Horizon Technology Finance Corp (HRZN) 2016 Q1 法說會逐字稿

Welcome to Horizon Technology Finance's first quarter 2016 conference call. Today's call is being recorded. (Operator Instructions). I would now like to turn the call over to Megan Bacon of Horizon for introductions and the reading of the Safe Harbor statement. Please go ahead.

Thank you and welcome to the Horizon Technology Finance first quarter 2016 conference call. Representing the Company today are Rob Pomeroy, Chairman and Chief Executive Officer; Jerry Michaud, President; and Chris Mathieu, Chief Financial Officer. Before we begin, I would like to point out that the Q1 press release is available on the Company's website at horizontechfinance.com.

Now I will read the following Safe Harbor statement. During this conference call Horizon Technology Finance will make certain forward-looking statements, including statements with regard to the future performance of the Company. Words such as believes, expects, anticipates, intends, or similar expressions are used to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions.

Certain factors could cause actual results to differ on a material basis from those projected in these forward-looking statements, and some of these factors are detailed in the risk factor discussion in the Company's filing with the Securities and Exchange Commission, including the Company's Form 10-K for the year ended December 31, 2015. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of (technical difficulty) events (technical difficulty) or otherwise. At this time, I will turn the call over to Rob Pomeroy.

Good morning and thank you all for joining us. For the first quarter 2015 we remain focused on selectively (technical difficulty) loans, preserving our solid credit (technical difficulty) to realize positive liquidity events for the benefit of our shareholders. This (technical difficulty) the size and (technical difficulty) investment portfolio and generate net investment income that exceeded our distributions.

We've now covered our distributions for three consecutive quarters, direct (technical difficulty) success in the creatively deploying the net proceeds from our (technical difficulty) equity offering (technical difficulty) and leveraging that equity with cost-effective borrowings. By originating high-quality loans with attractive on-boarding yields, and increasing our leverage towards our target level, we have been able to grow our portfolio to a size that can generate net investment income in excess of our distributions.

Notably, we have accomplished this important objective by pursuing a disciplined growth strategy. Going forward, our focus will remain on originating high-quality loans while continuing to manage our investment portfolio to provide shareholders with stable distributions from net investment income. Credit quality remains an utmost priority for us. The overwhelming percentage of our portfolio continues to perform as well or better than our expectations. We saw a normal rating migration during the first quarter, with loans being upgraded and downgraded amongst our rating categories.

During the first quarter, we did see a reduction in NAV associated with the unrealized depreciation on our public and private warrant portfolio, and fair value adjustments on two portfolio loans. As I mentioned on our last call, we have settled the one loan on nonaccrual at year end at its carrying value. At March 31, we have only one small loan on nonaccrual.

With the current reporting of real and unrealized depreciation, I did want to clarify where we stand on our fee cap and deferral mechanism in connection with the management and incentive fees we pay our advisor. We moved closer to the limits of the cap on incentive fees as of March 31. At quarter end, it was approximately $600,000 in excess before the NAV cap is reached. In the interest of time and not putting listeners through an accounting class today, I refer you to the existing agreement, which details all the aspects of the structure, which we filed with the SEC in 2014 when the program was implemented. Generally, the formula for the cumulative look back is based upon cumulative gross pre-incentive fee income, as outlined in our filings. This gross calculation includes adding back the incentive fee and management fee. It is similar to other look back formulas, and has been consistently applied since it was adopted by us in mid-2014.

We continue to execute on Horizon's strategy of being a pure play in venture lending to innovative technology and life science companies. Horizon offers investors the ability to participate in the venture and technology space, with the benefits of lower risk than equity, stable distributions from current income, and the potential for additional distributions or share price appreciation from equity-like upside through warrants and success fees. Horizon remains committed to creating shareholder value by aligning management's interests with Horizon shareholders. Since approving a share repurchase plan in September 2015, we have repurchased over 110,000 shares. Although no additional shares were purchased during the first quarter, largely due to the extended blackout period, we expect to further execute on the repurchase plan before it expires this September.

During the first quarter, we continued to execute on our long-term strategy by capitalizing on the strength of our competitive advantages. Horizon has a long track record of being a good partner to the management teams and venture capital investors in our target technology markets. We have proven expertise in providing venture loan structures that extend runway, enhance enterprise value, and propel our portfolio of companies along their development curve. Finally, Horizon works cooperatively with our portfolio of companies as their plans evolved and pivot to ensure that the investors, management, and Horizon are all working toward a profitable outcome.

