Helix Energy Solutions Group Inc (HLX) 2014 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the first quarter 2014 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session.

(Operator Instructions)

As a reminder, this conference is being recorded Tuesday, April 22. I would now like to turn the conference over to Mr. Terrence Jamerson, Director of Finance and Investor Relations. Please go ahead, sir.

Good morning everyone, and thanks for joining us today. Participating on this call for Helix today is Owen Kratz our CEO; Tony Tripodo, our CFO; Cliff Chamblee, Executive Vice President and Chief Operating Officer; Alisa Johnson, our General Counsel; and Eric Staffeldt, our Finance and Treasury Director. Hopefully, you all have had an opportunity to review our press release and related slide presentation released last night.

If you do not have a copy of these materials, both can be accessed through the Investor Relations page on our website at www.helixesg.com. The press release can be accessed under the Press Releases tab and the slide presentation can be accessed by clicking on today's webcast icon. Before we begin our prepared remarks, Alisa Johnson will make a statement regard forward-looking information.

During this conference call we anticipate making certain projections and forward-looking statements based on our current expectations. All statements in this conference call or in the associated presentation, other than statements of historical fact, are forward-looking statements and are made under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.

Actual future results may differ materially from our projections and forward-looking statements due to a number and variety of factors, including those set forth in our slide 2 and in our annual report on Form 10-K for the year ended December 31, 2013. Also during this call certain non-GAAP financial disclosures may be made. In accordance be SEC rules, the final slides of our presentation materials provide a reconciliation of certain non-GAAP measures to comparable GAAP financial measures.

The reconciliation along with this presentation, the earnings press release, our annual report and a replay of the broadcast are available on our website. Owen?

Good morning, everyone. Let's move to slide 5, which is a high level summary of Q1 results. 2014 is off to a very good start. EBITDA increased to $93 million from $82 million in Q4 and $42 million in Q1 of 2013. EPS came in at $0.51 per share, benefiting by two non-recurring gains that contributed $0.11 a share. Revenues increased to $254 million in Q1, up from $227 million in the prior quarter. When you look at quarter-over-quarter results on the basis of the businesses we are operating today, our quarterly revenues increased approximately 33% in 2014 versus 2013.

Turning to slide 6, we closed on the sale of our former Ingleside spoolbase in Q1, realizing a gain of $10.5 million. And we also collected insurance proceeds on an old oil and gas property related to hurricane Ike damage of some $7 million. After tax, these two items contributed $0.11 of earnings in Q1. We continued to experience strong levels of utilization in Q1 to our Well Intervention fleet at 91% despite the fact that the Well Enhancer spent the first 24 days of the year in a scheduled dry dock. The Q4000 realized 100% utilization.

As we noted in our prior conference call, the H534 finally entered service in mid-February with 42 days of utilization; however, startup issues for its new intervention riser system led to 17 of these days at reduced rates. The Skandi Constructor continues to perform at a high level while operating during its West African campaign, which was completed during Q1.

Our Robotics chartered vessel fleet realized 80% utilization in Q1, which is relatively good for this business segment during the winter months. That fact, along with a fair amount of spot market work in the Gulf of Mexico, has gotten this business off to a very good start. Year-over-year for Q1, our Robotics business increased revenues 38%.

On to slide 7. From a balance sheet perspective, our cash and liquidity levels remain very strong. Cash of $470 million, along with the unused portion of our credit facility, kept total liquidity at a fairly consistent level of approximately $1.1 billion. Net debt to book cap remains at a very conservative 6% level. I'll now turn the call over to Cliff for an in-depth discussion of our contracting service results.

Okay, Owen, thanks. Good morning, everyone. First of all, I'd like to echo Owen's comments. All of the businesses are off to a great start for the 2014. On the Well Intervention side, the addition of the 534 and the Skandi Constructor helped drive revenues higher, both over the last quarter and over a year ago.

Over in the Robotics, keeping the vessels working during this winter season has been instrumental in improving revenues and profits from a year ago. Increased activity in the Gulf of Mexico and Trenching work that carried over from last quarter has also helped Robotics continue its strong performance from Q4 of last year.

