Precision Drilling Corp (PDS) 2007 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the Precision Drilling Trust fourth quarter 2007 earnings conference call and webcast.

I would now like to turn the meeting over to Mr. Kevin Neveu, Chief Executive Officer. Please go ahead, sir.

Good afternoon, and welcome to our special Valentine's Day call today. Joining me today is Doug Strong, our Chief Financial Officer; and Gene Stahl, the Chief Operating Officer for Precision Drilling. I'd like to ask Doug to begin and recap our Fourth Quarter financial review. Doug?

Thanks, Kevin. On that note, happy Valentine's Day to everyone. Ladies and gentlemen, through a news release this morning Precision Drilling Trust is pleased to report its financial results for the fourth quarter and year-ended December 31, 2007. The news release included the unaudited consolidated financial statements, business segment information, and Canadian drilling statistics compiled by Precision. Please note that the financial figures are stated in Canadian dollars unless stated otherwise.

We remind our audience that today's comments may include forward-looking information and statements reflecting Precision's views about events and their potential impact on our performance and capital structure. Including oil and natural gas commodity prices, weather trends, growth initiatives, demand trends, estimated capital expenditure levels and timing, projected equipment utilization, customer pricing, operating expense levels, earnings, cash flow, and cash distribution policy of Precision Drilling Trust, and tax legislation and policy announcements by the governments of Canada. These expectations involve risks and uncertainties that could impact Precision's operations and financial results, and cause actual results to differ from such forward-looking statements and information. In addition, some of today's comments may refer to non-GAAP measures such as operating earnings and we refer our listeners to disclosures in the news release issued this morning. The December 31, 2007 audited financial statements complete with notes and management's discussion and analysis will be filed with regulators and made available on sedar.com by the end of March 2008. We encourage investors to examine Precision's annual and quarterly filings including the MD&A annual information form and information circular.

This morning, Precision Drilling Trust reported net earnings of C$89 million or C$0.71 per diluted unit for its fourth quarter of 2007 compared with C$127 million or C$1.01 per diluted unit for Q4 2006, a reduction of 30%. Included in 2007 results are three items that contributed a net C$12 million or C$0.10 per diluted unit to net earnings, as feature income tax recoveries were partially offset by charges for personnel reductions and decommissioned assets. Therefore, Q4 2007 net earnings before these items was C$0.61 per unit. For the year-ended December 31, 2007, Precision reported net earnings of C$346 million or C$2.75 per diluted unit compared with C$580 million or C$4.62 per diluted unit for the prior year, a reduction of 40%. Included in last year's net earnings was a future income tax recovery of C$21 million or C$0.17 per diluted unit.

Operating earnings margin as a percentage of revenue was 31% in the quarter and 35% in 2007. The Q4 margin was reduced by C$12 million for expense associated with asset and personnel charges as mentioned earlier and this equates to 5% of revenue in the 2007 fourth quarter, for an adjusted margin of 36%. Sequentially, the adjusted operating earnings margin of 36% in the quarter is 4 percentage points higher than third quarter of 2007 due to factors that include Canadian winterization revenue streams for boiler use and high margin contribution from Precision's growing presence in the United States land drilling market.

In the quarter, Canadian rig activity was close to third quarter 2007 levels and our United States drilling rig operation grew operating days by 53% to 818, with utilization greater than 95%. Demand for high performing rigs and less weather interruptions continued to drive Precision's success in the United States. In terms of customer pricing in the quarter, Canadian drilling rig dayrates essentially held at third quarter average levels once winterization revenues were removed. United States drilling rig dayrates continued at contracted rates in the quarter for an average higher than the Canadian market. We will stay away from absolute day rate numbers in the United States until such time as Precision has a large fleet and diversified client base. It's happening and the time is not that far off.

Hourly pricing for Precision's service rig fleet in Canada in the quarter increased by 2% over last quarter, Q3 2007. However, with winterization removed, the average hourly rate declined for the first time in many years. Completion work to tie in wells has declined to match the drilling cycle and demand for natural gas well production workovers has diminished. Activity and pricing in the quarter for Precision's Canadian service lines is lower than the fourth quarter of last year, consistent with the theme for 2007 in the Canadian oil field service sector. For drilling rigs and Canada, the average day rate of C$18,554 was 12% lower. Precision's marketing team did a nice job holding Q3 dayrates for the '07 to '08 winter drilling season in Canada. For Precision service rig fleet in Canada in the quarter, hourly pricing of C$694 was 10% lower than Q4 2006. As we indicated in our third quarter 2007 materials, service rig pricing began to decline midway through 2007 as the lag in service rig completion work was brought in line with lower drilling activity in Canada. Natural gas price weakness for Canadian producers impacted demand for natural gas well workovers.

