Navios Maritime Partners LP (NMM) 2022 Q2 法說會逐字稿

Thank you for joining us for Navios Maritime Partners Second Quarter 2022 Earnings Conference Call. With us today from the company are Chairwoman and CEO Ms. Angeliki Frangou; Chief Operating Officer, Mr. Stratos Desypris; Chief Financial Officer, Ms. Erif Tsironi; and Executive Vice President of Business Development, Mr. George Akhniotis.

As a reminder, this conference call is being webcast. To access the webcast, please go to the Investors section of Navios Partners website at www.navios-mlp.com. You'll see the webcasting link in the middle of the page. And a copy of the presentation referenced in today's earnings conference call will also be found there.

Now I will review the safe harbor statement. This conference call could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Partners. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Navios Partners' management and are subject to risks and uncertainties, which would cause actual results to differ materially from the forward-looking statements.

Such risks are more fully discussed in Navios Partners' filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Navios Partners does not assume any obligation to update the information contained in this conference call.

The agenda for today's call is as follows: First, Ms. Angel will offer opening remarks. Next, Mr. Desypris will give an overview of Navios Partners' segment data. Next, Ms. Tsironi will give an overview of Navios Partners' financial results. Then Mr. Akhniotis will provide an operational update and an industry overview. And lastly, we'll open the call to take questions.

Now I turn the call over to Navios Partners Chairwoman and CEO, Ms. Angeliki Frangou. Angeliki?

Thank you, [Danielle], and good morning to all of you joining us on today's call. We are pleased to report our results for the second quarter of 2022, in which we recorded $280.7 million revenue and $118.2 million of net income. For the first 6 months of 2022, net income is equal to $6.62 per unit. We are also pleased to discuss the transaction we announced last night involving the acquisition of 36 vessels dry bulk fleet for $835 million.

Today, NMM is the second largest U.S. listed maritime company and the third largest U.S. listed dry bulk company. Well, really, we are just about tight for shekel, both by a number of vessels. Before we dive into the details, I wanted to briefly review our business model that has allowed us much of this.

Slide 3 shows the pro forma composition of our fleet by vessel type and segment. We have about 15 different vessel types operating in 3 segments: The average age of our vessel in each segment is below the industry average, which matters as it relates to carbon efficiency of our various fleets.

Turning to Slide 4. We continue to leverage diversification. We believe that diversification allows us to optimize chartering by extending charters in well-performing segments and keeping charter duration short in less well-performing segment. In addition, we can make acquisitions that we hope will benefit from cyclical volatility such as the acquisition announced last night.

Slide 5 takes a look at selected segment data pro forma for the acquisition. If you look at the asset and market value category, you will see the rebalancing of our portfolio as a result of this acquisition. On a pro forma basis, dry bulk shipping represents about $2 billion of exposure or 32.5% of total fleet value. This material increase should benefit us in the medium term. You will also notice Efstratios will address in a moment that although there has been some movement in the value of each sector net the [Navy] has moved up in 2022 year-to-date.

In addition, I would like to mention that our LTV has moved up as a result of this transaction. But it is still reasonably low at 33.8%. We will continue to focus on our target leverage ratio of 20%. While we will exceed this from time to time based on market movements, acquisition and other factors, we will use this as a guide in managing our financial affairs.

Please turn to Slide 6, where we discuss some of the details of this transaction. We acquired a 36 vessel dry bulk fleet with a 3.9 million deadweight tons capacity. The fleet has an average age of 9.6 years. (inaudible) it has 26 owned vessels and 10 charter-in vessels, all with purchase options. This was a noncash transaction for a gross price of $835 million. Of this purchase price, $441.6 million informed the assumption of various liabilities and obligations. The remaining $393.4 million represents equity. The purchase price is subject to customary debt and working capital adjustments. We anticipate that the first closing covering 15 vessels will happen tomorrow and the second and final closing for 21 vessels should occur by the end of August 2022. I note that this transaction was unanimously approved by the Conflicts Committee of Navios Partners and the full Board of Directors. The conflicts committee also retained its own legal and financial advisers.