The decrease in vessel utilization of our chartered fleet from Q4 to Q1 of this year is reflected in a decrease in Robotics gross margin of last quarter to this quarter. As many of you already know, we sustained a power outage on the Helix Producer 1 at the end of this quarter. The outage occurred on March 28, which had a very minimal impact on the Q1 numbers. The vessel was returned to service and production brought back online on April 13.

To move on to slide 10 for well ops overview, the Q4000 continues to be extremely reliable. This is now our third straight quarter achieving 100% utilization. Our rental IRS system was on hire for the 42 days during the quarter, 12 of which at standby rates. The 534 has been on hire every single day since going into service in mid-February.

As we stated earlier, 17 of those days were either reduced or repair rates due to connector issues we encountered with the IRS when first placed into service. The 534 is back working at full rates, and both vessels are fully booked for the remainder of 2014, and we also expect strong utilization from our rental IRS system for the remainder of the year.

Over in the North Sea, the utilization was 86% for the quarter compared to 92% for the fourth quarter in 2013. This is primarily due to the Well Enhancer being in dry dock for the first 24 days of the year. We also had the Seawell off hire for approximately seven days in February for routine maintenance. Although utilization was down, revenues were bolstered by strong performance after the Skandi Constructor while down in Africa and the recognition of deferred mobilization revenue.

Onto Robotics on slide 11, we achieved 80% utilization for the chartered vessels, which is relatively strong for the winter months when activity sometimes tapers off due to weather issues. We've also seen greater activity in the Gulf of Mexico for this quarter. All four of the spot vessels utilized during the quarter were deployed in the Gulf of Mexico.

Trenching also remains stronger in the quarter, both the Deep Cygnus and the Grand Canyon performed Trenching scopes utilizing the T750, T1200 and the i-trencher. Our fourth trencher, the T600, completed Trenching scopes aboard the client's vessels during the quarter. Overall, a pretty strong start in Robotics for the year, and we have good visibility on our vessels, which are the key drivers for revenues in this business.

Move on to slide12, I'll leave this slide detailing the vessel utilization for your reference, and with that, I'll turn it over to Eric for the key balance sheet metrics. Eric?

Thanks, Cliff, and good morning. Please turn to slide 14. Slide 14 provides an illustration of our debt instrument maturity profile at March 31. Debt reduction during the quarter was the result of the required quarterly payments of our term loan and the semiannual payments of our MARAD loan.

Moving on to slide 15, it provides an update on our year end growth and net debt levels historically and at March 31. We continue to maintain a strong liquidity position and approximately $1.1 billion of liquidity. Our net debt level is approximately $91 million, remaining fairly constant quarter-over-quarter. Cash generated from our operations funded approximately $45 million of cash investments, $6 million of loan repayments, and $5 million of stock repurchases during the quarter. At quarter end, our net debt to book capitalization ratio to the conservative 6%. Tony?

Okay. Moving over to slide 17 which represents our updated 2014 guidance. The combination of the following factors has led us to tweak our guidance upward a tad. First of all, we're off to a very good start as we documented here, and quarter one came in better than we initially forecasted. Secondly, our backlog levels should produce high vessel utilization for our Well Intervention fleet throughout 2014.

And third, better visibility in our Robotics fleet utilization should result in a strong year for this business unit. Thus, we believe we have more upside than downside off of our original $350 million EBITDA guidance, and thus, we are now saying EBITDA should be equal to or greater than $350 million for the year. Following suit, we have tweaked our EPS guidance up $0.05, now providing $1.60 to $1.70 range for 2014.

Over to slide 18, our updated guidance takes into consideration that both the Seawell and the Skandi Constructor will enter dry dock sometime in Q4. With the execution of the two vessel Petrobras contract, we are reporting our total backlog as of March 31 of approximately $2.9 billion. Slide18 also discusses the near-term utilization levels for each of our Well Intervention levels, which I will leave for your reference. We have excellent near-term backlog visibility for our fleet.

Again, and as previously stated, the outlet for the Robotics business is much stronger at this stage of the year versus 2013. We expect all geographic regions for Robotics to improve in 2014. The Trenching market, a strong niche for us, has materialized very nicely in 2014; as such, we are presently working on two major Trenching programs right now.

Our newest trencher, the T1500, is expected to be delivered to us shortly and will be immediately mobilized on a -- onboard a spud vessel and deployed on initial three month project in the North Sea. The Grand Canyon II is now slated to enter the fleet in early 2015, a slight move to the right, but this factor is already baked into our updated forecast.

