Universal Stainless & Alloy Products Inc (USAP) 2012 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Universal Stainless first quarter 2012 conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions).

As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, June Filingeri. Ma'am, you may begin.

Thank you, Sam. Good morning. This is June Filingeri of Comm-Partners, and I would also like to welcome you to the Universal Stainless conference call. We are here to discuss the Company's first quarter 2012 results reported this morning.

With us from Management are Denny Oates, Chairman, President and Chief Executive Officer; Bill Beible, Senior Vice President of Operations; Paul McGrath, Vice President of Administration and General Counsel; Doug McSorley, Vice President of Finance and Chief Financial Officer; and Chris Zimmer, Vice President of Sales and Marketing.

Before I turn the call over to Management, let me quickly review procedures. Again, after Management has made formal remarks, we will take your questions and our conference coordinator, Sam, will instruct you on procedures at that time.

Also, please note that in this morning's call Management will make forward-looking statements under the Private Securities Litigation Reform Act of 1995. I would like to remind you of the risks related to these statements which are more fully described in today's press release and in the Company's filings with the Securities and Exchange Commission.

With the formalities out of the way, I would now like to turn the call over to Denny Oates. Denny, we are ready to begin.

Thanks, June. Good morning everyone. Thanks for joining us today.

We are pleased to announce that first-quarter sales represent a new quarterly record for Universal. Sales were $74.6 million, up 25% over the first quarter of 2011 on an 8% volume increase. Gross margin dollars were also at record levels, despite fluctuating nickel prices.

Operating income increased 39% and the operating margin on our legacy Universal business of 14.2% was at a five-year high. While favorable end market trends support these results, further execution on three main strategic initiatives continue to drive our sales performance and profitability gains in the quarter.

The first is our strategy to move sales mix towards higher-value, more technologically advanced products. In the 2012 first quarter, finished products represented 41% of total sales, compared with 37% in the first quarter last year and 39% in the 2011 fourth quarter. The second is maintaining a relentless focus on reducing cost by process improvement and capturing the benefits of recent capital investments. And third is pricing strategy and discipline.

Earnings per share for the first quarter were $0.86, including a $0.07 benefit for state taxes and an after-tax loss of $0.03 associated with the North Jackson startup. We did not achieve the operational accretion we projected for North Jackson due to a hot metal spill which occurred during commissioning of our vacuum induction melting furnace. Furnace repair work and other spill-related costs totaled $0.05 per share.

Our team did a great job recovering, and the furnace has been operating without incident since February. Were it not for the spill, North Jackson would have been slightly accretive to first-quarter results as we planned. Our North Jackson operation, once fully operational, will substantially accelerate our progress in achieving a new level of profitable growth for Universal.

Let me update you on the startup activities during the quarter.

Commissioning of the vacuum induction melting furnace resumed in earnest after melting our first heat late last year. Our operating plan calls for three heats per week as we refine melting practices and downstream processes. Customers will begin receiving test material to begin the approval process this quarter.

Our two new vacuum arc remelt furnaces are now running around the clock and have been since late January. We are now working towards AS9100 certification for our melt shop in North Jackson, with a target of early summer for certification.

Production on our new hydraulic radial forge has increased each month since the acquisition last August. Our first quarter of production was 50% above the fourth quarter of 2011.

AS9100 certification for forging operations was achieved earlier than planned in March.

The heat treating and finishing equipment has been commissioned and all equipment is operating well. The infrastructure preparation for the two additional vacuum arc remelt furnaces has been completed and the furnaces are on schedule for delivery and installation during the third quarter.

In short, we continue to make important strides in fully integrating North Jackson into our manufacturing processes Company-wide, and expect North Jackson to be fully accretive in the second quarter.

The heavy lifting in terms of investment and ramp-up of North Jackson will continue for the next few quarters. In the first quarter, our investment in working capital for North Jackson, and in support of our higher sales activity Company-wide, resulted in negative cash flow from operations of $3.8 million.

We ended the first quarter with backlog of $101.3 million including $16 million for our North Jackson facility. Backlog at year-end 2011 was $102.6 million.

As I said earlier, end market trends were generally favorable in the first quarter. Let's take a look at some of the markets.