By leveraging these strengths, we were able to produce solid results for the first quarter. Specifically, we maintained the size and quality of our portfolio, achieving an industry-leading and consistent portfolio yield of over 15%. We experienced liquidity events from four portfolio companies, including $8 million in prepayments and proceeds from our maturing warrant portfolio, which saw three of our portfolio companies complete M&A transactions. Importantly, we generated NII of $0.38 per share for the quarter, a 27% increase compared to $0.30 in the first quarter of 2015.

Including our second-quarter distribution, we have now paid a stable distribution for 45 consecutive months, and have declared distributions of $8.375 per share since our IPO. And in April, we successfully expanded our banking group and increased our revolving credit facility to $95 million, which should allow us to capitalize on growing market demand for our debt products.

Also, as I discussed on our last call, we believe Horizon is insulated from the headwinds facing many BDCs. While we saw some improvement in BDC share prices during the first quarter, BDC valuations continue to be depressed relative to historic values, due to several macroeconomic concerns relating to energy and foreign markets exposure, the possible start of a down credit cycle in middle-market lending, and the potential for rising interest rates. None of these concerns directly impact Horizon. Horizon has no direct investments in oil, gas, and energy markets, and has limited exposure to foreign markets.

Regarding the credit cycle, the venture lending market has a credit cycle that historically has not been correlated to middle-market lending, so this issue has less influence on us. In anticipation of higher interest rates over time, Horizon has shifted its focus to floating-rate loans. Now, 95% of Horizon's loan portfolio is floating rate, with coupons that are structured to increase when interest rates rise. In fact, Horizon is positioned to experience both increasing income and expanding net interest margin in a rising interest rate environment.

Before turning the call over to Jerry and Chris, I want to briefly comment on the unfunded commitment topic that we've talked about previously, and how we currently view our committed backlog. Horizon typically has shorter and more manageable commitments to its portfolio companies relative to its equity base and to other BDCs. As the SEC continues to focus on liquidity and the calculation of unfunded commitments in the BDC space, we see ourselves as being in a solid position, and we expect little to no impact on Horizon's business.

Now that we are in range of our target leverage with an eye towards managing our committed backlog, we are more focused on near-term commitments with near-term fundings. The reduction in committed backlog we saw this period resulted from a combination of first-quarter fundings, new commitments made during the quarter, and commitments terminating or expiring during the quarter. Jerry will now update you on our direct origination efforts, liquidity events, market conditions, competition, and the venture capital environment. Chris will then detail our operating results, capital outlook, and financial position. Jerry?

Thanks. Rob. Good morning, everyone. In the first quarter, Horizon successfully managed its diversified investment portfolio while continuing to exercise strong pricing discipline in evaluating new loan opportunities. During the quarter, we funded five new loans totaling $16.5 million and achieved strong and consistent on-boarding yields of over 12%. These results, combined with liquidity events from four portfolio companies, which were driven in part by ongoing M&A activity in the technology sector during the first quarter, enabled us to achieve a portfolio yield of 15.5%.

As of March 31, Horizon's unfunded loan approvals and commitments, all priced at floating interest rates, were $6.5 million to three companies. In addition, during the quarter, we were awarded three new transactions totaling $12.5 million. Meanwhile, our pipeline of new opportunities was approximately $250 million at March 31. With our substantial pipeline of new opportunities, combined with expanded commitments on our credit facility, we are well-positioned to execute on our investment strategy.

Based on market demand, our enhanced liquidity, and expected normal amortization and prepayment activity, we expect the size of our portfolio to remain flat or to grow slightly for the second quarter. At the end of the first quarter, we held warrant and equity positions in 86 portfolio companies. We experienced four portfolio company liquidity events during the first quarter, which included prepayments of $8 million and the successful sale of Overture Networks in January.

During the quarter, we monetized three warrant positions, receiving total proceeds of $877,000 from the exercise and sale of warrants and receipt of a success fee. In addition, one portfolio Company expects to repay our loan in the second quarter, which will include acceleration of end-of-term payments, prepayment fees, and another portfolio company has entered into a letter of intent to be acquired later this year, which, if closed, will result in additional prepayment, end-of-term payment, and success fees.