Slide 7 goes through the rationale of this transaction. We acquired a young, known en-bloc fleet of 36 vessels at an opportune time in the dry bulk market. We read the recent weakness in the market as a momentary pause while China deals with the internal issues, but I believe that by the end of Q4, much of this will have been resolved and China will return to the international producing table in a more robust manner. Our diversification and low levels allowed this transaction. Diversification provided a margin of safety as other sectors are working well and our relatively low leverage and strong balance sheet allowed the acquisition with minimal impact on our cash flow and balance sheet.

The acquisition itself provides scale and migration path to a younger, more carbon-efficient fleet. We can opportunistically sell older, less carbon efficient vessels. Post-transactions the dry bulk and total fleet will increase by 67% and 24%, respectively. We also believe that the expected financial returns based on the assumption we share in our deck are compelling. Among the metrics we share in our deck, I note that the cash return on equity is expected to be 20% in 2023.

Turning to Slide 8, we review other recent developments. During the quarter, we acquired 2 newbuilding LNG, 7,700 TEU containerships for $241.2 million. Delivery is expected in the Q4 2024. At the same time, we had a position by entering into a 12-year charter that will generate about $370 million in revenue. The average rate is $42,288 per day.

Navios may extend existing charters to generate an additional $5 million to $10 million in total. In terms of the financing update, you will see that we entered into about $140 million of financing covering 6 vessels with a reasonably low LTV. The commercial activities, we fixed $3 billion contracted revenue, much of this in the container space. As a result, we have established an internal credit unit to monitor credit quality of our counterparties so that we are adequately prepared for any contingency.

For 2022, in the second half of the year, we have 13,997 open/index days. The good news is that contracted revenue exceeds total cash expenses by $18.7 million. So our revenue book has a significant upside.

Finally, our Board authorized a unit repurchase program for $100 million. At current prices, this program would cover approximately 15% of common units outstanding and 17% of the public float. The timing of the purchases and the exact number of units to be repurchased shall be determined by the company based on market conditions and financial and other considerations, including working capital and planned or anticipated growth opportunities. We continue to believe that total return is the way to measure the success of our company. And we will use this tool as a means of achieving this result to for our unitholders.

At this point, I would like to turn the call over to Mr. Stratos Desypris desires, our Chief Operating Officer. Stratos?

Thank you, Angeliki, and good morning, all. Slide 9 details our strong operating free cash flow potential for the remaining 6 months of 2022. Pro forma for the acquisition of the 36 vessel fleet discussed by Angeliki earlier, we have fixed 51.3% of an estimated 28,800 available days at an average rate of $28,966 per day. For the second half of 2022, contracted revenue exceeds total cash expenses by almost $19 million, and we have 13,997 available days with market exposure, providing additional operating costs. The majority of our market exposure comes from dry bulk vessels, where approximately 78% of our available days are open or contracted on index-linked charters.

Slide 10 demonstrates the basic principles of our diversified platform in action. We benefit from segments, countercyclicality. This creates the opportunity to redeploy cash flow from well-performing segments into asset purchases or other activities in underperforming segments. Asset values alone can be volatile and a diversified asset base mutes the volatility on the balance sheet. For the first half of 2022, while container values have dropped by 4%, dry bulk and tanker vessel values have increased by 11% and 18%, respectively. In sum, the net change to our fleet value is an increase of approximately 4%.

Having multiple segments allows us to optimize our chartering activities. In segments with attractive returns, we can enter into period charters. In other segments, we can be patient. As you can see from the chart on the bottom, the container segment is enjoying historically high charter rates. Not surprisingly, we have fixed our container fleet on long-term charters with almost 100% of our available containers days fixed for the remaining 6 months of 2022. This reduces market and residual risk. We manage the credit risk of the long-term charters independently to ensure we are not simply trading one risk for another.

In our Dry Bulk segment, we benefit from the market where rates are recovering to their historical 20-year averages. We have fixed only 22% of available dry bulk fleet days for the remaining 6 months of 2022 and have opted to keep 78% of available days exposed to market rates to capture any available upside. Our goal will be to fix our dry bulk fleet on long-term charters when rates improve.

Lastly, within Tankers, current charter rates have been recently surpassed their 20-year average levels. We have increased fixing of our available tanker days to 62%, taking advantage of an improving market. We expect our tanker fleet will generate strong returns as the market continues to recover.