Aerospace sales reached 50% of our total sales in the first quarter versus 41% in the same quarter a year ago, and 46% of sales in the 2011 fourth quarter. Our Aerospace sales increased 54% from the 2011 first quarter and 31% sequentially. That follows full-year 2011 growth of 62% in our Aerospace business.

The strong backlogs, order books and plant production ramp-ups of Boeing and Airbus continue to point to a vibrant outlook for the commercial aircraft market for some time to come. The combined Boeing and Airbus backlog is currently estimated to represent about seven years of production. Production levels are ramping up for numerous platforms.

As I noted last quarter, the challenge for aerospace suppliers is to keep pace with demand and expected production rate increases. The addition of North Jackson will enable us to meet more of that demand.

Petrochemical remained our second largest market in the first quarter, representing 21% of total sales compared with 23% in the 2011 first quarter and 21% in the fourth quarter. Our sales to the petrochemical market, where we have strategically focused on oil and gas, increased 14% from the year-ago first quarter and 17% from the fourth quarter. Demand for our steels comes mostly from the harsh environments in exploration and production.

In their earnings report last week, Halliburton and Schlumberger both reported strong exploration and deepwater activity internationally and in the Gulf of Mexico, with a shift towards more liquids and less gas. Halliburton specifically noted there was a 12% increase in US oil-directed recount, which has reached a 25-year high, nearly offset by 17% decline in the natural gas rig count. From a supply-chain perspective, inventories remain in balance and the outlook remains strong.

Power generation sales represented 15% of total sales in the first quarter of 2012 versus 18% in both the first and fourth quarters of 2011. Power generation sales increased 4% from the first quarter and were down 1% from the fourth quarter. Power generation demand in terms of maintenance remains solid. However, the new turbine market signals are mixed.

We have received recent inquiries from customers about our plans to gear up for new turbine business in 2013. That optimism was echoed in recent favorable remarks by GE in their first-quarter call. GE reaffirmed its forecast of 137 new gas turbine deliveries in 2012, an increase from 2011 even though their orders for gas turbines in the first quarter totaled 23 versus 27 in the 2011 first quarter. GE did note seeing -- and I am quoting -- a lot of activity, end quote, in gas turbine demand around the world.

It is also noteworthy that in US market electricity produced by gas power transmission has increased year over year, even though overall electricity demand is down. That is obviously a positive for our maintenance business now and new turbine business in the future.

Low gas prices are also beneficial for gas turbine usage. On balance we are cautiously optimistic that the long-delayed new turbine business will begin to materialize in 2013.

Service center plate represented 6% of sales in the first quarter versus 9% in the first quarter last year and 8% in the fourth quarter. Tool steel sales generally account for most of our sales in this category. In the first quarter our tool steel sales decreased 22% from the first quarter last year, but rose 20% sequentially.

Imports are continuing to impact the market. Tool steel imports increased 32% for the full year 2011 and 19% in January. However, our tool steel backlog continues to improve and the news on the automotive front remains positive. Overall US light vehicle sales increased 12.7% in March.

With that, let me the turn the call over to Doug at this point for his financial report.

Thank you, Denny. As Denny said, our first quarter sales were a record $74.6 million, an increase of $14.8 million or 24.7% from the first quarter of 2011 on an 8.4% increase in shipments. A continued favorable sales mix of higher-value products, along with increased pricing, also contributed to the sales increase. Sequentially, sales increased by $12.4 million or 20% on an 18.7% increase in shipments.

Our gross margin in the first quarter reached a record level of $14.3 million, an increase of $3.5 million or 32.2% from the same quarter last year. It was higher by $2.4 million or 19.9% from the 2011 fourth quarter.

Our first quarter 2012 gross margin includes the impact of the North Jackson ramp-up cost for the metal spill and VIM-related charges that totaled $530,000. As a percentage of sales, the gross margin including these costs was 19.1%, which was up from 18.1% in the first quarter of 2011 at a level with the fourth quarter of 2011.

Selling, general and administrative expense for the first quarter was $4.6 million, an increase of $753,000 or 19.7% from the first quarter of 2011, but down $308,000 or 6.3% from the fourth quarter. Our first quarter 2012 SG&A includes $740,000 for the North Jackson facility. As a percentage of sales, SG&A expense was 6.1% in the 2012 first quarter versus 6.4% in the same quarter last year and 7.9% in the 2011 fourth quarter.