Year-over-year, for ongoing operations, we are forecasting revenue growth of 29% in 2014. We are forecasting a total CapEx spend for 2014 of $400 million, the same as we've previously guided. Of this number, approximately $320 million is growth capital, including progress payments for the Q5000, spending on the Q7000, ROV fleet additions, the T1500 trencher and initial spending to furnish for the two vessels to be constructed for the Petrobras contract. I'll skip slides 21-24 and leave them for your reference. At this time, I'll turn the call back over to Owen.

Thanks, Tony. Q1 has certainly gotten us off to a good start in 2014. The earnings report is relatively self-explanatory, and there's not much more to be said about it. It does reflect our internal expectations of our current business model. Our expectations regarding the market are materializing, and we're executing as planned. Our newest Well Intervention vessel, the H534 is now in the market, working and working well. We did have some early shakedown issues with the intervention riser system, but we expect those to be behind us.

The construction of the Q5000 is going well. It's on or under budget, and we anticipate that it will be in service around mid-next year. The Q7000 is soon to cut first steel, and all is going as planned for delivery in 2016. The two vessels for Brazil are still in the early stages of their construction schedule. The new trencher is being delivered soon, and we have six ROVs on order this year. The new Grand Canyon vessel should be joining the Robotics fleet in the beginning of next year.

We believe that Helix is clearly the global leader now in non-rig Well Intervention solutions, as well as Robotic Jet Trenching. We forecast a continuation in the increase and demand for our services and have a strong backlog extending out multiple years.

While it may be a bit early to offer an upward revision to our 2014 full year guidance, we have tweaked our original guidance to indicate an upward bias. We realize and are well aware of the concerns that have been expressed about the softening rig market and how it may impact Helix. Hopefully, and as evidenced by our growing backlog and our demonstrated operational efficiencies, we believe this concern as applied to Helix is fundamentally overstated. We'll be happy to take any questions now.

Thank you.

(Operator Instructions)

Jim Rollyson.

Good morning, guys.

Good morning, Jim.

Owen, couple -- big picture question first. Been a lot of talk in the last few months about the IOCs and capital spending and refocusing towards returning cash to shareholders, and it seems like a lot of that discussion revolves around infrastructure costs.

But just as it relates to spending in offshore deepwater, your market niche, curious what your customers are telling you as far as that capital change in focus, how that's -- may or may not impact you going forward for the next couple of years?

Okay, Jim.

We don't hear much more from the clients than you do about their capital spending aspirations, but what I will tell you is one of the reasons that I really love the niche that we're in right now is that it's more life appealed oriented. When capital spending drops on the drill bit and the field development side, increasing production -- production has to come from somewhere, and that typically falls to well enhancement and improved recoverability, and that's the essence behind intervention.

As a life appealed service, focusing on improving production at a time when the drilling is in a slow cycle is actually beneficial to us.

Makes perfect sense.

A couple questions around backlog, either Owen or Tony. If I'm not mistaken, last quarter you guys had stated the 534 had backlog through 2016 and into 2017. And the wording's a little different now, it says through 2015 with visibility into 2017.

A, I'm curious if that's a just a verbiage change or something actually changed on the backlog. And then maybe a little color on where you stand on getting additional backlog for the 4000 and actually backlog for the 7000.

Jim, a good question. I think it's subtle semantics here.

We only count as backlog what's set in stone contractually. Internally and to our customers we have committed these vessels with the understanding that they are committed to certain customers. Our semantics may have been a little different last time, but really, nothing has changed in the backlog.

Okay, and any hope or visibility on extending the Q4000 into 2017 and/or getting backlog for the Q7000?

I'll take the Q4, I'll let Owen take the Q7.

The Q4, in our own mind and to certain customers, is committed through 2017. We don't count all of it as backlog again until some of these, quote, intents, are firmly set in stone. But in our own mind and in our own scheduling, the Q4 is really pretty much spoken for through that time period.

I'll let Owen address the Q7000.

Jim, as you know, we don't build purely on speculation, although technically you could call the Q7 a spec build vessel. The -- if you notice, the Q7 was built ahead of the Q6, and that's because all of the designs are pre engineered. But the Q7 jumped the queue because of dialog with clients.

