Octave Specialty Group Inc (OSG) 2017 Q3 法說會逐字稿

Good day, and welcome to the Overseas Shipholding Group Third Quarter 2017 Earnings Conference Call and Webcast. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference call over to Mr. Sam Norton, President and CEO of OSG. Mr. Norton, the floor is yours, sir.

Thank you, Mike. Good morning, everyone, and thank you all for joining Dick Trueblood and me for our 2017 third quarter earnings call. We welcome the opportunity to provide added depth and perspective to our written public disclosures and appreciate you taking time to listening on this call. Also joining on the call is [Molly Garcia], our Controller. Prior to beginning our review of the past quarter, I would like to direct everyone to the narrative on Pages 1 and 2 of the PowerPoint presentation available on our website regarding forward-looking statements, estimates and other information, which may be provided during the course of this call. The contents of this narrative are an important part of this presentation, and I urge everyone to read and consider them carefully.

We will be offering you more than just the historical perspective on OSG today, and our presentation includes forward-looking statements, including statements about future results. These statements are subject to uncertainties and risks. Actual results may differ materially from projections and could be affected by a variety of risk factors, including factors beyond our control.

For a discussion of these factors, we refer you specifically to our annual report on Form 10-K for the fiscal year ended December 31, 2016; our Form 10-Q for the first, second and third quarters of 2017; and our other filings with the SEC, which are available at the SEC's Internet site, www.sec.gov as well as our own website, www.osg.com. Forward-looking statements in this presentation speak only as of the date of these materials, and we assume no obligation to update forward-looking statements or the reasons why actual results could differ.

In addition, our presentation today includes certain non-GAAP financial measures, which we define and reconcile to GAAP in our filings with the SEC.

Please turn to Slide 4. As highlighted in our press release this morning, the progressive and anticipated transition of our vessel assets away from legacy time-charter contracts to what is today an oversupplied spot market continues to negatively impact short-term financial results. Weighing positively against this notable cyclical decline in revenues was a consistently strong contribution of our 3 differentiated niche operations, which we believe collectively provide us with a solid foundation upon which to transition through the cyclical downturn in our more conventional tanker and ATB markets.

Time charter equivalent earnings for the third quarter of 2017 declined sequentially from the second quarter by $6.2 million and nearly 23% from the comparable period in 2016, as more of our vessels competed in the challenging spot market.

Considerations about the appropriate amount of capacity to remain active in the spot market are a regular management discussion point. As the data suggests, we are more exposed currently to the spot market than any of our competitors. Balancing supply availability in an uncertain demand environment is a persistent challenge, but one that we have chosen consciously to accept. Tactically, we believe that OSG has both the necessary liquidity and the appropriate asset mix to accept this exposure. Fundamentally, we consider the cost of acquiring short-term cash flow visibility by committing vessels at sustained loss-making rates has been too high, when measured against what we believe will be an asymmetrical potential upside of being positioned to benefit from the recovery in rates.

At the end of September, 5 of our 9 conventional tankers are either trading in the spot market or fixed on short-term charters, which reflect the current spot market rates. One additional tanker has recently been fixed for a 2-year charter at current rates. A further ATB has been taken out of service since the end of the quarter, leaving 6 ATB units in operation. All but one of the remaining ATBs are now trading in the spot market or are on short-time charters reflecting current spot rates.

Broker reports indicate that a total of 36 spot fixtures with Jones Act tank vessels in excess of 150,000 barrels were concluded during the third quarter. 16 crude oil movements and 20 fixtures to transport refined products. OSG vessels covered 21 of those voyages or 58% of the total. In addition, our business was impacted by the 14-day Jones Act labor period that was in place from September 8 to September 22 in response to perceived needs arising out of hurricanes Harvey and Irma. It was reported that as many as 8 foreign-flagged vessels were fixed to move clean product within the United States during the labor period. Although we initially witnessed the firming of spot rates in the wake of these 2 storms, it is reasonable to conclude that foreign vessels fixed under the Jones Act labor took away cargoes that might have otherwise been fixed on some of our vessels.

The hurricanes also caused delays in performing voyages that had been booked prior to the storms, which, in many cases, the cost of these delays being borne by our vessels under the contractual terms agreed. Our assessment is that, notwithstanding the short-term pop in rates, the net impact of the 2 main storms was to have reduced our revenue by approximately $3 million during the quarter.