In Slide 11, you can see our fleet profile. We constantly renew our fleet to maintain a young profile, benefiting from newer technologies and more carbon efficient vessels. Navios Partners made a $1.4 billion investment in 22 newbuilding vessels that will deliver to our fleet through 2025. In containerships, we agreed to acquire 12 vessels. In the first deal, we agreed to acquire 10 5,300 TEU container ships for $620 million. We then hedged our investment by entering into long-term creditworthy charters, generating about $710 million in contracted revenue for the 5.2 years duration of the related charters, providing an expected unlevered yield of 17.5%.

As Angeliki mentioned earlier, we agreed to acquire 2 7,700 TEU LNG dual-fuel container ships for a purchase price of $241.2 million. The vessels have been chartered for 12 years at an average rate of $42,288 net per day, generating approximately $370 million in revenue. These vessels are expected to provide an unlevered yield of about 10.5%.

We also leveraged the strength of the container market by selling 2 16-year-old vessels for an aggregate price of $220 million. In the tanker space, we entered the 2 [Aframax] subsector by ordering 4 vessels for a total price of $234 million. Two of the vessels are chartered out for 5 years at an average net rate of $25,576 per day, generating revenues of approximately $93 million, providing expected unlevered return yield of about 10%. The (inaudible) has the option to charter the other 2 vessels at the same terms.

Moving to Slide 12. We continue to secure our long-term employment for our fleet. Our contracted revenue amounts to $3 billion and 81% of our contracted revenue comes from our container ships with charters extending through 2,036 with a diverse group of quality counterparties. Around 50% of this contracted revenue will be in the next 2.5 years.

I now pass the call to Erif Tsironi, our CFO, which will take you through the financial highlights. Erif?

Thank you, Stratos, and good morning all. I will briefly review our unaudited financial results for the second quarter and the first half ended June 30, 2022. The financial information is included in the press release and is summarized in the slide presentation available on the company's website. I would like to highlight that 2022 results are comparable to 2021, as in 2021, NMM gradually acquired 2 companies, significantly expanding its current on-the-water fleet to 130 vessels.

Moving to the earnings highlights on Slide 13. Total revenue for the second quarter of 2022 increased by 85% to $280.7 million compared to $152 million for the same period in 2021. The increase in revenue was a result of a 56% increase in our available days to 11,269 compared to 7,242 for the same quarter last year and a [70%] increase in the fleet TCE average rate to $23,823 per day compared to $20,296 per day for the same period in 2021.

The average TCE achieved by sector was dry bulk $24,721 per day, containers $31,613 per day and tankers $16,391 per day.

EBITDA For Q2 2022 increased by 81% to $163.5 million compared to $90.4 million for the same period last year. Net income for Q2 2022 increased by 18% to $118.2 million compared to $99.9 million for the same period in 2021. Per unit net income was $3.84. The increase in net income was due to the increase in EBITDA partially mitigated by a $24.4 million decrease in the amortization of unfavorable lease terms, mainly relating to the acquisition of the NMCI container vessels and a $19.6 million increase in depreciation and amortization expense.

Interest expense and finance costs increased by $7.2 million to $14.5 million, in line with the additional debt following the expansion of our fleet. Total revenue for the first half of 2022 increased by 138% to $517.3 million compared to $217.1 million for the same period in 2021. The increase in revenue was a result of a 96% increase in our available days to 22,497 compared to 11,494 for the same period in 2021 and a 21% increase in the fleet time charter equivalent rate to $22,107 per day compared to $18,276 per day for the same period in 2021.

The average time charter equivalent rate achieved by sector was: dry bulk $22,311 per day; containers $21,417 per day; and tankers $15,864 per day. EBITDA of Navios Partners for the 6 month period ended June 30, 2021, was adjusted by $125 million gain from one-off noncash items, while there were no such adjustments for the first 6 months of 2022.

EBITDA for the first half of 2022 increased by 133% to $289.6 million compared to $124.1 million adjusted EBITDA for the same period in 2021. Net income for the 6-month period ended June 30, 2022, increased by 82% to $203.8 million compared to $111.7 million adjusted net income for the same period last year. Net income per unit was $6.62. The increase in net income was due to the increase in EBITDA partially mitigated by $49.4 million increase in depreciation and amortization expense, a $6 million increase in amortization of deferred dry bulk special survey costs and other capitalized items. And a $2.6 million decrease in the amortization of unfavorable lease terms mainly relating to the acquisition of the NMCI container vessels. Interest expense and finance costs increased by $14.5 million to $27.7 million in line with the additional debt following the expansion of our fleet.

