Select Medical Holdings Corp (SEM) 2002 Q1 法說會逐字稿

Good morning. My name is Tania. I will be your Conference Facilitator. I would like to welcome everyone to the Select Medical Corporation's first quarter conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question and answer period. If you like to ask a question at this time, please star and the number 1 on your telephone key pad. If you to withdraw your question, press star and the number 2 on your telephone key pad. I would now like to turn the call over to Don Murphy of Russo Communications. Thank you Don Murphy, you may begin your conference.

Good morning and thank you for joining us for Select Medical Corporations investor conference call to discuss recent developments relative to yesterday's earnings announcement. By now you should have received the press release. If for some reason you have not received the press release, call me at 212-696-4455 extension 257 and I will be happy to assist you. This conference call is being recorded and will be available through replay starting at 1 P.M. Eastern today and running until 1P.M. Eastern on Wednesday May 8th. To access this replay, please dial 800-642-1687 within the u.S. Or 706, 6459291 internationally. The pass code will be 37565152. Speaking today we have the Company President and CEO Rocco Ortenzio and Martin Jackson. Before we get started, we would like to remind you that this conference call may contain forward-looking statements regarding future events including without limitation statements regarding operating results in calendar 2002, earnings per share in 2002, growth opportunities and other statements that refer to Select Medical's plans, prospects, expectations, strategies and beliefs. These forward-looking statements are based on the information available to Select Medical Corporation today and the company assumes no obligation to update these statements as circumstances change. For additional information please see the cautionary statements included in Select Medical's recent form 10 q or other filings filed with the securities and exchange commission. At this time I will turn the conference call over to Mr. Ortenzio. Please go ahead.

Thank you, Don. Good morning every and welcome to Select Medical's call covering first quarter of 2002. I'll provide some overall financial performance highlights for quarter and take you through operating performance in each of our divisions. We are again pleased to announce strong earnings performance which exceed analyst expectations. Fully diluted earnings per share were 21 cents, three cents ahead of analyst consensus. This is a 61.5% increase over earnings 13 cents in the same quarter last year. Our net revenue for quarter increased 20.8% to 271.9 million compare to $225.1 million for same quarter last year. Our earnings before earnings, or EBITDA increased to 30.1 million compared to 27 million for same quarter last year. Income from operations increased 25.1% to 24 million for quarter versus 19.2 million for same quarter last year. We had another strong quarter for cash flow as our cash flow from operations was 34.2 million for quarter versus 24.8 million in the same quarter last year. Next I'll take you through some of the key performance measures for each of our operating divisions starting with our specialty hospitals. Our hospital net revenue increased 31.5% to 148.8 million to 113.2 million in the same quarter last year. For hospitals open prior to January 1, 2001, which I'll refer to throughout as same store, net revenues increased 22.1% to 137.5 million compared to 112.6 million in the first quarter of last year. This increase was primarily driven by higher occupancy and rate in these hospitals. Our hospital EBITDA increased 17% for quarter to 15.7 million compared to $13.4 million in the same quarter last year. Same store hospital EBITDA increased 28.8% to 18.1 million compared to 14 million in the first quarter of last year. Same store EBITDA margins improved to 13.2% for the first quarter versus 12.5% in the same quarter last year. Occupancy in our hospital was 72% for the quarter, up from 68% in the same quarter last year. Same store occupancy rates increased 900 basis points to 78% for quarter. Our hospital non-medicare patient mix, based on the number of patient days decreased by 100 basis points in the first quarter to 23% compared to 24% for same quarter last year. Same store non-medicare patient decreased to 23% for quarter. This was primarily the result of medicare HMOs exiting that line of business in several of the markets where we operate. Our hospital revenue per patient day or rate improved 8.8% to $993 per day compared to $913 per day in the same quarter last year. Our hospital payer was 61% medicare, 2% medicaid, 1% workers comp and 36% balance from commercial insurance and managed care. Hospital patient days increased 21.1% for quarter to 149,000869 days compared to last year. Same store hospital patient days increased 12.4% for quarter versus 123415,000 days in the first quarter last year. We opened into no new hospitals this past quarter but still expect to open 8 to 10 new hospitals this year. As many of you are aware, CMS published the proposed regulations including rates for prospective pay for l tax. Current expectations may be final by 2002 with implement aches at a later date perhaps January 2003. Moving to our outpatient rehabilitation division. Our outpatient rehab revenue increased 10.1% to 119.7 million compared to 108.7 million in the same quarter last year. Of our outpatient rehab revenues for quarter, 83 million was from the U.S. Outpatient rehab clinics, 6.3 million from managed clinics and 30.4 million from canadian subsidiary and other outpatient services. Our outpatient rehab --EBITDA increased to 20 million compared to 19.1 million in the same quarter last year. EBITDA margins expanded as well year over year to 17.6% for the first quarter compared to 17.5% in the same quarter last year. Visits in our U.S. based outpatient clinics increased compared to a little over 946,000 visits in the same quarter last year. Net revenue per visit in these clinics increased to $86 compared to $81 in the same quarter last year. During the first quarter, our outpatient rehab division opened 14 new clinics, acquired one clinic and closed [another] and consolidated 12 existing clinics. At the end of the quarter, we had a total of 720 clinics operating in 31 states, the District of Columbia and seven Canadian Provinces compared to 675 clinics at the end of first quarter last year. We are on track with clinic development efforts and expect to open 30 to 40 internally developed clinics this year. I'll now turn it over to Marty Jackson, our Chief Financial Officer to cover our financial highlights in greater detail as well as provide you some guidance for upcoming quarter.