Operating income was $9.7 million in the first quarter of 2012, an increase of $2.7 million from both the first quarter of 2011 and the 2011 fourth quarter. This represented increases of 39.1% and 38.2% respectively.

The operating margin was 13% in the 2012 first quarter, compared with 11.7% in the 2011 first quarter and 11.3% in the 2011 fourth quarter. The operating losses recognized for North Jackson in each quarter were $327,000 in the first quarter of 2012, $854,000 in the fourth quarter of 2011. In the first quarter of 2011 we recognized $419,000 of due diligence costs.

Before including the North Jackson-related expenses in each period, we achieved an operating margin of 14.2% of sales in the first quarter of 2012 compared with 12.4% in the first quarter of 2011 and 12.8% in the fourth quarter.

Interest expense was $704,000 in the 2012 first quarter compared with $125,000 in the same quarter of 2011, and $569,000 in the fourth quarter. The most recent periods reflect our increased debt for the North Jackson acquisition. Late in the first quarter of 2012 we amended our credit facility, which will have a positive impact going forward, and which I will address in a few minutes.

Turning to taxes, our effective tax rate for the first quarter of 2012 was 30.2%. In the first quarter of 2012 we recognized a benefit for tax adjustments related to state taxes. Based on our current tax position, we expect that our annual effective tax rate will be 35.1% for the balance of the year.

In terms of cash taxes, as we have discussed previously, we generated a taxable loss in 2011 in refundable taxes due to the acquisition of North Jackson and the accelerated depreciation from placing those assets in service. In early 2012 we bought filed for a recovery of $4.5 million of estimated tax payments made in 2011 prior to the acquisition and we received that reimbursement in the first quarter.

Also we have the option to elect a carryback for cash recovery of federal taxes paid in 2010 as well, which would have an estimated cash recovery of $5.4 million, but if we do so would result in an increased tax rate.

The number of shares used in computing the diluted earnings per share in the first quarter was $7.4 million, which is the same level as the fourth quarter but above the 7 million shares in the first quarter of 2011. The increase is the result of convertible note provided as consideration for the North Jackson acquisition.

Our net income for the first quarter of 2012 was $6.3 million or $0.86 per diluted share. This included a benefit of $0.07 per diluted share due to income tax adjustments. It also included a loss of $0.03 per share attributed to the North Jackson facility.

In the first quarter of 2011 net income of $4.4 million or $0.64 per diluted share included $0.04 per diluted share of acquisition expense for North Jackson. In the fourth quarter of 2011, net income was $4.3 million or $0.59 per diluted share, including a total of $0.13 per diluted share of expense related to North Jackson.

Turning to the balance sheet, our managed working capital as of the end of the 2012 first quarter, which includes receivables and inventory less accounts payable, was 35.6% of annualized sales compared with 36.5% in the first quarter of 2011 and 35.3% in the 2011 fourth quarter. Capital expenditures for the first quarter were $9.7 million, including $7.4 million for North Jackson.

At the end of the quarter our total debt was $103.9 million and our debt to total capitalization was 35.7%.

In the first quarter of 2012, we announced that we amended our credit agreement with our bank syndicate. The amendment improves the terms of the facility by lowering interest rates by 50 basis points. It gives us additional flexibility in the structure of our credit facilities and extends the maturity date to 2017 from 2016.

The agreement increases commitments under our revolver to $105 million from $75 million, while reducing the term loan facility to $20 million from $40 million, and thereby reducing our quarterly principal payments to $750,000 from $1.5 million. It also extends the start date of scheduled payments by one year to July 1, 2013.

That concludes my report. Denny, I'll turn it back to you for concluding remarks.

Thanks, Doug. In summary, our first-quarter sales increased 25% to a record $74.6 million. Profitability continued to improve in the quarter, as evidenced by our recent gross margin -- our record gross margin at a five-year high operating margins on our legacy Universal business. Sales mix, cost reduction, and pricing initiatives drove that improvement, as did generally favorable end markets.

We made further important progress on our start-up of North Jackson, although a melt spill kept it from being accretive through the quarter. We fully expect to be operationally accreted at North Jackson in the second quarter.

