Westport Fuel Systems Inc (WPRT) 2009 Q1 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to Westport Innovations First Quarter Fiscal 2009 Conference Call. I would now like to turn the meeting over to Mr. Darren Seed. Please go ahead, Mr. Seed.

Thank you, and good morning. Welcome to our First Quarter Conference Call for Fiscal 2009. It is being held to coincide with the disclosure of our financial results earlier this morning. For those who haven't seen the release and financial statements yet, they can be found on Westport's website at www.westport.com.

Speaking on behalf of the Company will be Westport's Chief Executive Officer, David Demers, the Chief Financial Officer, Elaine Wong, and the President and Chief Operating Officer, Mike Gallagher. Attendance at this call is open to the public and to the media, but for the sake of brevity, we're restricting questions to analysts and institutional investors.

This conference call may include forward-looking statements including but not limited to Westport's future performance. It is important to note that Westport's actual future results could differ materially from those projected in such forward-looking statements because of a number of factors detailed in the Company's filings with regulatory authorities.

Now, I will turn the call over to David Demers.

Thanks, Daren, and good morning, everyone. As usual, I'll make a few introductory comments and then turn the call over to Elaine, for her review of the financial statements. Mike will give you an update on the heavy-duty truck business unit.

Q1 was a return to strong profitability for CWI, and in our heavy-duty business we saw good progress at both our beachhead market opportunity at the Los Angeles ports, and our program with Kenworth to launch factory production of trucks incorporated in our LNG fuel systems in early calendar year 2009.

Revenue numbers were very strong this quarter. Because the Port program is still in its pre-purchasing phase, virtually all of this revenue came from the CWI midrange business. Of course, as we told you on our last call, a few large orders slipped from Q4 last year into Q1. Nevertheless, the quarter was another revenue record with almost 75% growth over Q1 last year, excluding foreign exchange movements, and our two-year revenue growth is 164% over Q1 2007.

We're seeing strong interest emerging from the trucking industry for both trucks incorporating the ISL G engine platform and larger Class 8 trucks incorporating our ISX LNG platform. For the first time we may this year see trucking applications emerge as our largest market even for CWI engines.

Refuse truck demand is very strong, and the new Sterling Set-Back truck appears to be generating a lot of interest. At the same time, our core city bus business is also showing strength in all markets. Significant new bus projects in India, Asia and South America are developing well, and our core business in North America is also showing strength, with major orders from several of our existing customers, such as the San Diego order we disclosed in the quarter.

Elaine and Mike will go through some of the operational details. I'll just remind you that we've established strategic goals for both the CWI and heavy-duty business units. And although we can't expect strictly linear progress very quarter, we feel our strategy is working well and both business units are performing well ahead of our business expectations.

CWI's goal has been to identify and enter new markets for alternative fuel engines based on the Cummins midrange diesel engine platforms. And then, of course, to grow those new markets while leveraging the production and distribution assets of its parents. Now, this is working very well and, as you can see, CWI is well positioned for continued growth.

Heavy-duty's medium term goal is to reach a sustainable break-even point, much as we did with CWI in 2004, while maintaining a rapid product development investment program. We are currently investing $15 million to $20 million per year in this business, so we expect that this break-even point will come as we reach production of 1,000 to 2,000 trucks per year. We also expect that the initial Ports program will substantially satisfy this break-even volume requirement.

It's very important for our team to remain focused and disciplined as we work through this extremely complex and challenging project which is intended to substantially reduce the environmental footprint of Port operations over the next four to five years.

The key short-term goal, of course, with the heavy-duty business unit is to achieve factory production by Kenworth in early 2009. This complex program requires us to be certified as a tier one engine and system supplier to one of the world's largest manufacturers. We're developing our Westport Assembly Center in Vancouver to facilitate efficient delivery of all the components that Kenworth will need to build trucks on their assembly line in Renton, Washington.

Westport Assembly Center will be up and running next quarter, and we expect this production readiness program to be complete on schedule in Q4 of this fiscal year. In the interim, we will continue to build small numbers of Kenworth trucks at the Cummins and Kenworth distributors in Southern California. Of course, now that OEM trucks are becoming available as a result of Port demand, we can also sell those LNG trucks to anyone else. High fuel prices have encouraged fleet customers to explore the idea of natural gas more seriously.

