Eneti Inc (NETI) 2018 Q2 法說會逐字稿

Hello, and welcome to the Scorpio Bulkers Inc. Second Quarter 2018 Conference Call. I would now like to turn the call over to Hugh Baker, Chief Financial Officer. Sir, go ahead.

Thank you, operator. Thank you for joining us today. On the call with me are Emanuele Lauro, our Chairman and Chief Executive Officer; Robert Bugbee, our President; and Cameron MacKey, our Chief Operating Officer.

The information discussed on this call is based on information as of today, July 23, 2018, and may contain forward-looking statements that involve risk and uncertainty. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statement disclosure in the earnings press release that we issued today as well as Scorpio Bulkers' SEC filings, which are available at www.scorpiobulkers.com.

Call participants are advised that the audio of this conference call is being broadcast live on the web, and is also being recorded for playback purposes. An archive of the webcast will be made available on the Investor Relations page of our website for approximately 14 days.

Now I'd like to introduce Emanuele Lauro.

Thank you, Hugh. Welcome to our second quarter earnings call, everybody. Thank you for your time today. I will keep my comments brief here as it is pleasing to report that the company is making good progress on all its key operational and financial fronts. Supply side factors in our industry remained benign, and as such, fundamentals continue to work in our favor, although we acknowledge the macroeconomic factors could actually put the market recovery in jeopardy. We must respect the tone of negative macro commentary and the risk of a global trade war leading to a broader policy-driven slowdown. I have little to add to this noise, except that we are vigilant and watchful.

Near term, notwithstanding the escalating trade tensions, we have not seen any direct evidence of trade tensions decelerating Chinese economic activity or demand on our trade routes. We are pleased with the quarterly performance and the forward-lookings that we are announcing today. Should weakness occur, even if we don't expect it, we are well suited to withstand more volatile markets.

Through a combination of positive cash flows, the closing of recently announced sale-leasebacks and refinancing of existing commercial loans, we intend to increase or have intended to increase SALT's liquidity over the coming weeks. Our balance sheet is well positioned and we continue to bring our cost of debt finance lower. The company took delivery of its last new built vessel in the quarter, the SBI Lynx, a Kamsarmax vessel. With our modern Eco spot fleet, we'll retain the operational and financial gearing to the steady recovery, which is so attractive to those of you who own -- hold our shares.

With that, I will hand the call back to Hugh Baker.

Thank you, Emanuele. I'm pleased to announce positive net income of $800,000 and EBITDA of $28.1 million for the second quarter. The company also announced a dividend of $0.02 for the quarter, and I can confirm that no stock has been purchased since Q1.

During the quarter, our Ultramax vessels earned $11,569 per day and our Kamsarmax vessels, $12,283 per day. As of today, I can guide you that our Ultramaxes have earned $10,963 for 46% of the days of the third quarter, and our Kamsarmaxes have earned $13,374 per day for 47% of the days of the third quarter. Also, as Emanuele mentioned, we're also pleased to announce that we took delivery of our only remaining newbuilding vessel, SBI Lynx, which is a Kamsarmax, in June. As of now, we have no vessels on order.

Emanuele also mentioned that our balance sheet is well positioned. During the quarter, we drew down on our previously announced $12.8 million credit facility for SBI Lynx, we closed 2 previously announced lease financings for $36 million in aggregate and announced a new $30 million credit facility to refinance 2 vessels. Our cash position today is $80.5 million, and we will continue to strengthen our balance sheet for a program of refinancing existing debt through new higher advance but lower cost loans and leases.

We are very pleased with the support we have received from our key lenders and expect this to continue with refinancing, and we expect to continue this refinancing process in a thoughtful and methodical way. I can guide you that we do expect to announce additional refinancing during August, which will substantially increase our liquidity position and financial flexibility going into the fourth quarter.

With that, I'd like to open the call to questions.

(Operator Instructions) Our first question comes from Jon Chappell with Evercore.

Hugh, on the last point, on the refinancings, it's interesting to see you're still doing sale and leaseback transactions. Obviously, from the Scorpio Tanker side, that seems to be from -- a little bit forced to do that to kind of repair the balance sheet. But from a Scorpio Bulkers standpoint, you already have a pretty robust balance sheet. So why are you still choosing sale and leasebacks? Is just that another arrow in the quiver? Does that address some of the macro risk that Emanuele is talking about? Or how do you view sale and leasebacks versus kind of just normal course refinancing?

