RPC Inc (RES) 2008 Q3 法說會逐字稿

Good morning and thank you for joining RPC's Third Quarter 2008 Earnings Conference Call. Today's call will be hosted by Rick Hubbell, President and CEO, and Ben Palmer, CFO. Also present, we have Jim Landers of Corporate Finance and Investor Relations Department. (OPERATOR INSTRUCTIONS) Jim will begin by reading our forward-looking statement. Mr. Landers, you may begin.

Good morning and thank you. Before we begin our call today, I need to remind everybody that in order to talk about our company, we are going to mention a few things that are not historical facts. Some of the statements that will be made on this call could be forward-looking in nature and reflect a number of known and unknown risks. I'd like to refer you to our press release, issued today, along with our 2007 10-K and other public filings that outline those risks, all of which can be found on our website at www.RPC.net.

I also need to inform you that in today's earnings release and conference call, we'll be referring to EBITDA, a non-GAAP measure of operating performance. RPC uses EBITDA as a measure of operating performance because it allows us to compare performance consistently over various periods without regard to changes in our capital structure. We are also required to use EBITDA to report compliance with financial covenants under our revolving credit facility.

Our press release today and our website show a reconciliation of EBITDA to net income, which is the nearest non-GAAP financial measure, so I invite you to review that disclosure if you are interested in seeing how we calculate it. If you have not received our press release, please call us at 404-321-2140 and we will provide one to you immediately.

I'm now going turn the call over to our President and CEO, Rick Hubbell.

Jim, thank you. This morning we issued our earnings press release for the third quarter ended September 30, 2008. In a few minutes Ben Palmer will discuss our financial results in more detail. At this time, I'd like to provide you with a few operational highlights.

RPC again experienced sequential improvement in its results during the third quarter. Not only did revenues increase by over 10% from the prior quarter, but our managers were able to increase operating profits by 17%. Many of our key financial performance measures also improved.

Through the end of the third quarter, the oil and gas service industry remained characterized by high activity levels, increased competition, and greater capacity. While the equipment we added during the past several years has allowed RPC to generate record revenues, higher material costs and competitive pricing continue to limit our ability to increase profit margins significantly.

Despite our positive results, current macroeconomic factors, including the credit crisis and steep drop in oil and gas prices, have the potential to severely and immediately impact our business. Our customers are currently having to reevaluate the economics of their exploration and drilling projects in a very difficult capital funding environment. With that overview, I'm -- I'll turn it over to our CFO, Ben Palmer.

Thank you, Rick. For the quarter ended September 30, revenues of $237.2 million increased 46.5% compared to the prior year. And this was due to increased capacity of our revenue-producing equipment, improved utilization of the entire fleet, and a favorable job mix.

EBITDA for the third quarter was $74.3 million, an increase of 62.6%. Operating profit for the quarter was $44.2 million compared to $24.7 million in the prior year. Operating profit increases includes -- I'm sorry. Operating profit includes an increase in depreciation of $9.6 million compared to the prior year. Net income was $25.8 million or $0.26 diluted earnings per share, compared to $14.9 million or $0.15 diluted earnings per share last year.

Cost of revenues for the third quarter was 56.9% of revenues compared to 56.5% in the prior year. This increase as a percentage of revenues was due primarily to higher materials and supplies and fuel costs, partially offset by positive leverage on higher utilization of our workforce. As pricing remains competitive, our ability to pass on our materials costs increases is limited.

Our selling, general and administrative expenses increased 12.7% from $26.3 million last year to $29.7 million this year due primarily to increased personnel and other costs consistent with higher activity levels. As a percentage of revenues, however, these costs decreased from 16.3% last year to 12.5% due to leverage of these costs over higher revenues.

Depreciation and amortization increased significantly from $20.8 million last year to $30.4 million this year, due to the large amount of equipment we placed in service during the previous year. Our technical services segment revenues increased 50.9% due to higher capacity, higher utilization of the entire fleet, and a favorable job mix. Operating profit increased 68.5% from $20.6 million to $34.6 million this year. This increase was due to higher revenue and some direct and fixed cost leverage, partially offset by higher materials, and supplies, and fuel costs.

Our support services segment, which is comprised mainly of our rental tool service line, experienced an increase of 24.4% in revenues and an 87% in operating profits compared to the prior year. This revenue increase was due to higher capacity and utilization in rental tools, although pricing during the quarter was a bit lower than at this quarter -- at this time last year.

