H&E Equipment Services Inc (HEES) 2009 Q3 法說會逐字稿

Good day and welcome to today's H&E Equipment Services third quarter 2009 conference call. Today's call is being recorded. At this time I would like to turn the call over to Mr. Kevin Inda. Please go ahead, sir.

Thank you, Jessica, and welcome to the H&E Equipment Services conference call to review the Company's results for the third quarter ended September 30th, 2009, which were released earlier this morning. The format for today's call includes a PowerPoint presentation which is posted on our website at www.he-equipment.com. Please proceed to Slide 1.

Conducting the call today will be John Engquist, President and Chief Executive Officer, and Leslie Magee, Chief Financial Officer and Secretary. Please proceed to Slide 2.

During today's call we will refer to certain non-GAAP financial measures and we have reconciled these measures to GAAP figures in our earnings release which is available on our website. Before we start let me offer the cautionary note that this call contains forward-looking statements within the meaning of the federal securities laws.

Statements about our beliefs and expectations and statements containing the words such as may, could, believe, expect, anticipate and similar expressions constitute forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties which could cause actual results that differ materially from those contained in any forward-looking statement. These risk factors are included in the Company's most recent Annual Report on Form 10-K.

Investors, potential investors, and other listeners are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The Company does not undertake to publicly update or revise any forward-looking statements after the date of this conference call.

With that stated, I will now turn the call over to John Engquist.

Thank you, Kevin, and good morning everyone. Welcome to H&E Equipment Services third quarter 2009 earnings call. On the call with me today is Leslie Magee, our Chief Financial Officer. Proceed to Slide 3, please.

This morning I will give an overview of our third quarter results. I will also discuss continued actions to manage our business in a very difficult environment that has resulted in very low demand for our products and services. Leslie will then go over our financial results in more detail. When Leslie concludes we will be happy to take questions. Proceed to Slide 5, please.

Our business environment remained very challenging during the third quarter with no increased demand during the summer months. In fact, we continue to see softening in our non-residential construction and industrial markets. We have also experienced significant contraction in our crane business over the last two quarters, and expect this trend to continue throughout 2010.

While we were pleased to see our fleet utilization stabilize during the quarter, we expect today's structural economic problems to continue to impact demand for our products and services for at least the next two to three quarters. As a result of the weak environment, our revenue, EBITDA and net income were down year-over-year and sequentially from the second quarter.

Revenue declined 37% to $175.6 million from $278.6 million a year ago. Our revenue declined 2.6% from the second quarter. EBITDA decreased to $29.3 million from $67.2 million a year ago, and was down 15.3% from the second quarter. We recorded a net loss of $2.3 million in the third quarter versus net income of $17.6 million a year ago.

In light of the very difficult operating environment, we are continuing to reduce our costs and tightly control our capital spending. This has resulted in a 23% decrease year-over-year in our SG&A expense and negative net rental CapEx for the third consecutive quarter. These actions have generated strong free cash flow which has been used to pay off our senior credit facility. We intend to continue to generate cash, strengthen our balance sheet, and position our Company to take full advantage of the recovery when it begins. Please proceed to Slide 6.

All regions within our footprint have been heavily impacted by this prolonged recession. However, our Gulf Coast market, specifically Louisiana and Texas, continue to generate solid results for our Company. The general economies in these markets have held up better than most areas, and our presence in the Gulf Coast region provides significant exposure to the industrial sector. This sector is certainly down but still providing opportunity for our Company.

With the improving commodity prices, the industrial sector could potentially recover well ahead of non-residential construction. To date it appears that only a small portion of the federal stimulus money has been spent. We hope to see stimulus spending increase in the future and provide increased opportunity in the markets throughout our footprint.

With the expectation that demand will continue to be weak for the foreseeable future, we are evaluating the opening of approximately six to eight new stores in order to re-deploy underutilized fleet from our weaker markets. These new starts will require little to no capital expenditures, and the cost of entry into these markets will be minimal.

We have just opened an aerial store in Nashville, Tennessee, and are currently in the process of opening a second store in the Baltimore area, also with an aerial focus. We have also shifted some aerial product to existing stores as a new product offering to those locations. These actions should help mitigate the impact from our weaker markets. Please proceed to Slide 7.