Attaining the stability of cash flow offered by time charters remains a fundamental objective of our chartering approach. We consider the normalized market in which our vessels trade to be one that should be characterized by stable, longer-term chartering relationships with our customer base.

At this time, however, a surplus of available capacity is rewarding charters with low rates, making medium-term charters unattractive or simply unavailable. We see this as a transitional condition. We expect that a rebalance of supply will occur over the coming quarters, as heightening age restrictions imposed by our core customer base progressively limit the acceptability for use in service of vessels exceeding 20 years of age. Further, we continue to view the prospect for increasing demand for domestic crude oil transportation as an important swing factor in determining the extent and timing of restoring a healthy balance between available vessel supply and overall transportation demand.

We are making material progress in our ongoing efforts to be more efficient with general and administrative costs as well as in our efforts to streamline some of our vessel operating costs. The results of these efforts continue to stand out in defining our bottom line results.

General and administrative costs for the quarter were $6.5 million, a $3.75 million improvement over spend levels during the comparable period in 2016. Over the first 9 months of 2017, we have achieved a $13.5 million reduction in general and administrative expenses as compared with 2016, a 39% year-on-year improvement. We've accomplished much in rightsizing our administrative cost structure and believe that we have largely succeeded in realizing a steady-state run rate that is appropriate for the current scale of our business.

Complementing our approach to cost discipline, we want to continue to highlight our 3 differentiated niche operations in our lightering, shuttle tanker and MSP services. We are confident that these niche assets will play an important continuing role in the future development of our business by providing stability, as we transition through cyclical downturn in our more conventional tanker and ATB markets. We have provided additional disclosure this quarter to assist you in understanding the importance of these niche businesses in giving us the confidence to accept heightened volatility in our conventional tanker and ATB markets.

Please turn to Slide 5. As can be seen in the tables provided in Slide 5, our niche market activities provided $26.7 million of vessel operating contribution during the third quarter and $79.5 million for the 9 months ended September 30. OSG is the only provider of Shuttle Act -- of Jones Act shuttle tankers in the U.S. Gulf today. Shuttle tankers operating in the U.S. Gulf Coast are purpose-built assets providing a critical logistics function in the value chain of offshore production units which they reliably serve. The continued high-level operational performance of these assets underscores OSG's commitment in providing safe and environmentally responsible services to our customers.

Our lightering vessels operating in the Delaware Bay handled seasonally consistent volumes that continued to provide steady and profitable business for OSG. Lightering volumes averaged 160,000 barrels per day in the third quarter. Time charter equivalent returns for each of our 2 lightering vessels were just under $60,000 per day during the quarter. While a drop from what we achieved during the first half of the year, 9-month charter average for each of these 2 vessels was still a very strong $67,998 per day, a 3% improvement over comparable 2016 levels.

Finally, our 2 tankers operating in the Maritime Security Program dampened the effect of market volatility in other areas of our business, providing over 20% of overall vessel operating contribution during the quarter. The combined impact of the stabilizing effect of our niche businesses that are focused on attaining available cost efficiencies allow us to report adjusted EBITDA on the quarter of $22.6 million and TCE revenues of $84.8 million.

As has been the case in recent quarters, we utilized some of our cash to accelerate the payment of $18.5 million in the principal amount of outstanding debt, while sustaining cash levels are just under $200 million of unrestricted cash at quarter-end.

In addition, we continue to have $75 million of undrawn liquidity available under our existing revolver facility.

Please turn to Slide 6. As of September 30, 2017, we own or operated an active fleet of 22 vessels. Our active fleet includes tankers and articulated tug barges, of which 20 operate under the Jones Act and 2 operate internationally in the U.S. Maritime Security Program. The company's revenues are highly sensitive to patterns of supply and demand. In the core Jones Act trades within which the majority of our vessels operate, demand factors for transportation have historically been affected almost exclusively by supply and distribution decisions of oil producers, refiners and distributors based in the United States. The rise and subsequent fall in demand for domestic crude oil transportation has in recent years added a new dimension to understanding traditional Jones Act trades. As noted in previous quarterly communications, the demand for transportation of domestically produced crude oil is today an important swing factor in determining the balance between available vessel supply and overall transportation demand.