We are pleased to report another quarter of strong financial results. We continue to beat consensus and other key financial measures. The five new hospitals we opened December 2001 are progressing quite well. However, these new hospitals have had a negative impact on our operating expenses in the first quarter. Operating expenses were up 22.1% to 241.9 million in the first quarter compared to 198.1 million last year. As a percentage of our net revenue, operating expenses for the quarter increased 90 basis points to 88.9% compared to 88% for same quarter last year. Our operating expenses include our cost of services, general and administrative costs and bad debt expense. Costs of services as percentage of net revenue was the primary reason for increase in operating expenses. As it climbed 90 basis points to 81.5% for first quarter compared to 80.6% for the same quarter last year. Again, this cost increase was primarily a result of the higher cost related to our recently developed hospitals. GNA is the percentage decreased for first quarter compared to 3.7% for same quarter last year. And bad debt as a percentage of net revenue increased slightly by 10 basis points to 3.8% compared to 3.7% for the same quarter last year. While total EBITDA increased 11.2% for quarter, ebitda margins declined 90 basis points to 11.1% compared to the same quarter last year. As I mentioned, start-up losses in our recently opened hospitals was the driver thinned EBITDA margin contracts. Overall hospital margins declined 130 basis points for quarter. However, same store margins improved 70 basis points to 13.2% for first quarter. Outpatient rehab margins also increased to 17.6% for the first quarter and as I mentioned, GNA cost declined as relative percentage 10 basis points for the same quarter last year. De-appreciation and amortization declined 22.9% to $6 million for the first quarter compared to 7.8 million for same quarter last year. The decline results primarily from the amortization reduction from the adoption of FAS 141, 142 which decreased amortization by 2 million, offset by increases in [depreciation ] and fixed asset additions to new hospital development. Net interest expense decreased by 1.1 million to 6.7 million for first quarter compared to 7.8 million for the same quarter last year. This decline in interest expense is a result of lower debt levels outstanding during the quarter as well as reduced overall interest rates compared to the same quarter last year. The effective interest rate on our credit facility debt at March 31, 2002 was 7.6% compared to 8.8% at the end of the first quarter last year. Tax expense was 6.5 million from the first quarter representing an effective tax rate of 39.1%. Net income increased 66.2% for the first quarter to 10.2 million compared to 6.1 million in the same quarter last year. And as Bob mentioned, EPS decreased 6.1 5% to 21 cents versus 13 cents in the same quarter last year. We ended the quarter with 276.7 million of debt outstanding and total leverage for a total debt to EBITDA of 2.4 times. This compares favorably to our leverage at year-end which was 2.6 times. And 3.0 times total to EBITDA at the end of first quarter last year. Debt a total capitalization was down to 53% at the end of quarter compared to 61% at the end of the first quarter last year. Again, we had a solid quarter of cash flow from operations with operating activities generating 34.2 million of cash for the quarter compared to cash generation of 24.8 million in the same quarter last year. Contributing to the quarter solid cash flow was the outstanding reduction to 74 days, compared to 77 days at the end of 2001 and 81 days at the end of the first quarter last year. Investing activities use $4 million of cash in the first quarter, including 9 million for purchases of capital equipment. 9.4. This includes 11.7 million in debt reduction payments, offset by proceeds from stock issuance of 1 million and reduction or bank overdrafts at end of quarter. We had $25 million of cash on the balance sheet up from 10.7 million at the end of last year. And 2.2 million at the end of first quarter last year. We are providing the following guidance for the second quarter and the full year of 2002. For second quarter, we expect revenue to be in the $260 to $265 million range. EBITDA we expect to range from 31 to 33 million, and EPS in the 21 to 22 cent range on a fully diluted basis. We have increased revenue to reflect the first quarter's performance. Revenue for 2002 expected to be in the 1.06 to the 1.07 billion dollar range. We expect to continue to expect EBITDA and have revised EPS expectations to reflect the strong first quarter performance. We now expect fully diluted EPS in the 85 to 87 cent range. As Bob mentioned to you, we expect to open 8 to 10 new hospitals this year and are on track to open an additional 30 to 40 outpatient rehab clinics for year. Our day sales outstanding expectations remain unchanged with the the target of 68 days for year-end 2002. Capital expenditures for 2002 are expected to be in the 27 to 29 million range. We are pleased with the financial and operational performance we have experienced over this past quarter. And the fact that we are once again able to exceed consensus expectations. The remainder of our time is allotted for your questions and would like to open up calls at this time.

