Pioneer Power Solutions Inc (PPSI) 2016 Q2 法說會逐字稿

Good day, everyone and welcome to the Pioneer Power Solutions, Inc. second-quarter 2016 earnings conference call. Today's call is being recorded. At this time, I would like to turn the call over to Brett Maas from Hayden IR. Please go ahead.

Thank you and good day. The call today will be hosted by Nathan Mazurek, Chairman and Chief Executive Officer and Tom Klink, Chief Financial Officer. Following this discussion, there will be a formal Q&A session open to participants on the call. We appreciate having the opportunity to review the second-quarter financial results.

Before we get started, let me remind you this call is being broadcast over the Internet and a recording of the call and the text of the management's prepared remarks will be available on the Company's website.

During this call, management will be making forward-looking statements. These statements are based on current expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the cautionary text regarding forward-looking statements contained in the earnings release issued yesterday and in the posted version of these prepared remarks, both of which apply to the content of this call. I will now turn the call over to Nathan Mazurek, Chairman and CEO. Nathan, please go ahead.

Thank you, Brett. Good morning and thank you for joining us today for our conference call. This was our third solid quarter in a row demonstrating the underlying earnings power and growth potential of Pioneer. We have eliminated drags on our earnings, including lower margin, less customized projects and we have successfully streamlined our cost structure and the results are apparent.

During the first half of 2016, we reported $56.5 million in revenue and $0.09 in earnings per share and have expanded our backlog with a record $37.8 million of identified committed orders, most of this scheduled to be delivered over the next 12 months. These results and the strong backlog confirm that we are on pace to achieve our full 2016 guidance. We are well-positioned to further increase our profitability and cash flows and that is indeed our focus over the next few quarters.

The material improvement in our profitability is a direct result of the tactical decisions we made to exit lower margin business, as well as achieving higher growth from our core business segments and our cost-reduction initiatives. From a GAAP perspective, operating income over $1.4 million for the quarter represented an improvement over the losses we reported in the second quarter of last year while earnings per share increased $0.13. On a non-GAAP basis, adjusted EBITDA of $2.2 million in the second quarter is a $2.1 million improvement over the prior year's quarter. Given our first-half performance and our operational plans and commitments for the next two quarters, we expect adjusted EBITDA to be stronger in the second half of the year.

We are also encouraged by the expansion of our backlog of committed orders. At the end of the quarter, our backlog stood at a record $37.8 million and we continue to expand that backlog. Demand for our solutions are strong and we remain focused on pursuing higher-margin opportunities where our ability to customize complex solutions gives us a competitive advantage.

Breaking this down further by operating segment, in our transmission and distribution solutions group, or T&D segment, we delivered a 5.2% increase in revenues year-over-year leading to a significant improvement in the profitability compared to Q2 of last year. These underlying businesses primarily serve the US commercial and industrial power market. We have streamlined the T&D business, including completing the facility consolidation discussed in prior calls and this, coupled with growth and margin expansion from both our switchgear business and our US dry-type transformer business, resulted in very strong performance.

Indeed, our US dry-type transformer business delivered their largest sales and profit quarter in the last 25 years due to increased sales of OEM products and higher brand label product sales. We achieved this without the full benefit from the Department of Energy efficiency conversion. As this conversion continues to take hold and legacy products are retired, we expect this portion of our business to continue to benefit and see strong sales and profitability in the second half of this year as a result.

In addition, this segment of our business is seeing margin expansion due to the benefit of our successful outsourcing effort for our most price-sensitive products to lower-cost manufacturing areas.

Our liquid-filled transformer business continues to contribute significant EBITDA on relatively flat revenue despite systemic weakness in the overall oil and gas market and the specific sluggishness in the Canadian economy.

Our critical power solution segment performed very well as we continue to shift the mix of this segment's sales from a more equipment-centric business towards a more service-oriented business. In the second quarter, critical power achieved the most profitable quarter to date under our stewardship reflecting the migration of sales towards a more service-oriented business. With a growing base of recurring service business and plans for further expansion, we believe additional earnings improvement is achievable.

Overall, our efforts this year are primarily focused on consolidating the gains we have made and positioning our switchgear and critical power businesses to achieve significant margin improvement and future revenue growth. And when Canada rebounds, our liquid-filled and Canadian distribution businesses are well-positioned to capitalize on those opportunities.

