included an $11 million pretax charge for a class action lawsuit settlement pertaining to fuel surcharges.

From a reporting segment standpoint, the Environmental Services segment reported revenue of $90.9 million, a decrease of $6 million or 6.2% during the quarter compared to the fourth quarter of 2019. The decrease in revenue was mainly due to the lingering impact of the COVID-19-related volume decline in our field services, parts cleaning and containerized waste service lines partially offset by favorable pricing in our parts cleaning business.

On a sales-per-working day basis, Environmental Services segment revenue decreased approximately 8.5% during the fourth quarter compared to the prior year quarter. Our profit before corporate SG&A expense as a percentage of revenue was down slightly to 24.6% compared to 25.1% in the year ago quarter. The decline in margin was mainly due to lower revenue and higher containerized waste disposal expense (inaudible) costs and depreciation expense for trucks, partially offset by lower field services related disposal costs, workers' compensation expense and solvent costs.

On the positive side, our fourth quarter operating margin was 120 basis points higher in the same figure from the third quarter of 2020. As Brian mentioned, our Oil Business segment revenue was down slightly despite base oil sales volume of 16.7 million gallons, which was up approximately 15% compared to the fourth quarter of 2019. Unfortunately, our average base oil netback during the fourth quarter dropped $0.29 per gallon compared to last year. We also experienced net back declines for sales of our re-refinery coal products and RFO compared to the same quarter last year.

The year-over-year revenue decline in the fourth quarter was mostly offset by the increase in used oil collection charges. The improvement from a net pay per oil position in the fourth quarter of 2019 to a charge oil position in the fourth quarter of 2020 is $0.27 per gallon.

From a profitability standpoint, Oil Business segment operating margin was $3.7 million or 9.1% of segment revenue during the fourth quarter. This represents a fourth quarter record on both a dollar value and percentage basis. The largest drivers for this improvement were the overall net charge for oil position and the significantly lower cost per gallon for third-party feedstock, which Brian previously mentioned. However, we also experienced lower expenses for shutdown maintenance, health and welfare and workers' compensation.

Despite this increase in the nameplate base oil capacity of the re-refinery on 47 million gallons in the fourth quarter of 2019 to 49 million gallons in the most recent quarter, we were still able to operate the re-refinery at 100% of base oil capacity during the fourth quarter. Our overall corporate SG&A expense of $16.3 million declined by $0.5 million compared to last year despite the fact the fourth quarter of fiscal 2020 had 2 more working days in the fourth quarter of fiscal 2019.

The decrease was mainly driven by lower share-based compensation costs, travel expense and bonus expense partially offset by higher software licensing fees. Corporate SG&A expense as a percentage of revenue was 12.3% compared to 12.1% in the year ago quarter, driven higher by the decline in revenue. EBITDA of $16.4 million was a record and up $12.3 million compared to the year ago quarter. Adjusted EBITDA of $18.9 million was also a record and represents 14.3% of revenue and a 13.1% increase compared to the prior year quarter.

The company's effective income tax rate for fiscal 2020 was 28.8% compared to 27% in fiscal 2019. The rate increase is principally attributable to state income taxes and the impact of nondeductible expenses. For the quarter, we generated $22 million in operating cash flow and $15.2 million of free cash flow, resulting in an end-of-year cash balance of $67.6 million, which was $14.9 million higher than at the end of the third quarter.

Despite the continued challenges presented by the COVID-19 outbreak, our balance sheet grew stronger. And we plan to leverage this strength to continue to drive value for our shareholders. I'm happy to report that our acquisition-related activities are in full swing as we look to utilize our strong balance sheet to capitalize on inorganic growth opportunities during the remainder of 2021.

In conclusion, we're very pleased with the quarter-over-quarter improvement in both of our segments. Despite the challenges presented by the COVID-19 pandemic. This improvement would not have been possible without the unrelenting efforts of our employees as they strive to help our customers not only recover from this devastating pandemic, but help them execute the steps to allow their businesses to thrive in the post-pandemic economy.

This concludes our prepared remarks. I'll now turn the call back over to Chris to take your questions.

(Operator Instructions) Our first question comes from Michael Hoffman with Stifel.

So on Environmental Services, can you frame where you are in parts washer service cycles and particularly since your mix is approximately 1/2 industrial and 1/2 transportation, can we characterize where you are coming into this year relative to the full recovery of activity?