General and administrative expenses decreased by 17% over the fourth quarter of 2006, as the cost benefits of reduced infrastructure were realized for half the quarter and lower long term incentive costs were greater than lump sum charges incurred with expense reductions. Kevin will speak to these expense reductions in a moment.

Below the operating line for the quarter, net interest expense in the amount of C$1.7 million remains low and in line with the prior year, due to low debt levels. In terms of Precision's financial position, the balance sheet remains strong. At December 31, 2007, the long term debt to long term debt plus equity ratio was 0.08 compared to 0.10 last year-end. In 2007, long term debt declined by C$21 million to a balance of C$120 million at year end. Working capital continued to exceed long term debt. Working capital at December 31, 2007 was C$141 million, a reduction of C$26 million over last year. From a financing perspective, Precision continues to borrow through its operating line of C$50 million and C$700 million bank loan facility.

Turning to the statement of cash flow for 2007, operations generated cash inflows of C$484 million during the year. The cash was used for, the cash used for investment was C$191 million, with C$141 million of this going towards new rig construction, other initiatives, but in particular, for the expansion of Precision's Super Rig series. Cash was used for financing, cash used for financing was C$293 million, with C$44 million used to reduce debt levels, and C$249 million paid in distributions to unit holders for about C$2 per unit.

Precision Drilling converted to an income trust on November 7, 2005, and through fiscal 2007, has generated a distribution history for 26 months. During the past two years the trust declared cash distributions of C$694 million or C$5.52 per unit. In the fourth quarter of 2007, Precision declared cash distributions of C$69 million or C$0.55 per unit based on a monthly rate of C$0.13 and the year-end special cash distribution of C$0.16. Precision's 2008 capital expenditure program was announced in December for C$370 million. This amount is comprised of C$295 million for expansion capital and C$75 million for upgrade of existing assets and infrastructure. The capital, the expansion capital is earmarked for the completion of four rigs from the 2007 rig build program and sets in place the 2008 rig build program to construct 19 new Super Series rigs. Kevin will expand on announced customer arrangements and rig movements.

At December 31, 2007, Precision's drilling rig fleet stood at 232 in Canada, 12 in the United States, and one in Latin America, for a total fleet of 245. For 2008, we have four rigs from the 2007 program to finish and 19 new drilling rigs in the '08 program for an additional 23. During 2007, Precision commissioned 16 new super series drilling rigs.

In closing, for those listeners that the are new to Precision and the Canadian oil field service industry, we would emphasize that Precision's activity is seasonal and highly dependent on oil and natural gas commodity price levels. Once again, we recommend that listeners read Precision's regulatory filings. We remind our audience that the government of Canada passed into legislation certain tax laws during June 2007 that were initially announced or proposed last October -- the previous October 31, 2006. Generally, the tax on distribution implications take effect on January 1, 2011, provided Precision complies with growth guidelines. Our trustees, directors, and management continue to monitor the situation carefully, in terms of value maximization for unit holders. Kevin, that concludes our Q4 financial overview.

Thank you, Doug. As Doug began, we are very pleased with our Q4 financial results, but I want to spend a moment talking about some of the non-financial results which we're even more excited about. 2007 has been a very tough year for all Canadian oil service providers. Demand for our services have been down, utilizations are up, the commodity prices and exchange rate and royalty issues have all been negative drivers for this business. Keeping our organization focused on high performance service operations and well motivated has been a real challenge environment.

I'm especially proud of the hard work and dedication of all of the people at Precision from our service rig crews in northern British Columbia working through a particularly cold winter to the drilling crew we just deployed to Latin America, our people have continued an intense focus on cost and safety, all while continuing to build on our reputation as a high performance service provider. 2007 saw Precision's people successfully improve our safety and performance records, and once again, we are leading the CAODC as one of the best safety records among all Canadian service providers. Doug and I certainly appreciate this effort. Our Board is very proud of these results, and most importantly, our customers clearly recognize Precision for the outstanding performance of our people.