We continue to believe that there exists latent demand for return of some of the crude transportation demand that has disappeared over the past 21 months. A revival of coast-wise demand for transport of crude oil in United States would be a favorable development for our business and bears watching. Key to understanding this potential demand catalyst is the relative price differentials of U.S.-produced crude oil as compared with internationally sourced crudes, including the cost of transportation on International Flag vessels from foreign markets. We consider latent catalyst demand-side surprise as supportive of our view to stay the course on maintaining our spot vessels with short employment duration. Expectations are that an increased supply of shale wall available in the U.S. Gulf into the future should sustain and perhaps even result in the widening of WTI-Brent spreads from current levels. A byproduct of a widening price spread would be to make crude oil available at U.S. Gulf Coast marine terminals a cost-effective option for East Coast refiners. As an example, a round voyage from Texas to Philadelphia takes approximately 14 days on a tanker. Any movement in crude oil sourcing decisions favoring Gulf Coast supply over competing international crudes would thus result in a meaningful increase in ton-mile demand for Jones Act tankships and a sizable draw on available Jones Act capacity. Favorable spot rate developments in the short term could be expected if this were to occur.

I will now turn the call over to Dick to provide additional details on our second quarter and year-to-date results. Dick?

Thanks, Sam. Good morning. Let's move directly to reviewing the third quarter 2017 results in more detail.

Please turn to Slide 8. TCE revenues for the third quarter totaled $84.9 million, a decrease of $24.8 million or 22.6% compared with the third quarter of 2016. During the quarter, we continued to see an increase in the number of our Jones Act tankers and rebuilt ATBs trading in the spot market. Currently, we have 10 vessels, 5 tankers and 5 refilled ATBs effectively trading in the spot market. This represents an increase of 9 vessels from the same period last year. We expect that this trend will continue.

The revenue decline was driven by lower daily rates earned as we experienced the continuous shift with greater proportion of spot market activity for our Jones Act tankers and Jones Act rebuilt ATBs, coupled with the weather-related disruptions that occurred during the quarter. We earned lower daily rates on the spot market than we have historically realized on long-term charters. Lower daily rates accounted for $21.4 million of the decrease in Q3 2017 TCE revenues. More than half of the Q3 2017 TCE revenue decrease was attributable to our rebuilt ATBs. TCE revenue for ATBs declined by $13.4 million year-over-year. The daily TCE rate for ATBs this quarter was $17,848 compared to $33,876 in third quarter of 2016.

The remainder of the TCE revenue decline is attributable to our Jones Act tankers. The number of revenue days on long-term charter decreased 26% from the third quarter of 2016, resulting in an 18% decline in the daily TCE rate for tankers. TCE revenues were $278.3 million for the 9 months ended September 30, 2017. This represents 17.3% decline from the same period in 2016.

Moving to Slide 9. Third quarter 2017 adjusted EBITDA was $22.6 million, down 43% from $39.6 million in Q3 of 2016. These decreases were driven primarily by the decline in TCE revenue, as previously discussed, partially offset by a $3.7 million reduction in G&A expense in the current period.

As Sam has previously discussed, we continue our strong focus on reducing general and administrative costs as well as our other operating costs. Some of this decrease resulted from the emergence from bankruptcy and from completing the spinoff of INSW, both of which reduced legal and other professional fees compared to last year. However, there have been real cost reductions in other areas of overhead, including compensation, consulting, rent and insurance expenses, and all of these have added to our bottom line.

We experienced adjusted EBITDA margin compression during the quarter, as our margin was 26.6% of TCE this quarter compared to 36.1% for Q3 2016.

For the 9 months ended September 30, 2017, adjusted EBITDA was $88.3 million or 31.7% of TCE compared to $126.3 million or 37.5% of TCE for the 9 months ended September 30, 2016. The vessel-operating contribution, TCE revenues minus operating expenses minus charter hire expenses for our niche businesses in Delaware Bay lightering, Gulf shuttle tankers and MSP tankers, was $26.7 million in the third quarter of 2017, an increase of 5% from the same quarter in 2016. Niche business year-to-date contribution increased 3.7% to $79.5 million from the like period in 2016. These businesses provided a stable base for OSG, as we continued to work our way through the industry's current difficult business cycle.

The vessel-operating contribution from our Jones Act conventional tankers and rebuilt ATBs declined from $24.3 million in the third quarter of 2016 to $2 million during the third quarter of 2017. Increased spot market exposure and weather disruptions drove this decrease.

