Teekay Tankers Ltd (TNK) 2013 Q3 法說會逐字稿

Welcome to the Teekay Tankers, Ltd.'s third quarter 2013 earning conference call.

(Operator Instructions)

As a reminder, this call is being recorded. Now, for opening remarks and introductions, I would like to turn the call over to Mr. Bruce Chan, Teekay Tankers, Ltd.'s Chief Executive Officer. Please go ahead, sir.

Before Mr. Chan begins, I'd like to direct all participants to our web site, www.teekaytankers.com, where you'll find a copy of the third quarter 2013 earnings presentation. Mr. Chan will review this presentation during today's conference call.

Please allow me to remind you that our discussions today contains forward-looking statements. Actual results may differ materially from results projected by those forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the third quarter 2013 earnings release and earnings presentation available on our web site.

I'll now turn the call over to Mr. Chan to begin.

Thanks, Ryan. Hello, everyone, and thank you for joining us. With me here in Vancouver is Vincent Lok, Teekay Tankers' Chief Financial Officer; and Brian Fortier, Group Controller of Teekay Corporation. During today's call, I will be taking you through Teekay Tankers' third quarter earnings results presentation which can be found on our web site.

Beginning with our recent highlights on slide 3. Teekay Tankers generated an adjusted net loss of $0.05 per share, compared to our adjusted net loss of $0.08 per share reported in the second quarter, and cash available for distribution of $0.10 per share in the third quarter, up from the $0.07 per share in the second quarter. These increases were primarily due to stronger Aframax and Suezmax spot tanker rates earned in the third quarter, despite a heavier-than-normal dry dock schedule that saw three vessels dry docking for a combined 90 days during the quarter. In keeping with our current fixed-dividend policy, the Company declared a dividend of $0.03 per share for the third quarter, representing Teekay Tankers' 24th consecutive quarterly dividend, which was paid on October 25 to all shareholders of record on October 16. Teekay Tankers' dividend is currently fixed at an annual level of $0.12 per share, payable quarterly.

During this period of cyclical weakness in the tanker market, we continue to focus on managing our fleet deployment mix, to ensure we preserve cover from fixed-rate charters, to support and provide stability to our cash available for distribution and cash dividend. During the third quarter, we extended a fixed time-charter contract on one of our Aframax tankers, the Kanata Spirit, for an additional year, securing more fixed-rate cash flow at a rate current above the spot tanker market average. This time-charter will enable Teekay Tankers to maintain strong fixed-rate cover of approximately 40% for the 12 months commencing October 1, 2013, and 35% for fiscal 2014.

Compared to the averages for the third quarter, fourth quarter to-date realized Aframax and Suezmax rates have been lower, while LR2 rates have been higher. Based on a weighted average of approximately 40% of spot revenue days booked, our fourth quarter Suezmax bookings have averaged approximately $10,800 per day, down from $13,800 per day in the third quarter, and our fourth quarter Aframax bookings have averaged approximately $10,400 per day, down from $13,600 per day in the third quarter. Based on approximately 60% of spot revenue days booked, our fourth quarter LR2 bookings, have averaged approximately $14,800 per day, up from $12,500 per day in the third quarter.

Turning to slide 4, I will take a moment to update you on our term loan investments secured by two 2010-built VLCCs that we detailed during the second quarter earning conference call. The table on the slide summarizes the latest status of the VLCC vessels that secure Teekay Tankers' VLCC mortgage loans, as well as a separate mortgage loan investment by our sponsor, Teekay Corporation. All of these loans are currently in default by the borrowers. During the second quarter, Teekay took over commercial and technical management of two of the three vessels, A Elephant, which is securing one of Teekay Tankers' loan investments, and C Elephant, which is securing Teekay Corporation's loan investment.

Since Teekay took over technical and commercial management, these two vessels have earned positive cash flow above their respective daily cash breakeven, including OpEx and interest expense, and have been actively trading in the VLCC spot tanker market. All amounts earned over Teekay Tankers' cash breakeven of $10,700 per day goes towards the recovery of the loan investment. At the moment, B Elephant remains under detention in Egypt, following an incident which took place under the management of the borrower. The ship's insurers continue to work with the authorities to negotiate a settlement to expedite the release of this vessel as soon as possible. Once this vessel is released, Teekay will take over commercial and technical management and trade the vessel in the spot tanker market with the other two ships.