: At this time I would like to remind everyone if you would like to ask a question, please press star then the number 1 on your telephone key pad. We will pause for just a moment to compile the q and a roster. Your first question comes from Dale of Shelton Investment Company.

Congratulations, guys. Good morning. How are you. I guess I'm trying to get to the EBITDA margin issue. On the outpatient side, if you look at same store like you look at lTAC what would be the EBITDA margin there. I know you opened 5 in Q4 and then had a 15 in Q1.

We have not compared it on that basis. We could get that information for you, though.

Okay. Great. And are you giving any guidance for cash flow from operations for the full year 2002?

No, we have not provided any guidance for cash flow.

Great. And I think you mentioned this, but I think I missed it. On the lTAC side the same store revenue growth of 22.1%, can you break that down in terms of occupancy and rate?

Well, I think on the same store growth what we have disclosed is the increase in the same store margins. I think what you would see from that is an increase in revenue on the same store basis as well as rate. So it is a combination of both increased revenue and rate and you will see it on the revenue side reflected through the rate as well.

Thanks, guys. That's all my questions.

Your next question comes from Julie Peterman of Wachovia Security.

Good morning guys, congratulations on the quarter. A couple of questions. First of all, I was wondering if you could go into a bit of detail about the overhang that still remains from the secondary that was pulled last year. I know that we did a distribution in December and distribution a couple of weeks ago. I was wondering if you could tell me how many shares are left. And your thoughts on preliminary indications of what you think the impact for PPS might be. Have you gone through some of the numbers? And I'll leave it at that.

Let me go at the first one. As you mentioned, we did pull a secondary last year since that time there has been two distributions by the financial sponsors. One shortly after the pulled secondary and it is our understanding that there was a recent distribution last week from the financial sponsors. The current float we believe now is approximately 45% and that has been an issue and we are pleased to see the float continuing to go up. As you know, we have three major venture capital groups in our company that have the ability to distribute their shares from time to time to the limited partners. And so we have had two distributions over the last 12 months with about 10 million shares which has gotten our float up as I mentioned. The follow-up question to that was how much do they still have. Our financial sponsors are the venture funds still have approximately 18.5 million shares of the company's common stock. As far as your question on the PPS for lTAC that did come out a month ago. It is in proposed form and typically, the mechanics for this is CMS publishes a proposed rule. It is followed by a comment period. We are told the comment period will be 60 days, at which point CMS will make any revisions and then put out a final rule. Their imposed deadlines were coming up is October of 2002 for implementation.

Right.

