Shenandoah Telecommunications Co (SHEN) 2010 Q4 法說會逐字稿

Good morning, everyone, and welcome to the Shenandoah Telecommunications fourth quarter of 2010 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Adele Skolits, CFO. Please go ahead, ma'am.

Good morning. And thank you for joining us. The purpose of today's call is to review Shentel's results for the quarter ended December 31, 2010. Our results were announced in a press release distributed this morning, and the presentation we'll be reviewing is included on our website at www.shentel.com. Please note that a replay of this call will be made available later today. The details were set forth in the press release announcing this call.

With us on the call today are Christopher French, our President and Chief Executive Officer, and Earle MacKenzie, our Executive Vice President and Chief Operating Officer. After our prepared remarks, we will conduct a question-and-answer session. I'll begin with slide 2 of the presentation. While we don't provide guidance with respect to specific future financial results, we caution that this call may contain forward-looking statements which involve a number of known and unknown risks and uncertainties. These may cause our actual results to differ materially from these statements. Shentel provides a detailed discussion of various risk factors in our SEC filings, which you are strongly encouraged to review. You're cautioned not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statement.

Also, in an effort to provide useful information to investors, we note on slide 3 that our comments today include non-GAAP financial measures. Details on these measures including why we use them and reconciliations to the most comparable GAAP measures are included in our SEC filings.

I'll turn the call over to Chris now.

Thank you, Adele. We appreciate everyone joining us this morning. We had a great fourth quarter, both in terms of customer growth and progress with the expansion of our cable and wireless businesses. On slide 5, we list some of the highlights in these areas. As of the end of the year, total postpaid and prepaid wireless customers exceeded 300,000. Total Cable segment revenue generating units, or RGUs, surpassed 100,000 at year's end. At the end of November, we closed on the announced purchase of two markets from Suddenlink, passing approximately 7,000 homes, and including 3,900 RGUs. In our Wireless segment, we continued to have great success in our prepaid business, which grew by 10,775 net adds in the fourth quarter, and 17,071 since we began offering Virgin Mobile and Boost prepaid wireless services in July. Earle will be reviewing our operating results in greater detail later on this call.

Highlights of the accomplishments in our Cable segment are shown on slide 6. Upgrades of all systems purchased from Rapid Communications in December 2008 are now complete. We're making progress on the upgrades needed in the cable markets acquired from JetBroadband last July 30. We've completed the work needed on two-thirds of the total mileage of outside plan, and will finish the first system upgrade in the first quarter. As of the end of 2010, we were able to offer high speed data to 89%, and voice to 73% of our acquired video homes passed, helping us to add 9,972 RGUs in 2010.

Wireless segment highlights are shown on slide 7. On top of the customer base we acquired from Sprint Nextel, prepaid customers grew by 17,071 in 2010; postpaid wireless PCS customers are up 6% from a year ago. Continued postpaid growth was helped by churn of just 1.9% for 2010, relative to 2.1% for 2009.

Financial results on a consolidated basis are shown on slide 8. We're reporting net income of $18.1 million for 2010, compared to $15.1 million for 2009. Results for both years include an impairment charge on our discontinued converged services operation. The impairment loss was $17.5 million in 2009, and we recorded an additional $1.9 million impairment in 2010. Net income from continuing operations was $18.7 million for 2010, as compared to $25.1 million in the prior year.

2010's results were impacted by transaction-related expenses and additional interest expense from our JetBroadband acquisition, the net after-tax loss from our new prepaid business, and the final cost from closing our defined benefit pension plan. We also recognized a gain from the sale of our telephone directory of $2.4 million after tax. Adele will review the financial results in more detail in a moment.

We've still not reached agreement for the sale of our converged services business, although we continue to work with potential buyers. This process remains challenging, but we continue to expect that a sale will ultimately be achieved.

In December, the Company increased its annual cash dividend to $0.33 per share, a 3% increase over 2009. We've had 14 consecutive years of dividend increases, and they've been paid every year since we paid the first dividend in 1960.

I will now turn the call back to Adele to review the details of our financial results.

Thank you, Chris. I'll begin on slide 10. Adjusted operating income before depreciation and amortization, or OIBDA, for 2010 was $82.6 million, or up $6.6 million from 2009. In order to better understand the forces driving this change, I have provided the OIBDA results by segment on slide 11. Here, you get a picture of the segment's results and how they are contributing to the consolidated financial results. In a moment, I'll go into the wireless and cable OIBDA changes in depth.

