World Kinect Corp (WKC) 2005 Q4 法說會逐字稿

Welcome to the World Fuel Services fourth quarter 2005 year-end results conference call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. (OPERATOR INSTRUCTIONS). As a reminder this conference is being recorded Monday, March 20, 2006. I would now like to turn the conference over to Michael Mason. Please go ahead sir.

Thank you, good morning and welcome to World Fuel Services conference call to discuss its financial results for its fourth quarter and year ended December 31, 2005. As mentioned by the operator I am Michael Mason of Allen & Caron Investor Relations. Before we start this morning's call there are a couple of items I would like to cover. Many of you received a copy of the press release announcing the Company's results for its fourth quarter and 2005 year ended. It was released on Thursday, March 16, 2006. If you did not receive a copy of the press release it is posted in the client section of our website at www.AllenCaron.com. Or you may call our office in New York at 212-691-8087 and we will e-mail to you right way. It is also posted on Yahoo Finance. In addition this call is being recorded. A replay of the call will be available through March 27, 2006 and may be accessed from North America by dialing 800-633-8284 and entering conference ID number 21284237. International callers should dial 402-977-9140. This call is also being broadcast live over the Internet and may be accessed on the Company's website at www.WFSCorp.com or on Thomson Street Events at www.earnings.com. A replay of the webcast will be available through March 31, 2006.

Additionally I have been asked to make the following statement. With the exception of statements of historical information made on this conference call this call includes forward-looking statements that involve risks and uncertainties including but not limited to quarterly fluctuations in results, the management of growth, fluctuations in world oil prices or foreign currency, major changes in political, economic, regulatory or environmental conditions, the loss of key customers, suppliers or key members of senior management, uninsured losses, competition, credit risks associated with accounts and notes receivable and other risks detailed from time to time in the Company's Securities and Exchange Commission filings. Actual results may differ materially from any forward-looking statements set forth herein.

With us this morning is Paul Stebbins Chairman and CEO. Paul will provide an opening statement addressing the Company's progress then the call will move into the Q&A. I would now like to turn the call over to Paul. Good morning Paul.

Thank you Michael. Good morning and thanks for joining us. With me today are Michael Kasbar President and Chief Operating Officer; Michael Clementi President of our aviation segment; Bob Tocci Chief Financial Officer; Frank Shea Chief Risk and Administrative Officer.

Last Thursday we announced earnings of $12 million or $0.42 per diluted share for the fourth quarter of fiscal 2005. For the year we produced earnings of $39.6 million or $1.57 per diluted share, which represents a 39% increase in net income and 29% increase in EPS for the year. The Company also achieved record levels of revenue, gross profit and operating income for the year while our cash position at the quarter end remained strong at $143 million. 2005 was a great year for both of our segments and we're very pleased with the results.

Our global team has delivered outstanding financial performance for our shareholders and made tremendous progress in advancing our business model in every region of the world while establishing an excellent platform for 2006. In our marine segment results increased significantly in the fourth quarter reflecting improved margins across all segments of the business. A strong supply position, new account acquisition and a healthy operating environment for the shipping industry all contributed to the strong result. Our commercial and functional management team has done an outstanding job of directing our global marketing initiatives and confidence in our ability to execute on our value proposition is high.

Our offerings have continued to improve; our market position is strengthened and high fuel prices continued to challenge less sell capitalized competitors. In 2006 our focus will be on continued expansion into new markets for existing accounts, newly found acquisitions and the development of specialized supply markets. We will also continue to refine our price rich management offering which is a critical component to any strategic procurement program.

In the aviation segment 2005 was a year of continued success across the spectrum. We achieved growth in every segment of the market in every region of the world. Our largest centers of activity the US, the UK and Singapore all posted strong results. Our overall volume grew as we continued to demonstrate our ability to add value to our supply and purchasing partners in a growing number of key markets. With the continuing changes in the industry our supply partners are working with us more closely to aggregate demand, derisk their portfolios and enhance their global marketing. This is significantly raised our profile with the purchasing community and for the second year in a row the Armbrust Aviation Group annual survey of airlines ranked World Fuel the best regional jet fuel marketer in North America. This public validation of our service offering is a much deserved tribute to our global team and what they have done to firmly establish World Fuel as a global leader in the fuel services business.