Jon, that's a very good question and I'm going to give you a very sensitive answer. The sale and leasebacks that we have engaged in at Scorpio Bulkers are slightly different from the sale and leasebacks that we've engaged in with Scorpio Tankers. The primary reason for these sale and leasebacks is because of the competitive terms that they offer. The Scorpio Tankers sale and leasebacks are principally from Chinese leasing companies and they display, I think, very favorable terms. But the Scorpio Bulkers sale and leasebacks are different. They're with different counterparties. They're not with Chinese leasing companies. And what we're seeing is very competitive terms on a single ship financing basis. And we are opportunistically taking advantage of these single ship financings to execute the sale and leasebacks that we have. To give you an idea, they tend to have high advance rates, much higher than the sort of 60% advance rates you would normally see in bank finance, but the margin and pricing for these sale and leasebacks is actually lower than in our plain -- in our normal bank financings. So what you're seeing is -- and I think that we've -- we're seeing 5-year fixed financings at a floating rate of LIBOR that is below 2%, and we feel that's very competitive. And on an opportunistic and individual basis, we may continue to do that.

Okay. That's helpful. And just one follow-up, I'm sure regulations are going to dominate this earnings season. You guys are first. You get to address it first. I'll let other people use the S word, but maybe let me ask it a little differently. Your fleet is incredibly modern. I think there's 2 2014s, everything else is '15 or newer which would mean, normally, your first dry dockings wouldn't really come until 2020. But do you expect any off-hire time ahead of 2020 associated with ballast water treatment installation or any other installations to meet upcoming regulations?

Jon, maybe I can take that. We continue to evaluate scrubbers. I think most in the community admit now or agree that the case for scrubbers is more compelling the larger the ship size, whether it's containers wet or dry. We continue to look at them, but we haven't yet gotten to the point where we feel that's a good use of capital for Scorpio Bulkers. That has to do both with the technology and technological risks, regulatory risks and most importantly, for smaller vessel sizes, the availability of HFO in, call them, secondary or tertiary bunkering ports post-2020. There may be a point where it becomes compelling, but it isn't to us today. But as and when we get closer to 2020, we'll see how the facts on the ground change.

Our next question comes from Randy Giveans with Jefferies.

First and foremost, congrats on the first ever quarterly positive EPS. So hopefully, more to come there. Two quick questions. Currently, manageable leverage over $80 million in cash as you said. We're expecting pretty significant free cash in the back half of 2018 and beyond. So as such, when looking at the dividend, how and when do you decide to increase it, or should we expect kind of the dividends to stay at that $0.02 per quarter for the foreseeable future?

Randy, it's Robert. I think we're going to have to take things one step at a time, in that we went through -- we take it from the fourth quarter last year, we did some very significant investments, grew the fleet by 20%, 25%, virtually using all cash. Then in the first quarter, we did another couple of things in the first and second quarter. So basically, we're consolidating the balance sheet, keeping everything steady. And now that you're hearing from Hugh, at the beginning of the third quarter, the end of the second, we're starting to really get the benefits of this through our financing. I mean, Hugh is being pretty modest about what he's achieved in these sale leasebacks. They really are incredibly good financings for the company, very high leverage against an extremely low fixed cost. So they do a number of things in terms of balance things out in a perhaps increasing interest rate curve. And the next thing that we're doing is we are taking the net benefit of a stronger balance sheet and refinancing at much lower cost and rate and for a longer tenure. The -- and taking advantage not only of the increased strength in the balance sheet and cash flows, but increase in the value to the company to refinance the other parts of the balance sheet in terms of some of the commercial loans that are either a little bit or older or were put in place when the company's balance sheet was weaker -- the dry cargo market and the company wasn't strong enough -- and that's really what we're going to be focusing on. And at this point, we haven't had any other discussions other than accomplishing that and that we hope to pretty well have done by the next time we talk on the third quarter.

All right. So $0.02 for the foreseeable future, got it. Going -- I guess that you answered part of it with that question, but looking at share repurchases, you did that 1.2 million shares at an average price of like $7.39 during 1Q '18. But as you mentioned in the call, or Hugh did, during 2Q, no share repurchases despite the share price dipping below $7 for a few days there and now still at $7.30, well below NAV. So should we expect either share repurchases or debt repurchases here in 3Q '18? I know you're focusing on the balance sheet, but that is...