In the third quarter, Teekay Tankers recorded an additional loan loss provision of $10.4 million on its mortgage loans, secured by A Elephant and B Elephant, due to updated assumptions related to future earnings for the B Elephant, which is currently detained. The expected sale proceeds for both vessels, an estimated cost to realize on the collateral of these loans. However, based on the $24.8 million on the cash interest payments received from the borrower to date, and considering the loan loss provisions we have taken, Teekay Tankers expects to earn an annualized rate of return of approximately 6.5% on these loans from the loan advancement date until recovery. In summary, while we work through the process with the borrowers, our plan is to trade the vessels, taking advantage of the recent spike in VLCC spot tanker rates which are currently in excess of $30,000 per day, bringing us closer to realizing the value of the loans while providing us with time to evaluate options on how best to realize our investment in the loans.

Turning to slide 5, I will provide a brief status update on the LR2 product tanker order from STX offshore and shipbuilding. As I mentioned during our second quarter conference all, due to financial difficulties, STX recently underwent a reorganization with its creditors, and has so far failed to provide refund guarantees for the vessels we ordered in April of this year. This was a condition of our shipbuilding agreement, and as a result, we have not made any installment payments for the new buildings. To preserve our rights under the shipbuilding contract, in October, 2013, we exercised options to order four additional LR2 new buildings under the STX contract. STX is also in default of these additional four ships and it does not appear likely that they will meet their obligations to build these ships. We are currently evaluating our alternatives, including taking legal action against STX for damages.

Turning to slide 6. We take a look at the crude and product tanker spot markets for the third quarter. In the crude tanker market, the third quarter started out strong due to peak summer demand. However, continued reduction in the US crude oil imports, due to rising domestic production, the onset of fall refinery maintenance, and reduced OPEC supply, all put down ward pressure on rate through the latter half of the third quarter. During the early part of the fourth quarter, there has been an increase in VLCC rates driven by an uptick in Chinese stockpiling and increased refinery throughput ahead of stronger winter demand. While Suezmax rates have begun to recover from their Q3 lows as a result of the stronger VLCC market, renewed disruptions in Libyan production could result in continued downward pressure on Suezmax rates in the fourth quarter. In the product sector, LR2 tanker rates in the third quarter returned to levels last seen in the first quarter of 2013 as a result of an attractive East/West gas/oil arbitrage. Rates corrected slightly as the arbitrage closed, but remained steady heading into the middle of the fourth quarter.

On slide 7, we provide an outlook for seasonal crude tanker rates heading into the latter half of the fourth quarter of 2013. Crude tanker demand strengthened toward the end of the third quarter, with the onset of normal winter seasonal demand and increased refinery throughput as refineries came back on line after autumn maintenance. We expect that the usual winter weather delays will provide some upside support to rates towards the end of the fourth quarter, when tanker rates are typically strongest in the Northern Hemisphere, especially in December. Based on estimates from the International Energy Agency, global oil demand in the third quarter averaged 1 million barrels per day higher than the second quarter, and is expected to grow by an additional 0.7 million barrels per day in the fourth quarter.

Potentially offsetting the seasonally higher tanker demand, is the recent reduction in the call on OPEC, partially as a result of increased US domestic production. US sea-borne crude imports averaged 5.2 million barrels per day during the first seven months of 2013, versus 6.2 million barrels per day in 2012, representing an 18% reduction year-on-year. This is the lowest level of US sea-borne crude imports since 1991. As I noted earlier, this has already had an impact on the Suezmax factor, in the form of weaker US Atlantic Coast import of West African crude toward the end of the third quarter. If this continues, the seasonal gains we expect could be tempered going into the fourth quarter.