We've seen a tremendous change in the market interest in our truck products over the past few months as the price of oil has shown such surprising volatility. Although oil prices have moderated in the past few weeks, it's important to remember that it's still 50% more expensive than it was last fall, and few of the fleets that we talk to are confident the prices won't be higher again six months from now. In the past few weeks, natural gas has fallen even faster than oil, at least in North America, so the price gap between natural gas and diesel fuel is continuing to widen.

So, we need to move faster and find ways to encourage all of our partners and suppliers to plan for faster growth as we work to turn this initial interest into hard orders.

We disclosed two other major strategic initiatives recently. We formed a joint venture with Weichai Power and Peterson Holdings of China, to form a company much like CWI, which will design and produce alternative fuel engines based on Weichai's diesel engine platforms, and to leverage Weichai's extensive production and distribution assets.

We've licensed our HPDI technologies to this joint venture on an exclusive basis for China-based engine production, to allow the JV to develop and launch its new engine successfully. We're honored and excited about the opportunity to work with Weichai, who are one of the most successful and ambitious companies in China, and one of the top five manufacturers of diesel engines in the world.

Just a few days earlier we announced that we had reached agreement with one of the leading European heavy-duty engine manufacturers to collaborate on development of HPDI LNG engines using their diesel engine platforms as well. This agreement is still at an earlier stage. Although we've established ambitious timelines for developing demonstrations, engines and vehicles, we have not yet reached agreement on formal commercial terms for launch of any of those engines into the market. Nevertheless, we and our partner believe that the market opportunity is compelling and we're working hard in parallel with the engineering work to develop such an agreement.

These two new global engine OEM projects are, of course, among the most important things that Westport has achieved since the original formation of CWI in 2001, the renewal of that original agreement in 2003 that created the permanent joint venture focusing on mid-range engines, and our agreement in early 2008, to work with Kenworth to deliver heavy-duty LNG engines to the market in their trucks. These two new programs will focus on larger engines than CWI's product line, and they will incorporate our HPDI LNG technologies. So, CWI and our new OEM projects are not directly competitive.

Each of our partners is a market share leader in each of the major markets -- North America, Europe and China, respectively, and together they manufacture about 40% of the heavy-duty diesel engines in the world. In fact, we expect considerable synergy between all of our programs as the increasingly visible global opportunity for natural gas, heavy-duty vehicles, the broadened OEM supply chains, and the increased customer awareness for these new products will encourage the development of fuel infrastructure, components, prior investments, new government energy policy and programs, and generally accelerate the development of the alternative fuel marketplace. The fact that Westport has established alliances with leaders in the North American, European and high-growth Asian heavy-duty markets will also encourage our suppliers and partners in each area as we work to become the leading technology provider and innovator in this market.

It's inevitable that to deliver these new products, substantial R&D and product development resources need to be put to work. Again, though, we expect substantial synergies between our programs. And, in fact, the three engine platforms for HPDI will offer us an opportunity to develop a next-generation fuel injection system with more flexibility and adaptability to support additional engine platforms.

Much of the increased resource will come from our partners, and we will be relying on their experience and talent in order to deliver great products. We'll also need to accelerate our R&D program somewhat, and at the same time we will need careful focus on expenses in order to ensure an optimum balance of investment and early profitability.

As I said in our last call, this year has seen dramatic shifts in all of our global markets, which we believe signals fundamental shifts in the transportation industry going forward. We're confident that natural gas will emerge as the leading alternative fuel over the next decade because it's cleaner, it's cheaper, and it's more widely available than oil, and we believe our strategy will allow us to participate in this growing market as one of the technology leaders.

I'd like to close by welcoming our three new directors to the Board -- Jill Bodkin, Dr. Sarah Liao, and Dr. Albert Maringer. All three people bring unique experience and perspectives, and we look forward to working with them to further build our Company.

Thank you again for your patience and support. I'll turn the floor over to Elaine.

Thanks, David, and good morning, everyone. The press release, financial statements and management's discussion analysis provide a considerable amount of detail regarding our first quarter ended June 30, 2008, and are posted on our website.

For the first quarter ended June 30, consolidated revenue was $25.5 million, compared to $15.7 million of the previous fiscal year, an increase of 62% year-over-year, and a new record quarter for Westport. The increase in revenue is primarily the result of a 72% increase in CWI revenues on 1,077 units shipped in the quarter, with deliveries of the ISL G and catch-up of orders which had slipped from the previous quarter. Since the launch of ISL G in 2007, we have seen strong demand for the engine not only in transit, but also growing interest in refuse and other truck applications.