Let me recap on some of our Q4 accomplishments. First off, in the U.S, we deployed three additional rigs and have since the end of the year added two more rigs from Canada and signed long term contracts with three additional newbuild high performance drilling rigs, which will come out of our 19 rig capital plan. I'll come back to those in a few minutes. Early January, we opened our Houston office and we promoted one of our Canadian operations managers to Vice President, Operations USA. He will be focused on ensuring we continue to aggressively grow our U.S. presence and drive our high performance operating level.

During November, we completed our organizational restructure. We reduced fixed expenses approximately 15%. We eliminated a senior level of management, we reduced corporate leased office space by 25%, we specifically aligned our operations support groups with the reduced domestic business levels. We believe these reductions very nicely position Precision Drilling for the ongoing competitive market in Canada. During the first few days of 2008, we delivered our first rig to Latin America, and we're currently looking at several other opportunities not prohibited by the non-compete provisions of our 2005 sale of the international drilling and technology businesses. This particular contract is a one rig contract which includes adequate financial provisions to support the full operating burden of running a rig at a remote region. I'd also point out that Canadian drillers and in general and Precision Drilling specifically have excellent experience in systems to deal with remote operations, and we don't see a one rig operation in Latin America as an operational barrier.

Doug has talked about our 19 planned new rigs as part of our 2008 capital plans. Let me go through some additional color on our expectations for U.S. growth and international growth. As mentioned earlier, our booking rate for early 2008 is exceeding our expectations. I mentioned the three newbuild rigs contracted to a single customer. This contract is notable for several reasons. First off, as a multiple rig booking, it signals customer acknowledgement of our success as a high performance driller. Secondly, this is a new rig contract in the increasingly competitive U.S. market, with several hundred idle rigs. And lastly, this contracts with a U.S. major, not a Canadian A&P service company. We also additionally booked and redeployed two existing rigs for our Canadian fleet to the U.S.

Since our last call, I've toured 10 of our rigs operating in the U.S -- 10 of the 12 rigs we have running. And I've done those tours with senior executive customers. I can tell you that our customers are very pleased with the performance of our rigs and particularly with the performance of our exceptional people in these rigs. Currently, one-third of our U.S. rigs are staffed by Americans, and that percentage is growing daily as we establish our recruiting and training processes in the U.S. I'd expect to see the U.S. domestic labor mix balance out later this year and weight towards a predominantly domestic workforce as we grow our core recruiting and training systems in the U.S.

I want to stress our growth and presence in the U.S. is a multi-year process. As we've told many of you individually, establishing our reputation as a high performance driller takes time. It could take two or three years in each new basin we enter. As we're entering our third year in the U.S., I fully expect our U.S. expansion to double as compared to 2007. Today we are on track and continue to build a solid reputation with our clients as a high performance driller. As our reputation grows, we'll continue to displace less productive rigs and we'll do so at highly favorable dayrates.

Just moving to the international market, we know that demand for rigs internationally remains strong. We have similar opportunities right now to the Latin American rig that we have running, and we'll continue over the coming months to cherry pick those opportunities to best develop our systems and logistics for international deployment. I believe we are well positioning ourselves for the August 31, 2008 end of our non-compete and full return to international markets.

Now, turning for a moment to western Canada. Q2 will continue to be a challenging quarter. We're hearing about aggressive pricing and seemingly desperate moves by some of our competitors. Frankly, we're not seeing anything we didn't anticipate. The pricing or the competition we're seeing in the marketplace is precisely what we expect to see. We've been through these cycles in the past and will experience these again in the future. I'll avoid guiding specifically on rates looking forward, but can comment that we expect the breakup in 2008 to be as competitive or challenging as Spring 2007 was for us.

As I look beyond to the second half of the year, I'm encouraged by what I believe is an emerging Canadian natural gas supply challenge. The facts are that 2007 Canadian drilling was [up] 25% from '06 levels and 2008 drilling despite reasonable utilization rate now still running about 9% behind 2007. And inside Precision, we experienced a significant decline in service rig activity late Q3, early Q4 2007 which signals kind of the completion of the 2006 built up inventory of wells now being connected. So, as we look forward to significantly reduced drilling back from '07 and into 08, coupled with dramatic first year decline rates on many of the new tight gas and unconventional gas plays and increasing demand for natural gas and heavy oil, this spells out a strong case for reduced Canadian exports to the U.S. emerging late in 2008 trending into 2009. Already over the past few weeks, we've seen domestic demand push the [ACO] differential to less than C$0.68 and we've seen a NYMEX price firming out on 12 months into the C$9.50 range.