Looking at the overall market supply of uncoated tankers on slide 8, the Aframax and Suezmax segments, are both expected to experience limited fleet growth going into 2014 and 2015, as the current order book comes off and scrapping of older vessels picks up. Presently, the uncoated Aframax order book stands at 32 vessels, or only 5% of the existing fleet, compared to the LR2 order book, which stand at 49 vessels or 20% of the existing fleet. In addition, a total of 120 Aframaxes are currently aged 15 years or older, with a further 50 vessels expected to reach 15 years by the end of 2015. As charters seek out newer vessels with the potential to provide greater fuel efficiency, older vessels are increasingly under pressure for scrapping. Factors such as the high cost of dry docking, combined with the cost of operations relative to potential returns in the current weak spot market, have encouraged many owners to scrap tankers before the end of their typical useful life. As a result, we are currently forecasting the Aframax fleet to shrink by approximately 16 vessels in 2013, and 14 vessels in 2014. Looking at the global Suezmax fleet, although the segment is expected to grow by approximately 17 vessels in 2013 and 2 vessels in 2014, since many of the Suezmax vessels on order for 2014 and into 2015 are at yards currently struggling with financial and structural problems, expected fleet growth could be significantly reduced if those orders are canceled or are significantly delayed.

In the bottom graph on the slide, the shaded sections on the bars for 2013 through to 2015 indicate the orders that are presently in question. And the dotted line indicates what the net fleet growth would be if those orders fail to deliver. Currently, the Suezmax order book stand at 54 vessels, or 11% of the fleet. However, if we remove all of the at-risk orders, the total number of vessels on order drops to 38, or 7.5% of the existing fleet. As these charts demonstrate, fleet growth for both Aframax and Suezmax tankers is set to be lower in 2014 and 2015. Overall, the Aframax fleet is expected to shrink by approximately 2% in 2014 and 1% in 2015, while the Suezmax fleet is expected to only grow by 1% or less in 2014 and 2015. Looking at the demand side, global oil demand is currently expected to grow by 1.1 million barrels per day in 2014, compared to expected growth of 0.9 million barrels per day in 2013 which should translate into stronger tanker demand growth. When combined with lower fleet growth due to fewer deliveries and increased scrapping, we expect that crude tanker fleet utilization will improve in 2014, and should result in a gradual improvement in rates.

Turning to slide 9, Teekay Tankers remains financially sound. At September 30, 2013, Teekay Tankers had $226 million of total liquidity, and the amounts we expect to recover on our VLCC mortgage loan investment will further add to Teekay Tankers' available liquidity. Our move to a fixed dividend policy in the first quarter, will also enable us to retain a greater portion of our cash from operations as the market recovers, which can be applied towards future growth opportunities. In addition, Teekay Tankers benefits from a favorable debt amortization profile and low principal repayments through to 2017. This enables us to retain a greater portion of our operating cash flow for future growth. Finally, our covenant light debt facilities mean we have no covenant concerns and considerable financial flexibility.

With that, operator, we are now available to take questions.

Thank you very much.

(Operator Instructions)

And our first question comes from Michael Weber from Wells Fargo Securities. Please go ahead.

Hi, everyone, this is Don in for Michael.

Good morning.

My first question is around the STX new builds. I know you exercised the options, this is a way to preserve the rights of the contract. Is it indicative of any optimism around eventually getting those guarantees?

It was more around preserving the rights. And as we said, they have not met the obligations under those options either. So that's why we are saying that it's unlikely that those ships will be built.

Okay. That makes sense. And then I guess given that scenario, how I guess -- how tied are your growth options to that STX order? Is there a way to gain growth in the LR2 market out of STX?

The STX orders were for LR2s. And what we've now had is a benefit of hindsight as we've seen this year's order book for LR2s develop. When we first place the orders, there were less than 20 LR2s on order, and now there is 50 or so.

So it's a factor that's becoming more finely balanced. We will have to look at other opportunities relative, both in the LR2 area but in crude, which may have better economic going forward.

Got it. Last question is just -- is there any timeframe for an Egyptian resolution?

No.

Okay. That's it. I'll turn it over.

Thanks.

Thank you. The next question comes from John Chappell from Evercore. Please go ahead, sir.

Thank you. Good morning, guys.

Good morning, John.

Bruce, just to follow up on that last question. Sounds like you're, maybe, not going to pursue the LR2 growth initiative.

When you think of that pretty compelling slide of the Aframax and Suezmax and where asset prices are today, I would imagine that you are going to return to a growth model at some point in the near future. Is that going to be new builds in those categories where you can maybe focus on modernizing your fleet and energy efficient designs, or would you want to get secondhand tonnage, because maybe the different return profiles of those assets?

I think that's the key question on the crude side is, we've got to look at the new building prices and the eco fuel-efficient designs relative to the -- what may be even more depressed secondhand modern ships on the water, which we know through our technical abilities can eco-refit a lot of those ships to narrow the gap between a new building eco and a secondhand ship on the water. And so the math may very well favor on the water assets going forward in our return to growth and renewing the fleet, John.