Demand for our products and services has continued to soften throughout the third quarter. We expect this to be the case for at least the next two to three quarters. Funding for construction projects remains difficult to access and is resulting in project cancellations and/or delays. We don't expect this to change in the short term.

The weak demand for construction equipment is creating excess capacity of equipment in the marketplace. This dynamic has negatively impacted price and utilization. While we are pleased to have seen our fleet utilization stabilize during the third quarter, we are still seeing significant rate pressures in most of our markets. We expect weak pricing to continue until the excess capacity flushes out and utilization levels increase.

We also expect significant declines in our new equipment sales. Our backlog of sold cranes is running out and crane demand is expected to be weak well into 2010. Based on today's visibility which is limited at best, we expect the softening in demand to result in significant sequential revenue declines in the near term. If you would please proceed to Slide 8.

Despite our expectation that our end markets will remain soft well into next year, we see some positive signs in the economy. The credit markets have improved and the nation's major banks are reporting improved results. Industrial production improved and GDP grew during the third quarter. Also some of the major equipment manufacturers are forecasting increased demand in 2010.

We continue to manage the things that are within our control. We have significantly reduced our costs and clearly demonstrated our ability to generate cash and pay down debt. We have low leverage, excellent liquidity, and a low-cost capital structure. We also have no near-term debt maturities. Our fleet is young, exceptionally well-maintained, and comprised of the type assets that are conducive to aging. We are well-positioned to weather the current environment and to take full advantage of the recovery when it begins.

At this time I'm going to turn the call over to Leslie for the financial review.

Thank you, John. Good morning. I will continue today's call with a more detailed review of our third quarter results.

On Slide 10, the graphs reflect our third quarter year-over-year performance for total revenues and gross profits. During the third quarter we continued to see significant topline revenue declines at similar rates to our second quarter year-over-year results.

On a sequential basis our results reflected further softening since the quarter ended in June, particularly in our new equipment sales. Based on the decline in rental rates through the first half of the year, we expected further pressure on year-over-year rental rates.

During our second quarter discussion we mentioned that we felt we were seeing signs of stabilization in our fleet utilization. This held true for the remainder of the third quarter. We also discussed that we expected sequential rate declines to moderate. Although third quarter rates were lower than in the second quarter, they declined to a much lesser degree and continued to moderate during the quarter.

On a year-over-year basis total revenues decreased $103 million or 37% to $175.6 million. Revenues declined across all business segments. However, our parts and service segment again contracted less than our other segments on both a year-over-year and a sequential basis.

By segment rental revenues decreased $33.1 million or 42.3% over the prior year. Rentals declined in all product lines, with the majority of the decrease in aerial work platforms. Year-over-year aerials were down 45%, earth-moving rentals declined 41%, and cranes were down 29%.

Dollar returns were 25.5% for the third quarter of '09 as compared to 38.8% for the same period in '08. Dollar returns were negatively impacted by lower year-over-year time utilization of 54.3% versus 67.4% in the third quarter of '08.

Indicative of the recent stabilization, physical demand for our fleet was consistent at 54% each month throughout the third quarter. On a positive note this level of demand was approximately 100 basis points higher than demand for our rental fleet during the one month of June.

Dollar returns were also affected by lower average year-over-year rental rates of 19.1%. Although rates declined 3.4% sequentially, we are encouraged by the fact that the trend has moderated.

Before moving away from rental rates, I think it is important to emphasize again that our Company's method of quantifying rate change only applies to newly opened contracts in the quarter. New contracts typically average 25% to 30% of our total revenue billings in a period.

On a product line basis, aerial and crane time utilization reflected the largest declines which is consistent with the year-over-year trends we experienced last quarter. Sequentially we also saw declines in utilization of aerials and cranes which were partially offset by improvement in earth-moving utilization for the second consecutive quarter.

New equipment sales declined $49.1 million or 50.2% over the prior year period. The declines continue to be largely due to lower new crane and earth-moving sales.

Used sales were down 17.9% or $7.2 million over the third quarter of 2008. Both cranes and aerials declined in excess of 50% over the third quarter of last year. Earth-moving used sales declined approximately 25.9% in comparison to a year ago. Partially offsetting these declines was the sale of a substantial portion of our used lift trucks, specifically Yale lift trucks, $13.4 million in sales located in our Intermountain region.

Although we are seeing declines in our parts and service revenues, these segments have still proven to be more resilient than our other segments. On a combined basis, product support revenues declined $8.3 million or 16.8%.