Yes. We're going to focus on the balance sheet. We're not going -- the only comment I'll make to share repurchases is that we were locked up or we were in a blackout period when -- you can't always, as a company, unfortunately, come in on those days where the stock is under pressure, in those periods you were talking about where the stock traded in the 6s. I think, though, that the fair thing to do is to create a -- we own -- we're right alongside shareholders as management and insiders here, and we're playing the strongest value we can. And the strongest value that we think at the moment is to spend this time taking the dividend, as it were, of the improved position of the company and refinancing for much cheaper and better terms structurally going forward, and that will then give us an amazing ability. I mean, if you imagine, I mean, it's a $1 worth of cash on the company at the moment, but it's not unreasonable to think that we would have at least $2 of cash on the balance sheet come the next time we talk on the earnings. And as you know, every -- sort of $10 million above your free cash or freedom cash is incrementally more and more valuable. So for us, I think it's a question of being patient. Obviously, it becomes a little bit more tempting just to take advantage if you have those really weak days and you're not blacked out or restricted on windows and there's volume there. But otherwise, the company is just going to focus on its mission to create a position between its modern fleet that really is very well prepared for IMO '20. The fact that the fleet is on the spot market, so it's very well prepared for what we see as improving fundamentals. A balance sheet that -- if the world is good -- is extremely well prepared at that side for the buybacks and/or dividends. And also, if over this next 2, 3 months, something unfortunate does happen in the world's macro outlook, the company is extremely prepared for that. That, I think, is the thing that's worth concentrating on.

Our next question comes from Amit Mehrotra with Deutsche Bank.

So the cash breakeven, I guess, obviously, in the second and third quarter, you're running above cash flow breakeven. Cash flows accruing to book equity and equity holders for the first time, I think, ever, to Randy's point. If that trend continues -- just related to all these questions around focusing on the balance sheet -- but you're already at 50% net LTV, there's obviously a lot of opportunities out there from a growth perspective. If surplus cash flow over and above debt amortization kind of starts to inflect higher, are you more inclined to delever the balance sheet further or are you more inclined to maybe return to growing the fleet in kind of a prudent way?

Well, I think we've spent the last 2 quarters, and we're in the third -- we're halfway through the third quarter -- where we've pretty well shown the inclination which has been to delever the balance sheet, increase liquidity, so as we can either take advantage of, let's say, any dislocation between what is the best fleet we should buy out there, which is our own fleet, through buybacks, or distributing value to shareholders. So there's not a -- we haven't really shown a strong inclination to grow the fleet further, which we think is substantial enough on an operating position. The other thing is that we left ourselves the opening, in the last conference call, which we would restate, that if there is the -- if there's something, if -- a star of the line, then you've got something that is particularly special out there, that -- a unique situation with modern ships at the right structure and all that, of course, you would look at it. So far, it's fairly rare to get that at the moment.

If I could just maybe ask the question in reverse. Robert and Emanuele, if you look at SALT -- in addition to SALT, you obviously also own the world's largest product tanker company. I would say, SALT is clearly -- I would say, if it's fair to say, a different company than when you envisioned it first back in 2013 when you floated it or a little earlier than that. We're also in an environment where many other dry bulk companies, whether it's Genco or Eagle, are sort of in growth mode and looking to add high-value, kind of young tonnage like what you have. So in that context, would you ever think about rolling the equity of SALT into another dry bulk company and then maybe allowing yourselves to give more attention to the product tanker side where you are the biggest and maybe there's more opportunity from a regulatory standpoint? I know that question is a little bit out of left field, but just trying to think about how you think about that.

Well, I think there are individual positions, to start with. It's a public company, regardless of how much the insiders own and hold, it's a public company. So you -- it's a hypothetical question until somebody actually makes a worthwhile offer and -- or until the company itself, like in the case of a previous company called OMI that the management manage, where the company felt that the upside was there to just -- it was the right time to actually put the company on the market for sale. So until that time, Amit, it's whatever. The roll you -- you roll in is like -- yes, I mean, you have to keep them separate, it's not...