As I mentioned in my comments, we think and this is somewhat speculation based on our discussions and the way we see things moving is we think that the they probably have the opportunity to make their October 2002 deadline to go final with the regulations but we suspect the imamendmentation will be delayed some months after October 2002. In terms of the impact to our company. These are complicated [ regulations]. We have looked at them, we have provided comments to CMS on some provisions of [regulations] because they are voluminous and complicated so we are still studying the impact. I will say that we anticipated that the new regs would be budget neutral, that it would an DRG system and that it would take into account the high accuracy of the lTAC patient. And the proposed rules did satisfy the criteria so we are pleased that CMS followed legislative mandate that they had for developing a rule for DRG or PPS for lTAC industry. In terms of the impact or our view of the regs, we think that they were pretty fairly done and represent a pretty good attempt to bring the PPS to the lTAC, we will make comments. But we are not making any comments on the exact impact to our company specifically until after the regs are final and after we had a bit more time to assess the final regs on our particular hospitals.

But it is safe to say there were no major surprises?

There were not any major negative surprises, no, there were not. The regs came out pretty much at the high level as we expected. They had some nuances and some wrinkles because the regs are very complicated. They bring in a lot of new provisions, but we think that most of those provisions that were introduced were pretty well thought out and looked to be fairly applied to our industry.

Okay. And then just two number questions. Can you tell me how many lTAC beds you had and how many admIts you had?

Julie, we had 2307 licensed beds at the end of q1-02, the total number of admits was 3978.

Thank you.

At this time I would like to remind everyone if you would like to ask a question please press star and then the number one on your telephone key pad. We will pause for a moment to compile the q and a roster. Your next question comes from Laurie Price of JP Morgan.

Hi. A couple of real quick questions. One is I wanted to see if you could be anymore specific in terms of the contributed loss by the lTACs open in the first quarter results in terms of giving us a rough feel as to what the magnitude of the loss was?

Yeah, it was in the 2.5 million dollar range.

Okay. And then other question. I don't want to get too far ahead and I know that you want to wait until we are through the comment period on the lTAC PPS regs, but if you could give us comments or thoughts on the transfer on the proposal and what that would mean based on what you looked at in the way of discharge data for select?

Well, the regs, Laurie, without going into too much detail, the proposed regs delineate four or five types of cases and they delineate very short stay patients and what they call interrupted stay patients, which are patients that leave the hospital and then are re-admitted. I would point out that the current regulations have a transfer policy right now that provide that if you have more than 5% of your patients are in the lTAC, leave to go to an acute care hospital and are re-admitted back, that then there is an adjustment fought payment. We don't think that the transfer policy, if I can use that term generally as it applied to the interrupted stay patients are going to be a material impact to select hospitals. Particularly because it is not a large departure, a significant departure from the existing transfer policy that exists today. Great. Thank you. Nice quarter.

Thank you.

Your next question comes from David Common of J. P. Morgan.

Thank you. I think Laurie asked one of my questions. But just to be clear. The loss contributed from the new lTAC. Was that EBITDA basis or EBIT basis?

Yeah, David there was about a two and a half million dollar EBITDA loss associated with the new development. Okay.

Also on the pricing in the lTAC, if I have this right, the average revenue per day was up 8.8% but then you mentioned the impact, health choice shrinking a percent of the pie. Could you just elaborate on the point you are trying to get to there?

I don't remember David mentioning anything about health choice.

It was something about medicare HMOs?

Yarn, as you know, there has been a trend in the commercial insurance industry that has historically had products that are generally known as medicare HMOs and those were when the private insurance industry would take a certain number of medicare patients that would be enrolled but then would technically leave medicare and become commercial insured which the government would pay a certain amount to the carriers to insure the medicare population. The trend has been that most of those, many of those insurers are exiting that line of business because historically it has not been profitable for a variety of reasons. As that has happened in some of our markets where you had a greater percentage of what they call medicare HMO products, as they leave, those patients go back to being medicare patients.

Um-hmm.

So it had a very slight subtle, although, I think it was 1 percentage point impact on our percent medicare versus percent commercial. When they were medicare HMO enrollees, when we saw those in our hospitals, they were counted as commercial, rather than medicare.

At $400 a day or better or something like that?

Well, not necessarily. Your medicare HMO patients generally -- you couldn't make a generalized statements that they were significantly lower than medicare because for our industry currently medicare pays costs. So it became more of a negotiated great. It is more a matter of the we have historically reported the categorization of patients between medicare and commercial, it is a recategorization, I'm not sure that I would read into that that there is a dramatic rate differential. That you will see great financial impact. But since we report the mixed statistics that was the variance and that is the explanation of the variance.