One of our most exciting areas of growth in the aviation segment has been in the corporate space. Based ops our fight services division had its best year ever. We achieved global acceptance of our brand and firmly established World Fuel as a leading fuel solution provider in general aviation. In 2006 we anticipate further growth in this market as we explore a number of alliances in the business and general aviation space related to our ability to supply fuel and services to corporate aircraft. Looking ahead we expect continued growth in our core aviation and marine businesses and we're looking to expand our commitment to the land-based diesel and gasoline markets. Our pilot program has shown promise as a new area in which to provide our pricing, marketing, credit and logistics offering to distributors known as Jobbers who are challenged by the same issues faced by our customers in the marine and aviation industries.

Suppliers who are increasingly focused on the upstream market will seek to rationalize their participation in the retail market have welcomed World Fuel into the space. We represent a reliable counterparty with a strong marketing and customer facing network which can help optimize their distribution program and reduce exposure. We have established proof of concept in 18 states and will devote additional resources in 2006 to further developing supply relationships and expanding and refining our offering to select customers in key markets.

In 2005 we also had a significant activity in our corporate front. Our $150 million revolving credit facility with LaSalle Bank was extended in September to 220 million. We also completed equity offering and raised over $120 million of new capital. In today's high price market we see many opportunities to put this money to good use not only in the business but for funding capital expenditures in the areas of systems and pursuing potential acquisitions and other business interests.

In 2006 we expect to spend approximately $15 million most of which will be capitalized on an ERP project which is scheduled to go live January 1, 2007. Strong systems are critical to the growth of our business and we're dedicating significant resources to the project. In the area of 404 although we have not yet fully remediated on the material weakness relating to derivatives which we originally reported last year. I am pleased to report that we have significantly improved our processes in 2006 and I commend our team for their tremendous effort. 404 is an expensive and time-consuming exercise but we're convinced that it is adding value and helping to drive best practices across the entire company.

In the area of derivatives we have developed a tremendous knowledge base with respect to FAS 133 and we have worked closely with our auditors and outside consultants to refine our accounting methodology. We are also making a significant investment in people and systems to improve our controls. We understand the challenges of derivative accounting are not unique to us but we feel we have had the benefit of the year to better understand these complex issues that are now becoming apparent to many other companies.

2005 was another transformative year across the board for World Fuel. We further secured the Company's strategic position the market and delivered strong growth in earnings and were rewarded with strong stock performance. We are proud of what our team has achieved and will continue to make investments in people, systems and business process and focus on solid execution to protect and expand our position in the future.

We would like to thank you our shareholders for your continued support and I now like to turn the call over to Bob Tocci for a detailed review of the financials.

Thanks a lot Paul. The revenue for the fourth quarter was $2.5 billion, up $743 million of 42% compared to the same quarter year ago due primarily to an increase in world oil prices. Marine segment revenues grew to 37% to $1.3 billion and our aviation segment grew 37% to $1.2 billion compared to the same quarter year prior. Increases in the average price of fuel sold in both marine and aviation segments accounted for $608 million of the increase in total revenue.

For the most part, the balance of $135 million was due to an increase in aviation volume. For the marine segment total business activity was flat at 5.8 million metric tons. Reselling activities constituted 67% of total marine business activity. Our aviation segment sold 580 million gallons during the fourth quarter, an increase of 69 million gallons compared to the same quarter a year ago. Passenger, cargo, charter and corporate customers all contributed to this increase.

Revenue for 2005 was $8.7 billion, an increase of $3.1 billion or 55% compared to 2004. Our marine segment contributed $4.5 billion in revenue an increase of $1.4 billion or 47% over 2004. Our aviation segment contributed $4.3 billion in revenue an increase of $1.6 billion or 62.7% over 2004.

Gross profit for the fourth quarter was $55.9 million an increase of 12.6 million or 29% compared to the same quarter a year ago. Our marine segment's gross profit was 31.3 million an increase of 9.4 million or 43%. Our aviation segment contributed $24.5 million in gross profit an increase of $3.2 million or 15% as compared to the same quarter a year prior. The increase in gross profit was due to margin improvement in both aviation and marine as well as increased business activity in our aviation segments.

In general, margins benefited from advantageous pricing, favorable market conditions and a change in business mix. Gross profit for 2005 was $178 million an increase of $48.7 million or 38% as compared to 2004. Our marine segment's gross profit for 2005 was $90 million an increase of $26.9 million or [44%] compared to 2004. This increase was primarily driven by an increase in gross profit for units sold.

