Helmerich and Payne Inc (HP) 2010 Q3 法說會逐字稿

Good day, everyone, and welcome to today's program.

(Operator Instructions)

Please note that today's call may be recorded.

It is now my pleasure to turn the conference over to Vice President and Chief Financial Officer, Juan Pablo Tardio. Please go ahead.

Thank you, and welcome, everyone, to Helmerich & Payne's conference call and webcast corresponding to the third fiscal quarter of 2010. With us today are Hans Helmerich, President and CEO, John Lindsay, Executive Vice President of US and International Operations, and Mike Drickamer, Director of Investor Relations. I will make some general introductory comments and we'll then turn the call to Hans for his and John's comments.

As usual, all forward-looking statements made during this call are based on current expectations and assumptions that are subject to risks and uncertainties. As discussed in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q. The Company's actual results may differ materially from those indicated or implied by such forward-looking statements. We will also be making reference to certain non-GAAP financial measures, such as segment operating income and operating statistics. You may find the GAAP reconciliation comments and calculations on the last page of today's press release.

During the third fiscal quarter of 2010, and as announced in the press release, the Company generated $0.61 in earnings per diluted share from continuing operations, which excludes the write-down related to the Venezuela expropriation. Our US land operations segment continued to lead the way, delivering significant sequential quarterly growth in segment revenue, operating income, and revenue days. Our Venezuela write-down of slightly over $100 million was included in the reported loss, corresponding to discontinued operations during the quarter. The book value corresponding to the Venezuela fixed assets and warehouse inventories in our consolidated balance sheet was approximately $70 million prior to the writeoff. Excluding restricted cash in Venezuela that is still included in our consolidated balance sheet and is expected to be used in covering local obligations, an amount in Venezuelan currency that is notionally equivalent to approximately $21 million was also part of the total impairment. Although, it is still held by the Company in Venezuela.

Furthermore, the portion of accounts receivable in Venezuela that was included in our consolidated balance sheet has been fully impaired. Although, a notional equivalent of approximately $42 million in local invoices remains unpaid by PDVSA. As you would expect, we are currently evaluating available remedies that may enable the Company to be compensated for the seized assets and for the unpaid invoices. However, it is premature to speculate when and if such efforts will be successful, and therefore, we will limit our comments on Venezuela to those in our prepared statements and public filings.

On a more favorable note, the Company's debt level declined by $50 million to $390 million by the end of the third fiscal quarter, and the corresponding debt to cap ratio declined to under 13%. The Company expects to continue to use internally generated cash flow to fully fund the construction of the announced new FlexRigs. Our capital expenditures estimate for fiscal 2010 remains at $350 million, but the actual CapEx level will depend on the timing of rig component procurement related to the Company's ongoing new build construction program. During the next few months, we will be working on an estimate for the Company's fiscal 2011 capital expenditures level, but at this time, it is expected to be similar to or greater than our mentioned estimate for fiscal 2010.

Our investment portfolio primarily comprised of eight million shares of Atwood Oceanics, and 967,500 shares of Schlumberger recently had a pretax market value of approximately $300 million, and an after tax value of approximately $195 million. The effective tax rate for continuing operations, for the first nine months of the fiscal year, was approximately 34% and is expected to be in the 35% to 36% range during the fourth fiscal quarter. The tax rate for continuing operations during fiscal 2011 is at this point expected to be in the 36% to 38% range.

I will now turn the call to Hans Helmerich, and after Hans and John have made their comments, we will open the call for questions.

Thank you, Juan Pablo.

As everyone knows now, we are recognizing a significant charge relating to the nationalization of our rigs in Venezuela. While the final chapter of this story will be about pursuing compensation for those seized assets and payment for outstanding receivables, and that work is ongoing. The larger part of this disappointing episode is behind us. And we are moving forward accordingly.

As we move ahead, our focus in energy are really better captured by today's announcement of nine new builds that have been added to a similar announcement of seven new builds made earlier this month. The conventional thinking would hold that we are too early in this recovery for new builds. After all, our major competitors have activity rates that languish around 60% or less.

Traditionally, improving industry activity rates are a result of rising commodity prices, tightening rig supplies are then accompanied by improving dayrates. As those rates move toward replacement cost economics, then a brief window opens for new builds, sometimes after the cycle turns over and we wait to do it again. But consider what happened this time. Commodity prices have recovered from their lows a year ago, but hardly the levels that would fuel a resurgent cycle. While natural gas prices have recovered from their springtime lows, they are still down 25% from where they were at the beginning of the year.

