Venture Global Inc (VG) 2008 Q3 法說會逐字稿

Good day everyone and welcome to the Vonage Holdings Corporation third quarter 2008 earnings conference call. Just as a reminder, today's call is being recorded.

At this time for opening remarks and introductions, I would like to turn the conference over to Ms. Leslie Arena, Vice President of Investor Relations. Please go ahead, ma'am.

Thank you, operator. Good morning and welcome to our third quarter 2008 conference call. Speaking on our call this morning will be Marc Lefar, Chief Executive Officer and John Rego, our CFO. Marc will his perspective since joining the Company and review our accomplishments for the quarter. John will review our financial results. The slides that accompany this discussion are available on the Investor Relations website. At the conclusion of our prepared remarks we'll be happy to take your questions.

As referenced on slide two, I would like to remind everyone that statements made during this call that are not historical facts or information may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act or 1995. These and all forward-looking statements are based on managements current beliefs and expectations and necessarily depend on assumptions, data, or method that may be incorrect or imprecise. Such forward-looking statements are subject to risks and uncertainties that can cause results to differ materially. More information about those risks and uncertainties is contained in Vonage's SEC filings. We caution listeners not to rely unduly on forward-looking statements and we disclaim any intent or obligation to update them. During this call, we will be referring to non-GAAP financial measures. A reconciliation of the non-GAAP to most directly comparable GAAP measures is available in our earnings release which is posted on the site.

And now I will turn the call over to Marc.

Thank you, Leslie. Good morning, everyone. And thank you for joining us on our third quarter earnings call. When I joined Vonage roughly 12 weeks ago, I spoke to you about the growth opportunities that attracted me to Vonage. My outlook on the marketplace for digital voice and Internet telephony and my belief in the Company's unique business model.

Today, having had an opportunity to drill into the business, I remain firm in my belief that Vonage has the potential to be a vibrant profitable business. We face significant near-term challenges. Dramatic improvement in operations and rapid acceleration in growth won't happen quickly. But I am optimistic that we can improve the yield on our marketing investments and enhance the performance of our distribution channels and improve the qualities of our core product while further reducing cost.

Before we review our results for the quarter, I would like to spend a few minutes sharing my observations and action plans after my first three months on the job. During the first weeks, I spent a great deal of time with front-line employees and customers. I listened to dozens of live customer calls with our call center agents, reviewed hundreds of letters and e-mails and held over a dozen small group meetings with employees. What I learned was truly enlightening. There is no doubt that Vonage has a dedicated and motivated work force that wants to win. Despite the challenges that the Company has faced over the past two years, the team is energized and ready to do what is necessary to succeed. And while our teams are very proud of the 76% of customers who state that they can't envision changing their service from Vonage, our employees also understand where we have failed to deliver against our customer's expectations.

The market opportunity remains robust, as digital voice penetration is still less than 30% of Broadband households. We provide a strong value proposition. Our pricing ranges from 15 to 20% below our competitors comparable offers, even against the voice component of most bundles, we provide meaningful savings after promotions expire and we have a number of unique features that customers love.

We simple have not done a good enough job of communicating the differences and making it easy for shoppers to become customers. The fundamental profitability of our customer base is strong. Our incremental premarketing operating income margins are approaching 60%. This is a good business.

That said, there are four primary where we have not executed satisfactorily or we have not provided adequate resources to truly fix the fundamentals. First, on on boarding processes for new customers are not sufficiently reliable to ensure a satisfying experience. In fact, early life churn, those customers who cancel service within 31 to 90 days is 180 bases points higher than those in the following nine months. Interestingly, a large number of these customers are not complaining about the quality of the service itself. They simply couldn't get properly activated and registered on the network. These issues range from problems related to number porting, to device delivery, to the installation procedure and sometimes information provided during our own sales process.

When we do get these customers into the hands of our most highly skilled agents, we find that we can remedy the vast majority of issues over the phone many times in one call. As a result, we recently established a dedicated team, the mission is to radically simplify the on boarding process and to be sure that each customer we sold is up and running quickly, an improvement in this area would not only improve churn by roughly 10 basis points but would to help to improve our gross ad yield as well.