Foreign exchange had a negative impact on reported revenue of approximately 8%, as the US dollar declined by that amount on average over first quarter last year. Gross margin increased to $8.3 million from $5.3 million on higher revenues. Gross margin as a percentage was relatively unchanged at 33% compared to 34% in the same quarter in the prior year.

Non-CWI revenues decreased by about $700,000 in the period, with the process of the Ports of Los Angeles and Long Beach continuing, but proceeding more slowly than anticipated. However, as Mike will discuss, the Ports have recently announced a jumpstart program and have approved funding for 100 Kenworth trucks with our LNG systems expected to be delivered this fiscal year.

Net loss for the three months ended June 30, 2008 was $3.5 million, or $0.13 per share, compared to a net loss of $4.7 million, or $0.22 loss per share post-consolidation for the first quarter ended June 30, 2007. Improvements of $1.2 million was due primarily to the $2.2 million increase in net gain after taxes on sale of investments at a $1.1 million increase in the contribution from CWI after taxes and JV partner distribution. I should also note on a pre-tax, pre-JV basis, CWI's offering profit in the quarter was $4.9 million compared to $1.5 million this quarter last year. Non-CWI expenses increased by $2.7 million primarily related to the increase in product development activities.

As of June 30, 2008, our cash, cash equivalents, and short-term investments totaled $18 million compared to $22.8 million at March 31, 2008. During three months ended June 30, we invested $1.5 million in Juniper Engines, Inc., acquiring 49% equity interest in the joint venture with OMVL of Italy.

The joint venture is focused on the development of sub-5 liter engines for global applications. Our share of Juniper's loss for the period was approximately $80,000. While for competitive reasons we're not saying much publicly about the venture, I can say that we are pleased with the progress so far. Working prototypes are being tested and we expect to see commercial products in the next 12 to 24 months.

We also used $2.7 million to acquire inventory, and $2.3 million on purchases of equipment and leasehold improvements primarily associated with the building of our Assembly Center in Vancouver.

In July 2008, we issued 15,000 debenture units for a total of gross proceeds of $15 million, and net proceeds of $14.1 million. Each debenture unit consists of unsecured subordinate debentures in the principal amount of $1,000 bearing interest at 9% per annum, and 51 common share purchase warrants exercisable into common shares at any time for a period of two years from the date of issue at $18.73 per share.

We are excited about the recent OEM developments in Europe and Asia. We'll make an approximate $4.5 million investment in the Weichai JV once government approvals are in place, which will give us 35% of the JV. Final product plans and resource requirements have yet to be determined, but we expect only modest increases in the current year R&D expenses.

As mentioned earlier, please see our MD&A and financial statements as filed and posted on the Company's website for more details.

Now, over to Mike for discussion of our R&D and opening plans.

Thank you, Elaine, and good morning, everyone. It may have only been two months since our last call, but we have accomplished a great deal in that time. We announced the order of 20 LNG trucks for HayDay Farms, our largest non-port order to date. Since the HayDay announcement, we have been working with other port and non-port customers to meet their demands for LNG systems in light of the rising fuel costs for diesel-based trucks. I do expect that more order announcements will be made as the purchase orders are signed.

We continue to target other ports and related fleets as the economic benefits of our natural gas engine solutions continue to improve over equivalent diesel vehicles.

The San Pedro Ports continue to progress as each new milestone is achieved delivering solid evidence of their commitment to the Clean Trucks Program and replacement of some 16,800 trucks, half of which are expected to use alternative fuel such as LNG.

I am pleased to report that under this Clean Trucks Program, our engine products have now been selected formally both for the Kenworth HPDI product and the Sterling CWI solutions. In fact, we are the only alternate fuel truck solution provider selected by the ports. Demonstrating their part in rolling out the Clean Trucks Program, the Port of Long Beach Board has approved the first new jumpstart preorders with $16.1 million for 100 Sterling trucks, and then recently another $19.7 million authorization for 100 Kenworth HPDI trucks. We are now working with Kenworth and Sterling as necessary to complete the forms and related contract negotiations with the Ports.

Including the jumpstart program, as well as the Port of LA original funding approved last October, $57 million has now been authorized specifically for LNG trucks using Westport and/or CWI systems.

