Mistras Group Inc (MG) 2015 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Mistras Group second-quarter fiscal year 2015 earnings conference call.

(Operator Instructions)

As a reminder this conference is being recorded. I will now turn the call over to your host, Sotirios Vahaviolos. Please go ahead.

Stephanie, thank you very much. Good morning to all and a happy new year.

In today's call we will review Mistras Group's financial results for the second quarter of fiscal year 2015 that ended November 30, 2014, and discuss our prospects going forward. I am very pleased with our second quarter. Mistras achieved record quarterly performance in several important categories.

We achieved more than $10 million of net income. We earned $0.35 of earnings per diluted share. We earned more than $28 million of adjusted EBITDA and we earned total revenue growth of 32% over prior year, 14% of that organic for a record quarter of $207 million.

This record performance was driven by our services business, which experienced year-on-year operating income growth of nearly 40% and revenue growth of nearly 48%. Services revenue growth was close to a 50-50 split between organic revenue growth of 22% and acquisition growth of 26%. Our organic growth was driven by a healthy fall turnaround season, project work for a handful of large customers and the year-over-year impact of last year's Alaska contract, which recently achieved its one-year anniversary.

Our recent acquisition of NACHER Corporation has performed our initial expectations -- has outperformed our initial expectations and helped to drive our revenue growth from acquisitions into the mid-20% from the midteens in the first quarter. Now that NACHER is an integrated part of our team we are even more excited about our offshore business, growth prospects and the demand for NACHER'S high-pressure water blasting and new and complementary NDT inspection services.

Our Canadian oil sands region start-up initiative remains positive even if progress has continued to be slower than we would like. As previously mentioned, we remain confident that our maintenance-dependent Canadian business will pick up in the second half of the fiscal year. We have been asked by many people about the volatility of energy prices and the expected impact, if any, upon our market and our Company.

In our oil and gas segment, Mistras's main business is on the downstream refinery operation side with the major integrated and independent energy companies. Here we have -- reoccurring revenue growth contracts in place to provide regular maintenance inspection services enabling safe and reliable production.

With a drop in crude oil prices, refinery operations are leveraging advantaged switchback and running their units at high utilization rates in order to leverage improved crack spreads. There is continued demand for gasoline, jet fuels, diesel, heating oils. These products tend to lag oil prices and are more stable due to fixed refinery capacity thereby supporting refining margins.

Because of these drivers our customers tell us their operating budgets that fund our services will remain intact or may even increase. To improve profitability we continue to press forward on several operating initiatives that Jon will discuss and as our team knows these are my top priority.

And now I will turn it over to Jon who will cover the Company's summary financial results. Jon?

Thank you, Sotirios. I remind everyone that the remarks made during this conference call will include some forward-looking statements. The Company's actual results could differ materially from those projected.

Some of the factors that could cause actual results to differ are discussed in the Company's most recent annual report on Form 10-K and in other reports filed with the SEC. Also, the discussions during this conference call will include certain financial measures that were not prepared in accordance with US GAAP. Reconciliations of those non-US GAAP financial measures to the most directly comparable US GAAP financial measures can be found in the Company's current report on Form 8-K filed yesterday.

These reports are available on the Company's website in the investor section and on the SEC website.

First, I will summarize our second-quarter financial results and first-half cash flow and then I will comment on our initiatives to address our profit margins. Revenues for the second quarter of fiscal year 2015 were nearly $207 million, or 32% higher than in the prior year driven by 48% growth in our services segment of which 22% was organic. These gains were offset in part by revenue declines in our international and products and systems segments of 5% and 13% respectively.

Sotirios mentioned the drivers for the strong services performance. The international segment had a 5% organic decline driven by FX impact and by a tough prior-year comp that included a large and profitable UK wind energy turbine project and a large product sale in Russia.

Also impacting revenues adversely for international in the second quarter were a refocus in Germany upon more profitable projects and continued market challenges in Brazil. The products and systems decline reflected a focus on more profitable opportunities as operating income was consistent with prior year despite the lower sales.

Our second-quarter gross profit grew by 23% over prior year on a revenue gain of 32%. Gross margins were 28.5% in the second quarter compared with 30.6% in the prior year.

Services gross margins rebounded to 27.5% from their poor Q1 levels but were shy of the prior year's 28.4% driven primarily by our continued strategic investment in the Canadian oil sands region and by some of the factors we discussed in our first-quarter call. International gross margin fell by over 300 basis points to 27.6% due to lower product sales in the UK and Russia.