Looking at LNG for a moment, we believe LNG will grow in significant North American markets; however, we don't believe LNG is going to replace Canadian gas exports to the U.S. in a meaningful way, short-term or long term. Relative to the royalty issue in Alberta, we believe that the Alberta government will work closely with the gas producers and citizens to make the adjustments and do what's best for Albertans. I think we all need to realize that natural gas is an excellent source of cleaner hydrocarbon energy and the Alberta industry has a stellar environmental record finding and developing this critical resource. I believe the likelihood of a late Q3 or Q4 recovery in Alberta drilling and service activities increasing every day. We are ready and positioned to handle that recovery but also well structured to ride out a prolonged slowdown. Our growth in the U.S. is on plan. 2008 will herald our full reentry into international oil service markets. This is truly a very exciting time for Precision and our excellent employees. On that note, I will turn it back to Julie and see if we have any questions.

Thank you. (OPERATOR INSTRUCTIONS) The first question is from [Nimal Denuve] of Bloom Investment. Please go ahead.

Good afternoon. Just wanted to ask, I know you're not guiding specifically on dayrates, within Canada -- as you focus next year more on defending pricing, do you have some control by withdrawing supply from the market or do you have to follow some of your competitors to a certain extent?

Thank you, Nimal. I'll let Gene respond to that question.

Sure, so just to repeat the question you're saying are we focused on defending our pricing or working on utilization?

Yes, really utilization is a little more out of your control depending on activity. But are you looking at defending pricing and forgetting market share? You're saying a lot of your competitors are getting desperate and driving down rates, continue to drive down rates in Canada, so just wanted to get a sense strategically in what you guys are doing in response.

We're pretty proud of what we do in the services we provide and we always think that we deserve a premium for that, but at the end of the day, we're only as good as our customers and we work with our customers pretty closely to determine the pricing.

With respect to the capital plan, the 19 rigs scheduled to be built out over the next 12 to 18 months, how many are destined for the U.S. and how many for Canada?

Doug Strong speaking. We'll announce on a quarter by quarter basis the contracted positions that we secure and we've made it pretty clear that we think high performance drilling is an opportunity for Precision. And we'll work with our customers to identify where those opportunities are basin by basin based on where those performance criteria are best met.

You'll build and allocate the demand then is what you're saying?

Exactly.

Okay, thanks very much.

Thank you. (OPERATOR INSTRUCTIONS) The next question is from Mike Mazar of BMO Capital Markets.

Good afternoon, guys. A quick question on the three newly contracted rigs. Are those, can you say at least what size those are?

Yes, Mike, those are rigs that are into the U.S. as we mentioned and they are purpose built high performance rigs that will be a variant of our Super Single design.

And I don't suppose you want to talk about rates on those?

No, but the rate is indicative of high performance drilling in the U.S. It's a rate we're very pleased with.

Okay. Like you say I guess you'll update us quarter by quarter on contracts for the rest of that rig fleet or that rig buildout. But just let's say in worse case scenario, how flexible is the construction program in a sense if you get to a certain point wherever you guys decide that you can't get contracts for them or at least the rates you're looking for, can these easily be cancelled and say forget it, we're only going to build 14 or whatever the number is?

Mike, that's a very good question about the flexibility of the construction program. In the early cycle of the planning, it's quite flexible but as you move closer to rig completion and flexibility drops down. So typically, in the first three months we have a lot of flexibility. As you move farther into the cycle it narrows out. And right now, we've got a pretty, I think comprehensive mix of Super Singles, Super Doubles and some Super Triples in that mix that we feel pretty good about. And frankly, we have a good sense of where and who those rigs will end up with when they're completed. So I think we're working pretty closely with our customers as Gene mentioned earlier to ensure we're building the right assets for them.

Lastly, just a quick modeling question. Maybe for Doug. Now that we've taken the C$5 million charge let's say for kind of the reduced G&A going forward, what might be a reasonable run rate on G&A?