From a growth perspective, I'd like to highlight two areas where Pioneer is leveraging competitive advantages to win new business. These two areas are, one, distributed generation where users are looking to secure independence from the power grid, reduce energy costs and better control their electricity; and two, data centers, which require unique and customized solutions to ensure constant and predictable power.

During the quarter, we announced three orders totaling $3.6 million for our relatively new distributed generation solutions. Included in this was a single order of more than $2.5 million to supply highly customized automatic transfer switches to a major integrated energy solutions provider. Shipments will begin in the third quarter and progress through the first quarter of 2017 with the majority scheduled for shipment in the fourth quarter of 2016.

We introduced these automatic transfer switches midway through 2015 and this is our first large distributed generation order validating our ability to customize and introduce products to meet these specific needs.

The data center market is also an important area of focus for us. In February, we announced that we had received new commitments from a developer of data centers for one of the world's largest technology companies for deliveries in excess of $5 million. All shipments are expected to occur during 2016. This is an opportunity that relies on highly customized magnetic solutions and that is a particular strength for Pioneer.

I will now turn the call over to Tom Klink, our Chief Financial Officer, to discuss our financial results and review our 2016 full-year guidance and underlying assumptions.

Thank you, Nathan. Good morning, everybody. Second-quarter revenues were $29.9 million, up 13.1% compared to $26.5 million in the second quarter of last year. During the second quarter of this year, the foreign currency translation had a negative impact on sales of approximately $0.4 million.

Gross profit for the second quarter was $6.1 million or a 20.5% gross margin compared to $5.1 million or a 19.2% gross margin a year ago. For the quarter, selling, general and administrative expenses decreased 17.5% on an absolute dollar basis to $4.7 million compared to $5.7 million in the second quarter of 2015. As a percentage of revenue, SG&A expenses also decreased from 21.5% of revenue in the second quarter of 2015 to 15.8% of revenue in the second quarter of 2016.

Operating income for the quarter was $1.4 million compared to an operating loss of $687,000 in the second quarter of 2015. The second quarter of 2016 included $62,000 in restructuring and integration charges compared to zero charges for these categories in the second quarter of last year.

Our effective income tax rate for the quarter was 75.7% of earnings before tax as compared to 22.3% for the same quarter last year. Let me explain the reasons for our tax rate. First, the tax penalties accrued related to the previously disclosed tax issues are not deductible for tax purposes. As of June 30, 2016, we have accrued approximately $1.2 million in tax penalties and as we discussed we are seeking abatement for these penalties.

Secondly, loans made by our Canadian operations to the United States operations are subject to a dividend tax. If these items were not included in these quarters, the effective income tax rate would have been 29.8%. Each of these adjustments and accruals are non-cash. It is important to note that the Company has tax net operating losses and foreign tax credits that offset the effect of these items, and the Company does not anticipate paying income taxes for this calendar year.

Finally, if we are granted an abatement of the penalties on the payroll tax issue, the abatement will not be taxable. Net earnings for the quarter were $194,000 or $0.02 per basic and diluted share compared to a net loss of $817,000 or $0.11 loss per basic and diluted share in the prior year's quarter.

Adjusted EBITDA was $2.2 million during the quarter or 7.2% of revenue compared to $95,000 or 0.4% of revenue in the second quarter of 2015. Non-GAAP diluted earnings per share were $0.08 compared to a $0.05 earning per share loss in the second quarter of last year.

Turning now to the six-month financial results for the period ended June 30, 2016. Revenues for the six months were $56.5 million, up 2.1%, or $1.2 million from $55.3 million in the comparable period of 2015.

Breaking this down by segment, P&D solutions revenue increased by $2.3 million, up 5.2% compared to the first six months of 2015. This increase was driven primarily by our low-voltage transformer sales in the United States and our medium-voltage switchgear sales offset by lower sales of our Canadian transformer products.

Critical power solutions revenue decreased to $9.4 million, or by 11.1% for the first six months ended June 30, 2016 as compared to the same period in the prior year due primarily to delayed equipment shipments in Q1 and two major service customers delaying the start of their agreements during this calendar year. Segment revenue consisted of $5.9 million in power generation equipment sales and $3.5 million in service revenue.