Okay. That is something you will be, kind of, examining and maybe acting on in the near future?

It is something we are certainly looking at.

All right. And will you stick to your knitting with the mid-size crude tankers, or would you -- seems like there's a little bit more interest now in VLCCs than most of the other asset classes. Maybe that works to your advantage, but would you go kind of further along the asset class scale?

We'll certainly look at different ones, but our priority is still sticking to the knitting. We have the scale and the commercial knowledge and customer relationships in those sectors. And, as you can see, when you don't have a large scale in an area, like on the VLCCs, you take a little bit more volatility in earning. So I think preferring-- our preference is to stick to our core, traditional segment of Aframax and Suezmax.

Okay. And one question on STX, as well. It seems, you haven't put any down payments down. So you're really not out of pocket anything. But you're going to potentially pursue damages.

What do you determine what those damages are? Is it, you know, what you missed out on marking those asset prices? You were able to lock in to markets today, and realistically, what are your odds of recovering any damages, not just based on a claim but also, you know, going against somebody who may not be the most liquid enemy in the world?

To your first point on the valuation, that -- the legal experts have reviewed that, and that's how they would calculate it. As for the likelihood, that's hard to say. I think, they are -- they went through a voluntary restructuring, so in some ways they've been recapitalized.

They're still trying to build ships. So it's not like the shipyard that's gone completely out of business. But it's very hard to assess the likelihood of success and any of that type of legal claims, it's just hard to put a probability on that.

Okay. Then one last one, and I'll turn it over regarding the provision in the third quarter.

What really changed? I mean, is it strictly the fact that Elephant B is still detained in Egypt? Because it seems like asset prices are going up. It seems like there's a little bit more optimism about the market going forward and what you could potentially earn by operating those assets.

And if that is the case, you know, what's kind of the end game here? You know, you say you're going to operate these ships, but you know, based on what you had said, that's not really your core competency in-- as far as asset classes are concerned. You want to have both together so you can dispose of them in block, or would you want to operate them for a little while?

I'll answer the last half of the question, and Vince can answer the first part about the impairment. In terms of our long-term realization, right now, I mean, rates are spiking, and into the winter, VLCC rates could be strong. So we are looking for opportune times to recognize on that value.

We are certainly not distressed sellers of assets. So we will pick the right time to look to dispose of those assets. But then that also gives you capital to redeploy in your core areas.

So it's a matter of most effectively deploying the capital, as opposed to keeping these assets just because we happen to have them. And as we said before, the reason why we stick to our knitting, it's because we have the scale. But, the correlation between the various asset segments are highly correlated.

So we'd rather probably redeploy in areas that are our core area of business. As for the impairment, I'll hand that over to --

Yes. Actually, it's a loss provision, John, as opposed to impairment. And most of the $10 million is related to B Elephant given its situation, given that it's still detained in Egypt, and we're not able to generate cash flows toward our accrued interest and all that. And we made some estimates as to, you know, what it would cost for us to get that shipped out of Egypt and get it ready for trading and all that.

So most of that is related to B Elephant. And you're right about in terms of the VLCC sector, certainly, the rates have increased recently. And if it continues to do so, and investment values follow, that may change our estimates upwards in future quarters, and part of that loss provision actually can be reversed. So it's different from vessel impairments where it's only one way, whereas loss provisions can go up or down.

One last quick followup for you, Vince. What is the assumptions in that provision as far as the release of the ship from Egypt? If it is still detained come February, when you're reporting fourth quarter earnings, is there going to potentially be another provision, or have you kitchen-sinked this where it can only go in your favor the sooner that it is released?

I think we've taken a fairly conservative approach when coming with this provision in the third quarter and it hopefully captures the eventual outcome of getting the ship out. So I'm not expecting any large-- further, any large impairments, hopefully next quarter. So, hopefully we'll get that ship released out of Egypt and start trading fairly soon.

Thanks, Vince, thanks, Bruce.

Thanks, Jon.

(Operator Instructions)

Our next question comes from Ken Hoexter of Bank of America Merrill Lynch. Please go ahead, sir.