Now, at this time I'd like to provide a few comments regarding our third quarter 2008 sequential results. Our consolidated revenues were up 10.5% compared to a domestic rig count increase of 6.2%. Again, revenue increased due to improved utilization and slightly higher capacity in our larger service lines.

Third quarter cost of revenues as a percentage of revenues increased from 56% in the second quarter to 56.9% in the third quarter. This increase was due to higher materials and supplies expenses, partially offset by increased workforce productivity. SG&A expenses as a percentage of revenues decreased 100 basis points to 12.5% as a result of successfully leveraging these costs over higher revenues.

Third quarter depreciation expense, which was 12.8% of revenues decreased 80 basis points sequentially due to higher revenues. Our EBITDA increased 10.7% on this improved performance to $74.3 million in the third quarter compared to $67.1 million in the second quarter.

Our technical services segment revenues increased 9.8% to $203.5 million while operating profits increased 8.4%. This revenue increase was primarily driven by growth in pressure pumping and downhole tools, nitrogen, and cold tubing. Operating profit margin was relatively the same in each period.

Our support segment experienced a strong sequential revenue increase of 14.8% to $33.8 million and its operating profits increased 52.8%. At the end of the third quarter, our pressure pumping capacity was approximately 290,000 hydraulic horsepower and currently we have no plans to make any material capacity additions.

At the end of the third quarter, RPC's debt was at $186 million under its credit facility, which matures in just under three years. Our ratio of long-term debt to total capitalization is approximately 30%. And during the quarter, RPC repurchased 524,100 shares of its common stock.

Third quarter 2008 capital expenditures were $35.6 million and we currently expect our total 2008 capital expenditures to be $160 million to $170 million depending upon the timing of equipment deliveries. And with that, I'll turn it back over to Rick for a few closing remarks.

Ben, thank you. In summary, we are very proud of our employees and their performance during the third quarter. As always, their dedication and hard work is the reason for our success. As most of you know, this industry has a way of changing very rapidly. This is clearly illustrated by the 57% decline in oil prices during the past three months.

While RPC is committed to being a long-term provider, prudent management requires us to remain vigilant in the current uncertain environment. I'd like to thank you for joining us this morning, and at this time we're happy to entertain any questions you may have.

(OPERATOR INSTRUCTIONS) We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Rob MacKenzie.

Good morning, guys.

Hey, Rob.

Good morning.

Good morning.

Question for you if you can expand on some of your job mix comments. How would you describe the profitability of doing a multistage frac job like the one you -- the recent 12-stage one you did in North Dakota compared to doing more frequent smaller jobs? And do you see your current mix staying the same, reversing, moving forward?

I would say clearly on those multistage fracs, the revenue potential is quite large. The margins -- perhaps on average our percentages are a bit lower. So, we're looking for the right balance of those types of jobs. And I think going forward at this point, we don't see any significant change. We see potential opportunities to expand into more of the more complex horizontal completion and we think that presents a lot of good opportunity.

The challenges there, as we -- as many people know, is having access to the appropriate proppant to be able to get in on as many of those jobs as possible, and that's something we're constantly working on to try to secure good sources of supply and allow us to compete effectively for those jobs.

Okay, on support services, you had a huge jump in profitability on the margin front this quarter. Can you give us a feel for what drove that? And is that a good run rate or is there something unusual in there that we should account for in future quarters?

Rob, this is Jim. Nothing unusual in that we hope. I mean nothing -- no accounting entries that were unusual or one-time. It's just volume in rental tools. We have been investing in that for a number of years actually. And I know you know this, but for others on the call, rental tools is just a high fixed cost, low variable cost business. So, we had high rental tool pipe count and that just goes to the bottom line.

Okay, that's a great segue I guess into the question I'm sure you're expecting to get is if we're modeling or expecting a decrease in the US land rig count, something on the order of 400 to 450 rigs by the end of June next year, what would you expect to see that do to volumes? Would you expect to see a decline commensurate with the rate count? And how would we think of margins in that environment? Particularly considering you guys are much larger, much more diversified than you were in say 2002 downturn.

We're actually more concentrated and less diversified than we were in 2002.

Okay.

In terms of number of service (inaudible).