Operating expenses gained leverage, declining to 19.7% of revenues during the second quarter, down from 20.9% in the prior year's second quarter. Operating expenses for the quarter increased by 25% on the 32% increase in revenue. The majority of the operating expense increase was driven by operating expenses of acquired companies.

Operating income excluding acquisition-related items improved to a new quarterly record of $17.8 million, 20% higher than prior year. Net income in the second quarter was $10.4 million, or $0.35 per diluted share, both new quarterly records.

Adjusted EBITDA in the second quarter was $28.6 million, another new quarterly record at 25% more than in the prior year. Mistras generated $3.2 million of operating cash flow during the first half of fiscal year 2015 as compared with $15.6 million in the prior year's first half. The $12 million adverse swing was driven by the timing of collections on receivables.

To this end, December was an extremely good collections month and we will have a favorable comparison next quarter. The Company used $7.3 million of cash for capital expenditures net of equipment sales in the first half of fiscal year 2015 and also made noncash outlays to lease $3.5 million of capital equipment. The Company's aggregate capital investment during the first half was $10.8 million, or 2.9% of revenue.

Debt and capital lease obligations net of cash was $155.5 million at November 30, 2014, a ratio of 1.9 times forecasted adjusted EBITDA. During the second quarter we amended our bank facility increasing it by $50 million and extending its life to October 2019. As of November 30, 2014, Mistras had an undrawn revolver balance of $47 million.

And now I will comment on the actions we have launched to address the contraction in our margins. During our last call we listed several initiatives that we are focused on to improve margins during fiscal year 2015 and beyond. These include pricing discussions with our customers, contract operational reviews, a review of SG&A costs, reducing unbillable time in certain international countries and a Plan B for the Canadian oil sands region.

Good progress was made on each of these initiatives during the quarter. Pricing discussions and contract operational reviews are proceeding. Several cost initiatives have been taken and more are planned.

Improvements that include management changes have been implemented in certain international countries and signs are very promising for the Canadian oil sands region. For competitive reasons I will refrain from quantifying customer-related initiatives other than to say that these conversations are going well and that several of our customers are very open to creative solutions that will help them achieve their goals while also enabling us to improve our margins. I expect to provide more information regarding these discussions and on cost reductions in our next call.

We remain confident that this plan will help to improve results in the second half of our present fiscal year and beyond. These initiatives may also provide some upside to the second-half results beyond what we have forecasted. The management team remains united in our common understanding of what is needed to be done and our shared sense of urgency is strongly supported by our CEO.

And with that, Sotirios, I turn it back over to you.

Think you, Jon. As always I am proud of my team. They recognize the opportunity in front of us and have created a plan that we are following to drive improved results.

And now I will update you on some key developments in our business. First, our services segment. The second quarter yielded a very strong and diverse mix of projects spanned across industries that included both traditional and advanced inspection services as well as engineering and application software design and implementation services.

Specifically our North American midstream business was especially strong with 15 new pipeline and terminal project awards, many of which are Canadian. These projects will also include such advanced services as automated UT, mechanical integrity, damage reviews and procedure development supported by our proprietary plant conditioning monitoring software, our PCMS software.

Our chemical business was strong with several new contracts for major multinational customers. One such project is the selection of our PCMS software as the US corporate standard for a major European-based chemical company.

Our refining business secured two new January turnarounds. Our in-house component inspection business secured the large order to inspect railcar wheels used to transport crude oil.

In the power generation sector we became the primary inspection provider of pressure vessels for a national utility and we gained a multiyear inspection contract for a top-five utility company. We also secured two capital projects for the construction of natural gas combined cycle plants.

Our products and systems segment continues to focus on its business pipeline of aerospace, automotive, power and chemical industry opportunities and focusing on higher-margin product lines to improve second-half profitability. A major electric utility ordered several of our advanced monitoring system solution packages to be integrated into their centralized monitoring and diagnostic center to perform online monitoring of their critical assets at various sites in their fleet. We also received repeat orders for worldwide deployment of our advanced ultrasonic automotive airbag canister weld inspection system.

And now let's discuss the international sector. Progress continues on this challenging sector of our business based on the following strategy we have put in place at the beginning of the fiscal year.