Looking at activity in our broader markets, M&A activity as a whole continued to remain fairly robust in the first quarter, particularly on the technology side. Of the 79 total transactions announced, 57 were technology companies. We expect this trend to continue throughout 2016, as venture capital investors continue to look for exit strategies and later stage technology companies, while technology buyers look to expand their product offerings through acquisition.

As part of our investment strategy for the past two years, we have focus on selectively weighting our portfolio toward technology, because we believed it provided an opportunity for better risk-adjusted pricing and higher-yielding investments. Our technology strategy was proven very successful in 2015, and with nearly all of our four rated credits being technology companies, we anticipate there could be continued favorable M&A activity in our technology portfolio during 2016.

IPO activity was down overall in the first quarter. Of the six venture-backed IPOs completed, all were life science companies. Given the uncertainty in the life science IPO market, we are seeing an increase in later stage life science companies looking to the venture debt market to extend their liquidity runway. We anticipate the life science IPO market will remain at significantly lower levels than what we have seen over the last three years. As a result, we expect to see quality opportunities provide debt to later stage life science companies during the balance of 2016.

As we indicated during 2015, we see the healthcare, IT, and service market representing a growth market for us. In 2015 we added three new healthcare, IT and service companies to our portfolio, and will continue to look for quality opportunities in this market during 2016 as we continue to diversify our portfolio. We are continuing to take a cautionary approach to the cleantech sector, similar to what we've seen with venture capital investing in this area. There are certainly opportunities here, but overall we are seeing VC investors shy away from cleantech companies with substantial infrastructure needs. We are still open to this market and will continue to evaluate opportunities on a case-by-case basis.

Turning to the venture debt competitive landscape, we have seen a pullback from some competitors in the life science sector compared to 2014 and 2013, resulting in a more rational market as it relates to transaction pricing and structures. We are also seeing a return to more multi-partner transactions in later stage life science transactions. We continued to see rational pricing in deal structures in our technology markets in Q1, with competition coming primarily from private venture debt funds and the tech banks. As it relates to the tech banks, we believe we will begin to see the impact this year of the M&A activity that took place in the tech banking sector in 2015.

Venture capital activity during the first quarter remained very robust, with venture capitalists investing over $12 billion, according to the National Venture Capital Association. For the most part, VC investors are continuing to invest in later stage companies. That suggests they still see upside valuation potential in these companies going forward. However, VCs are (technical difficulty) selectively as they continue to reduce their investments in overvalued companies, especially unicorns, and portfolio companies that are significantly underperforming. In addition, venture capital fundraising had a very strong first quarter, with fundraising topping $12 billion. Institutional investors continue to believe that venture capital as an asset class remains an attractive investment strategy.

Our outlook for the balance of 2016 remains positive, as our portfolio continues to generate steady interest income. Based on that and the typical prepayment activity we experienced during the first quarter, we are moving forward in a very solid position to add quality, well-priced transactions to our portfolio. Also, given the maturity and diversity of our warrant portfolio, we believe Horizon remains well-positioned to benefit from further M&A activity throughout 2016. With that update, I will now turn the call over to Chris.

Thanks, Jerry, and good morning, everyone. Our consolidated financial results for the three months ended March 31, 2016, have been presented in our earnings release and our Form 10-Q, both distributed after the market closed yesterday. For the first quarter of 2016, total investment income was $9.3 million compared to $7.3 million for the first quarter 2015. This increase was primarily due to the higher interest income on investments resulting from both the higher average size of the loan portfolio and the higher level of income associated with end-of-term payments within our portfolio.

Taking into account portfolio liquidity events, our portfolio yield for the first quarter 2016 was 15.5% compared to 15% for the first quarter of 2015, and 14.2% for the fourth quarter of 2015. The primary changes quarter to quarter were driven by the timing of new loan originations and the timing and extent of loan prepayments, and the related fee income from those prepayment, including prepayment fees and acceleration of previously unamortized transaction fees.

Total expenses were $4.9 million for the first quarter as compared to $4.3 million for the first quarter of 2015. Interest expense, which includes the amortization of debt issue costs, decreased primarily due to the decrease of our effective cost of debt for the three months ended March 31, 2016, compared to the prior year period. Base management fee expense increased to $1.3 million in the first quarter of 2016 as compared to $1 million in the first quarter of 2015, due to a 24% increase in the average size of the investment portfolio.