Many of the same issues that are experienced by early life churn are causing returns among customers in their first 30 days. As you know, these returns are simply netted against gross ads. So fixing the on boarding process will not only improve churn, it will also improve our gross ads and slack. Fixing the on boarding process is a major priority for the Company. It is not an overnight fix. Some of these efforts require significant changes in our core process with strategic partners. But we are already seeing improvements and we expect significant benefits in 2009.

As we discussed on our second quarter call, our key customer service metrics of first call resolution and customer sat continue to show improvements. In the third quarter, FCR and customer sat were 74% and 86% respectively. But we still have work to do in enhancing the technical knowledge of our agents, improving IVR call flows and providing better information through our tool sets.

The second area of enhanced focus is the quality and reliability of our network, products and core operational platforms. While the majority of our customers are highly satisfied with the performance of our service, we still have a large opportunity to improve further. With better prioritization of resources and clear accountability is, we can and will identify quality issues much earlier and remedy problems before they are noticeable by our customers. Despite the fact, that some quality issues are driven by problems with our carrier partners, better early warning signs, and proactive troubleshooting are already improving the customer's experience. Unfortunately, this is an area where we have not adequately focused in the past.

Beyond this, we are revisiting the features of our enhanced services to ensure they work exactly the way customers expect. That they are easy to set up and to modify. And lastly, we must improve the reliability or up time for our core internal platforms to allow us to sell, provision and service our customers. There is no silver bullet to reduce churn and I know this has been mentioned in the past; however, we now have very specific initiatives and accountable individuals to execute against our plans. We will not waver from our focus. And executed well, these activities will have a material improvement on churn during the coming year.

In order to better align resources with our most critical needs, we've also decided to delay the integrated rollout of Broadband with Covad. In addition, the Company will apply mobile resources only on applications based products that are highly consistent with our core offerings. We will not let this distract us from our pursuit of operational excellence. There is tremendous growth and financial upside in our primary business. We simple need to execute better. Specific programs, accountable leaders, defined resources and measurable results will be the corner stones of the back-to-basics approach in the New Year.

The third area of focus is distribution and marketing effectiveness. Notwithstanding our less than exciting subscriber growth in recent months, we do have a phenomenal opportunity to grow. We have over 650,000 sales prospects that proactively inquire about purchasing service every month through our Tel-a-Sell Centers and our online store. And our retail partners continue to express their desire to help us build this category; however, our close rates are unacceptably low. There is a large variation in the success of our inbound telemarketing channels. Optimization of our partner mix, enhanced agent tools, training, scripting and better consultative selling should drive dramatically enhanced close rates.

Our online platform requires a significant overall. Our service is ideal for an online shopping experience. We believe that dramatic improvements in our web presence will enhance satisfaction, increase close rates and reduce slack. While the online store represents roughly 30% of gross ads today, we plan to shift this mix substantially over the next 18 months.

As I've mentioned, our flow of prospects remains quite solid. That doesn't mean that it can't be improved. And those that do express interest in our services need to be better educated and better ready to buy.

I have spent a fair bit of time over the first couple of months reviewing our advertising, messaging, and media plans. For competitive reasons, I will not get into the specific enhancements you will see in the next several months. But it is clearly evident that our current advertising is tired and overly complex. It contains no less than a dozen separate messages. And customers still do not fully understand what we do, why it will work well for them, and why they should choose us versus competitors. New commercials will be simpler and will provide more targeted messaging for key segments such as value seekers, international users, feature lovers, and frequent business travelers.

Our media strategy and plans are also being reevaluated. In the past, our strategy has been dominated by a direct response, remnant inventory buying strategy. While there is a place for this approach, the pendulum has swung too far and we are not successfully reaching and engaging our best prospects.

Finally, we need to tighten down our non-media marketing investments. Unproductive sponsorships and legacy agreements with fees and commissions well above market rates must be phased out or eliminated. Legacy sponsorships, those that will be expiring this year represented roughly $15 of slack in the third quarter with little positive impact on gross ads. I believe strongly that improvement in distribution and marketing can meaningfully increase gross ads in 2009 versus 2008. And I believe we can do this without any material change to our spending levels.

Our fourth area of focus is cost structure optimization. We have made great strides in the cost of telephony services in the recent years. As mentioned previously, these improvements along with some improved G&A discipline have allowed us to generate incremental margins on incremental subscribers or PMOI of 59%. But we have more work to do. There are opportunities in all aspects of our business, including third-party contracts, customer care vendor and citing operation, customer self service and further vigilance in G&A spending.