Our business is characterized by a high degree of fixed vessel operating expenses, and thus vessel financial performance is highly impacted by changes in revenues.

If we turn to Slide 10. The loss from continuing operations for the third quarter was $6.3 million compared to a loss from continuing operations of $52.9 million for the third quarter of 2016. During the quarter, we made the decision to dispose of 1 of our rebuilt ATBs. We considered the future operating revenue generating capabilities of this vessel in light of current market conditions and necessary expenditures required to be able to continue to create this ATB. As a result, we recognized a $7.4 million loss.

Additionally, the current period saw a decreased depreciation expense on vessels and reduced interest expense on lower outstanding principal balances. In addition, the tax benefit in the current period was lower relevant to last year, mainly resulting from recording a deferred tax liability in the third quarter of 2016 on the unremitted earnings of International Seaways.

Net loss for the current year also was $6.3 million compared to a net loss of $98.7 million for the third quarter of 2016. The prior period included a net loss from INSW of $45.9 million which is accounted for as discontinued operations.

Please turn to Slide 11. Moving from left to right on the chart, we ended the second quarter of 2017 with total cash of $210.5 million, which included $5.9 million of restricted cash. During Q3, we earned $22.6 million of adjusted EBITDA from continuing operations. We spent $1.5 million on drydocking and improvements to our vessels. Cash interest paid during the current quarter on the term loan and the notes equaled $9,500,000.

During Q3, we repurchased and retired $18.5 million of the 8 1/8% 2018 bonds. As a result of these changes, we ended the quarter with $203.6 million of total cash, including $3.9 million of restricted cash.

Please turn to Slide 12. Continuing our discussion of cash and liquidity, as we mentioned on the previous slide, we have $203.6 million of cash at September 30, 2017, including the $3.9 million of restricted cash. Our total debt is $500 million, consisting of $455 million of the term loan and $45 million of bonds. We also have a $75 million revolver which is presently undrawn. Combining our revolver with total cash, we had $279 million of liquidity at September 30, 2017.

In order to maintain access to our revolving credit facility, we will defease the 8 1/8% bonds, having a current balance of $44 million by December 29, 2017 prior to their state of maturity in March 2018. Our $455 million term loan matures in August 2019. We're currently assessing alternatives to address this future maturity. With $259.3 million of equity, our net debt-to-equity ratio is 1.2x. Our total net leverage at September 30, 2017 was 2x our trailing 12-month adjusted EBITDA. We are not subject to any mandatory amortization on our term loan, and we don't expect we have to make any required payments under the law in 2017.

We estimate that we will make a $28 million payment on the term loan in 2018, due to the excess cash flow sweep provisions.

This concludes my comments on the financial statements. I'd now like to turn the call back to Sam for his closing remarks.

Thank you, Dick. Please turn to the final slide of the presentation, Slide 13. We continue to experience a condition of oversupply in our conventional tanker and ATB markets. But our niche market businesses help provide a solid platform to accept the consequences of volatility and reduced earnings visibility.

We believe we have a diversified portfolio of assets that will allow us to manage through the current market cycle. And we are keeping a close eye on the variables that could result in an unanticipated but favorable changes in base-load demand for our conventional tankers. Developments in this respect could accelerate resolution of the current excess of supply.

Generally, we consider the market in real terms to be tighter than what it appears on a static analysis, as was illustrated by the sharp market moves experienced during this past hurricane season. Restoration of sustainable spot and longer-term charter rates for Jones Act vessels could well arrive sooner than current consensus thinking. A development which, were it to occur, would have important implications on the value proposition embedded in OSG's business model.

We believe we are well positioned to respond to developing market trends and to build on the company's strengths, address future growth opportunities and drive shareholder value.

We will now open the call up to questions. Operator?

(Operator Instructions) The first question we have will come from Sean Kelley of OFS Management.

On the ATB, which one did you dispose of? And when you say dispose of, did you scrap it or sell it to a competitor? And how much cash did that generate? And is that a value that you view to be similar to the rest of the fleet? Or is this -- can you give some characteristics of this vessel? Is it older or why it was chosen to be disposed of?