Yeah, number of service lines and things of that nature. And more concentrated in certain areas -- certain geographical areas. I mean Rob, I guess we go with the recount. This business is hard to forecast and that difficulty has increased recently. So --

And obviously very region specific and very much on where the rigs are laying down relative to where we're positioned. Reasonable question, but obviously a very complex one to try to answer. We've been growing at a faster pace than the rig count. I'd like to think all things being equal we maybe wouldn't drop quite as much as the rig count decreased, but clearly we're just as susceptible as everyone else that if that come to fruition, it clearly will impact our business and margins will decline.

Part of the difficulty that we talked about in being able to generate even wider margins with the increased revenue is the cost of proppant, the difficulty in getting proppant -- the availability. I think if things slow down, I would expect the price of proppant will probably decline some. So, that would help to some degree. Help to alleviate some of the otherwise margin decline that we would experience in a decreased activity environment.

Okay, but do you still that -- do you think that still applies for rental tools, which as you rightly mentioned, Jim, is a high fix cost business? It would seem that in a downturn, that would have pretty steep decremental margins. Is that -- am I reading that correctly?

Yes. (Inaudible)

(Inaudible) absolutely, yes.

Rental tools specifically -- if -- we have a number of long-term contracts. It's still not a real large percentage of our business, but that protects us to some extent. But clearly yet to the extent that it has nice upside margin growth with revenue increases, it clearly will fall more rapidly on the downside. If that --

Okay, thanks. And then have you guys -- where does your planning stand in terms of potential rationalization of resources in the event of 400 to 500 rig count reduction?

Rob, it's Jim again. We are looking closely at our 2009 financial plan, which of course includes capital expenditure plans. And trying to revise -- revising that a little bit. We -- I guess one thing to say is that our capital expenditures should be lower in 2009 than 2008 and we're continuing to look at those. I mean we're looking at that as we speak, to be honest with you.

I mean we constantly look at that and adjusting things. And we are going through the planning process now. And when we initiated our planning a few weeks ago, the price of oil was still substantially higher than it is today. So, clearly we're taking all of that into consideration.

And we look at various scenarios going into the next year and like to think that we try to be as nimble as we can. And as Jim indicated even before the recent decline, we had already expected that our CapEx would be lower next year than it will be this year. So, at this point, again we are reevaluating that and making sure that we're being prudent and maintaining our flexibility.

Your last question before I turn it back, strategically how do you think about any -- the magnitude and -- more so the duration of the downturn that we're going -- like basically going to have in 2009? Do you think of it that it could be prolonged and you're likely to reduce headcount more sustainably? Or do you think it's like to be shorter and you're less inclined to cut heads or equipment -- retire equipment in the eventuality that it bounces back fairly quickly late in the year or in 2010?

Rob, this is Jim. I think your crystal ball is a lot less cloudy than ours. We're not convinced that we're heading for a steep downturn by any means. There are some positives to this -- to what we're seeing right now. Lead times for equipment are a lot shorter. The price of equipment is lower. The workforce is less likely to jump to competition for huge pay raises that we cannot match or don't want to match. So, there are some positives to some slight softness that I think we all agree we're going in to.

We're not convinced that we're headed for a steep downturn. And we are ready to pull the trigger and cut costs whenever we need to, but we're not looking at that right now.

But I'll tell you, historically the last downturn that we went through, we did make the strategic decision -- our people made the strategic decision to not reduce headcount significantly, because we did expect that there would be a fairly quick return and with all the investment we had in our people with training and everything else, we held onto our people. And I think we benefitted when things did return.

Sure.

And we'll just have see at the time when the downturn does begin, we'll have to reassess that, but I think our belief is that this is a good long-term industry. We don't -- I don't -- we'll have to see, but I don't expect that there would be a protracted downturn. I think that it would be I think if anything probably just a softness for a period of time as people reassess and see where they are. So, I would expect we would hold on to the majority of our people.

Okay, thank you guys. I'll turn it back.

All right, Rob. Thanks.

Your next question comes from Jeff Tillery.

Good morning.

Hey, Jeff.

Good morning.

Recognizing that the '09 budget is not set in stone, could you talk to us a little bit about how you see maintenance CapEx on an ongoing basis for your business? The $50 million to $75 million, is that too high, too low?