Even with a summer that is 25% hotter than average, supply and price concerns remain with natural gas. That's why we believe our current new builds are not a result of a traditional energy cycle dynamics, but instead, they reinforce our long held conviction that a growing number of customers are increasingly shaping their efforts in the field around efficient high performing rigs. A year ago, this is what we hoped would happen. We said then that we expected a recovery to show more pronounced bifurcation or segmentation of the industry fleet. Clearly, two markets have now emerged. One is made up of high efficiency rigs, where customers have employed nearly all available rigs as they secure their current and future needs, for increased activity in selected plays. The other market made up of older conventional rigs remains underutilized and underpriced.

Future demand may disproportionally favor new builds. Our customers are increasingly engaged in more complex drilling targets for natural gas, liquids, rich gas and oil. The old conventional fleet becomes less and less suitable for the task.

For a time, a segment of refurbished SCR rigs, a subset of the conventional fleet, will act as a buffer for a steadily rising US land rig count. Like others, we've been somewhat surprised to see about a dozen rigs per week added to the overall domestic count, over the last nine months. It's difficult to predict how long this expansion will continue. What would surprise us is a repeat of 2006 or the first half of 2008, where a bullish rig count outlook was fueled by very strong natural gas prices.

If gas prices remain more range bound, which is what we see as the most likely case, then customers will continue to strongly prefer high efficiency rigs, turning to conventional SCR rigs as a place holder or buffer while the supply and demand dynamics work themselves out. That type of marketplace favors our company's strengths and capabilities and presents the potential for us to capture additional market share. Stated more plainly, there's a shortage of high performing rigs and an oversupply of older conventional rigs. In between a group of not so old SCR rigs representing about a third of the domestic fleet will play a swing role. This confirms our expectations for a segment in market where high performing rigs and our FlexRigs in particular, will continue to experience better utilization and margins compared to the industry fleet and positions us well to satisfy our customers' future demand.

And with that, I'll turn the call to John to make his comments.

Thank you, Hans, and good morning.

Operators continue to direct more dollars toward oil and liquid-rich plays and FlexRigs are in high demand for both. New and existing customers are high-grading their fleets with FlexRigs, as they pursue more unconventional resource plays. Unconventional wells require mostly horizontal and directional drilling, enabling better and more cost effective reservoir performance, and FlexRigs are a catalyst for better drilling and safe performance.

The following comments will describe the third quarter results and the fourth quarter outlook for our three operating segments, and we'll start with US land. Total US land segment revenues increased 13% sequentially to $367 million, due primarily to higher utilization. As a result, operating income increased 14% sequentially to $103.1 million.

During the third fiscal quarter, the average number of rigs working increased by 12 to 158, including 106 rigs under term contract and 52 rigs in the spot market. Total revenue days increased 10% to 14,374 days. Excluding the favorable impact of revenues from early termination and new build delays during both quarters, average rig revenue per day for the fiscal third quarter increased over $400 sequentially to about $23,000 per day, as average dayrates for rigs in the spot market increased by over $2,000 to about $20,000 per day. Average rig expenses per day increased slightly more than $400 sequentially to $12,539 for the third quarter. These cost increases are directly associated with 12 FlexRig four reactivations during the quarter, and 14 FlexRig reactivations in the second fiscal quarter.

Without going too deeply into the details, the best way to describe why costs increased during the third quarter is related to relocating FlexRigs from lower cost per day basins to higher cost per day basins. During the third fiscal quarter, two-thirds of the rigs we reactivated moved to new basins, compared to the second quarter, where only one third of the rigs we reactivated moved to new basins. While these inter-basin moves were challenging in terms of the costs required to acquire and train the right personnel, and invest in rig modifications that better suit the rig to the basin, these long moves put FlexRigs in strategic areas.

The average rig expense per day during the fourth quarter is expected to be flat to slightly down from the third quarter. In the fourth quarter, fewer rigs should be reactivated, as the remainder of the stacked Flex 4s return to work, and fewer of the reactivated rigs will make inter-basin moves.

It's worth repeating what I said on the last call. Our customers have high expectations from H & P and it's important that the rig is in top shape and the rig leadership and crews have undergone proper training as we endeavor to deliver value to our customer.