I mean I think we're kind of in line with some of the general economic metrics you see. I don't think where it had, I mean, we might get into it. I think we're a little bit ahead on used oil collection as it relates to things like miles driven and the recovery there, but in parts cleaning, I think we're in line. On a normalized basis, we had a 6.5% increase over Q3. If you had that throw out all of our crazy Q4 calendar stuff in parts cleaning. We're seeing volume was still down. Price was up, though. I think Brian and I mentioned that in our prepared remarks, so we had kind of mid-single-digit price increase, which was great. And that's not much different than what we typically experience with this more mature business. It's mostly price and usually, we don't see the volume declines in non-pandemic environments, but we're still kind of in that same pace, I guess, with some of your general economic indicators. At least that's my feel. Brian, do you disagree?

Yes. No, I absolutely agree. And Michael, with vehicle miles driven being down roughly 10%. Well, we've been tracking a little bit ahead of vehicle miles driven. We're running at about, as Mark said, roughly 5% off of where we were pre-pandemic. And we think as we look out at economic indicators with GDP, we expect to see some meaningful growth in the back half of the year. We think we'll start trending back to more 2019 numbers by the end of the second quarter is our hope, provided we don't see any further COVID-19-type slowdowns. But everything for us is positive and pointing in the direction that we'll begin to see a recovery back to 2019 levels in the U.S. business by the end of the second quarter, certainly in the third quarter.

Okay. And then I think you've answered my question then, which was, if it's 5%, it's about $20 million of reopening revenue and your -- and what you're saying is on a run rate basis, you're going to be at that -- divide that by 4, sort of $5 million a quarter roughly. I mean I get it, I got to do the 12-week thing. But through the second half of the year, so there's sort of this assumption of picking up about $15 million of that pandemic-related displacement in '21 and then there'd be a rollover of about 4 or 5 into '22 plus other underlying organic growth?

Yes. That absolutely makes sense.

Okay. All right. Cool. And then last question for me is, is there a particular issue that drove catalyst -- catalysts have always been the hot button of loops in the used oil side. So is it -- was the mix of the oil coming at you different because of the changing and driving and where is it sourcing? Or what drove the above-average catalyst use?

Yes, Mike, I think we talked about it a little bit on our last conference call, we're in the middle of 10-year tank inspections. So we've been operating with smaller feed tanks, which makes our feed quality less than optimal, to put it mildly. And we just completed the turnaround of our used motor oil tanks. So it's back in operation this quarter. That will begin to help our quality. That was the primary driver for the additional catalyst expense in the fourth quarter. We're expecting pretty good production in Q1. We've got 1 5-day turnaround scheduled for the first quarter, which we're in the middle of right now. It's a simple routine cleaning for us.

We're going to be battling these tank inspections throughout the year just because it's 10 years into the purchase of the tanks. So we'll get that done this year. We don't think it will cause any operating problems beyond what we've already experienced with feed quality. Now that we're done with the feed tank. So we feel pretty good. We think production will be in the 11 million to 12 million gallons in Q1. So not that inconsistent. I think we were at 10.5% last year. Had a few problems in Q1, but we feel positive about the plan going into this year. And obviously, the spreads look much better, as Mark talked about in his prepared remarks, pretty excited about base oil pricing these days. Best I've seen since being the CEO.

Our next question is from David Manthey with Baird.

Brian, you mentioned that by the end of the year, ES operating margin could be in the 27% range. Are you referring to a quarterly basis? Or is that the annual average?

Yes. It would definitely be -- this is Mark, David. It'll definitely be ramping up to that. We expect to see some headwinds just due to normal seasonality, which really, to be honest, if you look back at 2020, people probably don't forget, but it was a very mild winter for the Northern and Eastern part of the U.S. So if you only go back 1 year, you won't see it, but you've covered us long enough to know that, usually, there's 1 to 3 percentage point headwind in our margin there. So certainly, we're not going to come out of the box this year with that, but we'll build up to that, at least on a run rate basis is our thoughts.

And that's provided, David, that we see the revenue bump that we talked -- I just mentioned in my conversation with Michael. (inaudible) in the direction of Q3 to see the revenue -- I mean, the margin improvement.

Okay. All right. And from a cost standpoint, I know during the pandemic, you had -- there have been some wage cuts and some furloughed employees and things like that, but you're in the process of resetting those to more normal levels. So as we look at the fourth quarter in its entirety, were labor costs relatively normal in the fourth quarter? Or should we expect some additional reset as we move into the first quarter of '21?