For the six months ended June 30, 2016, our gross profit increased 13.2% to $12 million, a 21.3% gross margin compared to $10.6 million of gross profit or a 19.2% gross margin for the year-ago period. Year-to-date, our SG&A expenses were $9.5 million or 16.8% of revenues compared to $11.5 million or 20.8% of revenues in the year-ago period. The decrease in SG&A was driven primarily by the cost savings realized from the restructuring plans begun in the second half of 2015.

Operating income for the first six months of 2016 was $2.5 million compared to an operating loss of $770,000 in the first half of 2015. Our effective income tax rate for the six months ended June 30, 2016 was 52.1% of earnings after-tax as compared to 23.7% for the first half of 2015. Again, this unusually high tax rate is related to the accrual for tax penalties not being deductible for income tax purposes and dividend taxes related to loans from our Canadian operations to our United States operations I mentioned earlier. If these items were not included in this period, the effective income tax rate would have been 18.4%.

To reiterate, it is important to note that the Company has net tax operating losses and foreign tax credits that offset the effect of these items and the Company does not anticipate paying income taxes for this calendar year. Finally, if we are granted an abatement of the penalties on the payroll tax issue, the abatement will not be taxable.

Net earnings increased to $763,000 or $0.09 per basic and diluted share, up from a net loss of approximately $1 million or $0.14 per basic and diluted share in the prior-year period. Our adjusted EBITDA for the six months was $4.2 million compared to $931,000 for the first six months of 2015. Lastly, our non-GAAP diluted earnings per share was $0.19, up from a $0.02 loss per share in the comparable 2015 period.

Turning to the balance sheet, our total debt at June 30, 2016 was $27.6 million compared to $16.1 million at the end of 2015. The increase in debt was used for working capital purposes as we continue our sales growth and develop our supply channel from lower-cost manufacturing areas.

As previously discussed, on April 29, 2016, we entered into an amended and restated credit agreement to extend our credit facilities with the Bank of Montreal until July 31, 2017, which we believe provides us with sufficient liquidity to execute our plans. We have and continue to make progress towards resolving the open items related to our payroll taxes that were discovered in the third quarter of 2015. During this quarter, we have entered into installment agreements with the IRS for 97% of the balances owed. We continue to pursue abatement of the penalties assessed by the IRS for this situation. While we are uncertain of the timing of bringing these matters to a final resolution, we will communicate any material updates throughout the process.

Turning now to our guidance, we are reaffirming full-year revenue and earnings guidance for 2016, which includes revenues between $117 million and $127 million, of which $100 million to $107 million is expected to be derived from the T&D solutions segment and $17 million to $20 million from the critical power solutions reporting segment. This reflects the consolidation of our Pioneer Critical Power, Inc. business into our Pioneer CEP operations, shifting more revenue into our T&D segment; adjusted EBITDA between $8 million and $9.5 million and non-GAAP diluted earnings per share between $0.55 and $0.66 per share.

As a reminder, our 2016 full-year guidance is based on the following assumptions -- no future acquisitions; a foreign currency exchange rate of $0.72 per Canadian dollar; an effective tax rate at or above 28%; share account of approximately 8.7 million shares; and we exclude the effect of any restructuring and non-cash charges arising out of our cost optimization plan.

Our 2016 guidance is driven mostly by growth from our US-based businesses and is based on the strength of our sales pipeline, expected production cost savings, facility consolidation and external factors, which may or may not materialize in a way favorable to us.

In Canada, we have assumed no meaningful improvement in business conditions and that performance of our liquid-filled transformer business will remain stable at its currently depressed level and that losses by our dry-type transformer business will continue to be curtailed. As we have said previously, we expect the second half of 2016 to be stronger both in terms of revenue and profitability than the first half of the year.

This concludes my remarks and I now turn the call back to Nathan.

Thank you, Tom. Operator, I'd now like to open the call for questions.

Thank you. (Operator Instructions). Matt Koranda, ROTH Capital Partners.

Just wanted to start off on the revenue outlook for the year. I know you guys were solidly up in terms of growth in Q2 and then comparisons in the second half of the year should get a little bit easier for you guys. With the backlog you have, could you just talk about the visibility that you have into the second half of the year and maybe just talk about swing factors that would enable you guys to reach the high end of the range in revenue? I guess maybe start there.