Stabilized revenues to last year levels even with large foreign exchange impacts for poor economies and aggressive local competition, finalized management changes, reduce unbillable labor and place more emphasis in profitability growth rather than revenues. Opportunistically value, pursue the implementation of the USA evergreen-based business model in EMEA and South America.

And now with some news that will help us better perform in the second half of the year. Our service division in France has successfully completed a major turnaround at the refinery where we won the run and maintain evergreen contract. Based on outstanding performance the customer awarded us two order turnaround contracts that are scheduled for Q4.

Our relationship with EDF electricity to France continues to expand in the nuclear sector due to our integrated solutions and efforts of our recently hired new manager. Our fatigue and fracture mechanics lab started to deploy the two large strategic projects that we won in Q1 to perform testing on Airbus programs.

In Germany we continue to grow our relatively new advanced NDT solutions business and based on current results we are confident we will achieve the revenue targets we have set. It is worth noting that we were awarded our first German bridge monitoring project that we will deploy with the support of our experienced Infrastructure Center of Excellence based in our Cambridge office. In Germany's main business of materials destructive testing we continue to expand our unique relationship with fewer players in the composite industry mainly to support the ramp-up of the Airbus A350 program that is now evolving into the production phase.

In Benelux, we were awarded a five-year evergreen contract at a major worldwide energy company where we will deploy our full range of NDT services. Mistras was chosen for its key performance indicator, driven evergreen management methods that ensure both Mistras and the client that services are deployed safely, thoroughly and economically.

The UK Group continues to grow profitably with a new Center of Excellence in Aberdeen for the offshore business. This is in addition to its onshore testing and inspection business as well as the remote-based monitoring applications work for bridges, wind turbines and other structures using Mistras's unique proprietary web-based information system.

We continue to closely monitor our Brazilian operations and are beginning to see an improvement driven by the renewed government investments to Petrobras coupled with aggressive cuts in expenses and unbillable labor. Our strong and expanding railroad ultrasonic inspection services also offer us unique opportunities for our business enabling us to diversify our market.

And now for my closing remarks. Following a difficult first quarter the second-quarter results are very gratifying to me. We set several important new quarterly performance records and did so while meeting and exceeding demanding market and customer expectations.

And we also did so with a new mindset that emphasizes growing profits faster than revenues. Every Mistras location in every country is prioritizing growing more profitability and making these decisions within this framework.

Our services team had a terrific record-breaking performance and yet our management team knows that we are capable of doing even better in the future. Our products and systems team has reduced its cost base and is poised to improve its results in this quarter to come. And despite a difficult economic and FX environment, our international staffs are making important improvements in their margins and costs for a better second half.

We have grown total revenues by more than 20% for three consecutive quarters. Now that last year's BP Alaska contract has reached its one-year anniversary, revenue growth might slow down a bit in the second half of the fiscal year but should still be healthy. Recognition of our strangled first-half performance will increase our revenue guidance to a range from $720 million to $740 million and we believe that our EBITDA will be toward the high end of our guidance range of $78 million to $84 million.

As I conclude this conference call, let me thank our 5,800 loyal employees for their commitment to quality and safety and our loyal customers and valued shareholders for believing in us. That concludes our prepared remarks and we would like to now open the floor to questions.

Thank you. (Operator Instructions) Matt Duncan, Stephens.

Good morning, guys, and congrats on a great quarter. Sotirios, you give us I think a lot of color on what has been driving the strong organic growth in the services segment.

It sounds like the Alaska contract is certainly a contributor. Can you talk maybe a little bit more, were there any specific large projects that you guys had in the fall that helped that may not repeat, or was this really just a good indication of the momentum in your business?

Actually, Matt, the turnarounds were really standard turnarounds that they used to be in the old days. Things did not stop at any point because of cost, anything else.

People really received the services that we always give and so that was really -- they were what we like to call them, healthy turnarounds. That helped a lot. Plus also some new business that we created during this quarter.

Okay. Can you talk about NACHER?

It sounds like maybe it is doing a bit better than you thought it would out the gate? How much revenue did it contribute in the quarter and what is the outlook like for that business?

Jon, go ahead.

Well, Matt, we would rather for competitive reasons not provide precise numbers. But I would say that the reason that we went from the midteens to the mid-20%s in the acquisition growth year-over-year from first quarter to second quarter was primarily NACHER.