If you look at our field labor, we did a lot of things throughout the pandemic to make sure these being frontline workers, I mean, legitimately, not only are they coming to work every day, but they're going to 5 or 8 or 10 different places of work. So we took steps to -- and it did result for some people keeping their haul, it wasn't completely intentional in that manner, but we help soften that load. So we don't expect as we come completely out of this that we'll see from that standpoint as big as impact as you might expect, as far as kind of the return to work comp. We've gradually shifted back and our sales team has done -- our management team has done a great job of shifting that compensation on a gradual way back to what our traditional plan is, and we're going to be at that rate some time here in the first half of 2021, meaning compensation completely based on the same formula that we were pre-pandemic. So I think it's going to be pretty limited as far as the impact that labor is on the margin anyway. I don't know, Brian, if you disagree?

No, I agree. And from a pure headcount standpoint, David, we're probably still short about 80 people in the field. And I think Mark was referencing that. We'll begin to bring those people back throughout the course of the year as revenue begins to climb.

Okay. And then the last question, I believe you noted that price paid to third-party collectors is down. Could you talk about that dynamic? Do you expect that to continue?

Yes. We expect it to continue. I mean I think you've heard the other competitors talk about IMO 2020 and the HSFO market. We're not seeing an abundance of people aggregating used motor oil for shipment overseas. So we still think the preferred method for the third parties of the ship in to a re-refinery. We're seeing pretty good demand for third-party oil, which means we get to pay less for it because the demand is still strong. I don't really see those dynamics changing. Certainly, we've seen crude oil pricing go up in the last 30 days in a meaningful way. I do think because of the shale plays and OPEC's inability to control themselves. And we'll begin to see that level off as we hit the summer. I don't think crude prices are going to continue to rock it up, which shouldn't make it fairly consistent for us from a feedstock standpoint. We hope that's what we want to see. So I'm optimistic that we'll be able to keep the price of third-party oil manageable, and we're seeing pretty good volume, David, in the plant now, pretty good demand.

Our next question is from James Ricchiuti with Needham.

I was surprised at the increase, but maybe not, just given what we've seen from the pandemic in the lost time hours in the quarter versus Q3. How is that tracking? I'm just curious thus far in Q1?

It's much better in Q1. I think we unfortunately dealt with the impact of the holidays. I mean you had lot of family gatherings, I think people are just overall frustrated with the fact they couldn't get out. They got out more in the fourth quarter, mainly driven by time off and holidays, and we experienced a rising case count end of November post Thanksgiving and into the Christmas holidays, but it's certainly way more manageable today.

We were literally dealing -- we were dealing with it every day in the fourth quarter, it felt like. It's much better today, much more manageable. Obviously more of our employees are accepting the vaccine, I think you're beginning to see some herd immunity out there. We definitely see the case count consistent with the rest of the country, if you just read statistics way down from where it was in the fourth quarter.

Got it. And it may be too early to tell. I'm just wondering, if you look at the business and perhaps the U.S. business, if you see any lasting structural changes perhaps to the business from the pandemic, just with respect to customer attrition? Or is it still a little too early to tell if there's been any kind of lasting change to the customer base?

I would suggest it's probably too early to tell. We certainly have not seen it. We were on the phone with our branch managers, our BSMs on a regular basis. They're not seeing shutdowns by our target customer base, which would be small manufacturers. I mean you know how many customers we have is 90,000 plus in both divisions combined, and we're not seeing it. I mean we're not seeing a lot of closures out there. So we're not seeing any fundamental structural changes to our business.

Good. And last question, you noted that pickup in M&A activity you guys are out there looking. And I'm just wondering how would you characterize the pipeline, the opportunities and maybe the valuations that are out there?

Yes. I'll let Mark talk a little bit evaluation. I'll talk to opportunities. I think with the potential change in capital gains tax structure, we're seeing a lot of smaller tuck-in opportunities. We've got a long list of pipeline opportunities. I think we mentioned on the call. Last quarter, we think we'll get a couple of deals -- tuck-in deals closed in the first half of this year. Pretty excited about it because it continues to expand our footprint and gives us some capabilities at the operating level, plant level that will enhance our profitability. So long pipeline of smaller deals for us and I think you'll see some larger deals that will be put in play this year. Obviously, there's a lot of money available and multiples are pretty high. We'll have to manage that and look for opportunities with synergies to avoid overpaying for acquisitions, but the pipeline, as Mark talked about, very long, and we think we'll get some deals closed this year. I don't know if you want to opine on some of this.