What you see from this table, however, is that the adjusted wireless OIBDA has grown, despite the significant incremental costs associated with acquiring prepaid customers. Increases in telephone rates and access fees drove a $2 million increase in wireline results. Cable results have improved as a result of the acquisition of JetBroadband. However, the impact of the incremental OIBDA from the JetBroadband business is being offset by the significant incremental costs of acquiring new customers in the cable business, as we'll see in a moment.

On slide 12, I have analyzed the changes in the wireless OIBDA results between 2009 and 2010. As Earle will discuss, postpaid revenues grew by $5.9 million as a result of the growth in its customer base. The prepaid business has already begun to make a meaningful contribution, with $5.6 million in new revenue related to prepaid customers. As you may recall, the service fee charged by Sprint Nextel in the postpaid business rose from 8.8% to 12% effective June 1, 2010; this change increased service fees by $2.4 million in 2010.

Acquiring prepaid customers involves additional expenses related to handset subsidies, commissions, marketing, and other sales related costs. As a result of our success in acquiring prepaid customers, there were $4.9 million of incremental acquisition costs in 2010. We also pay separate fees to Sprint Nextel to provide ongoing support services for PP customers. These prepaid services added an incremental $1.6 million in expenses in 2010, while postpaid customer acquisition costs grew by $500,000. Enhancements to our wireless network, primarily to accommodate incremental data traffic, increased network costs by $2.5 million. Finally, we made an adjustment to the accounting for certain tower leases, which resulted in a favorable adjustment of $900,000 to our wireless segment's revenues.

On slide 13, I have shown the components of the changes to adjusted cable OIBDA, which improved by $2.1 million in 2010 over 2009. As you can see, all revenue lines grew substantially in 2010. This is driven by the JetBroadband acquisition on July 30, and the growth in RGUs. As with wireless, the growth in customers comes with an immediate cost related to acquiring the customers. This incremental cost was $5.6 million in 2010 over 2009. The increase in video customers resulted in an increase of $5.8 million in programming costs in 2010 over 2009. In addition, the improvements in the network, an increase in broadband customers, and the addition of JetBroadband resulted in a $5.9 million increase in network and backhaul expenses.

At this time, I'll turn the call over to Earle to go into greater depth on some of the operating factors driving our results.

Thank you, Adele. Customer growth in our wireless segment in 2010 continued to be strong. Slide 15 shows the postpaid growth over the past several years, with our postpaid customers growing 5.8% in 2010 to 235,697. Slide 16 shows the details behind the postpaid growth. We added 5,112 net postpaid customers in the fourth quarter of 2010, compared to 3,465 in the same quarter last year. Our fourth-quarter churn was at 1.8%, down from 2% in the fourth quarter of 2009. The annual churn reduction from 2.1% to 1.9% was the key factor in higher net postpaid adds in 2010, since the number of 2010 gross additions were only up slightly over 2009.

Postpaid gross billed revenue is shown on slide 17. Fourth-quarter gross billed revenue was $55.49, the same as the third quarter, and reverses the recent trend of a declining ARPU. This is being influenced by our increased data usage and the $10 data fee for smartphones. Data ARPU for the fourth quarter was $22.61, almost a 15% increase over the same quarter last year, and up $1.03 or 4.8% from the third quarter of 2010.

The reconciliation of our gross billed revenue to the net service revenue is shown on slide 18. Gross billed revenue has increased approximately 4% between 2009 and 2010, to $151 million. The amount of bad debt has decreased 17%, and the service credits, although up in absolute dollars, have declined slightly as a percentage of revenue. The major change is the increase in the net service fee percentage in June 2010, from 8.8% to 12%, the maximum allowed by our current contract. The impact of the change in the net service fee percentage for the last seven months of 2010 is $2.4 million, resulting in a net increase in the net service fee of 3%.

Slide 19 shows the most popular postpaid rate plans and phones for the fourth quarter of 2010. The Everything Plan continued to dominate our gross sales. The LG Rumor and HTC EVO were over 30% of our phone sales, with data cards and mobile computing devices representing 7%. In the fourth quarter, 50% of our phone sales were smartphones, which brings smartphones as a percentage of our base at year end to 34%.