No, that's about right, Jeff. This is Jim. That's about -- that's what I was going to say. We think -- clearly we have a bigger fleet of equipment, so it's a little bit harder to come up with than it would have been before. But somewhere in the $60 million to $75 million range is good maintenance CapEx.

I think that'd be the right number in the continued robust environment. I think that's a (inaudible).

And you spoke specifically about pressure pumping. On coiled tubing or wireline or any other business line, you'd think about do you still see select opportunities to add new equipment? Do you see any of those opportunities right now? Or how are you thinking about that, kind of as you said, today?

Jeff, this is Jim again. We -- we're -- you mentioned coiled tubing, so I'll just throw that out. There's some nice opportunities that we've already found and will continue a bit with some of the high diameter coiled tubing. That has a lot of applications in some of the unconventional plays.

And the -- I'm not telegraphing that these are big capital expenditures, but just selected rifle shot kind of opportunities. In wireline, there's some eline opportunities that are good for us. And then in some of these shale plays, we just need to see how they play out. I mean everybody was talking about the Haynesville a few months ago, and now they've kind of forgotten about that a little bit. So, it's likely that we'd have just incremental adds there.

But, yeah, there's some selected opportunities with some of these. Again, a lot of these unconventional plays that are going on are just requiring more specialized equipment. So, we're -- we stand ready to try to provide that.

Yeah, we'll remain opportunistic. Again, as we said we -- CapEx next year will be lower we expect than in this year, obviously dependent upon what opportunities come along. And we'll try to remain nimble and flexible. And at the current time, we don't have any strategic plan to go in and significantly increase really in any of our service lines at this very moment. So, again we want to do the '09 planning process and we'll make those decisions as we go along.

And in light of some of the discussions from our customers, capital funding, difficulties, they're reevaluating their economics. Clearly we're not moving toward, at this point time, to increase anywhere significantly.

And give that uncertain outlook, at least in the short-term, you guys have somewhere around $100 million in liquidity. How do you -- and then how you think about kind of a minimum liquidity threshold that you're comfortable running with?

Well, we've said before that from here we're -- we want to work the debt down. And if the debt increased slightly in the third quarter, we did have the share repurchases and that obviously played into that number. But we still intend to pay the debt down from here in terms of where we're comfortable.

We're clearly comfortable where we are right now, but have said over the last few quarters, and are continuing to say that we're going to, for the time being, work that debt down just because we think that's prudent. We're not looking for -- you didn't ask it this way, but we're not looking for that point at which -- get up to the point where we're comfortable with the liquidity. At this point, we're just trying to pay it down from here. And we think we'll be able to do a good bit of that over the six to -- the next six to nine months.

And then in the technical services segment, margins were basically flat with revenue up pretty nicely. Can you just talk about what factors drove that? Was there any sort of cost pressures that hurt? Just trying to understand that dynamic.

Jeff, it's single story -- well, I guess getting a little bit old, but materials and supplies, and fuel costs. I mean fuel costs were still high. Certainly they've been coming down. But the real thing was materials and supplies. Pressure pumping is the biggest part of technical services. Proppant for pressure pumping is scare, and therefore expensive.

There was a little bit of impact -- we haven't talked about the hurricane in this call -- the hurricanes in this call, but there was a little bit of impact on the availability and price of acid, which again is an important component in pressure pumping. So, those are the main three, materials and supplies for pressure pumping being the biggest, but also fuel prices.

And my last question, you guys mentioned in the press release some new sources of profit and assay. Could you just talk about those sources of profit? Are you importing that and can you just give us the feel for what that means for your cost structure?

Well, we're really looking at everywhere. Everywhere we can. All potential sources. We have made some progress in securing supply. There's a couple of things trying to secure a steady supply, so that you can commit to customers and be certain that you can execute a job. And then there's trying to secure perhaps a better price. We think we've made some progress on both of those fronts, but there's still -- we see whatever, lots of opportunity to improve that even further, and we're making some progress. Obviously we don't want to give any particular details, but it is a very -- very much of a focus are for us.

Okay, thank you very much.

Thank you, Jeff.

Thank you.

Your next question comes from Mike Drickamer.

Good morning, guys.

Good morning.

Good morning.

Hey, Mike.

Ben, how much do you guys spend to repurchase the 524,000 shares?

A little over $8 million.