Yes, I can't say about reaching the high end of the range. For our liquid transformer business and the switchgear business, we pretty much know what the revenue is going to be for the rest of this year. The critical power business and the dry-type business is less visible to us, so we are pretty confident that when we say we are going to achieve the guidance, we will definitely achieve the bottom of the revenue guidance. And as the year is unfolding, we expect the profitability to increase a little bit during the second half of the year, so I think the question is how far above the lower range of the EBITDA guidance we are going to break through.

Okay. Got it. And maybe just talk about, I guess, the cadence, especially as it pertains to the revenue line. For the remainder of the year, do we expect an evenly split second half, or is there a bit of a ramp? I know that you were delivering on some of the CEP projects that you mentioned in the prepared remarks in Q4, so is there going to be a bit of a ramp into Q4?

It's about even. Any movement is not material enough not to call it even, so they will both be about the same. The only reason I guess I'm a little calcitrant on the revenue side is, every week, if I make a trade, if I could have another $250,000 of EBITDA and maybe do a little less revenue, I'm going to make that trade all the time.

So as we continue to really walk away or try to reformat some poor or lower-margin business that we've taken in the past, it's less about blowing through the revenue guidance and much more about achieving higher margin.

Got it. That makes sense. Gross margins, just wanted to cover that for a second if we could. A little bit lower I guess than I would've expected in Q2. I guess I would have expected it to remain flat relative to Q1 just given the better fixed cost absorption that you guys probably got during the quarter. So maybe just talk about, in Q2, was it a mix issue that held gross margins back a touch sequentially, or was it something else?

You've identified it correctly, Matt. It was a mix issue. We had the largest sales number ever from our dry-type transformer division. Historically, their margins have run a little bit on the lower side and so that effect was to drag it down that small percentage. We also have been surprised by the time it has taken for the market to embrace the new energy efficiency requirements and we expect that now coming in Q3. The old efficiency units are no longer available, so we expect an improvement in revenue from the higher cost new DOE efficiency and there should be a slight margin uptick that comes with those as well.

Okay. I thought that with the legacy product you guys were able to price that maybe more attractively in terms of margins. Was that just not -- did that then not end up being the case, or essentially is there just some other -- something else going on there?

No. We were able to price it better than what it had historically run at. It ended up not being as attractive or not being as high as we had originally hoped, but still higher than the historical levels. Also, when we go to mix issue, the brand labeling agreement that we have, which is done at lower gross margin numbers, but has low SG&A associated with it, they had a stunning second quarter and so that impacted the gross profit line. That did not have as big of an impact on the operating income line.

Got it. That makes a lot of sense. Thanks for that. SG&A, definitely very nicely below where I thought it would come in for the quarter. Assuming the lower run rate, I guess it's probably the result of most of the restructuring activities you guys undertook in the second half of the last year and through Q1 of this year. Maybe you could just speak to how that trends for the remainder of the year. I guess should we take OpEx at that 16% of revs for the remainder of the year and scale it with the rampup in revenue, or is there something else that we should be factoring in?

Matt, yes, there shouldn't really be any surprises. I believe the run rate we are at this quarter at the $4.7 million, or 16% is a good run rate. I don't see any unusual spends or any increases in SG&A during the course of the last six months of this year.

Okay. Got it. And then just how do we think about modeling tax rate? I know there's a lot of moving pieces with, I guess, the nondeductible tax penalties and then the loans made to US operations, and I understand those are non-cash, but in terms of modeling GAAP EPS for the remainder of the year, how do we think about the tax rate that we should be thinking about for Q3 and Q4?

Right. Until we get those abatements, Matt, until we get final resolution on that, we will continue to have a higher tax rate. I don't believe it's going to continue to be at this 76% rate or 53% as we had for the first six months. I'd say instead of being in the high 20%s as we've done in our guidance, I believe we will be mid-30%, 35% to 38%. The penalty situation adds between 7% and 10% to the tax rate.

Okay. Got it. Let's talk about some of the business segments for a moment here. I know the liquid-filled business you guys mentioned not really counting on any kind of uptick there. Business as usual. Just curious to get your take, do you see any risk to any further deterioration in that business on the depressed level that it's at just given the continued choppiness in energy, or is energy just totally out of that business now and it's just [C&I] and stable here?