Sometimes it takes longer to translate that into a written document and a signed contract. But I'd just advise a little patience, and I'm not worried about the queue. It's just a matter of when, not if we contract it.

Perfect. I was just looking for an update. That's great. Thanks, guys, appreciate it.

Jeffrey Campbell.

Good morning.

Today Baker Hughes announced an alliance Aker Solutions that will include, and I quote, focus on advancing the industry's well intervention capabilities to further optimize efficiency and reduce risks in subsea developments. And in Baker's own earnings call, they also called out a deep-water Gulf of Mexico ESP solution specifically designed so that it could be serviced by a light well intervention system.

Sounds like well intervention utilization is being considered in a significantly different way than might have been the case even a year ago. What is your take on these developments? And is Helix specifically part of any project discussions or planning?

Well, I'll take the second part of that question first. If we were, we wouldn't be allowed to talk about it right now. But we're certainly in discussion with a lot of parties.

With regard to the first part of the question, I think the -- we have seen in the last few years a real awakening of the industry to the fact that the producers are going to need long-term intervention solutions to the deep-water subsea wells. And that probably -- the solution needs to be more efficient than what a drill rig can offer, and I think you're starting to see people waken to that.

But I would caution that intervention is not a single market niche. Single -- intervention is actually multiple market niches. A great deal of what drill rigs have been used for to intervene into wells can be done more efficiently by a specialization of the vessel.

And then you have to look at which segment of the intervention market you're talking about. You mentioned ESPs, that's one of them. You've got well construction activities, which may take one kind of platform. You've got production enhancement, which is another platform. Decommissioning is yet another platform.

I think you'll see a lot of room for multiple niches and specialization. That's one thing that makes me pretty excited about where Helix sits right now, because we have the vessels of opportunity from Canyon. We have the light intervention vessels of -- in the North Sea. We have the monohulls deploying risers and we also have the semi submersibles.

So, there's -- we're more than just an intervention company. We are an intervention solution provider, and we're the only ones that provide it across the board. I would -- I think which way the market goes and which way Helix goes will depend on the outcome of the discussions that I alluded to.

Okay, great. Thanks. I appreciate that color. And I have one follow-up.

I was just curious to know what was the motivation to increase the ownership of the Helix Producer to 100%, and does it say anything about the potential for any additional floating production units similar to the Helix producer in the future?

I'll take that.

When the Helix Producer 1 was originally acquired, that is the hull itself, the vessel was acquired from a Danish shipping concern. And there was always a put call on the minority interest, that is, we had the right to call the minority interest. And if we didn't call, the Danish ship owner had a right to put it to us.

We viewed that inevitability to occur and decided just to clean it up and buy out the minority interest. So, that was the reason. It was going to happen anyway because it was very likely that the partner there was going to put the vessel to us, and it was at a predetermined formulaic purchase price.

It is highly unlikely that we'll seek to expand our floating production system business, to answer the second question.

Okay, great. Thank you. I appreciate it. Congratulations on the quarter.

Thanks.

Igor Levi.

Great quarter, guys.

Thank you.

I'd like to focus a bit on the robotics segment where it appears you have grown visibility relative to what we've seen in prior years. I was wondering if you could talk a bit about how visibility in this segment has changed over the last 12 months?

I'll take that one.

Last year was a slow start to us in the first quarter. And historically, in the Gulf of Mexico and in the North Sea in Europe, the first quarter, maybe December through the first quarter is a slow start because of weather. Nobody wants to do any work when the weather is bad offshore on these monohull type vessels.

We have -- we strove to improve our first quarter this year by looking a little bit at some other activities, which we were able to find some work in the Middle East and things like that. Last year in the first quarter, we probably had three boats idle. This year first quarter, we had 1.5 boats. We had the Olympic Triton idle half the time maybe, and Deep Cygnus was idle quite a bit as well.

Going forward, we've seen activity in the trenching side pick up quite a bit. You'll notice from what I said earlier, all four of the existing trenchers that we have now have been working this first quarter, and we're taking delivery of a new trencher the first of May. And it goes straight to work on a spot boat that we're going to pick up for I think 160 days or so as well. We have a couple of spot boats we're picking up for the North Sea, and potentially same here in the Gulf of Mexico.