Okay. Going forward here, you commented that you want to take and of course work to pay down the debt, but what are your thoughts here on more share buybacks in light of an $8.00 stock price and the liquidity constraints and credit concerns in the market.

Well, we're in pretty good shape because our debt doesn't mature for almost three years. So, we're in pretty shape we feel. Unless the bank's going down the tubes and they can't fund themselves. Hopefully we're past that. It's something clearly we're looking at. Not sure -- that's what we're trying to do. We're trying to balance the debt level with those opportunities that are presenting themselves with the stock price of -- we'll see. I mean that's something we talk about if not daily, very frequently of course. And just have to see. Can't disclose that here.

So, at this point you're not curtailing the share buyback, but you're also -- it's perhaps a priority?

Yeah, I'd say that's a good way to describe it.

Sure.

Okay. Rick, you commented the uncertainties we've seen have the potential to immediately impact your business. Have you seen any impacted business yet? Or is it still kind of steady as she goes through October here?

I think it's steady as it goes. I mean we hear a lot of people talking and a lot of chatter out there, but we haven't seen any direct impact.

Okay, and then one more on the profit issue. I think if we go back to the last quarter, perhaps the profit issue is more of a regional issue, specifically in markets like the Fayetteville shale. Is it still a regional issue or has it expanded more nationally now?

It -- I think it's national. That is maybe a little -- your proximity to mines can help to a degree in terms of the cost of course. But it's really -- it's an issue everywhere.

Yeah, Mike. It seems reasonable in a sense that every region has an issue with shortages and it's a different kind of shortage, it's a different kind of proppant. But every region has the issue.

Okay, guys. That's all for me. Thanks a lot.

Thank you, Mike.

Thanks.

Your next question comes from John Daniel.

Hey, guys. Just a couple of follow-ups on the profit market. Do you notice any quality differences in the proppant, foreign vendors versus the US vendors? And is there any meaningful difference in price from the foreign than there is of ceramic proppant?

We're going to test all the proppant and it'll have to meet the minimum standards. There clearly, as you've heard -- all heard, read about the China suppliers and the concerns that people have, not only for proppant, but all product coming out of China and that you have to have adequate controls in place to test, and validate, and ensure you're getting good product.

So, we're not going to use anything unless it meets the minimum standards. And -- anything more on that, Jim?

Yeah, no. I mean we don't quite yet have all the experience, John with the international proppant to know, but it's clearly different from buying it off the shelf from a supplier that you know and trust and have worked with for a number of years.

Right.

That makes sense. Quick question on the -- on just the frac market. Are you still seeing some of the private competitors aggressively adding capacity and/or opening new facilities?

John, it's Jim again. Not exactly sure of the answer to that. We -- it does appear to be slowing down a little bit, but that's more anecdotal than real hard evidence.

Okay. Well, that's it for me. Thanks, guys.

Thanks, John.

Sure.

Your next question comes from Tom Escott.

Good morning. I think all these issues have been touched on, but just a follow-up on one of these earlier questions about share repo and then debt reduction. You did both during the quarter. As you look forward, how do you -- what's the priorities? I mean is there going to be a greater priority to pay down the debt? Greater priority to build up cash reserves or buyback stock? How do you list them sort of one, two, three?

Well, Tom, it's Rick. I'd say the first priority's to pay down the debt. And then stock buyback obviously is dependent on the current price of the stock. And if it really drops, then that might jump in priority. But I think our first -- with all things equal, our first priority is pay down debt.

Okay, and then another corollary to the CapEx questions. In your press release, you -- the language you've used here is our long-term growth plan is complete, but you'll continue to make capital additions in locations and service lines where the returns are favorable. Snapshot in time, I'm sure the returns look very favorable with pricing where it is today. Why would you not just stop adding equipment and simply move equipment around from lower utilization locations to better locations?

Well, there's clearly some of that going on, and that's something we constantly evaluate. But as we said, the CapEx is going to slow next year compared to this year. So, that process has begun. And then we -- in planning for next year again, we still have the flexibility -- we're not committing in '08 for everything we're going to receive in '09. So, there's still something to be played out in terms of what the current circumstances are before we pull the trigger on new additions. But you make a good point. There are opportunities for us to move equipment around, and we are doing that. And we'll continue to evaluate.

Okay, thank you.

Sure, absolutely Tom.

Thanks, Tom.