Helping to secure the future customer alt-fuel truck orders at the Ports, a team of Tetra Tech, TIAX and Gladstein and Neandross have just been selected by the Ports as the program administrator for the Clean Trucks Program.

As some of you may have read last week, the long expected American Truckers Association lawsuits were filed against the Ports. They did focus on the concession agreement structure for the fleets and individual truck owner/operators. But notably the lawsuit did not take issue with the Clean Trucks Program itself or the alt-fuel component. As a result, both Ports have restated again just last week, full speed ahead on this program.

And illustrating this commitment to continue under the Clean Trucks Program, Southern Counties Express was notified just yesterday that a check in the amount of $5.5 million is now ready for them to pick up at the Port of Los Angeles for delivery of the first 30 of Southern Counties previously ordered 50 Westport LNG trucks.

From a customer satisfaction standpoint, I would also like to point out that the first eight trucks that had been delivered to TTSI are doing well and in fact TTSI has expressed interest in the purchase of more trucks.

The international interest and presence of our innovative HPDI solutions for heavy-duty trucks continues to build also, as Kenworth unveiled their Innovation Truck recently at the Melbourne Truck Show featuring our systems. Australia is a key market, as you know, for our HPDI systems due to its substantial natural gas infrastructure and significant fuel cost savings in comparison to diesel.

A consistent question seems to arise when we talk to the investment community around the production capacity for our heavy-duty systems. On that note, I am pleased to report that our Kenworth assembly line program is on track. We have just in fact completed building the second prototype vehicle just two weeks ago, and this program is expected to be ready for integrated LNG truck production in early 2009 as planned. And the increase in awareness for our HPDI systems in Australia has been instrumental in helping further our relationship with Kenworth Australia, who intend to offer a similar assembly program for production there.

We are also seeing heightened interest from other truck OEMs. We have initiated more detailed discussions with another member of the PACCAR family, Peterbilt, to follow up on their earlier announcement of a strategic partnership to incorporate our HPDI systems into their trucks. And recently Freightliner has just announced their plans to introduce the Cummins ISX diesel engine platform into their new Cascadia truck in 2009.

The supply chain for the production of our HPDI fuel systems continues to gear up around the quickening demand from ports, North American commercial fleets, and Australian opportunities. Our Westport Assembly Center buildout is on track, and our new engine commissioning test cell there is expected to go live in approximately one month.

As unit sales increase along with volume purchasing, we are also starting to see some improved supplier pricing, which we had expected and we would expect to broaden further over time.

In closing, we have seen a record quarter with our first $25 million-plus revenue quarter. Furthermore, there are indications this revenue level may be sustainable, and with the successful launch and growing commitment under the Clean Trucks Program may grow further beyond today's levels.

We are all very energized and enthused by the growing top line momentum being driven both by expanding CWI successes and the growing opportunities for our new heavy-duty truck business.

I will now pass the call over to the operator, who will open the call to your questions.

Thank you. (Operator Instructions) The first question will be from Rupert Merer from National Bank. Please go ahead. Your line is now open.

Good morning. Great result today. Looking at your outlook for China, how long do you think it will take before you have a commercial product ready for the Chinese market? And do you have any thoughts on what the pricing of HPDI would have to look like to be successful in that market?

Hi, Rupert, it's David. I'll give you a little bit. Obviously, there is a whole bunch of commercial confidentiality on this. But you're absolutely right, a big part of this program is to come up with a much lower cost product and we are very hopeful that with Weichai's extensive supply chain relationships in China, we can develop a much lower price point for at least some of the critical components.

There is no magic here. An LNG tank is an LNG tank. We're already making them in China, so we're not going to see a 90% reduction in that cost. But there's a lot of other elements going into overall LNG truck costs. Weichai, part of their network is one of the top five truck builders, is part of their overall conglomerate. So, we're very hopeful we can see an integrated, fully engineered product for the China market that is a much lower price point.

In terms of when, it's probably too early to give you a good answer on this. Obviously, we have very ambitious plans and Weichai aren't -- they're not shy, either, about setting very aggressive goals. But realistically I think it's going to be 12 to 24 months before we'd see HPDI product.

The joint venture does have existing natural gas engine products, so Weichai and Peterson have been building alternative fuel products for some years, and Weichai includes -- I mean, they're also one of the largest manufacturers of industrial engines and things like off-road construction equipment and power generation. So, there may well be some near-term revenue opportunities for the joint venture, but we haven't yet really sorted out the product line in terms of exactly what we're going to carry over and what we're going to do with HPDI.