We entered the second quarter with $100 million-plus in backlog and strong markets. We will continue to focus on driving profitable growth by expanding our product portfolio with higher-margin products. When improving manufacturing processes to reduce costs and cut cycle times, and on positioning Universal to seize current and emerging market opportunities. Once North Jackson is completed, our ability to do so will expand substantially.

That concludes our formal remarks. We are now looking forward to your questions.

(Operator Instructions). Michael Gallo, CL King.

A couple questions. The SG&A level in the first quarter was lower than it has been on a sequential basis over the last couple of quarters, despite the increase in sales. Is that a good number to use going forward or is there anything unusual about the first-quarter? I would have thought as you start to ramp Patriot up you might see an increase in that. Thank you.

In fact, some of our run rate costs for the North Jackson facility are starting to come down in the SG&A. But the primary driver of the decrease is the variable component of our labor cost. Our performance targets are reset every year, and that is where you are seeing the decrease in the first quarter from the fourth a quarter of last year.

Right, so going forward, assuming Patriot ramps up and some of the performance targets are met, that you would expect that level to increase. Is that right?

That's right.

Second question, perhaps I missed it, did you give what the revenue from Patriot was in the first quarter?

It was for both the plant-based external sales and those that are being transacted through Bridgeville and our other facilities. It was $3.8 million.

Okay, so $3.8 million. When you guys -- you look at the backlog, could you talk a little bit about the ramp of how you expect that to transact through in the second quarter? I mean, I guess I would have thought it would have ramped a little more. How much did the spill cost you in terms of what you would have expected to ship on a revenue basis in the quarter?

Let me take those in reverse order. As far as the spill goes, it didn't really affect shipments in the first quarter. From a VIM standpoint, our vacuum induction melting standpoint, where it is really in a ramp-up phase, so we are melting products -- little of that is going to get to the marketplace directly until the third quarter, fourth quarter timeframe, and we will ramp up very gradually from there.

Right now we are making product to test the melting system, downstream processes and beginning to send material to customers so they can begin the approval process on the facility.

As far as the backlog goes, as you look at the fundamental markets we position the Company in, we see a pretty solid year. So I would expect that number to be bouncing around that $100 million to $110 million range. As we go through the year, we are working very diligently to get product through our system faster. So you won't necessarily see the same correlation between backlog and sales dollars as you have seen in the past.

Okay, great. (multiple speakers) go ahead.

I thought you asked a question about the ramp-up of North Jackson. If you look at the forge I would expect the forging operations itself, you should see continuous growth each quarter as we go through this year. As I described in my prepared remarks, our production is up about 50%.

We are not going to increase it 50% every quarter. I'm not saying that. But you can see each month an improvement in the throughput and higher volumes going through North Jackson.

The vacuum induction or melt shop itself, from a re-melt standpoint, the two furnaces are running full right now. From a vacuum induction melting standpoint, we are still in a commissioning mode, I would characterize it. So, you will see more heats made in the second quarter and the gradual improvements you'll get into the third and fourth quarter as we get approvals and start to get some of that material out into the marketplace.

Right. Okay, great. I will go back in the queue. Thank you.

Dan Whalen, Auriga USA.

Did you mention -- or it may be too early; do you have a backlog number for the current month?

$102.6 million.

Is that the end of the quarter or is that the end of --

End of the quarter.

And then that's (multiple speakers).

I don't (multiple speakers). I would say when you look at our bookings versus what we would intend to ship in April, you won't see much deviation from that. We'll be about the same number.

Okay. And I would imagine the composition of that is largely driven by Aerospace and petrochem. Is that fair?

Well, it would mirror our percentage of sales, so, yes, Aerospace would be the largest piece of that -- somewhere in the 45% to 50% range. Power-Gen would be around 20%.

And then, I understand (multiple speakers).

About the same range.

Okay. I understand nickel is a timing issue. But did it have any negative impact on the gross margins this quarter just from a timing issue?

It is difficult to quantify. But if you look at when we melted many of the products that we shipped in the first quarter, a lot of that stuff was melted with $8.50, $9 a pound nickel. And nickel dropped down into the $8.50 range. So what you've seen is, over the course of the first quarter, is declining surcharges and usually you get pinched a little bit over the short term there. Over the long term, it balances out.

Sure. Should we expect a little pitch in the second quarter maybe?