We had a strong showing in our prepaid business, as summarized on slide 20. In the fourth quarter, we had 19,199 prepaid gross adds, and 10,775 net prepaid adds. This results in a total of 33,488 gross adds and 17,071 net adds for the six months we were in the prepaid business in 2010. With the Virgin mobile customers we purchased from Sprint, we ended the year with 66,956 prepaid subscribers. Due to our higher proportion of Virgin mobile customers compared to Boost mobile customers, our average billed prepaid revenue per subscriber was $18.42 per month in the fourth quarter, and $17.61 for the last six months. Prepaid sales have continued strong in the first two months of this year. Our combined postpaid and prepaid subscribers at year end were 302,653, or 14.8% of covered POPS.

The story remains consistent in our wireline segment. On slide 21, we continued to have access line losses below the industry average. DSL subscribers in our LEC area grew by 8% to 11,946, which represents over 50% penetration of access line. The average DSL revenue per subscriber is approximately $38 per month.

In the Cable segment, we continued the upgrade of our networks and growing revenue generating units, or RGUs. Slide 22 shows the quarterly change in the net RGUs over the past two years. The fourth quarter of 2009 reflects the positive results of the upgrades in the markets we purchased from Rapid in December 2008. The third quarter of 2010 includes our first numbers from Jet. In the fourth quarter of 2010, we had 2,844 net new RGUs, down from the third quarter. The lower net adds in the fourth quarter was a result of lower door-to-door sales due to the time of the year, and clean-up of accounts that occurred during our conversion of the Jet customers to our billing platform late in the quarter. The clean-up continued into January.

With two acquisitions in 2010, it's difficult on this slide to get a clear picture of the percentage growth in the markets we'd owned the entire year. In 2010, we grew the number of RGUs in the markets we acquired from Rapid by approximately 45%, taking advantage of the demand that was generated from the upgrade of the systems. The quarterly RGU totals are shown at the bottom of the slide. The changes in the third and fourth quarter reflect the addition of the systems we purchased from Jet and Suddenlink in the third and fourth quarters, respectively.

Slide 23 shows the number of homes passed by each of our services at the end of 2008, 2009, and 2010, along with the penetration of video, Internet and voice services. Although we continue to make progress, we are still significantly below the industry averages, so we are confident there is good growth prospects. Upon finishing the scheduled upgrades, we'll be able to offer Triple Play to all cable homes passed outside of Shenandoah County, Virginia. We offer the Triple Play in Shenandoah County with a combination of our cable and telephone networks.

My final slide, slide 24, shows our capital expenditures for the past three years by segment, and our projected expenditures for 2011. The upgrades of the systems we purchased from Rapid in December 2008 were completed in December 2010. The initial Jet construction planned for 2010 was completed. We have a record level of spending planned in 2011, with the majority in the cable segment going toward upgrades of the previous Jet market, set-top boxes and cable modems for planned new customers, and building out adjacent areas in Virginia and West Virginia to expand the number of homes passed. Neither Rapid nor Jet spent monies in recent years to keep up with the growth in new homes prior to the current real estate downturn.

The wireline capital is to complete the conversion of our network to the soft switch, finish the upgrade of our DSL network, and the building of new fiber routes. The dollars shown in the wireless segment is primarily for capacity. We have not included any dollars in 2011 related to Sprint Network Vision Project. At this time, we are continuing to learn more about Sprint's plan, and how they may affect our existing contract and network, also the investments needed to remain a seamless part of the Sprint national network. We believe we'll be able to work with Sprint during the year to obtain this visibility and make the mutually beneficial decisions necessary to be able to best serve our customers.

I'll now turn it back to Adele.

This concludes our prepared remarks. Karen, would you now review the instructions for posing a question?

Absolutely. (Operator Instructions)We'll go first with Ric Prentiss of Raymond James.

Hi. This is Charlie Castillo sitting in for Ric.

Good morning, Charlie.

I guess my first question would be -- I mean, you guys are doing really well in terms of getting prepaid ramped up. I was just curious if you could go over really what is the competition that, that you guys face in your areas on the prepaid side?