Just seeing a little bit of increase of activity in the vessel utilization, as well as, you might have noted that the ROV utilization increased as well. It's really about this first quarter that helps this, probably second, third quarter be pretty much, I think, as planned for budget, maybe potentially a little bit upside in the fourth quarter.

Great.

And the Grand Canyon II vessel that you're -- once you take delivery of that, will there be enough work, you think, to keep that as an incremental sixth long-term vessel?

It will be a long-term vessel. We're taking it on charter for multiyear. It will be a long-term vessel, and our strategy that part of the business all those vessels are chartered vessels are chartered vessels, and they are staggered in.

We can get rid of a vessel or two vessels in any given year just about. And we also, as I mentioned, have charter -- spot charter boats in for 60 to 180 days or something like that. We'll bring that boat online when it comes out, as Tony mentioned, I think probably mid-January, maybe a little bit later. And we'll play the spot market and if we don't need to pick up spot -- more boats than we want, we'll keep the Grand Canyon busy.

Great. Thank you. And I'll turn it back.

Martin Malloy.

Congratulations on the quarter. First question, how much was the deferred mobilization fee that you recognized in the first quarter?

Marty, the impact earnings was about $0.05. However, I wouldn't try to isolate that, because during the course of any quarter, you've got a lot of give and take. For instance, the 534 came on late and really didn't contribute much during the quarter in terms of bottom line earnings.

But to answer your question in isolation specifically, it was about $0.05, but that kind of stuff happens all the time. It was perhaps a much larger amount than we normally see for promote that carried over in terms of revenue recognition. But, like I said, we have that kind of stuff that is a give and take every quarter.

Okay, and then on the last quarterly conference call you mentioned you were evaluating potentially some investments in some additional IRS systems. Anything new to report there?

Well, we're -- we have -- this is Owen -- we have the fifth IRS system in construction right now with the components ordered for the sixth one, and our aspirations are to build as many as 10. Of course, that's a multiyear aspiration.

Okay. And the timing for the fifth and the sixth coming out?

The fifth is -- correct me if I'm wrong here, Cliff, but the fifth is targeting the -- that will go on the Q5000. So, it will be completed prior to the Q5000 going into service. And then the IRS6 will be going onto the Q7000, which comes out in 2016.

Okay. Thank you.

Joe Gibney.

Thanks, good morning. Just a couple quick ones for me.

Tony, I was just curious, on the other income within oil and gas, it skewed a little bit higher sequentially, even backing out some of the one times you called out. I was just curious, what drove the change in that figure sequentially? Was there some other figure in that number?

Yes, this is Eric.

When you back out the items that we identified, the oil and gas insurance recovery, we do have a couple of oil and gas fees, the royalty revenue from the Wang property. And we do have a couple of other obligations related to that where we receive annual fees here in the first quarter, and that would cause a one time blip every year.

Got you, okay, that's helpful.

And just a follow-up on Marty's IRS related question. You referenced expectations for strong utilization for the balance of the year for that asset.

What is strong utilization for that asset class? Is it above 80%? I'm just trying to understand what you really see in terms of utilization there?

Yes, I think you're referring to IRS 2, which is on a third party -- on third party drilling rig. All of our intervention vessels, the heavy usage vessels have one of their own. But we have a, what we call IRS 2, which was originally built to be a spare for our fleet, but it got sucked up into use by one of our clients needed one of their rigs.

And originally they were supposed to use that and get rid of it probably, I think it was around March or April of this year. Indications are they're probably going to keep that all the rest of this year, so that's much over the budget utilization than we had for it.

Okay. Helpful. I appreciate it. I'll turn it back.

Trey Stolz.

Just to go back to Marty's question on 1Q impact, may ask it a different way.

If we're -- somebody always asks every quarter, what's the trend in rates? I think we know the answer, generally speaking. But if we look at 4Q to 1Q, any help you can give us on isolating that, how much of that increase in revenue was due to higher rate quarter over quarter and if there's any change in how that's trending over the next several quarters?

I'll take that, Trey. I think any rate increase from Q4 to Q1 is generally negligible. We do have inherent rate increases in our North Sea fleet when contracts roll over.

But I think net/net, really the impact on earnings is going to be more affected by utilization than increases in rates when you look at it in such a short time period as Q4 to Q1.

Understood. Thanks.