Yes. It's maybe, also, an unfair question on a public call, so I fully understand that. Just one quick one for Cam, if I could. Just on Jonathan's question on IMO 2020, which I think -- that was a question he maybe didn't want to mention IMO 2020 for some reason. But I think related to IMO 2020, outside of scrubbers, could you just update us on your thoughts in terms of expectations around -- just based on your conversations with some of your fuel suppliers and things like that, what is your latest thoughts on where the spread between low- and high-sulfur fuel could go because that seems to be kind of the big question mark. And then related to that just on the operations side, if we do see the -- is there like some formula or help or a rule of thumb that we can think of to try to understand the relationship between the cost of fuel of bunkers versus the kind of the speed of the vessel? I've heard numerous things out there in terms of exponential relationships between speed and propulsion, and so just any help there to help understand what the opportunity could be in terms of slow steaming of the dry bulk fleet.

Sure. No problem. Let me take the second one first. So as you may know, whether it's cars, airplanes, buses or ships, conventional engines follow an exponential power curve. So it is correct that by -- it depends on the design rating of the engine -- but in most circumstances, by cutting your speed by 20% or 30%, you can save maybe 50% on your fuel consumption. That rule of thumb may not apply to all ship types and all transportation types, but if you look very quickly at where a nominal rating lies on that exponential curve, you can see that there's an outsized benefit in consumption by reducing your speed just a little bit. So slow steaming indisputably provides great savings. The question really is, at what cost? At what cost to the charterer and at what opportunity cost to the vessel? So it depends on the state of the market and obviously, what the customer wants. Going back to your first question, it is a very mixed bag on what the availability of different fuels will be and what their relative pricing will be post 2020. Many believe that the spread, which comes somewhere in the high 300s, will expand materially as we get towards 2020. I would caution, however, that there are a number of blended products coming to market, which in certain circumstances, could be quite useful substitutes for distillate post 2020 and post regulatory roll out. And then how the market adjusts both in terms of pricing, but as importantly, in terms of availability and physical supply is still very, very much in question. I think the early adoption of larger ship types, the big container ships, the larger bulk carriers, the large tankers, obviously, give us a good feeling about availability in some key global ports. This sort of positive externality that is developing around fuel availability looks quite good. But when you get into smaller ships that have to bunker in areas way off those main trade routes, it's still very, very unknown and uncertain whether the benefit of a scrubber can be realized because you won't be able to find heavy fuel. That is in doubt, the environment is changing rapidly and we're watching it.

Yes. One very, very quick one, and then I'll leave. On just your comment about blending down high sulfur fuel into more compliant fuel. Is it just the weighted average, i.e., if in order to blend down high sulfur fuel into 0.5 or lower compliant fuel, you just need 2 to 3x as much low sulfur fuel to bring that down, is that how we should think about it?

No. Well, first of all, I won't purport special expertise here. You should really talk to a refining analyst. But my understanding is it's a combination of desulfurization, so additional steps in the refining process and blending down fuel with other crude stocks. So it's not quite so simple, but -- and therein lies the question on where those blends lie in the spectrum between specification and pricing between distillate and heavy.

Our next question comes from Magnus Fyhr with Seaport Global.

Just 2 questions left for -- as a follow-up on the capital allocation. I mean, your stock trades at pretty significant discounts to NAV vis-à-vis the peer group. It sounds like debt reduction remains a focus for SALT. Can you elaborate on any targets over the next 12 months as far as debt-to-cap ratios?

No. I think that we've elaborated enough by saying that we're spending this quarter and we'd expect to put ourselves in a position where we'd have around $2 a share or whatever of cash on the balance sheet. And I didn't say that we were having a priority going forward on debt reduction. I said our priority was to create liquidity and refinancing in terms of a beneficial way to our improved position. In fact, I think what I said is that that's what we'll concentrate, take advantage of doing that, get the liquidity to $2 a share or so, which will then give us various options at that point, which would include dividends, stock buybacks, other things. When it comes to buying ships, we already have said to the previous questioner that except for a rare opportunity, which we don't necessarily foresee, we think we have a large enough fleet. So you should be able to triangulate from that point to the -- where we would go from there.

Okay. Just a follow-up or a question on the rates in the quarter. I know it's -- we're in this kind of seasonally weaker part of the year. It looks like the spread between the Kamsarmaxes and Ultramaxes increased here in the third quarter. I mean, is it -- can you explain that? Or is it just kind of in the seasonally weaker period where the bigger ships may get little a bit better bid?