The vessel -- the unit in question is the OSG 252 and the tug that's associated with it is the Navigator. This vessel is due for an intermediate survey in this month, actually. And it was our assessment that investing the capital to take the vessel through the intermediate survey was not a remunerative investment and then that we would rather substitute in other vessels that we have that have more favorable survey positions in order to maximize cash flows in what we consider to be end-of-life assets as we move forward. We have characterized the decision that we take as we're moving the vessel from service, and we are currently evaluating the best options as to how to maximize cash recovery on that asset. We will not sell the asset to a competitor. I can affirmatively state that whatever we do, this asset will be removed from trading in the Jones Act petroleum trades, and so will result in a net decrease in supply.

Sure. Okay. So it actually has -- no cash has been exchanged for this vessel you still hold it as of today?

As of today. That's correct.

Okay. And do you have an estimate of what it would garner if you scrapped it today?

I think we're evaluating the options on that front. I'd rather leave that for explicit disclosure for when we realize that cash.

Sure. Okay. One follow-up question, the spread between WTI and Brent has been widening on average over the last couple of months. How much wider do you need to see that get for our volumes to meaningfully be restored in your Jones Act?

I've tried to point out on previous calls that there are multiple variables that are involved. And the WTI-Brent spread is, clearly, a key indicator to look at. But just to try and highlight the complexity of this arbitrage -- even though the WTI-Brent spread is widened, the WTI, which is price in Cushing versus WTI Houston has also widened. In the early part of the summer, the spread between WTI Cushing and WTI Houston was probably $1.65, which represented effectively the transport cost by pipeline from Cushing to Houston. That's widened out to almost $5 a barrel today. That's partially a consequence of disruption in pipeline capacity that was occasioned by the hurricane. But it is also a function of increase in production especially in the Permian Basin, which is creating an oversupply of oil that [looks seeking out but] through the pipelines of the Houston. There has also been a sharp increase in exports out of the Gulf Coast export terminals as a result of the widening spreads. It is our -- notwithstanding all of that, it is our current assessment that the arbitrage between what's called Texas and Philadelphia should be open. And we're starting to see indications of movements of crude oil up the cost. We think that the timing of crude cycles, in terms of purchasing cycles for the refineries as well as disruptive events that have also played a factor. For example, during the hurricanes, because of the fact that the outlet for crude oil in the Gulf of Mexico effectively shut down, there was a revival of crude by rail transportation that came out of North Dakota into the East Coast, something that we had expected would have been shut down permanently. But because the crude had no outlet other than the -- [to see the] outlet by rail, that trade revived for a short period of time. That probably took away from some of the potential crude movements that might have occurred during the September, October period. But we still think that, that's a trend that bears are watching and we think that the pricing dynamics are favorable to the developments that we've suggested we think will occur.

Next, we have Steve Sylvester with Alcentra.

Just as a reference point, what were ATB rates on average in Q2? Just looking at sort of sequential comparison. And then on that point, are you seeing further deterioration in Q4 from a rate perspective?

The -- are you referring to the blended rates of the two...

You provided 17.84 on ATBs in Q3. So I'm just wondering what that was in Q2.

Q2, we have to get back to you on that. I don't have the number in front of me. I can tell you that for the ATBs, the fixed earnings during the second quarter were $26,000 a day on 488 days; and for the spot, it was $7,000 per day on 200 -- 2 days of effective trading. And then in the third quarter comparable numbers, $25,000 on the spot -- excuse me, on the fixed earnings, $25,331 on 355 days and $8,360 on 280 days. So we have to increase the number of days of spot availability, a significant drop in the fixed number of days and a slight drop in the rate on the fixed days on the average. So the trend is clear. We have a declining contribution from the ATBs. And directionally, we think that trend will continue.

Okay, helpful. Thanks. And then just from other potential expenses, drydocking, in particular, surveys in Q4 that we should know about? I don't think there are.

There are, to my knowledge, no scheduled drydockings in Q4.

Okay. And are there, I guess, looking into Q1, on your ATB fleet, further events that may motivate you to take more capacity out? What's the next trigger?