(OPERATOR INSTRUCTIONS) Your next question comes from the line of Bill Dezellem with Tieton Capital Management.

Thank you. We have a group of questions. First of all, let's circle back if we could to the debt issue. Would it be a fair assumption that you would expect that the debt level at the end of December will be lower than the debt level at the end of Q3?

Sure.

Yes, Bill. That's a fair assumption.

And then did we also interpret correctly in the press release that the lack of profits and issues with acid did reduce third quarter revenues and earnings? That you had some jobs you were not able to complete due to a lack of material?

Sure.

Yes, Bill. Yeah. This is Jim. That's correct.

And would you please quantify the magnitude of that?

No, we can't do that. That's -- we wouldn't do that anyway, but obviously that's -- if -- there are particular types of proppant that if you have that today, there's lots of lots of opportunities. Proppant is very difficult to get and some of the specialty proppants. We're trying to secure sources and there's a lot of opportunity if we get a good source of proppant. So, it's hard to find proppant.

Yeah, Bill, we feel like Rick's comment on page two of the press release pretty much stands on its own. That's a -- that 1% to 3% and the net income reduction is a combination of customers that weren't working because of the hurricanes, and a shortage of materials and supplies, and employees who were out of place for a while. So, that's -- that becomes a consolidated comment.

Okay, so that is not solely for the hurricane; that would incorporate in the materials issue.

But it (inaudible) some degree.

But again, all related to the hurricane, yes.

Right.

All right. That is helpful. And continuing down this same line of thinking, would you characterize the number of jobs that you were not able to execute as a result of a lack of materials to be similar to prior quarters or has it increased? Or decreased for that matter?

Bill, it's a valid question, but we don't capture those data. It's very hard to say.

Do you have any qualitative feeling about it?

Probably similar to previous quarters, but again it's very hard to say.

All right, that's fine. And then your utilization rate of the equipment, how would you characterize that either quantitatively or qualitatively?

Higher.

And is it the -- given that you've been expanding the fleet, is the utilization rate in the third quarter the highest level that it's been since you initiated the large CapEx program?

Since we initiated the large CapEx program, probably yes. Not completely sure about that, but probably.

Okay, fair enough. And would you care to quantify exactly where you believe your utilization rate is today, even within a range?

No.

No, we -- it's hard to compare a year-over-year and to be honest, the absolute number is not that meaningful because it's hard to know what full utilization is.

Yeah, and job mix and all those things (inaudible).

Yeah.

And then finally, the equipment that you have, would you give us your perspective as of today on how that equipment is placed relative to the geographic spread of the rig count at this point?

Geographic spread of the rig count.

Yes, I guess is your equipment more heavily skewed to certain regions, less heavily skewed to other regions, and if so given that the equipment does have wheels, I figure we should ask how that skewing might be today.

Bill, that's really the same that it has been. And just to review in five or 10 seconds, our major areas of operation are in East Texas, and West Texas, Eastern Oklahoma, and Arkansas, Western Oklahoma, then the Gulf Coast of course, and some throughout the Rockies. That proportion does not change. We're doing a little bit of work and some interesting work in the Appalachian region, but clearly those others have the preponderance of the assets.

So, no major change in terms of your relative positioning there.

Right.

At this time that's correct, yes.

And what comments would you like to make about the international market?

We're just focused domestically at this point.

Great, thank you.

Okay, Bill, thank you.

Your next question comes from the line of Rob MacKenzie.

Hi guys. Quick follow-up for you. Questions for Jim. Jim, what percentage of technical services revenues was pressure pumping this quarter?

I knew you were going to ask that and I should have had it available. Give me one second.

Okay.

I mean --

(Inaudible) percent.

Huh?

41%.

But he said of technical services, Ben. Is that (inaudible)?

Oh, technical?

Yeah, he's asking about the technical.

It's still in that 41%.

Yeah, it's probably pretty close to 41%. Let's see.

And while you're looking at that, ending horsepower was still, what 287,000?

Yes, 290,000. 290,000, yeah.

Okay.

It's more like 50% of technical, not of consolidated.

Okay, great. That's it for me. Thanks, guys.

Thanks, Rob.

At this time there are no further questions.

Okay, well, great. Well, we appreciate everybody listening to our call this morning and appreciate the questions and the dialog. We will hang up now and everyone have a good day. Thank you.

This concludes today's conference call. You may now disconnect.