It depends on your outlook for nickel. (multiple speakers) I'm way too old to forecast nickel. Right now, my best estimate is it is going to move sideways and stay between $8 and $9 a pound, so I wouldn't think you'd see much of an impact.

Okay, great. And then if I may ask just one more; you mentioned the imports pressuring the markets. Just any commentary you could share on your view on that topic, and is it accelerating, decelerating?

That strictly applies to our tool steel plate business. It doesn't have anything to do with our aerospace, power jet or oil and gas business. And as you look at 2011 there was an increase, and it looks like it is plateaued up there continuing to increase on a year over year basis. Most of that material is coming in from China.

All right. Thank you.

(Operator Instructions). Phil Gibbs, KeyBanc Capital Markets.

Good morning. Solid quarter.

Thank you.

Are you expecting, at this point, for revenues to be better in the second quarter than they were in the first? Relatively stable at this point?

I would think directionally you should expect revenues to be up slightly.

Okay. And as far as volume, the volume that you would characterize coming out of North Jackson, out of the 14,000 tons you shipped in the first quarter, how many can we earmark out of North Jackson? Any sense there?

You are talking [14] (inaudible) we always talk pounds, as you know.

I was just -- well, yes.

Just a commentary on North Jackson. Keep in mind North Jackson is an integral part of our entire manufacturing process. Even though we talk about it as a separate entity, you guys know what is going on.

But if you look at what is going through the forge, you are talking about 2.5 million to 3 million pounds a month in the second quarter. And the VIM will be picking up activity as we go through the second quarter. But most of that won't be translated into shipments.

Some of that activity on the forge will be conversion business because directly in -- comes in and goes right out to customers. It is not part of our backlog because it is a pretty quick turnaround; basically comes in one day and it is forged that week and goes back to a customer. And the remainder would be material that we previously used to make in Bridgeville and send to a third-party, which we are now using our own forge for.

Yes, and the remelt capability that you have in North Jackson, presumably you are moving product from Bridgeville into there as well. So that is what you're talking about as far as integrated supply-chain.

As well as forging; it's re-melting as well as forging.

Okay. Going forward we should probably think about it more as an integrated unit, to your point.

Absolutely.

Okay. I just have a nuance question here, on that interest costs. Did you have any refinancing in that number, any costs associated with that renewal of the credit facility?

We did, but you won't see that make any impact, since the anniversary of the deal was pushed out another year. So, the averaging impact of the additional cost basically equates to what our run rate of the amortization of our original financing cost was.

Okay. And if I could just ask one more, the price increase that you put through on the premium products earlier this year, how should we be thinking about that impacting you guys? And, one, should we think about you realizing any of those increases, assuming that they are going through?

This is Chris Zimmer. The increase that we put into the marketplace was effective for new orders, which is really going to start to translate into shipments in late second quarter and third quarter for sure.

Okay. Thanks. Good luck.

Thanks.

Thanks.

(Operator Instructions). Lloyd O'Carroll, Davenport.

Denny, you talked about the major benefit this year as cost reduction as you pull in outside forging, outside VAR melt. How -- can you give us some idea of the magnitude of that cost reduction and at which -- at what point, how long will it take you to achieve?

Two things. On the remelt side, this is a kind of a good news/bad news thing, I guess, in a sense, in terms of cost reduction. The good news is we have been very successful in selling our re-melted products. We have grown that into the business. So, as a result, we fully loaded up those two new vacuum arc remelt furnaces.

All of our other furnaces continue to be full and we still have the need for outside support. So, it hasn't been a quid pro quo there, because our top line has been stronger.

As far as the forging goes, as you know, we used to participate in some of these markets and we would take product that was produced in Bridgeville and send it to a third party for forging and bring it back. Volumes on that was somewhere in the range of 10 million to 12 million pounds, and we are probably saving in the range of $0.10 to $0.12 a pound on every one of those.

Okay, and then when your other two VARs get put in the summer, when will they be operational and able to take the next step?

Early in the fourth quarter.

Okay. All right. Thank you.

Steve Roberts, NorthPointe Capital.

I just -- kind of a more -- bigger picture question as far as the aerospace industry. I am seeing [DEGA] showing that the US civil aircraft inventories are -- they have been going up for several years or new highs, and the orders this year are down substantially. It's a volatile series. Can you talk about the chain in the aerospace industry and where you see your products as far as over inventoried or other under inventoried?