Okay, thank you.

Your next question comes from Doug Simpson of Merrill Lynch.

Hello, everybody.

Hi, Doug.

There has been a nice upward trend you guys are seeing in your outpatient revenues per visit. Looks like it is gone up $8 over the last couple of years. And looking ahead, I was wondering if you could give us a sense what do you see is the primary driver for this and where do you see the number going over the next 12 to 18 months?

Doug, it is no different than what we have been reporting over the past year in that what we have been doing is renegotiating or terming unprofitable contracts. And that has certainly had a very beneficial impact to increasing the net revenue per visit. And we are probably about 70% through our contracts right now. So, we anticipate you will continue to see a bit of an upstick.

And that could go above $90, is that the thought?

Well, that is not --we are not out there saying it will go above $0, we think we can continue to increase it. We have not indicated to anyone what we think we can get to. We think probably high 80s.

Okay. And then you know with the recent kindred acquisition in early April, we have seen increased activity. I was wondering if you could give us color of your view of the environment right now in the lTAC and outpatient side with respect to what you seeing and availability pricing, that type of thing. I think on the lTAC side of business, we are always look for acquisition opportunities. Although, particularly with the acquisition of specialty by kindred, this industry is really become relatively small and acquisition opportunities do not abound.

Sure.

Having said that, we will continue to look. But once again, you compare your returns on acquisitions with the kind of returns on invested capital that we get on our development projects and we spend a number of years developing a very strong pipeline for new projects and we are confident, you know, we opened 10 hospitals last year, 10 the year before that and we think we will get 8 to 10 this year. So our growth on the lTAC will be there even without an acquisition. So, we will always be on the lookout and one of the opportunistic for acquisitions on the hospital side of the business. Although they are not nearly as plentiful as you would see on the outpatient side of business, which is a much more fragmented industry.

Um-hmm. Okay. And then maybe one last question. This is an issue with all the services providers, wondering if you could give us a sense of labor and wage rate trends that you are seeing in the two divisions.

I don't really -- we really don't see it being an issue on the outpatient side of business. On the in patient side of business, it is certainly much more significant with the nursing shortage which continues. What we have seen is like most providers is that we have seen an increase in our nursing salary wages and benefits on an expense per patient day. It has not been what I would call dramatic. I think if you look, go back and look at the trends we probably increased probably between 20 and 25 per patient day for nursing costs over the last year. That doesn't represent a significant percentage of our revenue or our total cost and may be between two and a half to 3% of our total revenue, that increased on a per patient day basis. A bit more of our costs. What we are focused on right now is really reducing temporary nursing as a percentage of our total nursing. Because that is really where you see the impact on your operation because temporary staffing is much more expensive and oftentimes you don't get the continuity of care that you would want that you would typically have with full time staff. And we've been working hard to reduce the increase in the percent of temporary nursing. I think over the last year we have been successful at that. I look back to Q1 of last year. Temporary nursing as a percent of total nursing was increasing quarter to quarter about 2%. We were able to slow that to the end of last year to less than 1% and acute for last year we took that the other way and were able to reduce the percentage of temporary nursing. In Q1 we saw a little bit of an uptick but still have not [DETERMINED] terms of growth rate of the temporary but really not a significant number. So we have got spotlight on that and continue to focus on primarily retention. Though you will continue to see increases in costs per nursing and that is just a reality right now of the health care service and hospital industry.

Great, well, thank you.

Your next question from Ann Hines of SG Cowan.

A couple of questions first on the outpatient side the volumes were up about 2% and you're operating a fair amount more clinics. Do we see impact of contract termination in q1 since you had a nice uptick in price?

A good portion of that has to do with new clinics opening up new clinics. I think in addition to that. If you take a look at the visits, the visits were relatively flat in existing locations.

Okay.

So, I mean, the -- and that is a function of contracts. And as we have indicated to everyone, you know, from the start of this year is you can expect visits to remain relatively flat where the increase coming from pricing. Okay. Super and we suggest you look at that the same way through next three quarters. Okay. That's good.

On the inpatient side, do you have any better visibility with regard to whether you will have any openings this quarter? I know in the past you had expected the openings to be back end loaded this year.