Now let me switch to a detailed review of each segment at the gross profit line. Our total gross profit decreased to 22.8% as compared to 29.6%, primarily due to lower gross margins on rentals and the impact to margins from the sale of Yale lift truck assets. For a sequential comparison, our gross margins were 24.7% in the second quarter.

In our rental segment margins declined to 30.6% from 50.3% in the prior year. The declines in average rental rates and time utilization previously mentioned have affected our rental gross margins. Partially offsetting the impact of rates in utilization were lower rental cost of sales. Depreciation of our rental fleet decreased 20% and maintenance and repair expenses have decreased 26.3%.

Margins on new equipment sales were 10.5% this quarter compared to 13.4% in the prior year. The decline in new margins is primarily due to lower margins on cranes as a result of pricing pressures. New earth-moving margins also declined.

Gross margins on used equipment sales declined to 17.2% from 23.3% in the prior year. The sale of the Yale used lift trucks at an approximate 5% margin was a contributing factor in the margin decline. The used equipment sales line item includes both the sale of used inventory and the sale of our rental fleet. Margins on routine rental fleet sales were very strong, near 30% gross margins, and in line with a year ago.

Margins in our parts and service business declined to 40% from 42.4% in the prior year. Parts gross margins decreased to 26.5% from 29.5% due to the mix of parts sold and the sale of Yale parts inventory at a lower margin.

Also service gross margins were 62.9% versus 64% a year ago, negatively impacted by service revenue mix. The impact of mix to service gross margins was partially offset by the recognition of deferred service revenue associated with terminated maintenance contracts on Yale assets sold.

Other revenue resulted in a loss of the gross profit line of $1 million or a negative 12.4$ gross margin compared to a break-even at the gross profit line a year ago. Margins have been negatively impacted by lower revenues from high-margin support activities. If you will flip to Slide 11, please.

Income from operations decreased $32 million or 86% to $5.2 million. With the sharp decline in revenues and lower gross margins, we believe it is not realistic to achieve the same magnitude of decline in SG&A costs. However, we have made significant progress to date. Our costs were down 23% compared to a year ago. Proceed to Slide 12.

For the quarter out bottom line was negative $2.3 million compared to net income of $17.6 million in the third quarter of last year. On an EPS level this calculates to a loss of $0.07 per share as compared to earnings of $0.50 per share a year ago.

For the quarter interest expense decreased $1.6 million over the prior year to $7.8 million as a result of lower interest rates, lower outstanding floor plan payables, and average debt under the senior credit facility. We ended the quarter just shy of fully repaying our revolver which I'll discuss in more detail in just a few slides. Slide 13.

EBITDA decreased $37.9 million or 56.4% to $29.3 million with margins decreasing to 16.7% from 24.1% compared to a year ago on lower revenues and gross margins due to the factors I've already discussed. Next Slide 14.

Our SG&A costs decreased $10.5 million or 23% to $35.1 million. Lower SG&A costs are due primarily to lower salaries and wages and related expenses due to workforce reduction since the beginning of the year. Our workforce is down 15% or nearly 300 employees since the beginning of this year. Also incentive compensation is lower as a result of a decline in revenues.

As a percentage of revenues, SG&A costs were 20% as compared to 16.3% a year ago. More recently SG&A as a percentage of revenues was consistent on a sequential comparison. Slide 15.

Our gross fleet capital expenditures for the quarter were $7.9 million, including non-cash transfers from inventory, and net fleet capital expenditures were a negative or a cash inflow of $21.1 million. On an OEC basis our fleet at the end of the quarter was $694.1 million, which is a decrease of $91.5 million since the beginning of the year or $38.8 million since the end of the second quarter.

Gross PP&E CapEx was $3 million and net PP&E CapEx for the quarter was $2 million. Our fleet age at the end of September was 38 months as compared to 31.2 months a year ago and 33.3 months at the beginning of this year. Slide 16.

Just as we have stated many times over the recent past, our balance sheet remains our primary focus. We were very pleased to have reduced debt under our revolver by $42 million during the third quarter which left only $3 million outstanding on this line at the end of September. Subsequently we have fully paid our revolver and have begun to build cash.