We just -- it is interesting. There was just an aerospace metals conference in Pittsburgh here this week. So I guess starting at the top, there is a very deep backlog that goes out, depending upon what numbers you want to use, about seven years of backlog on the commercial aerospace side.

The fuel efficiency of new airplanes is very significant, which is driving a lot of this. So we don't see any cancellations or deferrals or anything along those lines of that backlog, simply because the economic issues with high gas prices, high fuel prices and what that means to these ultimate customers of these commercial airlines.

As far as the inventories go right now, we sell primarily to distributors and forgers. We don't sell directly to OEMs. Most of our existing product goes into structural applications and will be migrating with the vacuum induction melting addition into more higher-end products in the aerospace world.

As we look at those inventories on the service center side, they look very much in balance. In fact, arguably, if you look at some of the Metals Service Center Institute numbers, a little bit on the low side by historical standards. And I would say forgers in the aerospace supply chain are very adequate. Things look to be in balance, nothing out of balance.

You get mixed reviews on the passenger side. Passenger is not as big a part of our business as some of the other structural components that we have. But right now, I would characterize our fastener customers as being pretty much in balance, although I do hear anecdotal stories about some shortages there, depending upon whether it's going to Airbus or Boeing.

And so, when you say structural applications, is that your air body? Or is that different? I'm showing another report they were talking about the -- they were saying -- I'm sorry, airframes, were over inventoried right now, have excess inventory.

I don't know what report you are looking at. We're not seeing that at all.

Okay. Thank you.

Michael Gallo, CL King.

Just a more philosophical question on tool steel plate. It has obviously come down over the last year or so; seems like the competitive dynamic with imports has gotten more significant.

Is it becoming just more difficult for you to compete in that market? Is this a structural change where it is going to be more difficult to grow it? Do you see anything that has kind of changed that in terms of imports? Or should we expect that the tool steel plate business is going to see pressure from imports all year? Thank you.

I wouldn't look at the tool steel plate business itself as a growth vehicle for Universal. We look at it as a business we are committed to. We have some unique facilities that give us a competitive edge in that marketplace, and we play to a very specific niche in the marketplace.

There has been some competitive changes in the marketplace with the increase in imports coming mainly from China. That kind of goes with the territory a little bit. So I guess if I was -- as I look at our tool steel plate business, we are committed to the market. It is a nice product line for us, but it is not going to drive significant growth for us.

It's a very lumpy business when you look at the history if you go back and look. It really is divorced from our aerospace, oil and gas, and petrochem business. There really is very little correlation between the growth markets we position the Company in and tool steel, which is much slower growing.

Just the broader question then is, one, can you hold the volumes you have? And two, is there a point where it just becomes non-core to be in the business? Obviously some of your competitors have exited that business some years ago. Thank you.

It's -- we are very committed to the tool steel plate market, so we are not anywhere close to a decision about not producing tool steel plate at this point in time. In fact there are probably opportunities for us to do some things in the whole tool steel world, including some of the rounds we'll be able to make with North Jackson, which will give us further strength in that marketplace.

But it is not a market that is growing. It doesn't have the fundamental growth characteristics that you see in aerospace, power-gen or oil and gas.

Great. Second question I want to ask is just on power-gen. I was wondering if there is any way to clarify or break down how much benefit, if any, you got from increased maintenance as a result of natural gas switching this winter. Obviously that tends to be a pretty quick turn business. So I was wondering if you saw much of that in the first quarter.

Well, if you look at our sales trends, it's pretty flat compared to the fourth quarter. So I guess that would tell you not a heck of a lot. But it is very difficult for me to sit here and tell you exactly how much fluctuation quarter to quarter is due to something like that.

When you look at -- you know, we are selling the forgers and we are selling to distributors there as well. So we don't have that direct contact with the end-use customer.

Okay, great. Thank you.

At this time I am not showing any further questions. I would like to turn the call back to Mr. Oates for any further remarks.

Thanks again for joining us today. We started 2012 on a strong footing and are fully focused on making additional progress during the course of the year. We'll all look forward to updating you on our progress during our next call. Have a good day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.