I think you've got -- I think it's more positive than that. I would say that the Ultramaxes have been doing fine for these last 2 quarters. If you put the second and the third as it is together, that's a great improvement over last year in what you correctly identified as a seasonally weak period. I think the oddity in this, and I think you're going to -- is that the Capes and the Kamsarmaxes are just strong for a weak quarter, which is much more positive. I think it's very interesting that ahead of the seasonally normally stronger quarter, the fourth quarter for Capes and Kamsarmaxes, you've just got this sort of early start coming right now. I think it's a very, very good thing that I think it's going to be echoed by other owners as they -- with the Kamsarmaxes and Capes as they come to their earnings call. So I wouldn't see this as a negative in the Ultramaxes. The Ultramaxes on a year-on-year is very positive growth development. It's just simply rather a big positive to the Kamsarmaxes and the Capes.

Okay. I mean, is there anything fundamentally -- I mean, you're carrying a lot of coal. Anything you can tell us about what's going on both in India and China as far as their purchases here?

As I think that Emanuele alluded to in the first part of the call, and the earnings are going further than that, so far we are only seeing positive developments and demand out of China or out of India in terms of the commodities, and have not yet seen any negatives as a result of economic or tariff or trade threats.

Our next question comes from Noah Parquette with JPMorgan.

We've heard that some exporters in the U.S. are thinking about sending soybeans down to South America before they export it to China. Have you heard anything regarding that or have you seen anything like that, that would support that in your fleet movements? And on the soybean issue, where do you guys think that U.S. exports could go instead of China?

It's a difficult one. It's a -- I was down in Pennsylvania this week talking to a soybean farmer who has 1,700 acres of soybeans who was putting a brave face on it and sort of saying, "Oh, well, I've got the ability to store. I don't have to sell at this really distressed prices." But he'll probably have to start selling. So I think it's a difficult dynamic because -- simply because the price of soybeans themselves have fallen now in the U.S. more than the 25% of the tariff. So you could just have the Chinese buying at their all-in cost. Shipping is fairly a cheap. So to the Chinese, it's almost like, so what. They're still buying net to them, delivered at the same prices as before the tariffs are put in. You could have that, so it's a hard one to handicap. And as you pointed out, if the tariffs do hold in pricing, people find ways around. So it wouldn't surprise me at all if they were to send ships -- use ships to send soybeans to South America. I mean, we've seen this type of aberrations when free trade is interrupted -- we see this in the product market. You have U.S. petroleum, clean petroleum products shipped because you can't do the carbon tariffs, there are ways of avoiding that legally. So we just have to wait and see on the pricing day to day.

Okay. I just had one other. On 2020, obviously you need to be finding new uses for fuel oil, one of them is power generation. Have you guys given any thought to how that could impact coal, electricity generation?

Noah, it's James. We looked briefly at a BTU comparison between the two and even at $100 a ton for coal, coal is still more efficient. But yes, there are possibilities that some of that could be used. But from a BTU standpoint, the coal, even at $100 a ton, is still more efficient, probably at least by 2x as much.

Our next question comes from Fotis Giannakoulis with Morgan Stanley.

Hugh, I was very pleasantly surprised to see these very competitive sale and leaseback financings. I'm trying to understand who are these providers of this type of capital and how much availability there is for the broader market these kind of deals. Is this a new pocket of money that can replace the European bank lenders that they are shrinking.

Fotis, as I said earlier, it's not Chinese leasing companies, but I don't really go into too much detail beyond that. What I can say is that it is generally done on a 1 or 2 vessel discrete basis. So it's generally not done in the same kind of quantity, shall we say, as, for instance, Chinese leasing which generally require -- the sweet spot for Chinese lease transaction is generally north of $100 million, between $100 million to $150 million. So it is opportunistic 1 to 2 ship leasing transactions, but again are very competitive on the fixed rate pricing that they offer.

Can you give us some sense of how much capacity these providers have. Is this a one-off deal that one of the -- some source of capital has some specific or it's a group of potential lenders that they can provide widespread financing to the market?

Let's put it this way, Fotis, we hope to absorb most of the capacity ourselves so I wouldn't get excited and consider this as an alternative sources of financing going forward.