We currently have our full facility net of outstanding letters of credit are $312 million available under this line. Furthermore, our access to the $320 million facility is dependent on the availability of eligible assets as collateral. As of September 30th, our eligible assets were approximately $450 million, providing $130 million of suppressed availability.

We are managing our business through extremely challenging times, but we're managing without financial covenant concerns or debt maturities around the corner. Our covenant under the revolver is a springing fixed charge covenant of 1.1 to 1. This covenant is triggered only if availability is less than $25 million, and currently we have $312 million of availability and suppressed availability above the facilities value.

As a quick review of the remaining debt components on our balance sheet, we have $250 million of 8 3/8% senior unsecured notes which are due in 2016. Our leverage remains low at 1.6 times on a debt-to-EBITDA basis.

In closing, we are committed to asset management and cash generation. So at this time we'll now take your questions. Operator, please provide instructions for the Q&A session. Thank you.

Thank you. (OPERATOR INSTRUCTIONS) We will take our first question from Henry Kirn with UBS.

Hey, good morning guys.

Good morning, Henry.

I'm wondering if you could chat a little bit about pricing on cranes as you see it on new transactions right now, and maybe what you're looking for for signs that things could start to bubble up again there.

Yeah, Henry. Domestically the crane market has turned down in a big way, particularly in the mid-sized cranes. We're still seeing reasonable demand for large lattice cranes and we're still seeing some reasonable demand in the larger rough-terrain cranes. But by and large that market has turned down significantly. I think we can see that bottoming out and probably demand bumping along at a relatively low level for a while here, well into 2010, and I'm speaking domestically. I think Manitowoc has some emerging markets that are performing pretty well for them.

I think the crane market turned down so rapidly that a lot of the distribution organization ended up with some pretty good crane inventories and this has created some price pressures, no question. Terex had a massive crane inventory, Manitowoc had some inventory, and Manitowoc's distribution organization had some inventory, so it definitely created some price pressures which have impacted margins.

Now, the good thing is our crane inventory has come down significantly and continues to come down on a monthly basis, so we're working through that. But I do think this thing is going to kind of bottom out and bump along at a low level, and later in 2010 with energy-related projects, petro-chem and whatnot, we expect to start seeing some improvement then.

And for other categories in new equipment, what are you seeing in the backlog for some of the other stuff? And I guess dovetailing with that, where are you seeing pricing on other categories and new equipment?

Well, our dirt business, our earth-moving products, obviously that is an early cycle product, and we expect to see some signs of recovery there. We have seen some improvement in our fleet utilizations. There has been some price pressures there, but definitely stabilization in utilization, and I expect as this economy starts to recover that will be one of the first things we see is improvement in our earth-moving business. Caterpillar announced a small price increase for next year. I would expect at some point other manufacturers to follow suit there, so hopefully we start seeing some improvement in our earth-moving lines.

And one final one if I could. Are there any categories where you're seeing improvement in your parts and services business that might be a little bit of a leading indicator today?

Well, look, I absolutely think, and we said this on the last call, that our parts and service business will be a leading indicator to us of a recovery. Demand has been so weak that many of our end users have their fleets parked and they're just not spending money on the fleet right now. When that stuff starts to go back to work, there is going to be a pent-up demand, and I think we'll start seeing that across all product lines initially and most prevalently probably in our dirt lines, but that will be a leading indicator for us.

Thanks, John.

Thanks, Henry.

We will go next to Chris Doherty with Oppenheimer & Company.

Good morning John and Leslie.

Good morning.

Leslie, just a couple of housekeeping items. Can you tell us what the floor financing was at the quarter end?

At the quarter end it was $100 million.

And what was the actual proceeds and gains from the sale of rental fleet going to be shown in the cash flow statement?

Proceeds were $29 million and the gain was a little over $5 million, and that's going to be higher than what you've seen in the previous quarters because there is a nice chunk of that that was related to the disposal of our Yale lift trucks.

Right. Okay. John, can you talk about the strategy for the branch expansion in terms of how you expect to gain business for those branches and also what the criteria is for new sites?

Sure, I'd be glad to. A couple of things. We're opening branches with an aerial focus, and we've got markets like Las Vegas and Southern California and Florida aerial operations that are very difficult right now. Our Arizona aerial operations are very difficult, and those stores are over-fleeted significantly right now because of the downturn in business. We don't have to spend any capital to go into these new stores. I mean, we've got the fleet sitting, so from a cash flow perspective it becomes positive very quickly. We're targeting markets that we think we can put 200 to 500 units in a store and get reasonable utilization.