As we progress into 2009, the senior leadership team will be laser focused on improvements in these four areas. We know that we must get this business growing again and we will do it profitability.

Let me also take a moment to talk about the debt transaction. John will go through the details. I want to start by saying that the refinancing of the $253 million in convertible debt was a tremendous undertaking in one of the most challenging credit environments in history. Even companies with the highest credit qualities found it nearly impossible to obtain financing. The funding, which was completed on November 3, provides us with financial stability and allows us to place our full attention on running the business. The agreement does require strong management discipline to meet certain lender requirements, but I do believe that we have sufficient flexibility to invest in the growth of our business even in a highly competitive market.

Now, let's move on to the results for the third quarter. Operationally, the quarter was slightly below our expectations. John will go through the details. But total revenue for the quarter was $226 million, a 7% year-over-year increase and a 1% sequential decline from $228 million. We increased our net line editions from the second quarter but are not growing at the pace we need to. Although it is difficult to isolate the individual variables, we believe that the economic slow down partially offset some of the term reduction that we would have seen from our customer care improvements.

Net loss for the third quarter of 2008 narrowed to $8 million or $0.05 per share down from $12 million or $0.08 per share excluding charges a year ago. We delivered record level premarketing operating income or PMOI of $91 million and adjusted operating income of $15 million in the third quarter. This is the fourth consecutive quarter of positives and consistently increasing adjusted operating income. These two metrics demonstrate the stability and the potential of our business model and we're pleased with the continuing progress in these areas.

In summary, my first 12 weeks have been very productive. We're already making improvements that will position us well for 2009. The core business model and market opportunity remain robust. But we do have a great deal of work still ahead of us. Our problems are largely of our own making. But they are fixable. We're working aggressively but our performance will not improve overnight. With the completion of the re financing, the Company can fully focus on positioning the business for further profitable growth.

Now I would like to pass it on to John Rego to go through the detailed results for the quarter.

Thank you, Marc. While the results from the third quarter were generally mixed, there are a number of metrics that clearly demonstrate that the underlying performance of the business is strong. Beginning with slide three, we continue to if effectively manage our cost structure and as a result are reporting our fourth consecutive quarter of positive and increasing adjusted operating income. This number which is operating income before depreciation and amortization and share based expense was $15 million compared to a loss of $1 million excluding certain litigation and severance expense a year ago and $12 million sequentially.

Additionally on slide four, you will see that we generated a record high premarketing operating income or PMOI. PMOI, which reflects the cash flow generated from our existing customer base, increased to $91 million, up from $71 million ex-charges a year ago and $87 million sequentially due to improving scale and cost reductions. On a per line basis, PMOI was $11.55 in the third quarter, up significantly from $9.53 in the year ago quarter. Incrementally, we generated $16.25 of PMOI. This number, which excludes marketing, cost of goods sold and equipment and shifting revenue translates to a 59% margin on service revenue of more than $27. Clearly, the customer base generates significant cash and margins.

On slide five, net loss for the quarter of third quarter of 2008 narrowed to $8 million or $0.05 per share, down from $12 million ex-charges or $0.08 per share a year ago.

So let's look at the details behind these numbers. Beginning with the revenue on slide six, revenue of $226 million grew 7% from the third quarter 2007 but declined 1% sequentially. The sequential revenue decline was caused principally by a decrease in telephony services ARPU. Average monthly telephony services revenue per line, which is the ongoing monthly revenue we collect from our customers was $27.52 up $0.20 from the year ago quarter driven by a benefit from the reduction in the period over which activation fees are amortized. On the a sequential basis however, average monthly telephony service revenue per line declined 1% or $0.40. Principally due to promotions as well as an increase in credits granted to existing customers.

In a competitive environment, promotional activity will always be a part of driving customer acquisition. In recent months, economic trends have had some impact on price-sensitive customers. And while we've experienced modest pressure on ARPU, we've seen no significant changes in service pricing and thus continue to expect a stable pricing environment. A consistent bright spot in our results has been are ability to meaningfully reduce cost of telephony services.