I think that we -- no. I'll repeat, what I said earlier in my comments is that, the amount of spot capacity to retain available in the market is a question of regular management consideration. The variables change from day-to-day. We are seeing more demands for crude transportation. So far that's manifested itself in cross Gulf movements as opposed up coast to the east coast. There have been -- there has been, in the prior quarter, an incident on an older vessel, not belonging to us, an ATB, which had an explosion which took that vessel out of service. And we think probably brings into question the acceptance for use and service of 4 of the sister ATBs. That's something that we are watching. Generally speaking, the litmus test that we use is to make an assessment as to whether or not we think in the medium term, and I would say medium term defined here as the next 3 months, do we feel that the ATB in question is going to contribute positively to cash flow? And as I said before, that's 2 things: what is the effective rate that the ATBs would be earning and what is the utilization factor that we can apply to that rate in determining what the net cash flow would be. And if we feel that, that number is negative, that we are unable to generate a positive cash flow, taking into consideration as well, as was the case in the recent case of the 252 Navigator, capital expenditures that are imminent then we will remove the asset from the market for trade. And a decision to remove the asset from the market for trade, to my mind, is a permanent decision with respect to participation in the crude and product transportation markets in United States. We do continue to consider alternative uses for these assets. As I've said in the past, these are projects with long lead and long development. So I would not expect all of our ATBs in any circumstance to be re-purposed into other uses outside of the Jones Act trades. But I do think there is scope for a handful of projects that could allow us to realize values that would be higher than the straight scrapped values of these vessels.

Just in terms of the unsecured notes. How do you expect to redeem those? Do you have to do it out of premium? Or would you -- obviously, it's before maturity, so there has to be some incentive, I would assume.

I mean, they will be redeemed basically at par plus. We'll pay interest through the actual contractual maturity date.

Okay. Will you do that all-at-one tender event? Or how do you...

Yes. So we'll defease it, and we'll put deposit sufficient cash to cover the actual principal balance plus that interest to be earned by the bondholders over the, call it, 3 months due to their contractual maturity. So the cash impact will be about the same over time. It will be a little bit sooner.

Got you. And just the last question, kind of larger picture, would be the recent waiver, the Jones trade for purposes of the hurricane. There was obviously more rumblings about the longer-term impact on the Jones Act trade in particular. Any thoughts on -- if that has any lags in terms of making changes to that?

We are not political experts. So take our views for what they're worth. It's my belief that the opponents to the Jones Act are ideological and vocal but politically weak. Whereas, the supporters of the Jones Act are multiple in number and politically strong. And that anything can happen in the world of politics, but the way that the political numbers stack up right now, it's inconceivable in my mind that you would see any sustained change in the Jones Act. It is a process that requires active communication in Washington and OSG participates in an industry group of the American Maritime Partnership, which engages in that communication. And it's one that has, I believe, succeeded marginally in the last several months in the face of the hurricanes, and particularly in Puerto Rico, getting out the message that it's not really the maritime transportation leg that was impeding progress in Puerto Rico, it was lack of infrastructure on the ground and other localized factors that were really the more material factors in addressing relief in Puerto Rico even to this day. So I think that message was ultimately communicated quite well. But as I said the ideological opponents to the Jones Act, who believe in free trade and other things that are part of their agenda, they are very welcome. And so the volume of their activity tends to outweigh their actual political power in my view.

Next we have Phoebe Clarke of Redwood Capital.

Just a question on the lightering numbers. I noticed they were down sequentially. Is that just seasonality? Or if there hasn't been any change in utilization of rates? That's it.

There's 2 things that play here. One is seasonal. We -- there was definitely seasonality in the volumes. They tend to drop off in the summer and pick up again during the winter. That has to do with a number of factors, not the least of which is calmer weather during the summer allows some offshore lightering to be done by non-Jones Act vessels, and we did see some of that in the third quarter and the second quarter. But the principal drop was just a shift in the makeup of the barrels that we were lifting. We have different price structures with different customers. And the way the volumes worked out, the customer that has the most favorable pricing structure did, by far and away the most volume during the quarter. So that just was a -- I would say, that's as much as scheduling issue as anything else.

Well, at this time, I'm showing no further questions. We'll then conclude our question-and-answer session. I would now like to turn the conference call back over to Mr. Sam Norton for any closing remarks. Sir?

So thank you, Mike. And again, we appreciate the opportunity to share with you a little bit more color on our business, and look forward to communicating with you further in the future. And I think if there is no further questions, we'll draw this call to a close, Mike.

All right. Thank you, sir, and to the rest of management team or Mr. Trueblood for your time also today. The conference call has now concluded. At this time, you may disconnect your lines, everyone. Thank you, again. Take care, and have a great day.