So, I'd say we're very encouraged by the near-term opportunity and the overall opportunity to reduce price point through supply chain work, but it's too early, really, to give you a hard answer.

Okay, thanks. And do you have a feel for the R&D investment that would be required for that joint venture? And is there any new IP that is expected to be developed? And how would be the ownership of that IP be shared?

Yes, that's another good question, which will be -- I'll be a little circumspect on this. There may well be some new IP, but we're responsible for development of the fuel systems, so that will remain within Westport. It's not within the joint venture. So, we will be supplying what amounts to black box fuel systems to the joint venture, and we expect that IP to be embodied in Westport patents and systems that we can use with other partners.

The R&D budget, I think you can probably get a pretty good idea of what we think the joint venture capitalization needs to be. Our $4.5 million investment gives us 35%. We'll see corresponding investments by Weichai, and so you'd expect that we will spend that cash to yet -- to cash flow break-even on the joint venture. So, that's an initial budget. It may be too little, it may be conservative, but we're not talking hundreds of millions of dollars to get this out the door.

Okay, thanks. I'll jump back in queue.

Thank you. (Operator Instructions) The next question will be from Bob Wallace from Raymond James. Please go ahead, your line is now open.

Thank you. Good morning, gentlemen. Eighty- -- you've got in a previous statement that you're raising $86 million, and you're looking at listing on other exchanges. Would you flush out what's happening there? Because I notice you've got Europe and Asia tied up -- or not tied up, but on the way to being tied up, and there seems to be a void for the HPDI in North America as far as relationship is concerned. Is this what it's all about?

We can't really comment on this, Bob. You're right, there is a prospectus on file and I think really your answers are all in the prospectus, so I think that's really the best thing we can say at this point.

On the North American relationship question, Bob, -- this is Mike -- I just might add a note that the North American relationships are already in place both with Cummins on the supply of ISX engines, but also increasingly emphasis on the OEM truck side with the Kenworth agreement for mass production. It just doesn't happen to take the form of a joint venture in terms of the business arrangement.

The other thing is that your consolidation has left a few people a little confused. Could you comment on that?

Well, it's a pretty well described, I think, in the searcher. It's a 3.5 to 1, so that bid did happen. So, we're trading at the consolidated share price and the consolidated share capital is in place. I think that happened last week.

23rd, Thursday.

So, the 23rd on TSX.

And all the financial statements have been retroactively restated to reflect that consolidation in our numbers, loss per share numbers and option numbers, Bob.

Okay. You talk about your cash and what will it be -- I'm sorry, it's okay, I'll pass. Thanks very much.

Thanks, Bob.

Thank you. The next question will be from Ron Oster from Broadpoint Capital. Please go ahead. Your line is now open.

Good morning, guys. You commented on the heavy-duty break-even point and how it's largely dependent on the Ports opportunity. I just wanted to ask you with regards to that how you expect the upcoming October deadline to be treated for the ban of the pre-1989 trucks? Do you expect that to be pushed back at this point in time?

And then, secondly, just -- you mentioned a few, couple hundred truck orders, how you kind of expect this -- the order flow to be through your end, if you have any outlook through the end of the year?

Thanks, Ron, this is Mike. On the truck side, with respect to the October 1 dates, when the Ports have agreed to ban the first tranche of the older diesel trucks, older than a certain vintage. It's interesting to track this. The Ports are holding a line pretty hard on keeping that program intact. And in fact that was the primary reason behind the Port of Long Beach Board's initial authorization of a so-called jumpstart set of orders, starting about a month ago, both with some on the diesel side and more importantly the hundred Sterling CWI trucks, and then most recently 100 Westport Kenworth trucks as well. So, that jumpstart program has been designed by them with the purpose of getting the first trucks rolling by October 1.

Will they have the full complement of replacement trucks for the pre-'89 diesels by then? That totals 2,000 and some. So, no, they won't have that number of replacement trucks in place yet, but they will have order starting to flow. They will have the first trucks on the road, and they will be moving, I believe, full speed ahead for the additional replacement trucks.

So, that's been reiterated again as recently as last week with their statement from the executive director of the Port of Long Beach, that despite the ATA suit, the Ports plan to move full speed ahead.