Today, we have 177 contracted rigs working, including 121 rigs under term contracts, which includes two new builds on customer requested delivery delays. The delayed rigs generate revenue, but do not generate revenue days. Additionally, we have 56 rigs in the spot market, including 53 FlexRigs.

Demand for FlexRigs continues to be strong, which are quickly approaching 100% utilization of the 40 idle rigs in the segment, only 6 were FlexRigs and all of those were Flex 4s. Five of these idle Flex 4s are now contracted to return to work in the US during the fiscal fourth quarter and one is expected to deploy to Bahrain during the first fiscal quarter of 2011. This represents our second FlexRig contracted for operations in Bahrain.

Accordingly, we expect the US land average of revenue days during the fiscal fourth quarter to increase by 10% or more sequentially. With the high levels of FlexRig utilization, our average dayrate for rigs in the spot market has increased to the low $20,000 a day level, while the average dayrate rigs, dayrate for rigs under term contract remain in the mid $20,000 a day range.

Excluding the favorable impact from early termination and delay revenues in both fiscal third and fourth quarter, we are expecting an increase of several hundred dollars in total average revenue per day in the US land segment from the third quarter to the fourth quarter. Considering only existing contractual commitments, the Company now expects an average of approximately 123 rigs to remain under term contracts during the fourth fiscal quarter. The corresponding annual averages for fiscal 2011 and fiscal 2012 have also increased to 99 and 60 rigs respectively. The average rig revenue per day for H&P rigs already under term contracts is now expected to remain in the mid-20s for the fourth fiscal quarter. Considering only existing term contracts, the average dayrate would increase by about $1,100 per day on average during fiscal 2011 and by an additional $700 per day during fiscal 2012.

Today, we announced nine additional new builds, all of which are under multi-year term contracts, with favorable dayrates and returns. These nine bring to a total of 19 new builds announced during fiscal 2010, and 159 new rigs since 2005. The 19 new FlexRig threes announced this year for US land will be activated in some of the most prominent basins in the US, to include six in the Eagle Ford, three in the Haynesville, three in the Woodford, and two in the Bakken. All of the rigs will be drilling more challenging horizontal and directional wells, and we believe there will be potential for more new builds in many of the unconventional plays.

In our offshore operations, as expected, during the third fiscal quarter, the number of activity days decreased to 638 from 660 as compared to the second fiscal quarter. Average daily margins decreased about 10% to $20,782, as one of our rigs rolled to a lower demobilization rate during the quarter. The impact of the government-imposed deep-water drilling moratorium on our offshore segment, segment's fiscal third quarter average rig margin per day was approximately $600. We now expect that one rig will receive lower standby rates during the fiscal fourth quarter and one of the rigs that was previously expected to return to full working rate during the quarter will remain on a lower standby rate. We expect that activity days will remain flat sequentially during the quarter, while the average rig margin per day is expected to decrease by 15% to 20% from quarter to quarter.

In the international segment, including the 11 rigs in Venezuela, we had a total -- pardon me, excluding the 11 rigs in Venezuela, we had a total of 28 rigs assigned to the international segment, one of which was recently mobilized to Bahrain. The other active rigs by country are six in Mexico, five in Argentina, four in Colombia, four in Ecuador, and two in Tunisia. Revenue days increased about 7% sequentially to 1,881 days during the third quarter. The average rig margin per day from continuing operations in the international segment decreased by $975 to $10,192 per day from $11,167. The decrease is primarily attributable to four rigs in Argentina that received standby rates due to a strike and to extraordinary items that favorably impacted the second quarter and did not impact the third quarter.

Given the significant and counter cyclical decline in land drilling activity in Mexico, our customer has informed us that at least four of the six rigs that we have in that country may be stacked or relocated to other international markets. All six of our rigs working in Mexico are FlexRig 3s, under two-year firm term contracts, due to expire during the fourth fiscal quarter of 2011 and during the first fiscal quarter of 2012.

Our first FlexRig in the Middle East, which is in Bahrain, is under a long-term contract, has spud its first well, and is expected to generate about 30 revenue days in the fiscal fourth quarter. As previously mentioned, we have received a long-term contract to move a second FlexRig 4 to Bahrain. Both rigs should be active in that country by the end of the first fiscal quarter of 2011. Considering the startup of the first rig in Bahrain as well as the reactivation of a rig in Colombia, we expect our total revenue days in the international segment to increase by approximately 5%. We also expect the average rig margin per day to decrease by 5% to 10% from quarter to quarter.