Mike, that charge is related to personnel reductions that applies to operating costs as well as G&A.

Okay.

So certainly, don't model out that it's all G&A because that's not the case. It was pretty balanced throughout, and at all levels.

Okay, thanks. That's good to know, but okay, but G&A run rate kind of going forward? I mean, presumably reduced somewhat from what we saw say in Q3 or something, right?

I think you'll find that Precision if you model it out as I know you have that we'll be responsible to our revenue line and that we will keep our G&A trend in line with our revenue trend. And that we'll stay within our historical range.

Fair enough. Okay, thanks, guys.

Thank you, Mike.

Thank you. There are no further questions registered at this time. I'm sorry, we now have a question from Todd Garman of Peters & Company. Please go ahead.

Good afternoon. Kevin, do you see, do you have any better visibility here for the back half of 2008 with the E&P companies in Canada in terms of their activity levels?

Todd, the fact is we don't have any better visibility right now. Our customers are, I think right now consumed with the winter season and I think as we roll into Spring and get through the breakup season, I think they will make their plans for the second half of the year more evident to us. It is interesting though, there seems to be a lot more optimism now than there might have been even four weeks ago, but playing that out in rig bookings or things like that yet, no, not yet.

Do you see any evidence of customers taking rigs on windows now? Or is it just a little bit too early for that?

What we're pretty confident in now are the rigs that we have under contract that are flipping between now and then, the conversations are all exceedingly positive for us.

Great, and then just regarding the number of rigs that are on contract, I think the number was given in the Press Release of about 25% of your operating days in Q4 were contracted? What does the contract rollover schedule look like here going forward? I mean, are those operating days basically all under contract for 2008 or is that going to change?

There's a small amount that come off during the course of '08, but what I'll comment on is the rollovers that happened late in '07 which I think was probably more negatively weighted were not unfavorable rollovers.

Okay.

So at this point, we're not sensing any reason to believe those contracts are going to be discounted going forward.

Okay and then just in Q1, can we expect, is it reasonable to expect rates to rise given that we would have a full quarter of winter equipment or is there going to be some compression?

Yes, I think Doug pointed out some of that impact in our Q4 numbers, the winter equipment numbers. Prices into Q1, I mean, Gene do you want to comment on that briefly?

I think when we look at it and we see where the demand for rigs has gone, obviously a huge challenge in the industry as people, and people are hard to come by. I think we're managing better than most, and that creates kind of an artificial demand for rigs out there. So I think right now, it's been fairly healthy and now we'll see what happens here with the warmer weather next week and whether people's vision of an early breakup will come to fruition or not. That will impact pricing obviously.

And I can close out on that comment. Q1 pricing hasn't disappointed us.

Okay, I understand, thank you.

Thank you. The next question is from Mark Kellstrom of Strategic Energy.

Good afternoon, guys. Maybe you talked about this and I missed it, but could you just touch on your view on acquisitions and then also comment as to whether the royalty trust structure limits you from doing anything more significant on the acquisition front?

Thank you, Mark. Boy, big question, and one we actually did quite a bit of, 1-on-1s, a lot of meetings, but first of all, I'll let Doug come back and just touch on the debt levels. Generally, we're an income trust. We feel quite comfortable being an income trust. We don't believe we've missed any opportunities in the past 12 months either on the acquisition front or the organic growth front. We think we're pretty well positioned right now considering this market for both organic and potentially acquisitional consolidation. But Doug, do you want to touch base on the balance sheet for a moment?

Yes, we like our flexibility in terms of where we've kept our balance sheet and our underlying strength, and the financing capability that's immediately available to us. So, certainly we've got the means to consider M&A opportunities. Obviously they have to be accretive and they very much have to fit our model in terms of being able to improve an acquisition and show accretion in terms of all of the traditional financial metrics.

Okay, thanks.

Thank you.

Thank you. The next question is from Roger Serin of TD Securities. Please go ahead.

Good afternoon. You touched on this, Gene, a little bit. I know crews are getting tough for everybody. Can you give a sense as to what you could effectively man in terms of the number of your Canadian fleet right now in terms of crews?

Yes, so just basically where we're at in terms of the situation, Roger?

Yes, or how much more could you actually crew if you had the demand for it I guess is the way to look at it.