We will we opened five new hospitals in December. So the first quarter no openings was expected. My expectation is that we will probably open a good number of hospitals either at the end of this quarter or at the very front end of the third quarter. We have a number of hospitals that are under renovation and really pre-opening. So, I'm pretty comfortable with our pipeline of projects. The timing of exactly when they open is always -- has increasingly become a bit more uncertainty. But I believe that before we will certainly have a number of openings before midyear.

Okay. Good. And last question on the PPS. Talking to some folks, there is concern that if the implementation date slips a bit from October 1st that at least the way I think the legislations written out, CMS might have to do an interim rate system or the like. Have they given any indication of what they might do in terms of a free transition period if that were to happen?

We have not heard of any plans to do any kind of an interim reimbursement if they don't make the October deadline. I suspect and with some input in dialogue that what they will do is get through the comment period and make the regs final by the deadline. Which would enable them to comply with their legislative mandate and then just have implementation dates follow. And as I mentioned, it would be very logical to of the regs final in or around October and then start the new reimbursement say January 1. And I think there is some logic to that. With all the time and the effort and the complexity of the proposed regs which kill will certainly be carried over into the final regs. The idea that there is going to be some interim reimbursement is probably not practical. I think originally, if you go back in the legislative history of that, the reason that that was put in, I believe a number of years ago when it was mandate to Delaware a PPS was imposed on CMS, I think the thought was if no activity or no work, or no proposed regs were done by this time that they were mandated to put in some kind of an interim proposal, really just to force them. But there has been a tremendous amount of work that has gone in to these proposed regs and they are very close. So to do anything on an interim time for a couple months would just not be practical. I don't think anybody in the industry or at CMS is pushing that.

Right. Great, thank you.

Your next question from Charles Lynch of CIDC World Markets.

Good morning, thanks a lot. Two questions. One on inpatient, one on outpatient. For the hospitals, Bob, can you talk about the same store occupancys pushing up into the high 70s. I'm curious what you consider a frequent shonal full capacity and following on the capacity you have NPT hospitals to add capacity in the existing facilities.

Well, Charlie, what we would consider a full, it really varies throughout our system. As you know, we have 62 hospitals within a hospital. It will depend in part, let me give you some of the moving parts of variables. It will depend in part on some hospitals that have all or majority of private rooms. Those hospitals can obviously reach a greater maximum occupancy than those hospitals that have all semi-private rooms, for example. So, we do of some hospitals that enjoy occupancies in the 90%. And we have some that maybe you would consider the mid-80s a relatively relatively full occupancy. So that really can vary. We still think we have opportunity to increase our census throughout the system. In terms of your second part of your question, which is what is the opportunity to add beds, we do have those opportunities in some of our markets. I won't tell you it is all of them. And this past year we have had the opportunity and have in fact added beds at certain of our hospitals where we have taken over either space that is contiguous or on the same floor or gone to a different floor in the hospital. So those opportunities do exist, but I don't want to give you the sense that they exist everywhere because if as all of you know who follow the hospital industry, overall hospital acute hospital occupancies have been going up as well.

Okay. Secondly, on the outpatient side. You had a lot of addition of new clinics as well as number of closings and consolidations. Can you just give a sense that there is any kind of geographic migration in there. Are you moving into new markets or leaving some markets in all that activity?

Are really isn't. We pay attention to the clinic. We have a number of geographic locations and we are really focused on concentration within those locations to the extent that we have a couple of clinics that are right by one another and it makes sense to consolidate, we will take a look at doing that. So it is on a monthly basis we go through that analysis. Taking a look at when the leases are up, taking a look at the geographic location, taking a look at referral -- referral sources and based on that we will make a decision on whether to do that or not.

Your final question comes from Timothy Gilbert of Principal Capital.

Yes. You had same store patient days up. Did you comment on that before?

Same store patient days?

On the lTAC.

Yes, I think we did comment on that. I think we said that same store occupancies rates increased about 900 basis points to 78% for quarter.

Okay but the patient --

The patient days actually went up by 12 1/2%. 12 1/2%.

Okay. Thank you.

Okay.

At this time there are no further questions. I will turn the call over to Mr. Ortenzio for closing remarks.

Thank you for joining us on the conference today to get our revised guidance and overview of how we did for quarter. We are obviously pleased as a management team with how we performed this quarter and are optimistic about our future prospects. Thank you very much.

Thank you for participating in today's conference call. You may now disconnect.