Hey, Bruce, hey, Vince, it's Ken Hoexter. Just on the ownership of the VLCC, the Chinese joint venture, the 50% ownership, if you would look to sell the contracted ones -- the Elephants, in terms of improving market, would you look to unload the contract for the joint venture, as well, or is that core because it's under a five-year time charter so you want to just sit on the income for a while? Just understanding the mix of your comment on expertise versus the financial benefit of that.

Yes. I think the two are unrelated.

The VLCC loans were at a period in the market where we were seeing cyclical weakness and we wanted to make fixed-rate returns. And even with the latest impairment -- or, sorry, loss provision, it -- that still returns a very good, kind of, fixed income over that period. Whereas the transition into the lock -- the joint venture VLCC, that's a -- as you say, a five-year charter with some profit share component, too, as the market recovers. So that was part of our strategic plan to have that type of exposure going forward.

And so the two are unrelated. We wouldn't look to dispose of the 50% JV VLCC.

I guess to follow on the questions before, if you're not looking to expand on the LR2 now, given what's going on in terms of the order book, would you look to -- if you entered the VLCC market, would it be through other joint ventures like this one, or would you move up market? I know you said you've got an expertise in the Afra Suez. So just wondering, is this your kind of toehold to get an expansion in that matter?

Yes, I mean, our expertise in Suezmax and Aframax is those are our commercial pools, and ability to operate both our own ships and other people's ship. The VLCCs, certainly, our joint venture partners is very good at VLCCs, and they have a few, and they are on time-charter.

And if there are other opportunities to grow there, we would certainly look at those. But it's not a core area of expansion.

Okay. I know you mentioned the switch to the STX. You mentioned you didn't put anything down additional for the expansion. What are you out in terms of down payments for the original?

We haven't put anything down for any of the orders.

Okay. So what was the-- at this point then, what of the violation at the yard? Was there a progress they were supposed to make? Just understanding what -- in terms of the first four, what had they missed in terms of targeting at this point?

What they've missed on all of the orders, and the first four with the refund guarantees. So before we made any installment payments, they were required to provide refund guarantees, which they have not been able to do.

Okay. And then lastly, just, you talked in terms of looking at the market overall, you talked about an increase of 1.1 million barrels per day. How much, when you start thinking about local production versus seaborne oil, and maybe a shifting, I guess, against you, in terms of the ton mileage, how do you step back and think about the ton mile change over the last few years, given the shale development in the US?

Certainly the general trend over the last few years has been less, clearly less, US imports. And then the question is, where did the other OPEC oil go? Is it West Africa, China, which is a long haul.

And China is still very positive, in that, this month, I think, they're now the biggest importer of oil in the world. They've surpassed the US imports. So their growth story is really where the oil is going.

And then, you know, going forward, you just see continued discussion around the impact of the shale oil. But potential for more product exports from the US as well as potentially crude exports, because of the fact that it's just going to be too much oil. And we need connect the price of US oil with the rest of the world. So that is a, kind of, the longer-term, 10-mile story, might be, more exports from the US.

So when-- to wrap up then, there used to be a multiplier you'd put on, in terms of oil growth turn into sea-going growth, and there was an x multiplier you'd put on, that you used to put on ton mileage demand. Has that-- have you shifted a, kind of, target number there?

No. We used to always have a range there. It wasn't ours, it was kind of what the analysts' oil -- shipping analysts would put out there. And most of them have fluctuated within that range still.

The fact that the OPEC oil has been reduced, has changed the multiplier and the actual oil demand, but not the multiplier itself, but what the multiplier's being applied against.

Okay. All right. I appreciate the time. Thanks for the insight.

Thanks.

Thank you. The next question comes from Jon Chappell from Evercore. Please go ahead, sir.

Jon might have already gone, I think. Already asked his question.

Okay. The next question is from John Reardon from Crowell, Weedon. Please go ahead, sir.

Hi, Bruce.

Hi, John.

Bruce, one of the thing you mentioned in your release, is that you were able to fix an Aframax at above market rates for an additional year. I'm curious, what allows you to do that? Is it because Teekay is a more reliable operator than some of the other people?

Also, could you please comment on what you think the recent strength in VLCC rates have been? And finally, earlier this year, the Chinese announced a big expansion of their refining capacity. Is that still on schedule? There, I'm done.