Our aviation segment's gross profit was $88.6 million an increase of $21.8 million and 33% compared to 2004. This increase was primarily a result of an increase in volume and a higher gross profit for units sold.

Operating expenses for the fourth quarter were $36.1 million an increase of $7.7 million or 27% compared to the same quarter a year ago. Of this increase $2.6 million is due to compensation employee benefits, approximately 600,000 was due to the provision for bad debts. And the balance of $4.5 million was due to an increase in general and administrative expenses.

The increase in operating expenses was primarily due to higher performance based incentive compensation, new hires and infrastructural spending initiatives to support our global business. Operating expenses for 2005 were $122 million an increase of $30 million or 33% compared to 2004. Income from operations for the fourth quarter was $19.7 million an increase of $4.9 million compared to the same quarter a year ago. Income from operations for our marine segment was $13.5 million for the fourth quarter an increase of $3.2 million or 31% compared to the same quarter a year ago.

Our aviation segment's income from operations was $10.5 million for the fourth quarter an increase of $700,000 or 7% compared to the corresponding quarter of last year. Corporate overhead not allocated to segments is $4.3 million. Our income from operations for 2005 was $56.6 million an increase of $18.6 million to 49.1% as compared to 2004. Our marine segment's income from operations was $35.4 million an increase of $12.1 million or 52% over 2004. Our aviation segment's income from operations was $40.8 million an increase of 11.5% over 2004.

The Company's effective tax rate increased from 22.8% in the fourth quarter of 2004 to 39.2% in the fourth quarter of 2005, primarily due to repatriating 40 million in foreign earnings in order to take advantage of the special taxing provisions provided in the American Jobs Creation Act of 2004. For 2005 our effective tax rate was 27.7% compared to 19.4% for 2004. Net income for the fourth quarter was $11.9 million an increase of $700,000 or 7% compared to the corresponding quarter last year. Diluted earnings per share was $0.42 for the fourth quarter compared to $0.47 for the same quarter a year ago. The decline in earnings per share was related to the increase in tax rate and dilution associated with our share offering.

For 2005 net income was $39.6 million up $11 billion and 39% over the same period last year. Diluted earnings per share was $1.57 per share an increase of $0.35 or 29% compared to 2004. Our return on equity was 15.4% for 2005 compared to 16.9% for 2004 and our return on assets in 2005 was 4.4% compared to 4.9% for 2004.

At year-end our cash, cash equivalents and short-term investments was $142 million as compared to $64 million at December 31, 2004. Net cash used in operating activities was $4 million in 2005. The Company's use of cash reflects the funding of accounts receivable growth and the timing of our payments to suppliers. DSO or days sales outstanding was 29 and our payable days outstanding was 24. On average we also invested 1.5 days of sales in inventory in 2005. We are confident that we can fund our Company's growth initiatives in 2006 as we significantly improved our capital structure in 2005 with the completion of the stock offering and the extension and increase in lines available under our syndicated loan.

Thank you for staying with me during this overview of our results. Now, before we go on to the question and answer period, let me first turn the leadership of this teleconference back to Paul Stebbins our Chairman.

Thanks Bob. Operator if you would be kind enough to open it up for Q&A.

(OPERATOR INSTRUCTIONS). Our first question comes from the line of Jonathan Chappell, of JPMorgan.

One number question for Bob just before I get an update on the picture stuff, despite writing fast and furious, could you repeat the aviation volumes one more time please?

Sure. The aviation volumes for the year --

For 4Q.

$580 million.

Thanks. Paul, a couple of issues here. The ground business you talked briefly about that in 18 states committing more capital and aiming to grow that. Can you give us any sense as to when that might be broken out as a separate division? And then also in the use of capital front obviously with the following offering last year and the new facility there is a lot of liquidity for growth. Can you talk generally about acquisition opportunities? I'm sure you're looking at a lot of things but maybe prioritize land versus your already established business units?