In summary, with the nine additional new FlexRigs mentioned today, we've announced a total of 16 new build contracts in the last 30 days, a significant achievement, considering we are only one year past the bottom of the cycle. Since the first fiscal quarter, we've tripled our exposure in the Marcellus Shale to 12 rigs and with commitments for 20 rigs in the Eagle Ford, 19 in the Bakken and 20 in the Permian, we have doubled our exposure to these markets. Customer demand for high performing rigs has provided H&P with 100% contract commitment for the FlexRig fleet today, even with the industry conventional rig fleet today at slightly over 50% utilization.

However, the FlexRig is only part of the solution. As we've said in the past, a key driver of our utilization and pricing premium is a result of having the best people in the business that are committed to delivering safety and performance excellence in the field.

And now I'll turn the call back to Juan Pablo.

Thank you, John.

And operator, we will now open the call for questions, please.

(Operator Instructions)

Our first question comes from Dan Boyd with Goldman Sachs. Please go ahead. Your line is open.

Thanks. Good morning, guys.

I guess just looking at the new announcements on the FlexRigs and the increase in the margins you expect on the contracted rigs in fiscal '12, it sounds like you're finding rigs in the high 20s again, not that far from some of the rates we saw last cycle, yet spot rates are in the low 20s. Can you help me understand the dynamic there if customers are willing to sign term at very high rates, yet they are not willing to pay for no term contract in the short-term. So I'm struggling to tie those two together.

Dan, this is John.

The new builds are in the, kind of in the mid-20s range. What causes those term contract rates to increase is that we have other term contracts that are rolling off between now and then over the next six months. And those rates are lower. They are lower than the average, and therefore that's what, along with the new terms that we're getting in the mid-20s, including some rigs in the spot market, that's what's driving that number up.

And this is Juan Pablo.

If I may add to that, the average low 20s number that you're referring to is an average of all of our rig categories, including a few conventional rigs, but all FlexRig type rigs. FlexRigs threes, as you know, command a premium. And so there's a difference there as well.

Okay.

Part of the thing I was alluding to was you actually guided up $100 a day for fiscal '11 and then implied I guess would be $200 a day increase in '11 on the contracted rates. But I think I understand what you mean.

And then just on that spot market again, recognizing that even the rigs in the spot market, I'm sure, aren't contracted on a day-to-day basis, I would assume they are something in the 60-day, maybe even 90-day range. Is there a -- are rigs being signed today on the spot market higher than that low 20s, or is that a pretty good rate to think it carries into 3Q?

Dan, it's really dependent on the type of rig, the higher performing rigs Juan Pablo mentioned, flex threes, they are going to be higher, in the mid-20s, and some of the, maybe some of the earlier flex ones or even some of the smaller rigs that we would have would be in the high teens. So there's a range. I mean, it's a range based on, really based on performance.

Okay. So the spot market and the contract term market are actually at the same level for an apples to apples comparison rig?

Again, there's a lot of variables. It's hard to just classify it that way because there are some, you know, there are flex fours as an example, that are entering both the spot market as well as term at higher pricing today. But those numbers aren't always the same. Again, it depends on what the amount of term that you're talking about.

Okay. I guess I just wanted to make sure that you're not -- customers aren't paying actually a premium and getting term. And I just want to better understand, should we expect rates to move higher as we move through the year, given how tight the spot markets are for FlexRigs? Or do you think you're at a point where rates level off?

We're going to vote for higher.

All right, thanks.

Thanks, Dan.

Our next question comes from Robin Shoemaker with CitiGroup. Please go ahead. Your line is open.

Thank you. I wanted to ask about the manufacturing strategy here. With these new orders, will you be going to a higher rate of manufacture at the Houston facility, like two FlexRigs kind of simultaneously? Or how -- and how will the higher rate of -- affect your costs, if any, per rig?

You know, I'll step back and answer your question by saying it was probably late last year that we talked about on calls like this and elsewhere, just the importance to us to keep a continuity of our manufacturing effort intact. And we were able to do that and as you know, and as we, as we look forward, we've had the experience of being able to be flexible with that range of continuity.