I'm still writing down your questions. Okay, your first one on the extension, above market rates. It is partly our relationship and long-term quality and relationships with those customers. It also has to do with being the incumbent ship and being, you know, something that's a known quantity to the customer. So they are willing to pay for that certainty and known ships. So there's that factor involved.

And in terms of the VLCC recent strength, it's largely due to Chinese stockpiling, increased imports, again, this month, becoming the largest importer of crude oil in the world, other seasonal factors, as well as Saudi Arabia now exporting more oil after their seasonal demand of their own internal usage has declined. So all of those things have resulted in stronger VLCC rates.

As for Chinese refining capacity, the most -- it is on schedule. They have been -- even more recently, been reported to be having -- allowing more product exports, which has been helping the regional trade in the area in the short-term. In the long run, it's so hard to predict what's going on in China, but so far, signs are that they are increasing their refining capacity and actual throughput to meet their own internal domestic demand.

One followup question, Bruce. This morning, Ship Finance and Frontline announced that they're basically going to demolish two of their -- the older VLCCs in the Frontline fleet, that Ship Finance had been leasing to them.

When you look out on the universe out there, do you see more shippers in a position where they're going to have to start scrapping their ships? And secondly, do you see the banks, which have -- like the German banks have been, kind of, doing, extend and pretend? Do you see them having to, kind of, finally bite the bullet and say, okay, hand it over? What do you think about that?

Sir, on the first question, we saw that report, and that's obviously positive. As for them choosing to do it out of -- because they want to help boost the market or because it is pure economics, I think it is economics, and everyone's facing it.

The dry docking or special survey, that's required at age 15 can be expensive. And you weigh that off versus us the two or three years that you have to recover that, and the outlook for the market relative to scrapping prices, and it comes down to math. So people are certainly -- who are doing the math, are incentivized to scrap or sell those ships for virtually scrap, or send them to demolition, as you said.

As for the banks, and are they in the same position? They certainly are, as you said, amend and pretend, and that is largely the result of denial. And bankers always sometimes don't necessarily see the costs that are coming up.

Certainly, they face the same math as all the ship owners do, and that's going to cause more difficulties in terms of their loans when they need to come up with actual new capital to put the ships through dry dock. So in some ways, they may face an even tougher decision.

Thanks, Bruce.

Thank you.

Thank you. The next question comes from Justin Yagerman from Deutsche bank. Please go ahead.

Hi, this is Taylor Mulherin, I am on for Justin. Wanted to ask you a question about OpEx. I remember back, looking back at Q2, it was a little bit higher than people had been expecting, and now here in Q3, it came in a little bit below where you had guided to. So I was curious if you could give any color about what's driving the variability and then, you know, looking forward, what the best way for us to think about that is.

The operating expenses did come in lower than expected in Q3, which of a nice, pleasant surprise. Most of the variance relates to timing of repairs and maintenance, and some of that maintenance is typically done also while the ships are in dry dock, it is more cost effective. So in Q3 we just -- you know, we ended up just spending a little less than expected.

I think for Q4, we do have three ships dry docking also in Q4, and -- but I wouldn't expect the OpEx to return to the high levels of Q2. I think Q4 might go up a little bit from Q3, maybe between $0.5 million to $1 million. But that should be a pretty good run rate to use.

Great. Then just kind of looking at the market in general, and this is more of a near-term question. When you talk about this run Q4 had, it's already been a pretty strong quarter to date.

So I was curious, you know, whether you expect that build to be on top of what's already happened particularly in the Suezmax market or kind of steady from here, just in, thinking about rates.

Yes, it's tough to say. I mean, the winter market usually didn't materialize until December. So anything that has come on now has been just more early refineries coming back on line.

The Suezmaxes may benefit, as we're seeing today, with the stronger VLCC market from West Africa, east, that is having a knock-on effect on Suezmaxes. But, also, as we said in the prepared remarks, the Libyan reduction in production has had a negative effect on Suezmaxes. It's going to be the combination of those positives and negatives. It's really hard to say what's doing to happen there for the rest of the quarter.

Great. Appreciate your time. Thanks.

Thank you.

Thank you.

(Operator Instructions)

Mr. Chan, there are no further questions at this time. You may continue.

All right. Thanks operator. Thank you, everyone. We'll speak to you next year.

Ladies and gentlemen, this concludes the conference call for today. We thank you for your participation. You may now disconnect your line, and have a great day.