Yes, energy, there's always continued risk. In any business, there's risk every day, but it's a dynamic world. But, yes, we had no oil and gas last year. We've had no oil and gas-related business, no metals and mining, so that's pretty much what it is. Let's say the Canadian economy was probably even, from our point of view, a little bit weaker this year. Nevertheless, they are going to achieve -- in Canadian dollars for the year, they will achieve over CAD40 million in Canadian dollar, which is going to be a little bit ahead of what we internally projected. So, yes, I would say this is the trough for them.

Okay. Got it.

Even so, it's probably going to contribute in profit either equal with the dry-type business or a little bit ahead for the year, so it's still at its depressed level a stellar profit contributor.

Sure. That makes sense. For the CEP division, Nathan, I know you guys called out the $3.6 million from new customers for DG for that particular opportunity, but maybe you could just help us frame that within the context of the larger opportunity that you see in distributed generation?

The larger opportunity in distributed generation is for us to continue to do what we do that got us to achieve that kind of an order from this customer, which is a lot of upfront engineering work, a lot of iterations as they tried to customize their solutions as part of a much larger package project that these kinds of customers are working on. And hopefully we get more successes with them.

It's also as these customers grow and become successful, we become more successful with them being an important vendor to them. So we are very much, very much focused on expanding our roster of customers in that world and really taking care of the ones that brought us to the dance.

Okay. Got it. Maybe moving on to Titan. Just wanted to get an update on the pipeline for you guys there. I know you re-won your anchor customer in that segment over the last several months, but what are you looking at, I guess, that could be incremental to revenues in that segment and maybe you could just talk about the opportunity and timing of those revenues?

Yes. As I said in my prepared remarks, we are pushing the service end much more trying to increase our margin on the equipment side of the business. Again, I would take the trade any day and do less equipment and more on the service. And on the service side, we are trying to push where we think we have a competitive advantage, which is large multi-location types of users. So that's a lot of retail, whether it be department store retail, drugstore retail, specialty sporting goods, firearms, fishing, whatever it is, those types of opportunities we tend to shine, do better, self-perform a lot of the work and get a better return and boost from our efforts.

On the equipment side, we are trying to push -- not just get a better margin, but where we can be a little bit more valuable where we can marry not just equipment, but expertise from things like our CEP division or our transformer decision and allow us to provide a little bit better solution with the engines and that lets us get a much better margin.

We did one job like that in the second quarter, and one job provided on the equipment side almost as much margin as all the other standard equipment sales did together. So that was a pretty big revelation to everybody.

Thanks for the detail on that, Nathan. Just moving on to the balance sheet, just wanted to cover a couple items with Tom maybe. Inventory ticked up sequentially and just wanted to get your take on is there an inventory build, or certain opportunities that you will be delivering on in the second half of the year? Just help frame the inventory levels for us here?

There's three components I guess to the inventory build. One is the continued build of the product that's coming in from the lower-cost manufacturing areas. Two, we are anticipating a very good quarter out of our liquid-filled group and in order to achieve that, they had to bring in some materials in the second quarter so that they could deliver on those Q3 promises. And third, we had some growth in our CEP group on some medium voltage switchgear opportunities that are delivering early in Q3 here. So the product was being built during the Q2 period.

Okay. That's helpful. AR as well ticked up sequentially. Was that just timing with some shipments that went out later in the quarter?

Exactly. It was timing. All of the businesses, their largest months were May and June. The industry historically has payment days that are around that 55, 60 day timeframe. So it's purely just the nature of the timing of the shipments during the quarter.

Okay. Got it. I think that's it for me. I will take the rest of my stuff off-line, guys. Thank you.

Joshua Horowitz, Palm Global.

Great quarter, everybody. Not sure there's a lot more to ask; a lot of my questions have been covered by the previous caller, especially as it concerns the tax rate, which I had some concerns about. But I guess what you are saying is model somewhere in the low 30%s, I guess, for the next 12 months out and then our net operating loss carryforwards should cover us going into next year?

Yes, Josh. I would actually model mid-30%s and, yes, the NOLs and the foreign tax credits will cover the cash effect of this, so there will be no US income tax payments required during the -- certainly this calendar year, maybe by the end of next year. And we are hopeful that the appeal of the abatements will occur sometime yet this year, so that we will all hopefully normalize yet by the end of this year.

Great. And have you set a budget for capital expenditure 12 months out that you can discuss, or no?