So I think at one point we were down to one rig per month and, you know, today with a nicer order book, like you suggested, will increase that. We've mentioned some of the deliveries go out into the late spring of '11.

You know, to your question of as you increase your cadence and your throughput, what does it do to your costs, I think there's probably some economies of scale and kind of the sweet spot, if you will, that allows us to increase that throughput, with the effect of actually doing quite well with costs. And then as you step change that up, then of course you have other challenges and other moving parts. But I think it gets back to the continuity and having the same guys on task with the same effort. They have been focused on costs. And so I think we've been very pleased with what our costs are, and as we ramp up to fulfill this current demand, I think we're in good shape. And then we have kind of the demonstrated ability to move that up, depending on where the market demand leads us.

Okay. As a follow-up, can you give us an update on the FlexRig four employment sort of situation? Are they all working -- are they, they're returning to work principally at spot market rates, but is there any discount on flex fours relative to that spot rate that you quoted in the low 20s for the FlexRig threes?

Robin, this is John.

The -- we've got six flex fours that are left to mobilize. All the flex fours are committed. All flex fours have contracts. And of the six, five are going back to work in the US and one is the one we've mentioned going to Bahrain. As the market has tightened, as you can imagine, we've improved pricing on flex fours, as well as flex threes.

The flex four typically is used on a little bit shallower work, but we've actually seen flex fours move to the Marcellus, move to the Bakken, move to some areas that they hadn't previously worked. And they have been quite successful there. And in fact, many of those -- well, in fact, all of those entered term contracts, as you can imagine. We're not going to move a rig that distance on a well-to-well contract. Those are all term contracts. And, again, we've been encouraged and are pleased with the pricing that we're receiving.

Okay. And then finally, on the number of rigs that you said are FlexRigs on spot market currently, are you exploring opportunities to put some of those on term, or what is your preference in terms of maintaining a number of FlexRigs on spot versus moving them all opportunitistically to term contracts?

You know, there's not been a kind of bright line number for us in that regard. I think that we're seeing, as you guys are, the improvement in the trends in the business. So the combination of getting new build orders, combination of seeing improving trends would make us less inclined to term up. We've added to the number of term contracts, as we mentioned. So that's some of our thinking on it. We've got, as John mentioned in his comments, we've got rigs coming off of term and so there are several moving parts to consider.

Yes, okay. Thank you.

Thanks.

(Operator Instructions)

Our next question comes from Joe Hill with Tudor Pickering and Holt. Please go ahead. Your line is open.

Good morning.

Good morning.

Hans, can you talk a little bit more about the labor issue surrounding incurring all these term rigs you're signing up and give me an indication as to how large the crews are for these?

Oh, I mean, I think part of what we were mentioning earlier is just, and John was hitting on, is just particularly as you go into new areas, Marcellus, and other basins, we're doing the same kind of training regiment we were doing, you know, back in the '06, '08 timeframe, where we were spending the money and effort to really get guys up to speed. But I'm -- is that what you're asking, Joe?

Yes. I was just trying to figure out whether or not there was a choke point there or whether you had it all taken care of. And then just get a sense as to how large the crews are, say, on the flex threes.

Joe, typically a flex three crew is a five-man, what you would consider a five-man crew. So you've got four crews on a rig working a schedule. Seven and seven, or 14 and 14 rotating schedule, so you then have five guys at any one time on the rig then you have a rig manager. It's a pretty standard, what you would consider standard industry complement. Occasionally a customer is going to ask for a six-man, but typically it's a five-man crew.

Just to add to Hans' comment, when you're with the growth that we've seen in areas like the Marcellus and the Bakken, as you can imagine with the rig counts there, you don't just go out and hire guys today and then go out and show up tomorrow. So there's some long lead planning and getting people in the Company, and getting them kind of used to how we do things in our culture, and then, of course, the training complement. I mean, our goal is to come out and deliver and, you know, drill very good wells for the customer on the very first well. And there's a cost associated with that. But, I think long-term, there's a real value.

Okay, and then in case I missed this, I apologize. But if you were to decide today to build an additional flex three, how long would it take you from decision to delivery?

Oh, I think we're probably in the best position of anyone to accomplish that task, and we're probably looking today at six months, maybe slightly over six months for available slot.

Okay. All right, guys. Well, very good quarter. That does it for me. Thanks.