For the three months ended March 31, 2016, professional fees and general and administrative expense, which consisted principally of legal and audit fees and insurance premiums, remained flat compared to the three months ended March 31, 2015. We earned net investment income of $0.38 per share for the first quarter of 2015 as compared to $0.30 per share for the first quarter of 2015 and $0.35 per share for the most recent prior quarter. After paying current distributions of $0.345 per share and earning NII of $0.38 per share for the quarter, the Company increased its undistributed spillover income as of March 31 to $0.14 per share.

Our NAV as of March 31, 2016 was $13.62 per share as compared to $13.85 per share as of the prior quarter. The sequential decrease was primarily due to the reductions in the value of public warrants and the impact of unrealized depreciation on two loan positions, including the one loan on non-accrual and one loan currently internally rated a two credit, partially offset by net investment income generated during the quarter in excess of distributions declared.

We ended the first quarter of 2016 with an investment portfolio of $245 million, an increase of $41 million or 20% as compared to the prior period. This quarter -- I'm sorry, this portfolio consisted of secured loans to 50 companies with an aggregate fair value of $238 million, and a portfolio of warrant and equity positions in 86 portfolio companies with an aggregate fair value of $6 million.

New originations in the first quarter totaled $16.5 million. This was offset by $10 million in scheduled principal payments and $8 million in principal prepayments. At quarter end, over 91% of our portfolio was performing at or better than expected, consistent with 92% at the end of the previous quarter. We had one loan on non-accrual status in the portfolio at the end of the quarter with a cost of $949,000 and a fair value of $250,000.

In terms of liquidity, Horizon ended the first quarter with $19.6 million in available liquidity, including cash and funds available under our credit facility. As of March 31, we had $68 million outstanding under our credit facility. Recently we announced the addition of a new lender, Union Bank, who committed an additional $25 million, increasing the size of the facility to $95 million. The facility continues an accordion feature which allows for an increase in size of up to $150 million. While we have seen a market supply of a variety of leverage products, we have primarily focused on the expansion of commitments under our credit facility, as evidenced by the $20 million increase in August of 2015 and the $25 million increase I just mentioned.

In addition to our credit facility, our asset-backed notes had a remaining balance of approximately $9 million at the end of the first quarter, and we continue to have $33 million in publicly traded baby bonds, which we expect will be held until maturity in 2019. With the recent addition of commitments to the credit facility, our pro forma liquidity increases to approximately $45 million. We expect to use some of this increased liquidity to refinance the remaining balance of our asset-backed notes in the second quarter. Our intention remains to target overall debt levels to a ratio of 0.75 to 1. At March 31 our actual leverage ratio was 0.7 to 1.

One last topic before we go to questions. I would like to provide an update on the topic of interest rate sensitivity. With the upcoming Fed meeting in June, the concern for BDC investors may be the potential for rising interest rates. As of March 31, 95% of the outstanding principal of our debt investments bore interest at floating rates compared with 74% this time last year. Based on our March 31 consolidated statement of assets and liabilities, we have determined that a 100 basis point increase in LIBOR would increase annual net interest income by $2.1 million or $0.18 per share.

This increases to $4.1 million or $0.35 per share with a 200 basis point increase in LIBOR and further $5.6 million, or $0.48 per share, with a 300 basis point increase in LIBOR. So the bottom line is that we are -- with our deliberate shift to floating rates, we are not afraid of rising interest rates, but rather expect a benefit from a rising rate environment.

Before we open the floor to questions, I would like to note that we plan to hold our next conference call to report second-quarter results during the week of August 1. This concludes our opening remarks, and we will be happy to take questions that you may have at this time.

(Operator Instructions). Jonathan Bock, Wells Fargo Securities.

First, congrats. The top line obviously grew substantially. The one question relates to the sustainability of that, because I think, Jerry, you mentioned the likelihood of a prepayment that may likely again boost the top line in next quarter, either through EOT or unaccreted OID. And we've got about $1.1 million of end-of-term payments that came in. And I know you mentioned there is others as it relates to OID, etc. Give us a sense -- how should we be thinking about velocity in this environment?