Moving to slide seven, in the third quarter of 2008, direct cost of telephony services was down to $7.20. We continue to aggressively manage cuts which on a per line basis has declined 33%, excluding customer USF since 2004. We believe opportunities still exist to reduce cost of telephony services over the next year as we work closely with our suppliers and optimize call traffic routes. Cost of goods sold increased to $21 million from $19 million in the prior quarter and $17 million a year ago as the Company assumed additional expense for customer activation charges due to the aforementioned change in amortization policy. As well as an increase in waived activation fees for new customers. Direct margins fell slightly to 66% in the third quarter, down from 67% sequentially.

Moving to slide eight, we continue to reduce SG&A, which declines for the third consecutive quarter coming in at $73 million. As a percentage of revenue, SG&A fell to 32% from 34% sequentially and 38% ex-charges a year ago. And while we will continue to focus on improving efficiency, we do not anticipate significant changes in the level of SG&A spend over the next few quarters.

On slide nine, marketing expense for the third quarter was flat sequentially at 65 million and up $3 million from the third quarter of 2007. Cost of acquisition declined $11 sequentially to $272 in the third quarter but was less sufficient than the $206 in the third quarter of 2007.

As Marc discussed, we expect changes in our messaging, media mix, and channel efficiency, will lead to improvements in gross ad yield and higher returns in our marketing investment. Gross line additions for the quarter were 238,000, down from 300,000-year-over-year. In the third quarter 2007, gross additions were inflated by the acquisition of tens of thousands of customers who came to Vonage after Sun Rocket abruptly discontinued their service.

The Company had 9500 net line additions and ended the quarter with more than 2.6 million lines in service. We believe that current economic conditions have had some impact on our business. For the third quarter of 2008, our churn comes in at a reported 3% which is flat with second quarter of 2008.

Turning to the balance sheet on slide ten, cash, marketable securities and restricted cash at the end of the third quarter was $154 million which includes $42 million in restricted cash, $2 million of which is short-term. Used for routine business operations. Cash used for operations was $27 million driven primarily by the timing of vendor payments and transaction costs associated with the debt refinancing. The decline in cash from operations was driven by advanced payments by devices to precure materials for production, timing of vendor payments and transaction costs relating to our financing.

I would like to spend some time discussing the details of our debt refinancing. Let me say that we are thrilled to have completed that transaction in these challenging financial times. We worked diligently for more than a year to refinance the $253 million in convertible notes that could have been put to us this December. This financing consists of a $130.3 million senior secured first lien credit facility, a $72 million senior secured second lien credit facility and $18 million of senior secured third lien convertible notes. The lenders under the first and second lien and the purchasers of convertible notes were Silver Point Finance, certain of its affiliates, other third party lenders and affiliates of Vonage. It is important to note that the purchase of third lien notes was only permitted if investors participated in other liens. In fact, for every dollar invested in the third lien, investors or their affiliates invested several more times that amount in the first or second lien facilities.

On a run rate commencing in the first quarter 2009, we expect our quarterly cash interest to be approximately 5.2 million and non-cash or pick interest to be 4.5 million relative to the new facility. We have model in these incremental payments and are confident that they will not impede our future operations. We have spent the past 18 months drastically reducing the Company's cash burn and are now in a position to resume generating positive cash from our operations. In light of that, we expect to have sufficient liquidity to invest and grow the business. The details of our debt refinancing can be found in our 8-K that was filed on October 20. Now, operator, let's open up the line for some questions.

(OPERATOR INSTRUCTIONS). And our first question will come from Clay Moran with Stanford Group.

Good morning. I have three questions. The first question I was a little surprised about the economic impact on your business. You say it negatively impacted churn. Are you interested in where those subscribers are going? Are they going to wireless and does that make wireless the value leader and not you guys? And any other sense you have about the economic effect? Is there any gains to be had given that you do have the lowest cost home phone service?

Let me take the first one, Clay. First in terms of the economic effect, what I said was we believe it had a modest effect. We do get phone calls into our retention centers where folks are looking for credits. They're optimizing and belt tightening as you see in every industry. We're not hearing so much a significant number of folks cancelling specifically for economic reasons. But we've seen improvement in a lot of our call center metrics and some other quality metrics and we expect there's probably a net zero gain there. We were flat on churn. We really, frankly, would have expected to see a little more improvement during the time period. It's not a significant. But it would be prudent not to suggest we are receiving phone calls to talk about it. It's something we'll catch carefully in months and quarters. It's not something I'm concerned about. It's something we watch carefully.