Yes. I think with our systems and structures in the way we manage our business, we're a little bit unique compared to most. And so job by job, we look at every single one and determine what would it take to put that rig to work in a safe and efficient manner. So we just take them one by one.

So that implies you do have flexibility from your current activity levels?

Yes, Roger. I think to follow on Gene's comments, besides manning up to this market in Canada this year which has been tough, we did put three more rigs into the U.S. late last year, two more this year, one internationally, along with riding on the Canadian growth this winter and we're doing that successfully. I won't tell you it's easy and I know probably have some of our people working listening right now that they're running through this but they're doing a great job for us and we've staffed up our rigs very well.

So you're not at full tilt in terms of effectiveness but it sounds like you got a little flexibility but it is getting tight?

Kind of going back to Gene's comment, we work really closely with the customers and I think we'll find a way to staff up a rig for any customer that wants a rig from us today, tomorrow, or for that matter, should things pick up stronger come Q3 or Q4 next year. A couple of comments on that, I think the industry as a whole right now is going to be employee constrained. There's no question, it's been a bigger challenge this year than any of the past five or six years staffing up for the winter for us and for everybody. But frankly, I'm quite pleased with the success we've had, and again, if we have a need for a rig, I know we already have the drillers and the tool pushes and the key hands working for us. That's not a question. They're already on staff working for us and I know we've been successful bringing the crews on. So we feel pretty good about it Roger.

One last question. You obviously took some rigs out of active service. Are you more or less donor do you see a little bit more through '08?

Roger, we commented when we did that that we would come back again at the end of the winter season and look at our rig fleet and see where it stands, and we'll do that. It's not going to be a dramatic review because I think our fleet is in pretty good shape, but we said we would do it and we'll do it during the breakup season.

Thanks very much.

Thank you.

Thank you. The next question is from Wade Suki of Round Rock Capital. Please go ahead.

Good afternoon, everyone. Wondering if you might be able to comment on business opportunities in Appalachia, sort of potential for your Super Series rigs, and maybe talk about some of the inquiries and kind of levels of interest from the producers? Thank you.

Thank you, Wade, asking about the Appalachia region first of all. We don't like to be very specific about where rigs are going because we still are a very small player in the U.S. But we'll have one Singles rig, Super Singles rig ready in the Appalachia region during the course of this year. And we feel pretty good about that rig and that technology in that market. We think it's a place where the Super Single rig has some real strong potential.

Great, thank you.

Thank you. The next question is from Dana Benner of Thomas Weisel Partners. Please go ahead.

Actually, it's (inaudible). Can you comment on in terms of the capital spending we saw in a reduction in Q3 and then again in Q4? Is there any possibility that what's being deferred could hinder you once activity in Canada picks up?

Yes, the capital expenditure reduction that you saw in the fourth quarter, that was a couple things. That was a reduction on some of the expansion capital and on the upgrade maintenance which was reduced to C$9 million in the quarter, that's a reflection of our operational decisions to retire some assets, take those a lot of very good spare components and use that in the active fleet.

Great. Thanks that's all I have.

Thank you.

Thank you. The next question is from John Tasdemir of Tristone Capital. Please go ahead.

Hi, guys, can you hear me?

Sure can, John, go ahead.

My question is you guys right now as we stand today, you got a pretty nice balance sheet and I know you're looking to grow particularly in August, when the non-compete is up both U.S. and internationally. And you got to measure the capital spend with the newbuilds and the distribution and potentially looking at acquisitions. I guess my question is specifically, what do you feel your range is to make acquisitions? Would you be able to make C$50 million or C$1 billion acquisition or do you have a sense of potential sizes that you'd be able to do?

John, we have a very clear sense and very strong sense of what we can do, and the best way I can answer is that we think that the potential consolidation possibilities right now might eliminate a list of three or four or five other drilling companies maybe. Outside of those three or four drilling companies that wouldn't be on our list, we think it's wide open to us beyond that, and I think that range could be anywhere from a couple of rigs to C$1 billion type deal or more. Okay. That's really all I had. Nice quarter, guys.

Great. Thank you very much.

Thank you. There are no further questions registered at this time.

All right, I would like to thank you for joining our call today and look forward to visiting back with you at the end of Q1.

Thank you. The conference has now ended. Please disconnect your lines at this time and thank you for your participation.