Charlie, this is Earle. We do not have LEAP or Metro PCS in our area. So our competition is primarily the Prepaid that are sold by the other major wireless carriers. Obviously, we have the same distribution that others are having with the Big Box stores selling. There also are a number of small Retailers that sell our product and other products. But we have now rolled out the Boost and Virgin Mobile product in all of our Company stores. We've added it to the distribution channels that we control in the area and also have picked up the hundreds of third party distribution that Sprint already had in place.

Okay. And if we can just go to the detail in terms of the $900,000 favorable of tower revenue that you guys mentioned. Just wanted to make sure I heard that correct. Was that in 4Q and did that flow down to EBITDA?

It was in 4Q. It was in other income, Charlie, and it did flow down to OIBDA.

Okay. Great.

In addition to that, we had $1 million of other just general increases in revenues from the towers.

Okay. And final question, I -- just if you can let me know when you think the Q will be filed.

That would be tomorrow morning.

Okay. Great. I appreciate it, guys.

Sure.

Thank you, Charlie.

Thank you. And our next question comes from the line of Greg Burns from Sidoti & Company.

Good morning.

Good morning Greg.

Thanks for taking the question. I may have misheard this but it sounded like the majority of the prepaid adds in 2010 were to Virgin Mobile. Is that -- first, is that correct? And I guess secondly, I would have expected more slanted towards the Boost Mobile offering. So, I mean, if you could just give me a little color as to that?

Greg, this is Earle. As far as our mix between Virgin Mobile and Boost, because we -- there was no Boost Mobile customers in our footprint prior to us selling in July, we acquired 50,000 Virgin Mobile customers. So although we have been adding a hefty amount of Boost Mobile, actually at a higher rate than we have Virgin Mobile customers, when you look at our overall mix at year end, it is dominated by Virgin Mobile simply because 60,000 -- 50,000 of the 66,000 were acquired from Sprint in July.

Okay. So the majority of the 17,000 added are on the Boost plans?

Yes, that is correct.

Okay. Then just looking at the OpEx, you've been -- it's been up as you absorbed the cost of the Cable acquisitions and the Prepaid subscriber acquisitions. Are we getting to a point where we're at a stable run rate and we start to see, I guess, inflection point here where you start to leverage the growing subscriber base or should we expect to see OpEx continue to rise from here?

The OpEx that's related to acquiring the customers, we expect, Greg, to continue to grow significantly as we are successful in acquiring those customers. Certainly, we should be in an inflection point with respect to the ongoing cost of supporting customers and most of the incremental OpEx spending will be related to success-based spending, relative to increasing the amount of back haul that we have to accommodate those customer needs and so forth.

Okay. Thanks. And lastly, when do you target, I guess, completing the Jet integration?

Well, we have completed the integration. They're now on our billing platform. We are now, from an operational standpoint, have integrated them into our organization. As far as upgrading the Networks, we are -- there's two paths. We have the -- we did the hardening of those Networks which really means we went back, we looked at the quality of the Network; we fixed any major maintenance issues. We also added power sources at the various nodes. Most of the Jet network did not have back-up power so if there was an interruption of electricity at any one of the locations of the nodes or the head-ins, the systems went down. We completed that in the fourth quarter of 2010.

Starting in 2011, and finishing up in the early part of 2012, we'll be going back and actually upgrading each one of the Networks, putting in the proper amount of electronics, collapsing the number of head-ins, and really trying to -- really in taking advantage of the economies of scale. Simultaneously, we are building fiber and completing the fiber backbone to allow us to have all of those systems on our Network, which will provide in the future some significant cost benefits, because Jet had been buying back haul and the facilities connector networks from third parties. And by the middle of this year, early third quarter, we will be complete with all of that fiber build and construction and we'll be able to have a significant amount of capacity on our own Network.

Okay. Thank you.

Thank you. (Operator Instructions)And our next question comes from the line of Barry Sine from Capstone Investments.

Good morning, folks.

Good morning, Barry.

Good morning. You may have already covered some of what I'm going to ask because I dialed in a little bit late but let me just go ahead. The first question, the -- prior to Christmas, I visited some of your Retail stores, especially in the northern markets like Maryland, Pennsylvania, and I'm just curious, they seemed pretty busy. What's your experience been in some of the new stores you're opening up in those northern areas?