We've opened a store in Nashville. We've opened a store in Baltimore. We're looking at some other Midwestern markets, Missouri, Indiana. These are markets that they never have the highs that the Sunbelt can experience in a good economy, but they don't fall off near as much either. And in going through [dodge] reports, EDA, the billing indexes, these are markets that are going to provide some opportunity, and I think we can, by re-deploying these fleets in there, it's a very low-cost venture and it's going to improve our rates, it's going to improve our utilization, and I think it will be very positive for us.

Are those new sites, the sites you're targeting, are they under-served markets or what's the competitive nature of those?

Well, we're able to find existing facilities at very attractive rates right now, and with very short-term commitments. I'll tell you, this commercial real estate market is difficult at best, so we've been able to go into these markets, make short-term commitments at very favorable rates to open these stores.

Okay. That's it. Thank you.

Thank you.

(OPERATOR INSTRUCTIONS) And we will go next to David Wells with Thompson Research Group.

Good morning everyone.

Good morning.

First off, just wanted to get some additional color on your commentary with regards to utilization rates stabilizing. And was that something that you saw occur sequentially as you went month by month through the quarter? And then would you expect -- as we head into the slower winter months, would you expect some additional pressure or do you think that we've kind of troughed at a bottom and you would bump along at those levels?

I think we've probably troughed and we're going to bump along pretty much at these levels. We might get some seasonality in the fourth quarter with holidays and whatnot, but we've -- we're pretty comfortable that our physical utilization has bottomed out and stabilized.

Okay, that's helpful. On the new equipment inventories, would you -- outside of cranes, would you expect that those inventory levels you would continue to work down or do you feel pretty comfortable looking at the balance of 2010 and heading into 2010, would you actually expect to add inventory if you see demand pick up?

No. I think you will probably see our inventory levels continue to decline. They certainly will on the crane side and I think they will on the earth-moving side for a while. We're certainly not bringing in any aerials right now. We've got some aerial inventory that will be used to feed our rental fleet as necessary, but I expect our new equipment inventories to continue to decline for the next couple of quarters anyway.

And on the rental fleet side, would you expect to continue to work that down? And maybe part and parcel of that, are there other categories similar to the Yale equipment where you would do a more focused movement of equipment off the books?

No, I don't think so. We are not by any means aggressively de-fleeting. We're maintaining very, very strong margins on fleet sales. Like Leslie said, ex-Yale approached 30%. Now, we may have had some benefit from some older cranes that we sold that bumped that up a little bit, but even with that our fleet margins on fleet sales are very, very strong. So we're going to continue to hold our pricing and -- but we're not going to dump fleet. We're going to maintain our rental power and wait for this thing to turn around. Our fleet is exceptionally young for the type products we have, it's very well maintained, and we're not going to be dumping any fleet.

Okay. And then one last question if I may. Just thinking about cash flow generation in 2010, the balance sheet is fairly clean at this point. What would your priorities be from a cash flow perspective for any free cash flow that you generate in 2010?

Well, I mean, I think we don't have any debt to pay down so we're -- for the time being we're going to be building cash on our balance sheet. I think we'll be opportunistic and see what develops, but I think we're awful well-positioned here to really take advantage of this turnaround when it starts.

Okay, great. Thank you very much.

Thank you.

We'll go next to Philip Volpicelli with Cantor Fitzgerald.

Good morning.

Good morning.

With regard to that last question, is it likely that you guys will be looking to make acquisitions at some point in 2010 with the cash that you'll have built on the balance sheet or are you just going to play defense and keep a cushion?

Well, I think short-term we're going to play defense and build some cash, and beyond that I think we'll be opportunistic. Are we actively looking for acquisitions right now? No. But would we entertain the right opportunity? Absolutely. It's not a focus of ours. We're not out actively looking to acquire people, but in this environment I suspect there will be some opportunities arise and we'll look at those from an opportunistic standpoint and make a decision at that time.

Okay, great. And then when you were talking about the decline in rates of 19%, is there a material difference between the rate decline you saw non-res and the rate decline you saw in industrial, or I guess maybe can you break that down a little bit?