Turning to Slide 14, I will briefly discuss some key balance sheet data. As of June 30, 2022, cash and cash equivalents were $174.6 million. During the first half of 2022, we have made $55.6 million of predelivery payments under our newbuilding program. Long-term borrowings, including the current portion, net of deferred fees amounted to $1.29 billion. Net debt to book capitalization improved to 34%.

Slide 15 highlights our debt profile. Pro forma for the acquisition of the [NMM] fleet and the assumption of its liabilities, our debt and lease liabilities are 3x covered by the value of our fleet based on publicly available valuations. We continue to diversify our funding sources between bank debt and lease structures while approximately 30% of our debt, including operating lease liabilities have fixed interest rate, providing a natural hedge against the foreseen rate increases. We have already arranged refinancing of our 2022 debt maturities while our remaining maturity profile is staggered with no significant balance due in any single year.

Slide 16 provides an update of our recent financing activities. In June 2022, we signed a $55 million credit facility with the European bank at SOFR plus 2.25%.

We are making good progress financing our newbuilding program, well ahead of the delivery of the vessels. We are currently in documentation phase for an $86 million facility with a European bank, which finances 2 containers delivering in the second half of 2023 at an interest rate of SOFR plus 2%.

I -- turning to Slide 17, you can see our ESG initiatives. We aspire to have zero emissions by 2050. In this process, we have been pioneering and are adopting certain environmental regulations after 2 years in advance, aiming to be one of the first fleets to achieve full compliance.

Navios is a socially conscious group whose core values include diversity, inclusion and safety. We have very strong corporate governance and clear code of ethics. Our Board is composed by majority independent directors and independent committees that oversee our management and operations.

Slide 18 details our company highlights. Navios Partners is a leading U.S. publicly listed company. Our diversification strategy creates resiliency and enables us to mitigate individual segment volatility. Our diversification, scale and financial strength would make NMM an attractive investment platform as we take advantage of global trade patterns.

I now pass the call to George Akhniotis, Executive Vice President of Navios Partners. George?

Thank you, Erif. Please turn to Slide 20 for the review of the dry bulk industry. The BDI started Q2 on a softer note before rising Capesize earnings to just above $38,000 per day, which lifted the BDI to a year-to-date high of [3,369] by mid-May. The index then retreated by the end of Q2 at close to [2,200]. The BDI averaged [2,530] in Q2, which was the second highest Q2 since 2010.

Similar to last year's pattern, the world seaborne dry bulk trade for the second half of '22 is projected to exceed the first half by 7.6% as solid demand for natural resources continues. Besides demand, new longer coal trade routes emerge as worldwide demand increases on the back of high natural gas and oil prices. Additionally, an expansion of ton miles is projected as Brazilian iron ore exports seasonally increased and Russian coal exports get redirected away from Europe to destinations further afield.

Turning to Slide 21. As previously mentioned, high gas and oil prices and the Ukraine crisis continued to support increased global coal imports. The surge in gas prices and a certain supply from Russia has led European countries to reactivate coal-fired power plants. European seaborne coal imports are expected to increase by 7% in '22. Additionally, the ban on Russian coal will lead to shift in trading patterns towards longer hold routes.

Chinese coal imports are projected to decrease by 11%. The decrease in Chinese imports will be offset by an expected 9% increase in Indian imports. Overall, seaborne coal trade is expected to increase by 1.5% in '22 and further boosted by an estimated 2.4% growth in ton-miles.

Turning to Slide 22. China's Zero COVID policy significantly impacted steel production and iron ore demand in the first half of '22. Chinese seaborne imports decreased by 4% and steel production fell 7% through June '22. As COVID restrictions are lifted and infrastructure spending increases in the second half, iron ore trade is expected to increase compared to the first half of the year. The Chinese slowdown is expected to be offset by seaborne iron ore imports from the rest of the world, with Europe up 2% and Asia excluding China, up 4% leading the increase.