Yes, we've been running -- the last several years, we've probably been running about $500,000, $600,000 a year. I don't see any change. The only change would be is if we -- there's one productline that we are thinking of moving, but I don't know how much -- we are talking about an additional crane or whatever, so I don't know. Maybe that would add $100,000 to what we typically do. So I'd say that's a fair estimate for us, unless there's something special going on.

Looking out as you model given a fairly low interest expense and what should be fairly low taxes and CapEx, is there a plan for your free cash flow?

Right now, the free cash flow is going to continue to reduce debt and then strengthen the balance sheet and we are going to take it from there. We don't have anything for the remainder of 2016. There's no special plans. As we go into 2017 and hopefully continue to perform and continue to perform better, we are definitely going to reassess what the extra cash is being -- how it's being deployed.

Terrific. Well, congrats again on a great quarter and certainly a great first half of the year. Execution has been top-notch.

Jim Kennedy, Marathon Capital.

Nice quarter. I just had a -- Matt was very comprehensive in his questions -- I just had one quick one for you, if you can address this. You mentioned early on that your success in the data center market is coming from your highly-customized, magnetized solutions. Can you explain exactly what that is, why it's different from anyone else out there? Are these competitive situations and what is your technology doing that others may or may not be able to do?

Yes, I don't know if it's the technology itself or the application of the technology. A lot of those orders -- when we look at data centers, we actually serve them in two ways. We attack that market I call it inside the room and outside. So this is all referring to stuff that's inside. It's mostly for what the data centers have inside. They are called power distribution units that a variety of vendors build for the data center developers and we are providing, depending on that customer's type of solutions that they want to offer within the server room, we are customizing the magnetics that go in.

So we treat them -- not that they are not -- that we treat them as an OEM, that's what it is. These (inaudible) coils are being integrated into a piece of equipment that our customer is assembling and designing for inside the server room, and the edge is just the application engineering. That's the edge.

Got you. Okay. Very good. I appreciate the explanation.

(Operator Instructions). Gregg Hillman, First Wilshire Securities Management.

Tom, can you talk about the actual amount, the net NOL, in the United States and also the amount of the foreign tax credit right now?

The NOL is well in excess of $3 million. The foreign tax credits are in excess of $1.5 million.

Okay. Nathan, in terms of, I guess, the data centers, can you talk about basically the partner relationships you need to go to get in there and to get more traction? In other words, there's, I guess, software people that help the data centers to do peak-shaving and store, I guess, more energy in the battery at times, and I was wondering if you can be part of a team that provides a comprehensive solution for let's say a new data center, including the people that do the batteries, the software and other pieces?

Yes. As I just said to Jim a few minutes ago, we go inside and outside. So inside, it's way in the power sequencing; the PDU units are way after all of that, meaning the power has already been transformed and it's been distributed -- or it's being distributed. Really it's final pieces of equipment, and so we are providing magnetics that are being integrated into equipment that's making sure that the electricity, its sine wave, its harmonics, its cleanliness to use a bad word is, I guess, acceptable to the equipment that's receiving it inside the server rooms themselves.

When you are talking about storage and stuff like that, you are referring more what we call the gray part because it's all gray metal boxes or outside the rooms in the actual power delivery and initial distribution that's going on. And to date, we've been primarily doing those jobs with our paralleling switchgear, so the redundant kind of switchgearing and engine-generator controls that's helping the sequencing and the parameters that are going on between the backup units and the primary feeds that these data centers have.

There hasn't been -- when it comes to storage, we are out of the loop on it. We are agnostic to it. From a storage point of view, we to date with the equipment and the solutions that we have, it almost doesn't make a difference -- not almost -- it really makes no difference what you are choosing to do. You want battery, you want flywheel, you want the rotary diesel UPS -- I don't care what you are using there. It's not affecting on either side any of the solutions that we are involved with right now.

Okay.

Is that helping or no?

Yes, yes. Just in general, for some of your various divisions, I take it you go through distributors and I was just wondering if you have signed up any new important distributors in the last six months or improved your relationships with them?

Well, we hope we are always improving our relationships, but nothing significant. The distributor market is served mostly by our dry-type transformer business and nothing significant to report there.

Okay. Thanks very much.

That does conclude our question-and-answer session today. Speakers, I will turn the conference back to you for additional or closing remarks.

All right. Thank you all for your time and support and we look forward to updating everyone again on our next call. Have a great day, ladies and gentlemen.

And that does conclude our conference call today. Thank you all for joining us.