Yeah. I can't exactly quantify that for you, but I can tell you the rate declines are probably heavier in the construction side as opposed to the industrial side. That's typically the case. And Leslie touched on it in her comments. I think when you look at our rate declines, you really have to look at how we measure rates. We only measure newly opened contracts in a given period. That's only about 25% to 30% of our revenue.

And if you go back to '06 and '07 and you look at our reports from back in that timeframe, our rate increases dramatically outpaced our competitors. And again I don't think -- it's partly due to the way we -- to what we measure, and it's newly opened contracts. So I would definitely keep that in focus because when you're comparing that you're really not comparing apples to apples in many cases.

Gotcha. Understood. And then you mentioned the sold crane backlog was winding down. How much is left in that sold crane backlog?

I don't have an exact number, but it's probably between $15 million and $20 million, so it's come down dramatically. For a long time there we were carrying backlogs north of a $100 million, so that's pretty much burned off.

Great. Thank you very much. Good luck.

Yes, sir.

(OPERATOR INSTRUCTIONS) This concludes today's question and answer session. Actually, we just had one line come in from Adrienne Colby with Deutsche Bank.

Okay.

Hi, thanks for taking my question. I was wondering if you could offer any commentary on pricing on existing contracts since you make that distinction that the new contracts are the ones that are down 19%.

Well, and -- yeah, well, existing contracts are holding solid. I mean, for the duration of that particular contract, if it's one month, six months, or 12 months, I mean, we're not getting any rate deterioration there. And I think that's one of the reasons our method of measuring rates just on newly opened contracts, we look worse in some cases than our competitors do because they use a different method. But we're not getting any rate deterioration on existing contracts.

Okay. And I was wondering too if you could talk just a little bit more about the decision to sell some of your fleet, the Yale truck sales, especially in light of seeing some stabilization in the utilization and certainly some sequential rate stabilization given that you have a pretty young fleet. Just curious about again that decision to make that sale.

I'll be glad to. NACCO is the manufacturer of Yale and Hyster industrial lift trucks. It's a branding situation there, an identical product but they're under a different brand. One is Yale and one is Hyster. Historically NACCO has used separate distribution channels for each of those products. Recently they have made the decision over time to consolidate that distribution. The Yale business is a very small piece of our overall business. It's about 3% of our revenue. The Hyster dealer in the Intermountain region, it's a big piece of their business. It's about 50% of their revenue.

So NACCO encouraged the distributors to get together and decided who wanted to expand their presence and who didn't. And in this environment we were not interested in expanding our material handling presence and the Hyster dealer was, so we got together and decided to sell them our Yale assets, which we did. And that's rental fleet, new equipment, parts, and some service trucks, some haul trucks. So we exited that business, and I think we'll focus on other areas. It's a bigger opportunity for us.

Okay. That's helpful. And then just one last question. At this point have you made any considerations in terms of the ERP rollout? I don't know if that's something that's moving forward or if you're putting that on hold until the environment is better.

I'm --?

ERP.

Oh, no. We're moving forward with that and that will be an early 2010 event, but we're progressing nicely and that rollout will occur in early 2010.

Thank you.

Yes, ma'am.

We'll go next to Vladimir [Bystricki] with RBC Capital Markets.

Hey guys, this is Vlad Bystricki calling in for Seth Weber.

Sure, good morning.

Good morning. I just had a quick question on the new stores that you've opened and that you're looking at opening. What's the timeline for those to reach profitability?

Normally in most environments we can bring a store to profitability between six months and a year. I would hope to do that in this environment, but it may push that out a little bit. I'm a little bit more focused on cash generation and cash flow than I am the income statement right now, and it's going to be cash flow positive very quickly.

Okay. So cash flow should be --?

Yeah. I mean, I'm taking assets that are sitting right now and I'm going to be putting them to work, so --

Okay. And then -- so do you expect these new stores to help the utilization rates stabilize and increase?

I do. I think it will increase our utilization and I think it will improve our rates and it will certainly be EBITDA positive.

Okay, great. Thank you.

Thank you.

This concludes today's question and answer session. At this time I would like to turn the call back over to our speakers for any closing remarks.

I appreciate everybody being on the call. We are managing the things that are within our control. We've got a great balance sheet, tremendous liquidity, and we're going to maintain that and be ready to really take off and run when this market turns around, and it will turn around. Thanks for being on the call.

That concludes today's conference. Thank you for your participation.