In terms of wireless being the value leader, we still believe that there is an awful lot of people. Certainly you see wireless only substitution continuing. We believe that's going to continue for some period of time. But we still recognize that for multi-person homes, there is still a strong demand for cost effective, highly functional home phone service that allows people to use that one number across multiple users. And we are not seeing as many folks or any increase in the number of folks that are cancelling for wireless only. It's been steady. But we've not noted any material increase in the past three months.

Okay. Second question, the last two quarters have really shown essentially no net subscriber growth but still fairly heavy marketing expense. Does that -- to me that implies maybe that maintenance marketing is very high. I'm sure you disagree. Why am I wrong on that?

Well, I think that you have to look at a couple of items, some of which I already talked about. One, there is a lot of marketing insufficient that's out there. In the third quarter alone, there was $15 in slack spent on legacy sponsorship. I won't get into the details. They're multi-year sponsorships that were entered into a long time ago. But millions of dollars are being spent. We're not getting our message out to customers telling them our story, engaging them and turning them into part of our funnel. The second issue is I think you've probably become a little weary of the commercials we've run. We've not had fresh advertising on air for a long period of time. And our research makes it very clear that folks still don't under that we are, in fact, a substitute for your home phone service. It works on your existing high-sped Broadband connection and we have not done a good job of clearing up the mess that is promotional confusion brought on by the telco's and the cable companies to help people understand where we really have significantly better value. So this is about core fundamental messaging. It's about efficiency in the money we do spend.

And then the last point is our channel of distribution. I don't know if you've visited our website lately. And while it is certainly improved over time, it is not the easiest place to shop on the online sign up process takes too long and does not allow the customer to actually do the shopping and learning that they need to as quickly as they do. And our inbound telemarketing channels, I've had a chance to visit our processes, procedures and listen to call there. We have tremendous upside opportunity to close better by explaining and do more consultative selling.. So I know the prove is in the pudding and you will sure hold me to task for the results behind it. But in the dollars we're spending, even modest percentage increase in yield at flat dollars spend dropped tremendous numbers to the bottom line. And you can look for those improvements in the coming quarters.

Will you give us a sense of where you think maintenance market is in terms of dollars?

No. That's not something that we broke out before. And I don't think we'll probably start doing that. We still look at the majority of our investment, however, as acquisition driven. So you certainly should think about the bulk of marketing spend as you look at slack. Remember, that includes our distribution channel cost as well. It's primarily acquisition.

Okay. Last question, can you share with us the one or two most restrictive covenants on the debt. Thanks.

John here. Clay, how are you. We have a fairly normal covenant set with this transaction. We have financial covenant that we have to hit. They're all fully disclosed. And the ones you would expect, it's an EBITDA, liquidity covenant, ratio so we feel pretty comfortable with the covenant to be honest with you.

Thank you.

This is Leslie. You had also asked about the share base compensation expense in a separate e-mail, it was 4.2 million from the quarter up from 3.2 the prior quarter.

And is that in G&A?

Yes.

Yes.

Okay. Thanks.

Next question, operator.

And our next question will come from City Investment Research. We'll hear from Michael Rollins.

Hi. Good morning. Marc, I was wondering if you could talk a little bit more, I know you talked about churn reaching the marketing and getting churn down and the gross up. In your mind, how do you position Vonage? Do you think it still works as a strong stand-alone product for users? Or do you think it has to somehow be bundled with some other functionality or other products. And the other question I have what are you doing on the distribution side? Do you see the telemarketing and direct mail are still the key distribution for you or do you think there is a retail opportunity that can work for you over time? Thanks.

Yes. On your first question, so the first question stand alone product, we absolutely believe that there is a need for a stand alone product and people buy. In fact, to be perfectly candid with you, you know where I've been in the past, the bundle is nothing more than a price discount. There is no functionality that makes that bundle work m anyway better for customers. So the first thing we have to be able to do is help people understand the value proposition that we have. And when you cut through the clutter of some of the promotions that start low and then increase quickly and then once you've got that tied up with your video service, you all of a sudden get slammed because you realize your pricing is going to change erratically if you want to disconnect your voice. There's no feature set that keeps you together. We need to make sure people understand buying us alone in many, many cases is still a lot cheaper than the voice element of the bundle. And our messaging will do a fair bit to help to explain to people where you get that value.