Sure. Be happy to. First in terms of breaking out land that is going to happen effective Q1 2006. I think we mentioned actually on the Q3 call that we would do that. We will actually break it out as a separate segment effective in 2006. So you will see that first showing up as a breakout in Q1's conference call. With regard to acquisitions, absolutely. We see an acquisition screening process that sees a number of opportunities across the spectrum, whether it be marine, aviation or land. In terms of priority I think that the way we look at it is that it ends up being some quality of acquisition as opposed to picking one segment per se. And these things tend to come along opportunistically. And I would say that yes there are opportunities in the land space that we are currently evaluating and there are also opportunities in the aviation space I would say are the two most alive zones of activity. We continue to see things in the marine space that might be attractive to us but I think on the back of the Tramp Oil acquisition last year we feel pretty good about our position in that market and that is not the area that we are as focused on at this moment in time. But yes we do see opportunities in both land and aviation and prioritize between the two, I think it is sort of they are both parallel processing at the same time. But yes there is opportunities.

Can you (indiscernible) a little bit the repatriation of the foreign earnings, is there a use of those --

Yes, the fact of the matter is is we had a great opportunity to bring back some cash into the United States. And given the fact that we had an aggressive capital expenditure program for next year related to the IP project we found it opportunistic to take advantage of a significantly reduced tax rate.

And then one final thing just on the volumes gross profit per units sold was up pretty significantly in both major divisions. Can you kind of talk to that a little bit more, maybe how much was customer mix, cleaning out some of the lower margin customers or what its use might have been driving the improvement in pricing.

Absolutely. Be happy to. In the aviation as you know we had there was a moving target that had been descending down and as you recall what we discussed was that as we were bleeding in the fuel management volumes, it was diluting overall mix of margin but the underlying reselling business was actually robust and continued to grow and that we anticipate I think Bob mentioned on the last call that you would see what we expected to be some continued upward trend in the aviation margin. In fact that has happened and we feel good about that trend and we think it is consistent with where the business is overall.

With regard to the marine space you are right; it is a little bit of a change in the mix of business but I think it is also a little bit of the success of our derivatives program. The use of derivatives is a pretty important part of strategic procurement today, for these large global fleets and I think just the combination of what was going on in pricing in the market -- what was going on with the industry itself -- a change in the mix's business as well as a more robust and targeted marketing effort on the use of derivatives -- all helped to sort of combine for an improvement in margin.

[Adriano Alameda] from DGHM.

The first question I have is on the aviation side, given that you have been growing that piece of the business on an organic basis quite strongly. What is it that really drives this growth on the margin? Is it more sales to existing customers, or are you actually seeking out and finding new aviation customers around the world?

It is both. It is actually both, Adriano. I think that as we have gotten the kind of recognition in the market that we have worked very hard to develop over the last few years, and change the image of the Company and our footprint in the space, that has allowed us access to a broader portfolio of customers that perhaps might not have historically looked at us as being a supplier of choice.

So we're very pleased that, I think, that our increasingly high profile in the market has introduced us or made us an acceptable counterparty to a broader class of customer. And we're very pleased about that.

I would also say that the shift, the mix of business, we're been focused more on our core reselling strength. I think that has continued to show that we can do it.

We have also have seen some excitement in the general aviation in corporates or business aircraft space, which is a market that we think is going through a lot of transformation. So we see some focus in that area as well. But I think that has been the overall reason for the change.

On the corporate aviation side, is that mostly a North American business or do you do that globally as well?

Well about 75% of all corporate aircraft are domiciled or registered in the United States. But they certainly are active all over the place. I would say that there is an increasingly robust market particularly in the European theater.

This is a changing target. You have seen the move towards [fractional] fleets, large management fleets. You have seen a number of high-profile highly-marketed cards representing almost like phone cards, where you can buy a number of miles on an aircraft in the same way that you use a phone, telephone card.

All these programs are competing for the space. There is a lot of change and transformation in it, all of which is good for us. Because I think that the one thing that is common to all of these programs is the need for competitively priced fuel on a global basis.

Particularly when these airlines get international they find it very difficult, much more difficult to source the fuel and to rationalize a highly fragmented supply market. To get visibility on these markets is not so easy.

But as these aircraft get bigger and you see corporate moving not towards sort of the smaller Learjet size, but for these big Boeing business jets, and for the Gulfstreams, and for the Challengers, and these large aircraft that can travel internationally, the ability to source fuel in a high-priced market has become more important than ever.

It is certainly the focus of the chief pilot's responsibility not only to get whoever he is carrying around there on time, but also to make sure that the fuel is priced competitively.