That's very helpful, Emanuele. And one more about the market, if you can -- people asked earlier about grains and the impact of the tariffs. I want to ask the different type of commodities since you're transporting a very wide range of cargoes. How they have been performing? Obviously, iron ore seems very strong. I'm wondering more about coal given the fact that China has said that they will increase domestic production. And if you can give us other sort of changes that you have seen in the trade among the smaller commodities?

James, can you...

Fotis, on the coal side for China, it's hard to determine really what their approach will be. In terms of their imports relative to their consumption, I think they import something like 180 million metric tons, but they consume over 3 billion. So we have seen demand from both India and China for higher-quality coal that was less pollutive. In terms of the smaller commodities, bauxite, cement, logs, a lot of fertilizer coming from the U.S. going to Europe have all been quite strong. Grains as well quarter-over-quarter. I would say that there hasn't been necessarily one that has stood out relative to others because you're still pretty much renting the same space at the same price, but I think that the global synchronized GDP (inaudible) has really benefited most segments. I don't think we've seen anything yet in terms of different grain and soybean movements, but it will really depend on kind of the announcements that come.

And last about the Atlantic market, in the previous quarter showed some unusual weakness. Have the Atlantic market normalized based on what we've seen from the Kamsarmax rate? And any impact -- lasting impact from the situation with bauxite with the Russian, with RUSAL earlier. Has this trade been normalized now?

I'd say that the Atlantic market has recovered, and it's probably more normalized. In terms of the bauxite, I haven't seen anything. We haven't had any situations where our vessels were affected by that directly, obviously, the market as a whole. But other than that, I would say more normalized. I'd say the Kamsarmaxes have definitely benefited when you have Capes last week at $25,000 a day. Whereas the Ultramaxes, as Robert mentioned, year-over-year are stronger. But there's about 25 to 30 different cargoes that are carried on those Ultramaxes, so -- and we've got 30 ships or something. So it's not one commodity, I would say.

Our next question comes from Ben Nolan with Stifel.

So a few questions, I guess, related to where you are as a company. It seems as though -- and Robert, you alluded it kind of being a plateau. You have now delivered all the ships and don't necessarily have aspirations of needing to grow further. Does this -- and the financing is largely done, although it sounds like there could be a little bit more to do. But is this now an opportunity to look a little introspectively and see if maybe there are some opportunities for belt tightening or anything else? Is it -- do you think that there is capacity to maybe squeeze more blood from the rock from a cost perspective here?

I think that the -- look, we're doing -- clearly, there's capacity to make the financing more efficient as it were. In a weird way -- you may not see in absolute dollars or percentages, but you're going to be in and we already are in an inflationary environment related to cost, that's not necessarily -- potentially there as we go forward. And you're always doing what you can to be efficient, but you're not going to compromise on your standards. And I don't think you're going to be able to improve your -- we're not going to give up. We're not going to follow other owners into non-ITF crews and other examples. I don't know, Cameron, Emanuele, if you'd like to add to that?

Naturally then, there are places where we should continue to see some efficiency, to Robert's point. And that just comes as a function of maturity and also investments being properly run in after a year or 2 on the water. But apart from gradual improvements quarter-over-quarter, we're not inclined to make any sudden changes in our operating set.

Okay. That's helpful. And then maybe for Hugh, kind of along those same lines, particularly after -- assuming there's a few of these sale leasebacks -- Is there any color or guidance that you might be able to give us as to what the spread relative to LIBOR should look like when you're sort of done?

Yes. Ben. I mean, what we're seeing is that the company and, as per our recent announcements, generally speaking, we would expect to secure financing in the sort of low LIBOR plus 200 range. The last 2 financings were at LIBOR plus 225 and LIBOR plus 240. I would say that the LIBOR plus 240 financing had a very low fee, whereas the LIBOR plus 225 had a more normalized fee. So I think we're very comfortable that we're going to be financing in the sort of mid- to low 200s over LIBOR. And again, the lease financing we're securing is generally marginally below 200 over LIBOR if it's converted into a floating rate finance. So we don't see that changing too much. I think the market for spreads from banks does change over time. But as a general point, I think it's -- we are where we are.

We have no further questions at this time. I would now like to turn the call back to Hugh Baker for any further remarks.

I have no further -- we have no further remarks. Thank you all for joining us today, and we look forward to speaking with you all soon. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day.