I would just say, Brian mentioned it, valuations, if you compare, let's say, where we were a year ago, you can say -- I mean, there's some nuance there, Jim, as I'm sure you can appreciate if you're trying to measure it as, let's say, where were multiples of earnings or multiples of EBITDA as a method to define valuation. You can say there back to what was pretty frothy, pretty pandemic, but it also depends on what earnings number are you talking about. Is this something that's been aggressively adjusted? Or, a, we had a down year because of COVID, so we're going to take out x dollars or add back, I should say, x dollars. So without getting to nuance, I would say, it is probably in that same range that it was. It's pretty much back to what it was pre-pandemic, which is to say it's not a cheap market.

(Operator Instructions) Our next question is from Kevin Steinke with Barrington Research.

So you talked about your optimism with regard to base oil prices. Just wondering how quickly you think you can begin to realize some of the benefits of these improved posted prices we've seen. Or has that already started to flow through here in the first quarter?

Yes, it's certainly starting to flow through in the first quarter. We see a meaningful change in base oil pricing since the end of the year, driven by the fact that the market is undersupplied because of refinery utilization. The refineries are down, the utilization is probably off. Last statistic I saw was 13%. So refined products are off 10%. There's just not a need for jet fuel oil and distillate products until we begin to fly again, travel again to the levels we were prior to the pandemic. So I think we'll benefit from that. As we said in our prepared remarks, through the first half, maybe the first 3 quarters of the year. And it's already beginning to flow into our income statement in a meaningful way.

If you look at, Kevin, and this is going to be comparing a quarterly average from Q4 to a point in time. So -- and it's in a rising price environment. So it could be a little dangerous, but given that context I just laid out, you're looking at close to -- there's been in -- [Argus] is one of the people we look to get a feel for the market. And their latest report last Friday, the spot market was up almost $0.70 from the Q4 average to what it was point in time, end of last week. So that doesn't mean our price is exactly up that much, but that can give you a flavor for what's pushing through. And again, that $2 roughly for the average of group -- that group one. But -- so the 100 and 200 viscosity products of around 260 gallons, what that translates to at the end of last week. That has been on the rise. So it hasn't been that way by in any stretch, the whole quarter so far, but it's going in a great direction.

We're good first quarter, as we mentioned in our prepared remarks in oil.

Okay. Great. That's helpful. Did you have any targets in terms of base oil production, either in the first quarter or 2021 that you could discuss?

Yes. I think I mentioned on an earlier call that we're shooting for between 11 and 11.5 million gallons in the first quarter. The overall capacity in terms of production is 49 million gallons. We see no reason to not get there, absent an issue. We forecasted 28 days of maintenance for the year, which is consistent with last year. We always budget a few extra days for issues. Obviously, we've battled a hell of a winter so far, but knock on wood, we've been able to get through it without any major issues contrary to a lot of refineries have struggled with the weather. So all in all, we're projecting to get closer to that printed capacity.

Okay. Great. Lastly, do you have any growth investments or growth plans that you're thinking about for the Environmental Services segment in 2021 in terms of branch openings or adding new sales resources? Or is that maybe something that you're just going to wait on until we kind of get back to a more normal business activity levels?

I think the game plan, well, I know what the game plan is. Our plans for this year to do the tuck-in acquisitions and build around those tuck-ins versus opening up pure organic locations. The other thing, as I mentioned on an earlier call, we'll certainly bring back the furloughed reps. We're still down in sheer numbers. So that will give us growth as our customer. The reason we haven't done it so far is it's very difficult to get into new customers. I mean it's almost impossible because of the pandemic.

We think as we move deeper into the year with the vaccines, the herd immunity, our customers will open back up. Our target customers will open up. We'll begin to bring back new reps, which will give us the lift that we talked about getting our revenue back to 2019 levels. But I doubt we do any organic offices unless we see an opportunity or pick up a corporate account, a need to open an office, but we'll certainly build around these tuck-in acquisitions to get into new marketplaces. Hopefully, that answers your question.

It does. All right. Well, congratulations on the nice results here.

Thank you. A good quarter for us. We're very happy with it.

Ladies and gentlemen, this concludes the Q&A session and today's conference call. Thank you for your participation. And at this time, you may now disconnect.