So we think we have kind of intersected that market at a very, very good time. I think our offering is well set up for those guys.

Now specific to marine, this mix change that you have continuously pushed towards; you are at 67% reselling now. Is this an industry trend, where the marine customers are actually more likely to do reselling type contracts? Or is this a push from you specifically to get that percentage?

No. I think we're very much responding to a market change. There has been -- if you look at the class of customer that we're dealing with in our marine space, many of which are large global fleets that very complex procurement programs, they have very complex operations, and they have enormous quantities of fuel that they are buying, I think it is fundamental recognition of a couple different things.

One, they are managing risk on different levels. They're managing counterparty risk, which is who are they doing business with? Who is transparent? Who is a good counterparty? Who has got the sort of visibility of a New York stock listed public company and has a global footprint.

As opposed to managing supply relationships with counterparties all over the world in different venues. That is one issue that is on their mind, trying to rationalize the number of channels that they are doing business with; and then trying to make sure that the business is going through channels that they consider to be very good counterparties, and have transparency and sort of a global footprint.

So they are driving that change. When you look at some of these big public company's they are looking to say gosh you know, I want the visibility, I want the transparency, I want the reporting, I want the venture reporting. That is one issue that we have. The difficulty for them to actually vet each one of these suppliers is very difficult. It is difficult for some procurement office in Denmark or Greece to go fly around world and have a serious vetting program for hundreds and hundreds of suppliers in different markets around world.

I would say the second thing is that when you get into these advanced strategies of procurement to get in the contract structure, the embedding of derivative instruments into contract structures, its very difficult to get that from a conventional supply market. So again they are looking for us to be the main experts who are taking these instruments, embedding them in the transactions and allowing them a lot more flexibility in terms of how they buy in various markets around the world. So I would say that the trend is being driven by the mindset of large global fleets that are looking to rationalize their cost structure. They are looking to generate competitive pricing. They are looking to get domain expert to help them construct a much more interesting kind of flexibility, in the way that they contract their fuel. And also it is about logistical support in various markets because it is very difficult to get that kind of support from individual suppliers. We are there having sort of the care and custody and control of how they actually get these operations done. That is something they come to rely heavily on and we can do that on a global basis.

Okay. Makes sense. Do you think is there any reason why your mix and marine couldn't go to say 90% reselling? Or 100?

Well, I guess this is an ongoing thing. I would say that we would anticipate the trend is to continue to increase the percentage of our business that is part of the reselling model. There is always going to be a component of our business that is brokerage. It is kind of a part of the industry. It depends on some of the suppliers and it depends on some of the individual markets. So I don't think the brokerage is going to go away altogether. I just don't say that as being a likely scenario but certainly we see the mix continuing to trend upwards in our core reselling space.

And just to confirm, this mix improvement does have a pretty solid margin contribution, right?

On a relative basis, yes.

The last thing I want to ask is you have mentioned when you talk about what produced such strong results these favorable market conditions. Could you just explain to me in each of the segments what constitutes favorable market conditions?

Sure. I would say the one most pronounced effect is just the volatility of oil pricing. There is just a lot of change going on in each of these markets and this is not unique to marine, aviation or land. It is across all spectrum of activity. When you get that volatility there is more demand for our services because we are the ones who are creating visibility on these discrete markets for these buyers who are basically net short of the product. They don't have that visibility. They don't have a window on the market and they are trying to manage a P&L and remember fuel can represent as much as 30 to 40% of operating cost depending on what is going on. And you look at a situation like we had in 2005 we had radically sharp increases in price, a lot of confusion in the market. The demand for our global services is at an all-time high. So we feel very good about that being a fundamental market condition that we don't see any change in the immediate future. Certainly there is going to be volatility for a long time.

I would say at a more discrete level I think that what we have found is that aviation was doing well, that you saw sort of a positive climate. There was a lot more activity in our core sort of cargo and regional passenger space. And the marine space generally anybody who is in the shipping market knows that they had a pretty good couple of years. So I think that has just helped generally and then overall the economy; there was significant trade still going on. So we are the beneficiaries of a global climate in which there is continued trade; trade and consumption is up.

And there hasn't like if you were to look on a quarter-to-quarter basis in 2005 have these fundamentals continued to improve or have we been at kind of like a plateau for a while?