The outlook is very positive. We're very excited about the business.

We think that NACHER -- our customers are telling us NACHER has unique attributes that they are excited about. But having said that it is a new business to us and we are just learning their seasonality patterns and so forth. So it's a little tricky for us looking forward to really specifically guide you.

Okay.

I think in the future also we hope that that will help our NDT business in the offshore business that is very very minimal at this stage.

Okay. Looking at the guidance for a second, guys, the guide on revenues implies the second half would be below first half and I suspect that there is probably some level of conservatism in that.

But is there any reason to believe that you had things happen from a revenue perspective in the first half that you can't repeat in the second half? Or should we really view this as more of just a conservative approach to guidance?

To start with Matt, basically as we said before, we expect that the -- in the third and the fourth quarter we are going to have good turnarounds again. But remember from our experience the last couple of years, we are very optimistic after the second quarter and then the third and the fourth quarter we're really below par for what we expected and the customers really do not do as much work as they are supposed to do.

So we are a little bit conservative. We are based on past records. We think that the market is there.

The turnarounds are there. But we just hope that the customers are going to spend the money.

Okay. And then last thing then I'll hop back in the queue just on price, I knew you guys had put a wage increase through back in June. Jon, I appreciate maybe for competitive reasons you don't want to give us too much detail here but just in broad strokes are you getting enough price to help make up for the wage inflation that you put through and maybe just give us an update on that process?

Well, the process is going very well. Our team is in discussions with customers. There is a couple of dozen of these conversations going on.

They are all progressing apace. We feel very positive about where they are heading. And in some cases we are having very innovative discussions, being very creative with our customers in ways that we can mutually solve each other's needs even better than we have been.

So we feel very good about it. At the same time we did cite the labor inflation pressure in the first quarter and the timing of our increase.

You are correct to allude to that. I think the expectation might be that with the price of oil declining that might take a little bit of the edge off of some of the inflationary pressures that we are experiencing but we'll see how that plays out.

Okay. Thanks guys.

Andrew Obin, BofA Merrill Lynch.

Congratulations on a good quarter. Can you talk a little bit more on what specifically you are doing inside the Company to control SG&A cost? I know you sort of refocused compensation but can you talk about specific initiatives, how you are changing the Company is operating to put maybe more cost controls to take advantage of all of the growth you have had over the years?

Go ahead, Jon.

Yes, thanks. Sure, Andrew. Thanks for the question.

You are correct about the compensation program. We have more closely aligned the management compensation incentive program with operating income margins and growth in operating income. And I think that is just beginning to play out and will have a big impact going forward.

But in addition to that, on a global basis all of our teams are looking at operating expenses. We are doing careful reviews, particularly in the international and services segments where we have been acquisitive in the past.

This is a great time to sort of circle back and look for efficiencies that can be gained from combining duplicative redundant functions, or efforts. So we are undertaking that kind of a review.

And just a question I guess on labor costs. I would imagine with what's happening with energy prices some people are being freed up and it's a benefit to you. But the same dynamic can work against you.

Was this decline in energy prices -- what we are hearing from a lot of companies, they want to go to the service companies and demand much better deals so that's the flipside of you guys were discussing. How are you going to deal with that?

I think first of all, Andrew, the last couple of years they got all the support that we gave them in reducing the prices. I think right now where we are and there is not going to be any labor shortages you suspected before. And we believe that the prices will remain where they are, if not better it.

Yes, I think, Andrew, what I would add to what Sotirios just said is that from a wage perspective while it is true that there are perhaps potentially some people who are being displaced right now within the oil patch or oil services industry, remember that within our group we use certified technicians and there is a shortage of those people. So I don't expect that there is going to be a big impact upon our market because of the limited supply of very qualified individuals that our industry depends upon.

It might be in some regions. It might be some difference in regions but right now, let's call it neutral. We believe that it is really neutral at this point.

That's right. And in terms of our pricing for our services and so forth, if anything the need for our services we believe is going to increase because of extension of life, because of busier refineries with increased demand that accompanies lower-priced petrol products. And so we don't see any demand slack in the offer of our products, or pricing pressures.

Thank you very much.

Andy Wittmann, Baird.

Jon, just on the guidance, you tweaked the revenue guidance up, the EBITDA guidance stays the same. That implicitly means that maybe you are a little bit more cautious on the margin profile. Against the initiatives that you've got going on across the Company to improve the margins, how should investors reconcile that?