We opened a store -- the answer is that they continue to be busy. We're seeing increased foot traffic. We opened a store in the York Galleria mall in the fourth quarter of last year and it has already gone to be our busiest store. And so we're very, very encouraged that we are seeing good traffic in existing stores and as we continue to evaluate the need for distribution, we're just getting better, I think, at picking locations and getting a better bang for our buck.

And a question in terms of the Prepaid product offering that you've had now for a couple quarters. In the past, I think you've said that you had a reasonably higher percentage of customers who came in but were denied service for credit issues and you had hoped that Prepaid would allow you to convert some of those to actual customers. How's that experience been? Who is actually buying prepaid in the retail stores and what are you using Prepaid for in the marketing campaign?

Well, what we found, we actually were a little bit off the mark as far as expecting that we would have a huge number of sign-ups of Prepaids in our stores. What we found is that those customers already had Prepaid. What they were are hoping for was to get Postpaid so they'd get access to the better phones. So we haven't seen a huge ability to flip customers who had poor credit onto our Prepaid but I think as we continue to upgrade the quality of the phones that are in the Prepaid grouping, that may be the case. But what we're seeing is, I think, typical of what people are seeing across the country on the Prepaid. It is those customers who are credit-challenged.

But also, we're actually seeing some of our postpaid customers take a look at their family plans, and decide that for some members of their family that a Prepaid phone is a good way to go. In particular, for their teens who don't tend to use as many voice minutes but use a lot of text minutes, some of our Prepaid plans are focused on text and can actually be a better bargain overall for the family. And so we certainly encourage them to select whatever combination of our products and services, give them the right mix and we're hoping that, that will translate into lower churn going forward.

And a question on some of the newly upgraded cable properties. In the markets where you've completed the upgrade you're now turning to marketing. If we look at the three product sets, where are you seeing the most success, the most traction, where are you having issues and what is your marketing angle? Are you offering a discounted first month, or free premium channels or what is the marketing catch, or --

You've asked about 12 questions there. I'll try to cover them all. As for in the upgraded markets, our biggest success has been in Data. You've got to remember that in many of these markets, either there was no high speed or if there was DSL, it's relatively low-speed DSL. So when we're able to launch with 3 Megs, 5 Megs or higher, there's a lot of interest in the market for that. We've also seen quite a bit of interest in people taking Phone from us. It is a little bit more difficult in an area where we do not have brand loyalty to get the customer to switch off of the Satellite. But we are still having good -- as you can see, good growth in video, also. But the two that have been the strongest for us have been the Broadband and the Voice.

As far as marketing, we are looking -- we do try to sell bundles and we try to do it with a consultative sale on -- whether on the phone or door-to-door, trying to find out exactly what the customer's needs are and put together a bundle, either a two-service bundle or a three-service bundle, depending on the need. We do offer a couple of months of discounted service. We have not offered free service. We offer some discounted services in order to entice the customer on. And at this point, we use installation, waiving installation fees as probably our primary marketing tool. Did I miss any of the questions?

No, you didn't. You got them all. But to follow up on that, just to help us understand a little bit better the competitive situation, obviously you don't have FiOS in those markets, you don't have an over builder, satellite is very important on video and the Telco has obviously got Voice and a rudimentary data. Is that a fair way to look at the (inaudible)?

That's a fair way. The only place there will be some fiber is you may be familiar -- or aware that in nTelos got some stimulus monies to build fiber in Allegheny County, Virginia, which is where our Covington, Clifton Forge systems are. And they are in the process of building right now. So there will be some competition there as far as a faster pipe than a DSL pipe, but from a pricing standpoint we haven't seen any strange pricing in that market and we have been able to upgrade that market to now offer 20 Megs over our cable system. So we feel like we've got a very competitive network even where there is fiber being built.

And just last question, quickly. Any update on the sale process on converged systems?

We continue to work with several potential buyers. They are basically the same folks that we've been working with. The real issue has been their ability to raise the funds. We are not interested in being the bank for them and have continued to run the markets. We've seen no deterioration in the number of customers or the number of properties that we're maintaining and so we'll continue to operate those markets effectively until we find the right buyer.

Thank you. Our next question comes from the line of Greg Burns from Sidoti & Company.

Hi. Just two quick follow-ups. Adele, what should we be modeling for depreciation and amortization this year? And also, looking at the cost of service, do you think gross margin has, I guess, bottomed this quarter or do you see it going a little lower in the coming quarters?