I would say for 2005 we saw a sort of an ascendance throughout the year that culminated in the fourth quarter which we felt good about.

(OPERATOR INSTRUCTIONS). Jim Larkins from Wasatch Advisors.

I wondered if you could give me some guidance on tax rate for '06? What kind of range that should look like?

I think 20, 22%.

And in the expenses, I think you mentioned there was some bonus compensation expense and could you maybe give us -- is that going to typically hit heavier in the fourth quarter or how should we kind of accrue for that during the year?

I think it should be ratable based on levels of income that is generated by each of the businesses.

And so given sort of the good quarter that you had, I guess it is a pretty good level to go off of going forward?

Yes, I mean when you look at the fourth quarter and you back out the impacts of dilution and the higher tax rate we had a tremendous fourth quarter. So that is why the compensation reflected that.

Okay. Great. When I go to the margins kind of in the marine space is there any difference in the broker margins? Has that been helping that as well or is it really more the margins that you are getting off of the traded business?

No, broker margins have been maintained at a pretty consistent level throughout all of 2005, so the margin improvement was really experienced in the trading. And in part that has to do with the importance that derivatives plays in our business and the ability that it provides us to provide pricing features to our customers that is readily not available in the marketplace.

And when I look at the margins that you are doing in the traded business obviously it is kind of at the highest level you have probably just about ever been at. Can I assume that a lot of that is because you are doing business a little bit differently and with the increased use of derivatives, as well as focus on higher margin customers, that I can model out a higher average gross profit for ton going forward? Just kind of trying to understand how I should deal with sort of this peak performance?

Well, I mean just think of it this way. If we just wanted to focus on the fourth quarter of 2005 you know on the marine side, you saw an increase in gross profit from 22 to 31 million or roughly $9.4 million. And in that quarter, two-thirds of the increase was price related which was true improvement in margin. Right. Whereas the balance was highly associated with derivative accounting.

Okay. So when you say priced related (indiscernible) use the word volatility?

True margin improvement and it was volatility related and obviously our derivatives program and the features that it provides, obviously plays into improving our overall margins that we can earn.

That's helpful. And then going to the balance sheet, can you maybe explain a couple of items such as prepaid expenses? That moved up quite a bit. I kind of want to understand what is in that bucket.

Well, I mean, if you really think of it, with total assets of $1,014,000,000 it is really an insignificant increase, but to be more specific on the prepayments -- yes, I mean derivatives are in there. Accrued compensation is in there and general accrued expenses and general liabilities. Much of which is timing related.

And thinking about working capital needs, can we sort of just drive that off of revenue growth or is there any moving parts in there that is important?

No, I think Paul referred to CapEx plan for 2006. We are going to spend roughly $13 million overall for our ERP systems and much of that will be capitalized. I think the capital expenditure will be roughly $10 million.

Okay. And then thinking more about working capital and the increase in working capital.

Well working capital is more difficult to project but there are three items that are important for you to understand and those are receivables, inventories and payables. And as I said earlier on the call, our receivable days outstanding is roughly 29 days. We invest roughly 1.5 days sales in inventory and our payables for the number of days that our suppliers provide us with credit is roughly 24.

Okay. Congratulations guys. Thanks a lot.

(OPERATOR INSTRUCTIONS). There seem to be no further questions at this time. I will turn the call back you -- actually, we do have a call from the line of Adriano Alameda from DGHM.

Just one more here. On the payables front, the 24 days, is that something that has room for improvement?

There is always room for improvement, but there is something sitting on the other side of the table called a major oil company, a state owned oil company or a regional refiner. They tend not to like to give credit so the fact that we get 24 days in an industry where most people are paying on 10-day terms, I think we've done a pretty good job in that area already.

Okay. Now in your 10-K you mentioned how certain of these suppliers require you post letters of credit. Is that something that is falling? I mean you have to post fewer letters of credit now that you have so much clout?

I mean we are doing more business today than ever before. We had sales of $8.7 billion; it was up over $3 billion over the previous year. But our LC's relative to sales have been pretty constant. They were $34.6 million drawn. And it was an increase year-over-year of $10 million. But again if you relate that to sales it actually would have declined.

There are no further questions at this time. I will turn the call back to you.

Thanks very much operator. Thanks all of you for joining us for this conference call and we look forward to talking with you at the end of Q1.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.