Thanks, Joe.

Thanks, Joe.

(Operator Instructions)

Our next question comes from Mike beard with Hodges Capital. Please go ahead. Your line is open.

I was just wondering what your progress is on your directional drilling tools.

Mike, we're still at it. We were talking about what is there really much of an update for this call, and there's not. I think as we mentioned last time, the whole test regiment of available wells to work on was impacted by the downturn. And so that did kind of move things to the right in terms of slowing us down a little bit. I think we're steady ahead. So there's been no setbacks. I think we're just kind of moving ahead to bring it to final commercialization. And then we'll have, you know, a host of different opportunities to pursue at that point. But really not much of an update on this call.

Okay. But you're still very optimistic that eventually it will be commercial?

Yes, sir.

Okay. Thank you.

You're welcome.

Our next question comes from Thad Vayda with Stifel Nicolaus. Please go ahead. Your line is open.

Good morning. Just a quick follow-up. What was your capital spending, or spending associated with -- in the quarter?

We'll let Juan Pablo answer that.

We had an R&D spending level of about $3.3 million during the quarter, Thad.

Thanks. And unrelated, in downturn, you guys had a nice plan for employee retention, essentially demoting some of the key personnel and so forth. With the fleet expansion, have you been relatively successful in re-hiring all of these folks or moving them back up the seniority chain? How has that worked out?

I think it's kind of two parts, as you imply in your question. One is we had a complement of guys on the rig that we had plans to distribute out as we had the rigs re-deploy and the growth opportunity to do so. I think, John, that's working well now.

Yes.

And then I think, you know, we've talked about training in regard to the costs and effort, but I think that we're very pleased with our ability to attract folks that are interested and then put them through a training regiment that allows them to hit the ground running and so I think we've been encouraged just by attracting people into that system.

And then I just remembered that kind of the other part of your question, which is we did try I think more than ever this time to take, keep better tabs on the guys that we wanted to get back. And we have had some good experience with pulling guys back in and getting them re-employed, if you will.

Thank you.

Thank you.

Our next question comes from Bill Sanchez with Howard Weil. Please go ahead.

Good morning.

Good morning.

Hi, Bill.

Hans, question for you on the international business. I know that the shale plays and the JVs we've seen there have opened up foreign EP companies to the US land market and now they have had a chance to experience the FlexRig firsthand. I'm just curious of when do you start seeing opportunities open up to see a material international FlexRig award maybe come about from this?

Yes, it's a great question. And we've seen what you just described. We've got the JVs and folks that want a front row seat to some of the US Shale technology. And John can address it. I know we've got guys Bill, in front of the folks that are players that have acres positions and so then it gets back to what you're asking, which is what is the timing and when do we see the fruit of it, and that's a little harder to nail down.

Bill, I think we've -- those players, you're right, they've seen the FlexRig, most of them, firsthand. And it's been a very good performance.

I think what really ultimately, of course, is going to be the deciding factor is the timing and best we can tell, I think the absolute earliest is in 2011. And I'm not so certain that that's not stretching it a little bit. I think there's still a lot of work to be done to determine where they are going to drill and those types of things. But I think we're in a great position. Because the horizontal performance that we've had in all these basins has been pretty remarkable. So we've been pleased with that.

John. I guess your manufacturing capacity on an annual basis is I think in past you've mentioned 25 rigs a year. If you were to see something materialize of substance internationally, are we talking about perhaps a facility overseas to manufacture in the Middle East, or how should we think about that?

Oh, you know, Bill, I think that we're really probably closer to an all-out -- if you had all the green lights, closer to a 50 rig per year capacity as we said.

Okay.

And then we have made efforts and strides to look at what opportunities are there to take the template or to take a similar effort and put it into an international market and I guess I would say two things. One, I think we have a line of sight that would let us execute on that effort and it would really depend on the continuity of demand and an outlook that would encourage you to make that type of investment.

All right. Thank you all for the time.

Thank you, Bill.

(Operator Instructions)

At this time, we have no further questions from the phone lines.

Okay. Enjoy your summer. Thanks, everybody.

Thank you very much, and let me note, please, that our fiscal 2010 year end earnings conference call is now scheduled for November 18, 2010 at 10 o'clock AM central time. Thank you.

This concludes your teleconference. Thank you for your participation, and you may now disconnect.