The cost of acquisition should be reflected in SG&A. So it wouldn't directly impact the gross margin. Gross margins have been fairly profoundly affected by the acquisition of Jet, and the video programming costs related to that, like other video providers, the video revenues run -- the programming fees, rather, run about 50% of video revenues. So, to the extent that as Earle points out we are selling more Voice and more High-speed data, the gross margins will improve going forward. So I think it's reasonable from that vantage point to expect that the gross margins would improve, particularly in the Cable business.

Okay. And depreciation and amortization for this year?

Depreciation and amortization for this year, I think you can expect that the new CapEx spending that we incur would average about seven years to eight years depreciation or useful life and if you use that assumption, Greg, you should be in pretty good shape.

Okay. Thank you.

Thank you. And I see no further questions in the queue at this time.

All right. Thank you for participating. We would like to invite you to let me know, Adele Skolits, if you have any additional details you would like to see covered on other calls. Karen, it appears that we have one additional question before I wrap up.

Our next question comes from the line of Will Lauber of Sterling Capital.

Hi. Yes, if you can just walk me through the economics of the Prepaid business, where do you start getting some more profitability that you get a longer customer life or the acquisition costs go down? What's the driver going forward hopefully?

Will, this is Earle. Basically, we have always expensed the cost of acquisition of a customer in the month of -- that it's acquired. We're looking at an acquisition cost in the $140, $150 range currently for a Prepaid customer. The churn rate has been below 5, which means that a customer will be on for approximately 20 months to 24 months. We haven't been in the business long enough to know if that will -- if that's how accurate that is, but I think it's a pretty good estimate. And so when you look at the average revenue that we showed, the acquisition cost, and the monthly cost of maintaining that customer is in the single digits. You do reach the point, after ten months or so, where that customer is contributing significantly to the bottom line. The reason why we've seen the negative impact in 2010 is because we put on a lot of customers very, very quickly and have not had them on long enough for them to be able to provide that contribution to the bottom line.

How sensitive are those customers, I guess I don't know how the handset subsidies work but, say, 12 months of -- you're promoting the new and better phone, how sensitive are they to upgrading or can they do that? How does that work?

Well, if they upgrade, it's much more on their nickel than on ours. Unlike in the Postpaid business, where you go in and based on how long you've been on the network and what price plan you're on, you get a very, very deep discount on a new phone. On a Prepaid, if you want a new phone, you're going to have to go to the rack and pick up the phone and pay for it. We will allow you to move your current phone number to that new phone but there's not the subsidy that you see in the Postpaid business.

Okay. Is there any upgrades at all if I go in tomorrow and buy a Prepaid plan and then, I guess, you're heavily subsidizing that handset. At some point, can you -- do you subsidize any more handsets for that person or how does that work?

Well, we do subsidize it some, but not nearly to the point that we subsidize a postpaid customer. You've got to remember in that $130, $140 on the Postpaid side, that can be three times that by the time you add in all of -- because the $130, $140 I talked about is not just the phone. It's all the other marketing and support cost it takes to acquire a customer. So there is no question that there is some subsidy in the purchase of a Prepaid phone but you're not having that same cost again, relative to a Postpaid that you have on the prepaid.

So say if it's $100 that you're subsidizing that phone and I stay with you for ten months, 12 months and then I want to get the latest phone, do you subsidize that at all? I guess what's the -- I mean, if your price for one phone for Postpaid people, say, is $100 and you're subsidizing that $300, what is the price to the Postpaid -- or the Prepaid person?

Well, it's probably closer to the $30, $40 range.

Okay. Okay. All right. Thank you.

Thank you. And our next question is a follow-up from the line of Ric Prentiss with Raymond James.

Hello, guys. Just wanted one quick follow-up. Just going back to the stat that 34% of your postpaid base is on Smartphones. Just want to make sure that we get what the -- what your definition of what a Smartphone is. What's included?

Basically it's the BlackBerries, the EVOs, the Epics, it truly has to be -- it's not just a slider phone that you do texting on. It truly is one that has the application.

Sure. So like a Rumor touch screen would not count, correct?

Right.

Okay. Thank you, guys.

You're welcome.

Thanks.

It doesn't appear there are any more questions so that concludes our call for today. Thank you for joining us.

And again, ladies and gentlemen, this does conclude today's conference. We thank you for your participation. You may now disconnect.