And what was the second part of your question?

Just wondering how -- what kind of order flow you anticipated once this does get going, what you expect to see there.

Oh, the order flow, yes. Of course, as I said in my remarks, we'd be announcing orders as they're signed. Can't say too much about the precise likelihood there. We never know until we sign the agreements. But I can say that I would expect news over the coming months both on the Port side with closing of pre-order negotiations and the first movement toward the next tranche of Port orders. And, in fact, the Port of Long Beach put out a press release just last night requesting applications from the fleets for financial incentives under this program, and announced generous incentives once again. And I would expect in addition some announcements on the commercial truck fleet side here in North America and probably Australia as well.

Okay. And then lastly you mentioned other Port opportunities. Can you just provide an update there? And that's all I have. Thank you.

Yes, other ports. I think the update is just to suggest that we are noticing an increased interest on the part of other ports particularly in North America at this point, but to some degree in Asia as well. And what's going on at the Port of Los Angeles, Port of Long Beach, both around clean trucks and particularly around LNG trucks. And we've begun some initial discussions with a couple of those guys already.

Great. Thanks.

Thank you. We have a follow-up question from Rupert Merer from National Bank. Please go ahead. Your line is now open.

Thank you. This quarter we saw a small increase in inventory, I think about $2.6 million, $2.7 million. Do we expect to see much more working capital going forward as you ramp up for the Ports?

Yes, I think you will, Rupert, just based on the numbers that the Port's been talking about and as we ramp up to supply Kenworth once they come on stream next spring. How much of that we'll need will sort of depend on how quickly the Port goes, kind of following up on the previous question.

Yes, and how fast we flush them out on the back end on the sales side.

Part of what we're trying to do, Rupert, is, as we've talked about before, we've got to step into the supply chain and iron out any of the wrinkles. Because our production capacity is limited by the slowest supplier, and there are dozens of suppliers involved in building these LNG trucks. And so we've got to kind of oversee the whole thing.

Now, ultimately, maybe a couple of years from now, we'd hope that we're completely uninvolved and this is all just automated from the truck factory back through and all the various supply chain. But in the meantime, we are getting in the middle and where necessary we'll order some inventory and build that up. I think our intervention is going to be critical in terms of building up supply chain in a well managed fashion over the next 6 to 12 months.

Yes, on that point, just to reiterate Dave's thought, we're basically in the business of creating this industry in terms of demand for LNG trucks, and at the same time we're creating the capacity to supply that industry.

Do you have a feel for what your ultimate inventory levels will look like? Will you expect 30 days of sales, for example, for HPDI, or something on that --

Our ultimate? I think the ultimate objective is to kind of get to see the value model where, as David indicated, where you've got the truck OEM managing the supply chain directly and we're out of it. I think that is the ultimate objective. I think in the meantime, it does kind of depend on if we can get some sort of orderly, monthly 30 days or just-in-time inventory and just get that ready for Ports and then non-Port customers.

Okay. Just one last question, then. You mentioned you thought the level of orders you're seeing in CWI could be maintained. Ultimately we will expect some lumpiness going forward, but do you expect the run rate from Q1, then, to be a fair estimate for your run rate going forward with some growth potential?

Gee, Rupert, how many quarters have we told you we can't give you any sort of indication on forward guidance? But you keep coming up with great new innovative questions. Short answer is -- I'll take Elaine off the hook on this -- we've been trying to say for the last few quarters the demand is really strong. CWI is penetrating new markets. Trucks in particular I think is surprisingly strong. The refuse market is very strong, had lots of success, lots of happy fleets, and the price of fuel is encouraging faster adoption rates than we saw in the bus business. At the same time the bus business is very strong. So, I think CWI is doing very well, and we're going to continue to see good growth.

The formal guidance, I'll just reiterate for anybody on the call. The only formal guidance we've given is that we plan CWI for more than 30% compound growth in the top line, and we're beating that. We've been beating that. We don't see any reason for it to slow down.

Rupert Merer. All right, thanks. I guess I'll have to start working on a way to ask that question next quarter.

Keep trying.

Thank you. There are no further questions registered at this time, so I'll return the meeting back to you, Mr. Seed.

Thank you, everyone, for your time, and we look forward to updating you on our next conference call.

Thank you. The conference call has concluded at this time. You may disconnect your telephone lines. We thank you very much for your participation.