And on the expense side, OpEx side for Well Intervention assets with the deep-water rigs building up their labor forces and wondering if there's an impending labor shortage and how you view your daily OpEx potentially trending over the course of 2014, particularly second half of the year when more of the rigs are out working?

I'll answer that.

There is a pressure on labor for drilling rigs, intervention vessels across the fleet, and more coming. And that's part of the reason why we've got a twofold philosophy there. One is we own some of our own vessels and the other is we lease some, for example, the two going to Brazil and Skandi Constructor. Those come with the marine crew already on them, and that's where we're seeing the most pressure is on the marine side, being the captains and the mates and engineers, et cetera.

And we have our own internal little bit of training program going on as well. And so we are going to see that just like everyone else is, but it's not something we can't overcome.

Let me add to that comment, Trey, and say we've seen cost pressure for years now, and we've planned for it. It's really baked into our numbers, so to speak.

Okay. And labor, should we assume is the 40% to 50% range on a daily OpEx basis for an offshore asset like that?

I'm trying to think off the top of my head. I'd better not answer, I'm afraid I'm going to be too far off, Trey.

But like I said, we've been dealing with labor increases for the last four or five years. It's probably more closer to 30% of our daily OpEx than anything. And, for example, in the UK, when we have inflation increases on the labor side, we have adjustment factors in our rates, so we get it back on revenues.

Yes, that's part of the answer is we try to increase the revenues like everybody else is doing. It's a treadmill there. And we're also spread between three regions; the Gulf of Mexico, Europe and Brazil. So, we're not seeing all the vessels hit in one area and driving that particular area up.

Are you having success with getting those clauses and contracts in the Gulf of Mexico with say the Q4 or the Q5 coming up?

The Q5 has an inflation adjustment clause in its contract. The Petrobras vessels do as well. The Q4 doesn't, but we've been successful in pushing rates over the years on the Q4.

All right.

And one more, when the Constructor started out -- started without the riser system and was operating at breakeven, I guess, initially. With the H534 starting out, is it operating at full possibility from the get-go here, and 1Q, the contribution there for the 40-some odd days? Or is there a ramp up on the operating income side as we go through a shakedown period?

Yes, the 534 in the first quarter, Trey, of the 42 days it was producing revenues, only 25 of those days were at full rates. (multiple speakers) The Constructor has been at full rates, right.

And do you expect full rate going forward on the H534?

Yes, that's our expectation.

Great. That will do it for me, thanks.

(Operator Instructions)

Michael Marino.

Tony, forgive me for a nitpicky question. I'm just trying to calibrate my model here, and looking at the Well Intervention revenue guidance for this versus the last time you gave it, it actually ticked down $5 million.

I'm just trying to figure out, is that just an added dry dock in there somewhere? Or was there -- because presumably, things are getting better there. I'm just trying to calibrate my model a little bit for the Q1 results and how to think about it.

Yes, we didn't give quarterly guidance.

Right.

There was a delay in the 534 going to work. Again, without going back to the original guidance, vessel by vessel, I would have to off the top of my head say it was the 534.

Okay, that's helpful. And then just another modeling question looking out a couple years, can you update us again on the CapEx runoff, $400 million this year. What does next year look like, what does 2016 look like? And now I guess -- where do you get when you're fully deployed maybe from a maintenance level standpoint?

Owen, you want to take that one off?

I can try right now, although we don't finalize our actual capital commitment until budgeting time for any following year. But I would assume that -- you could assume that CapEx is going to remain at the 400 level at least through 2016.

As far as maintenance CapEx run, we tend to look at dry docks. Dry docks are not fully capitalized. A lot of that is repair and maintenance, but we tend to look at it as cash out the door and it falls onto our CapEx project for cash management.

Looking at it that way, I'd say our CapEx -- our maintenance CapEx on an ongoing basis would be $50 million to $60 million.

And that's on the fully deployed fleets with the 5000 and 7000 in there? Or is that --

I would think that right now. I think it's a little early for us to define it any closer than that.

Fair enough. Okay, thank you.

(Operator Instructions)

There are no further questions.

Okay. Thanks for joining us today. We very much appreciate your interest and participation and look forward to having you on our second-quarter 2014 call in July. Thank you.

Thank you, ladies and gentlemen. That does conclude our conference call for today. We thank you for your participation, and we ask that you please disconnect your lines.