Because it would seem that, with market volatility out there, we would be less apt to see more of this -- I will call it a one-time fee benefit in nature. Am I wrong for thinking that? Or what incents some of your entrepreneurs quickly turnover their -- pay back their loans and find others at a point when it is really difficult to achieve other forms of financing?

Jon, it's really a two-part question. This is Chris. The first part really kind of the frequency of prepayments. And so we have historically seen a pretty steady cadence of prepayments in our portfolio as it has been maturing. Jerry can speak to the broader markets of the refinancing environment, so if you want to --?

Yes, so, I think one of the things that we pay pretty close attention to, Jonathan, and I think it gets a little bit lost in our representation, is what does the top of our pipeline look like at any period of time, based on what's going on relative to the market cycles. And actually, right now, I think the top of our pipeline is about as large as it has been in quite a while. We are seeing lots of opportunities.

I think there is a concern in the marketplace relative to liquidity from the IPO markets that just isn't there that had been over the last couple of years. I think we are very well-positioned, especially with the increase in the credit facility, to maintain the kind of size of portfolio that we have during the course of the year. And to your point, go through those normal prepayment activity that takes place during the course of the year.

So, I actually -- fundamentally, I see a very normal year for us relative to both repayments, but also creating opportunities to obviously maintain the size of our portfolio, maybe even hopefully grow it a little as the year goes on. And generally speaking, when the IPO market is a little bit tighter, we also are able to get a little bit better pricing in the marketplace. So, I am not -- I don't think we are going to see any deterioration in our pricing. We are pretty disciplined on that anyway, no matter what's going on in the market.

But I also think that there is going to be enough opportunity in the marketplace for us to be able to transition prepayment loans into new loans with consistent pricing during the year.

Got it, and that's helpful. And then, Chris, just as I go back -- and I understand prepayments have been certainly study. And when I think of the amount that has been accreted in income with end-of-term payments -- so the June through December 15, kind of around the $300,000 to $500,000 mark. And now this quarter we received $1.1 million. So, obviously great; want to highlight that. But are you saying that we should see a consistent level of that $1.1 million going forward in light of -- just because you mentioned that prepayments are steady. Is that what you're saying with your previous statement?

No, Jonathan. Thank you for your clarification. So, I think this was somewhat of an outsized quarter for the end-of-term payment fee recognition. So, I think historical average is a better way to think about the portfolio. This was definitely a benefit this quarter that we had, maybe a little bit better than other quarters in the past.

And then, Jerry, the one that is going to prepay this quarter, is there a sizable EOT attached to that?

Actually, I don't have the answer for that as I am sitting here right now.

Okay, okay. And then just a little bit of cleanup. As a relates to NOMi, this was $7.5 million investment, marked at 86, 87. Would you mind just giving us some additional commentary on performance of that underlying portfolio company? And that is all my questions.

I will take that one, Jonathan. It is a two-rated credit. As we have always said, those are companies that are experiencing some stress, but that we do not expect to experience a loss on, and that would be the case with NOMi. So, they are working through the stress and we still expect to have full repayment of that loan.

Okay. Thank you so much.

Casey Alexander, Ladenburg Thalmann.

Jon asked a couple of my questions, but just for maintenance, when did or does the cumulative look-back begin?

It commenced in July 1, 2014, and it has a three-year look-back. So, it is still gathering quarters towards (multiple speakers).

Okay, great. Thank you. And at end of quarter, what was the percentage of floating rate loans to fixed rate loans?

95% were floating. We have a small piece of the portfolio that is in the securitization, that is fixed rate. But all the new stuff that we have been doing for the past two years has been floating rate.

Okay. And again, as it relates to NOMi, mean that was originated in January. And so it is marked down in the quarter that it was an originated in. Was there a specific event at the company that related to them to some sort of stress? Or did this not come to light until after the underwriting process was complete? Can we get a little bit more color on that, please?

Yes, it is a fair value adjustment, not an impairment to the loan, just to be clear. But yes, there were things that happened since we did the loan that have created the additional stress, Casey.

Okay, thank you. That is all my questions. Thank you.

Robert Dodd, Raymond James.