Please turn to Slide 23. The global grain trade continues to be driven by heightened food security issues initially driven by the pandemic and now by war affecting the wheat and corn fields of Eastern Europe. Although global seaborne grain trade is expected to decrease in '22 by 2.8% due to the Ukraine crisis, new trading patterns will result in a ton mile decrease of only 1.2%. The recent UN broker deal to allow black sea grain exports should lead to increased trade in the second half of the year. Grain trade for 2023 is expected to increase by healthy 4.2%.

Please turn to Slide 24. The current order book stands at 7.1% of the fleet, one of the lowest on record. Net fleet growth for '22 is expected at 2.7% and only 0.7% in '23 as owners removed tonnage that will be uneconomic as the IMO 2023 CO2 rules come into force. Vessels over 20 years of age are about 8.2% of the total fleet, which compares favorably with the historically low order book.

In concluding our dry bulk sector review, continuing positive demand for natural resources, warrants action-related longer haul trades, combined with a slowing pace of newbuilding deliveries all support healthy freight rates going forward.

Please turn to Slide 26, focusing on the container industry. While macroeconomic headwinds have increased, the charter outlook remains positive as demand remained solid, and there is a persistent shortage of ships supporting container rates. Recently, rates have moderated down from heights earlier this year. However, rates are around 5x 10-year averages and long-term rates continue at near record levels, allowing owners to lock in contracts at profitable levels. As you can see in the graph on the lower right, the U.S. inventory to sales ratio is off the recent low but still well below the long-term average. Continued demand keeps volumes well above port takeaway capacity and record port congestion persists. This, together with restocking during the peak (inaudible) season should continue to support containership demand with expected growth of 0.7% in '22 and 2.7% in '23.

Turning to Slide 27. Net fleet growth is expected to be 3.4% in '22. It should be noted that about 64% of the order book is for 13,000 TEU vessels or larger. In addition, 10.2% of the fleet is currently 20 years of age or older. In concluding, the container trade remains robust. Supply and demand fundamentals remain balanced due to the continuing demand for consumables, stock building and supply chain bottlenecks. Along with continued fleet and [port inefficiencies] should continue to support the containerized shipping industry in '22.

Please turn now to Slide 29 for the review of the tanker industry. In spite of economic headwinds and the Ukraine crisis, the IEA still projects a 1.8% increase in world oil demand for '22. The expectation is that oil demand will grow by 2.2% in '23 and exceed 2019 pre-pandemic levels. Refining margins have increased substantially as strong demand for clean products continues to expand during the summer travel season. Both crude and clean products should benefit from a boost in ton miles as Russian oil exports are redirected to new longer trade routes on the back of a phased in European bank. In fact, product ton miles are expected to increase by 10% in '22 and 6.1% in '23.

Turning to Slide 30. VLCC net fleet growth is projected at 3.7% for '22 and only 1.3% for '23. This decline can be partially attributed to owners hesitant to order expensive long-lived assets in light of macroeconomic uncertainty and (inaudible) technology concerns due to upcoming CO2 restrictions. The current order book is only 4.6% of the fleet. Vessels over 20 years of age are 10.5% of the total fleet, which compares favorably with a low order book.

Finally, turning to Slide 31. Product tanker net fleet growth is projected at only 1.3% for '22 and only 1.5% for '23. The current product tanker order book is 5.1% of the fleet, one of the lowest on record. And it compares favorably with a 7.2% of the fleet with 20 years of a holder. We believe that the overall tanker order book and fleet are well balanced as the IMO 2023 regulations will lead to some vessel retirements in the coming months. In concluding, product tanker rates continue at strong levels, leading the way for the crude tanker recovery.

The combination of global oil demand returning to prepandemic levels, OPEC plus increasing production, new longer trading routes for both crude and products as well as the lowest order book in 3 decades should provide for healthy tanker earnings going forward. And this concludes our presentation.

I would now like to turn the call over to Angeliki for her final comments. Angeliki?

Thank you, George. This completes our formal presentation, and we open the call to questions.

(Operator Instructions) I will take our first question from Omar Nokta with Jefferies.

Thanks for the thorough overview of the company in the different markets. You're obviously now close to completing the whole reorganization of the Navios Group's shipping assets here under this one umbrella. It's been, I guess, maybe 2 years in the making, but I'm sure from your side, it's been going on a bit longer.

But I wanted to ask now that you've gotten to this point with NMM, does this now kind of change how you think about strategy in the near term? And what I mean by that is there anything that you've been waiting to do that you can now do now that you finally rolled everything up into NMM?