Well, while it's true that we maintained the range of the EBITDA range that we have given we did say that we expect to be in the upper end of that range. So for us I think that revenue we do expect will be a little bit about that range as we have said but we also increased our expectation of where EBITDA will fall. So I don't think it's a material difference.

Okay. And just in terms of creative approaches to get after as you work with your customers in these discussions about how to best suit their needs while meeting your return goals on specific projects, can you talk about different contracting styles and risk profiles that you might be employing and what that could mean for your business and your financials going forward?

Basically, Andy, we always tried to attempt to really change the way we do business and try to improve because in this particular case we are trying to improve our profitability. Some of the measures that we have taken is really normally just on the run and maintain areas where you have really nothing more than time and material.

In some cases there might be some benefits, there might be some bonuses that we can really create for the customer and ourselves. And that's as much as we can say on this call. Okay?

Yes, in general Andy, what we are trying to do is just make sure that we improve our alignment with our customers' objectives and as they succeed then we succeed. And so it's a virtuous relationship and it just strengthens the relationship between us and creates more value for both.

Are you open to looking at potentially doing more fixed-price contracting work in circumstances where you feel like you are better positioned or can manage that risk?

In areas where we have years of experience and a specific example, specific examples we will do that.

Got you. And then just as we move into the oil sands I know that's been an area of focus and I believe you started actually getting to work on some of those contracts now. Can you talk about the ramp that you have seen so far and that you expect in the year ahead?

Is this expected to be a substantial growth driver as you finish off the year, or a modest growth driver recognizing that in the last year you have won the Alaska contract, which now is anniversaried and this was kind of seen as the other big one. I guess just as you look at the top line, how much of a factor is the oil sands contract that you signed?

Okay, first of all we see modest increase. And that's as we said, we see modest increase, but what is important also, Andy, to mention because this question was before, is that the past two or three years we have really mentioned that we try to diversify.

Our oil and gas business now is below 60%. If we take the oil and the chemical industry we are below 60% where we used to be above 70% before.

So we are really doing all the things -- the oil continues to grow for us bringing us growth but other areas grow faster than the oil and gas. Power generation, for instance, is a key area for us that we really like to spend more and more time.

And we have already received contracts for that, as I mentioned in the earnings call. So that's really how we are trying to really predict the future.

Got you. Maybe just one last one for me, I guess for Jon. And Jon, just on the cash flow it sounds like you got the $20 million receivable in December, so that kind of makes sense and gets you back to probably closer to where you want to be, or maybe above, but as you look over the last or the next year or two, balance sheet leverage on a debt to EBITDA basis on a trailing basis is over 2 times.

I think you guys had said that you are a little bit closer to 1 times. Can you talk maybe, two angles to this question, about the kind of cash flows that you expect over the next year, two years and what does it mean for your ability and your desire to go after M&A targets recognizing that you do want to deleverage?

First I would say that we just, as I said in my remarks, extended and updated our revolving credit facility. Our banking group was extremely helpful. We were able to execute that amendment thanks to our excellent banking group very quickly within a month and we did slightly increase the amount of aggregate debt we could have under that facility to 3.25 times from just 3 times trailing EBITDA.

And the banking group indicated they would be willing to go even higher than that under certain circumstances. Having said that -- so we have ample flexibility -- having said that, our desire would be closer to 1 to 1 just because it gives us more flexibility going forward so that if another terrific opportunity like NACHER Corporation comes along we would be able to have the flexibility to pull the trigger and act on that kind of opportunity.

So we are going to work back toward 1 to 1. My expectation is that we will be closer to 1.5 than 2 by the end of the current fiscal year and that we will work it down from there.

Okay. That's still pretty good cash flow.

So if EBITDA is $80 million-ish and you are over 2 times now, you are looking at somewhere like $100 million, $80 million to $100 million to get down to that level. Is there something wrong with that math that we are thinking about there?

Well as I said, we are at about 1.9 as of November 30 times projected EBITDA and we had a very good paydown in December that we think will mostly hold for the Q3. Of course there will be working capital utilization as we continue to grow. Again I expect that we will be closer to 1.5 times our full 2015 EBITDA by the end of the fiscal year and that will go down from there.

Andrew, if I summarize this, our base is really 1. That's our base.