So that's piece one. And we are clearly a value brand that provides a good level of service. But the broader issue for us, as we think about the long-term positioning, we have the ability to basically de-aggregate the number from the physical device and the idea of one number for life and a single number that allows you to be access wherever you are, a single number that can ring multiple phones simultaneously and the flexibility you have to use messaging from your PC to your phone and think about messaging that works in an integrated way across multiple devices, we actually in many ways provide better bundled services than those folks who claim to be selling the bundle themselves. So buying service from Vonage I think provides you the flexibility of feature sets that is at least as good as the bundle. And we have to do a better job of making sure folks understand the actual value proposition , what you get for what you pay, compared to that bundle.

In terms of the distribution question around inbound telemarketing and direct mail, I think that you will see from us a shift over time in terms of the percentage of the mix. It's fairly expensive. But more importantly, it's not necessarily the place where a product that should be relatively simple, it's one core service, it's a couple of rate plans, there's a handful of features that you want to be able to see demonstrated, to set up, to be able to change, it is perfect for a well-driven, online environment. And we think if we focus our advertising and outbound messaging in a way that drives more traffic to a properly organized, highly functional website, not only will we be able to do better in terms of gross ad yield and the slack that comes out of it, but we'll also think we'll get customers to use our features more frequently and they'll become stickier.

In terms of direct response, we still get a pretty nice yield and pretty slack on our direct response program. The challenge there is to use sophisticated analytics to constantly assure we're hitting the right people with the right message. And it's also been proven many times that you have to have the right kind of air cover in terms of television messaging to improve your yield on direct mail response. So we're working to try to understand those combinations a little bit better and perhaps enhance our yield. And relative to retail, we continue to get good support from mass merchants. We're still experimenting with the model trying to figure out exactly what we can do to make sure people know to shop us there and what kind of through put we can improve. We see long variation building by building, channel by channel. And I do think retail has a long-term place in our distribution mix. I think balanced distribution is very important. But it's unclear how much that will be over the next 12 to18 months. We still have some work to do there. I think the bigger shift you can think about is over 18 to 24-month period of time, we will make a conservative effort to do a better job in messaging and shift inbound telemarketing volume which is nearly two-thirds of all of our gross additions to web based channels and I think you'll see that shift begin in 2009.

And just one follow-up. As we try to think about churn on a go-forward basis, do you have a percentage of customers that you have identified as low activity or no activity where you either have to remarket to those customers to get them active again or you run the risk of losing them?

Mike, we do look at customer usage. We do have folks who use some of our lines as second lines. We have some that are primary. We have some that are extraordinarily heavy users and we do segment that. We don't see a significant need or activity to remarket the core service. What we do do is based upon people's usage, we bring to them opportunities to cross sell to other features that can then drive some of that usage. So that's kind of the core of what we do. We do have that data. We don't report it publicly, we look at it in those cohorts because it changes the kind of marketing activities.

I'm sorry. One last follow-up to that. Is that part of what's driving -- when you try to identify the reasons for the elevated churn and the early life churn, is there a high correlation between usage levels or do you find it really is other factors driving the churn?

I don't think there is a fairly high between the usage levels. Somebody who is about to churn, sometimes they've already churned off and you don't hear about it until later. You look at their frequent usage and it's very low. We have a lot of folks who have modest to low usage where they have wireless service and they're using several hundred minutes of our service and they're happy with the value they get from us as well as their wireless service and we don't see a decay in their usage over a period of time. We also see folks that have very light usage that are very long-time customers that show no propensity to churn at all. So there really is other factors. And on the early life piece, I can't emphasize too much. This is about we don't do a great job of getting the port completed, the device in their home, making sure that it's active and registered in their home and working the way they expect it to frequently enough. Much of the churn we see in those first couple of months, and, remember, keep in mind early life churn is only in month two because we have returns in month one, if they turn it back in first month it's net out of gross ads. What we're seeing in the first year we are constantly remedy problems that related to how we got them up and running in the first place. If we get that solved, we will have a material improvement in churn.

Thanks very much.

Next question, operator.

Just as a reminder, that is star one if you do have a question or a comment. Please keep in mind if you're using a speaker phone, please make sure your mute function is turned off to make sure the signal reaches our equipment. Once again, that is star one if you have a question or a comment. And we'll pause for just a moment.

Okay. Thank you, operator. We'll conclude the call now.

That does conclude our teleconference for today. We would like to thank everyone for your participation and have a wonderful day.