I think that you have seen that in the last couple of years, we have done a lot of work. We changed -- we created a diversified portfolio. And basically, that gave us the ability. What we did is in the last transaction is basically do a rebalance of our portfolio. We have about -- and I think Stratos gave you a lot of the information there. We have about $6.5 billion in assets. And basically, the last acquisition was opportunistic, and we actually rebalanced the portfolio, bringing the container below 50% and increasing the dry bulk to about -- or a little bit over 30% and with tankers being about 23%.

So this is basically a rebalancing. As an asset portfolio of $6.5 billion, yes, we are in a good size, and we find that this is a company that we see that the portfolio makes sense. Now you may have some time to buy time. We may rebalance the different sectors on that aspect or we may renew our fleet. But basically, we have the size we like. By the way, I want to say congratulations on the new job.

Angeliki. Yes. So obviously, you guys have been very busy, you've done a lot. And I guess the -- you've been very active across all the sectors. You've now announced a $100 million buyback, which obviously, I think, will be well received.

How do you think about that utilizing it to the extent you can give some color. Given as you show in the slide deck, there is a pretty compelling equity value story. Do you see yourselves putting that buyback to work fairly quickly?

I would say something about investing in Navios is about total return. So this is number one. And performance is a driver to your stock price. And you have seen a solid result, solid quarter, solid and great 6 months. We have $6.62 net income per share. And we are working on our stock price to NAV (inaudible).

One thing that I want to tell you on NAV, and that is something that we have been working to articulate and Stratos, I think, did a good job is that we are trying to create a more durable NAV. Basically -- and you will see that even though the values of the containers went down this year, and they represent over 50% of our asset values because of the strength of the tankers and a lesser degree, the dry bulk, we were able to actually increase our NAV. So basically, we like to look, total return, drive the stock price with our result and also create this durable NAV, which will give you better visibility. And basically, the buyback is a tool to achieve that and achieve this discrepancy, and we use it as a tool.

Got it. And then one -- just one final follow-up, just on the transaction, the $835 million acquisition price, you have the $441 million of liabilities and the rest is cash at $394 million. Is there -- how do you intend to spend that $394 million. Do you have a facility that you're looking to -- is there a facility that you put together that you can draw on? Do you have that excess cash? Are you looking to sell ships to get that amount of capital? Just wondering where do you come up with that $394 million?

Basically, Stratos will take you through details, but it's cash in our balance sheet. I want to remind you that we have shown the container vessels at an attractive part. We took that money out -- and we react -- reusing, reinvesting this amount, and this is part of the diversification, we're using this amount as the cash in our balance sheet to buy the vessels, the dry bulk fleet.

And one thing I like before I give it to Stratos, is this is about this acquisition, it was totally opportunistic. We acquired 36 vessel dry bulk, which is basically quality vessels, excellent vessels that we knew at the weak point in the market, on the dry bulk market. We could afford this because of our diversified platform. Don't forget that containers provide this visibility of cash flows. Tankers are stronger and they are coming back.

And basically, on the dry bulk, there are scenarios where it's simple. China, the 50% commodity buyer because of the Zero COVID policies have locked down, isolations for the first half with a peak in the second quarter. This continues in the third quarter, but we see that after the national congress, we believe that China will come back stronger in the growth. In the transportation of the commodities. So this gives you a little bit why we did it, and I think Stratos will tell you more.

Omar, I think, Angeliki more or less covered the funding. Actually, if you see our balance sheet, we already have around $175 million of cash at the end of the quarter. And we also sold the 2 containership vessels that we are expecting $220 million, but this is the sale price. And also, you will have the cash generation during the quarter, which is, again, as we have seen in the last couple of quarters, it's a very strong cash generation that we expect. So the fact the cash is there, and we expect that everything will be funded through our internal cash generation.

Okay. Great. That's helpful. Yes, that $220 million is obviously substantial, not bad for 2 ships to use that to help bring in those 36 dry bulkers. Great. Well, I appreciate the color here. And congrats on getting Navios to this point.

Thank you. And that does conclude our question-and-answer session. I will turn it back over to the presenters for any additional or closing remarks.

Thank you. This completes our second quarter earnings.

Thank you. That does conclude today's presentation. We thank you for your participation, and you may disconnect at any time.