Two questions, first one following up on Jonathan's as well, but making it easier for me and throwing some numbers out there. Total amortization of ETPs, regular OID, etc. in the quarter was $2.5 million. The prior four quarters it averaged about $1.1 million to $1.2 million. So, would it be fair to say there was a bit more acceleration than just the $1 million, $1.1 million ETP, and there was some other OID accelerated as well? And then following on from that, when you talk about historical average, that total line, not just acceleration, $4.5 million last year but $6 million in the year before. So, can you give us a -- what is the historical average for that number?

Yes, so the activity that happened this quarter is outsized, as I had mentioned. It largely refers to a couple of transactions that had previously been on ETP nonaccrual for a period of time, and they came off because of a substantial improvement in their overall credit stature, much like a middle-market company would put a PIK interest loan on PIK nonaccrual, a very similar situation. So these transactions had improved dramatically in the portfolio. So you see a little bit of a pick up through that. And so, when we were speaking earlier with Jonathan about the trends of the impact of prepayment activity, I would go back to more of the past 12 or 24 months of ETP or OID acceleration as it results to prepayments.

Okay, got it, thank you. And then on the rate sensitivity, flipping through the Q, it looks like most of the loans have floors at about 50 basis points to LIBOR. Is that about right? Or is that there a bit of a dispersion in where the floors are?

No, that's right. Substantially all have a 50 basis point floor.

Got it, thank you.

(Operator Instructions). Christopher Testa, National Securities.

Just for the unrealized marks this quarter, how much were from the two specific credits, and how many -- how much of that was from just general market conditions?

Can you repeat the question?

Sure. Just the unrealized marks, how much was just from technical, from spread widening, and how much was from credit specifics?

Most -- substantially all of it was credit specific.

Okay, got it. And that is the nonaccrual in the loan ranked two?

Correct (multiple speakers).

Got it. And I just wanted to clarify the yield on the portfolio of 15.5%, that includes ETP and the OID acceleration?

It does, yes.

Okay, got it. And I know you had remarked the pipeline is very strong. You guys are not trading at NAV to be able to deleverage. Would you be willing to take the balance sheet leverage beyond 75% debt to equity, given the opportunities you are currently seeing?

No. We are really focused on staying in that range, Chris. From quarter to quarter, depending on the timings of actual loan fundings or prepayments, we might be plus or minus like we are today. But we really are focused on staying within that target range of 0.75.

Got it. And I know you had mentioned that the venture capital cycle is not correlated to the middle-market credit cycle. I would just be interested in hearing your thoughts on where we are in the VC cycle and what do you think would be the signs that are saying that this is still going?

Sure, this is Jerry Michaud. One of the things we follow very closely is both VC investing, but also VC fund-raising. And for the last, really -- I guess it's almost eight quarters now -- when we see VC investing over $10 billion consistently and we see fund-raising in the $7 billion to $15 billion range, that suggests that the way institutional investors and VCs are looking at the marketplace is they still think from an asset allocation place this a really good place to be putting their money.

I think the only concern on the VC side relative to investing is some of the valuations, which is pretty well known and has been pretty well discussed at every level, relative to unicorn companies, that those valuations have gotten probably out over their skis relative to the real values of these companies when you drill down into actual operating performance. And so, there's going to be some level of stress relative to those companies and how they are going to manage pulling those valuations back.

But generally speaking, from what we are seeing in the marketplace and our own portfolio, companies are getting -- continuing to be funded by VCs with follow-on equity rounds, including new investors coming in to some of those rounds. And those are all very positive aspects relative to how we view that market and pay attention to what's going on.

That's great color, thank you. That's all for me.

Thank you. There are no further questions. I would now like to turn the call back over to Robert Pomeroy, Chairman and Chief Executive Officer, for closing remarks.

Thank you. To recap, in the first quarter by executing on our investment strategy, focusing on preserving our solid credit quality, and continuing to realize positive liquidity events, we successfully maintained the size and quality of our investment portfolio and generated net investment income that exceeded our distributions and increased the amount of our spillover income, which can support future distributions to shareholders.

Over the coming quarters we will continue to selectively originate high-quality loans by utilizing the increased liquidity from our expanded credit facility while maintaining our leverage at our target levels. In addition, with our growing and maturing warrant and equity portfolio, we expect to continue providing upside to our shareholders.

Thank you for your interest in Horizon and we look forward to sharing our progress again with you in August. This concludes our conference call and thank you and have a great day.