But at the same time opportunistically we are looking for if there's an opportunity we will go after it as we went after NACHER. We have the banks to support us.

Yes, okay. And that makes sense. I think I found the discrepancy that Jon is kind of the way you have looked at the metric versus the way we did.

So you are at 1.9 getting down to 1, so that cash flow is more modest than the math that I was suggesting earlier, so that makes more sense. Thank you guys and have a good day.

(Operator Instructions) Tahira Afzal, KeyBanc.

Congratulations for a great quarter. My first question is, can you give me an idea as you look through your businesses how much you would consider recurring as in inspection services, maintenance services, really tied to existing capacity versus new ones coming up?

Okay.

I'm not sure we quite understood the --?

Yes, sure. So an example is there's an Airbus plane coming up, a new plane, that would be something tied to something new. But you are not going into a refinery that already exists.

Basically as we mentioned, Tahira, since you mentioned Airbus, that is an area for us because the A350 is coming into production. So we hope that our German business, especially destructive testing, will increase and be more profitable.

In the case for instance in France that I mentioned, EDF electricity to France, is a new business for us. We never had the nuclear business in France and now we are entering that area with a couple of small acquisitions.

All of these things will give us more. At the same time in the United States and Canada we will continue to be looking at opportunities as they come in front of us. And in some cases, as we did in Canada, if we have to reinvest, we will try to invest.

Got it, okay. And then if I look at what the CapEx trends might be in oil and gas for the next couple of years at least, clearly it doesn't look like a good picture.

And that means whatever capacity is there, there is going to be more effort maybe plowed into maintaining it, etc., so that should play into your expertise. So can you talk a bit about areas you feel you can get bigger in potentially in terms of adjacent end markets like you have in NACHER, if there is more capital allocation to really maintaining the current asset base on the oil and gas side?

Well you know, we will continue to of course play on the oil and gas because that's our 60% of our market, okay. But at the same time keep in mind that we have become a good player in the chemical industry as well as in the power generation industry. We will continue to do that.

Aerospace also is in double digits for us for the first time. Now these are areas that five years ago we did not have.

So we are trying to basically continue to play on the oil and gas but at the same time diversify. And I think it's the same thing that we have discussed the last couple of years. When you diversify of course sometimes you've got to make investments and that's really what we have to deal with.

Yes, what I would add to that, Tahira, is that the investment we made in NACHER and the investment we are making in the organic growth in the Canadian oil sands, we believe we have an awful lot of running room in both areas. There's a big opportunity in both spaces for us that is incremental in terms of a growth perspective in addition to the areas Sotirios has spoken about.

So really we are not sitting here scratching our heads worrying about how we're going to grow. Most of the effort right now is really on maintaining and driving improved margins and profitability with the business as we grow.

Got it. Last question on that and I will hop back in the queue.

Jon and Sotirios, when I look at products and systems, clearly you are rationalizing and we are starting to see that on the margin side. When do we start on the revenue side seeing stable comps going forward? When should we look for that inflection?

Basically as we're moving more and more not on capital projects but things that people really need like I mentioned the area in the power generating business where really where they have they put a lot of information technology in their plants. That's where it is really helping our growth in the products.

Our products really are not a commodity anymore. They are really solutions-oriented kind of -- we are really giving solutions to the customers and that generates the growth of our products. So you are going to have this lumpiness that goes up and down based on the solutions that we provide but at the same time you have to remember that products is not a very high growth area for us or for others in our industry.

Yes, that's right. What I would add to that, Tahira, is that in products our team has done a very nice job of rationalizing some costs. There's probably a little bit more that we can do recognizing, as Sotirios just said, that it's not a high growth area for us.

It's an area that we can be opportunistic and we can really ensure that we are performing high-value added activities with our customers and realizing good margins from it. But also cognizant that we need to maintain a lean cost structure there.

Yes, it's also a resource for us for our services. Keep in mind that the products group provides some proprietary products for our services group that are a lot better and more efficient. So it also helps our Company.

Got it. Okay. Thanks very much and I will hop back in the queue.

I'm showing no further questions. I will now turn the call back over to Sotirios Vahaviolos for final remarks.

Thank you very much. That concludes our prepared remarks and I would like to thank everyone for listening and we wish you a great day. Thank you very much.

Ladies and gentlemen, that does conclude today's conference. You may all disconnect and everyone have a great day.