Advanced Emissions Solutions, Inc.
Q4 2016 Earnings Call Transcript

Published: 14 Mar 2017

[Operator:]

Good morning. My name is Tracy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Advanced Emissions Solutions Q4 2016 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remark, there will be a question-and-answer session. [Operator Instructions] Mr. Ryan Coleman, you may begin your conference.

[Ryan Coleman:]

Thank you, Tracy. Good morning, everyone, and thank you for joining us today for our fourth quarter and year end 2016 earnings results call. With me on the call today is Heath Sampson, President and Chief Executive Officer; and Greg Marken, Chief Accounting Officer. This conference call is being webcast live within the Investor's section of our website. A webcast replay will also be available on our site, and you can contact the Alpha IR Group for Investor Relations support at 312-445-2870. Let me remind you that the presentation and remarks made today include forward-looking statements as defined in Section 21E of the Securities Exchange Act. These statements are based on information currently available to us and involve risks and uncertainties that could cause actual future results, performance and business prospects and opportunities to differ materially from those expressed and/or implied by these statements. These risks and uncertainties include, but are not limited to, those factors identified on Slide 2 of today's slide presentation, in our annual report on Form 10-K for the year ended December 31, 2016, and other filings with the Securities and Exchange Commission. Except as expressly required by the securities laws, the Company undertakes no obligation to update those factors or any forward-looking statements to reflect future events, developments or change in circumstances or for any other reason. In addition, it is very important to review the presentation and today's remarks in conjunction with the Form 10-K and the GAAP references in the financial statements. So with that, I'd like to turn the call over to Heath Sampson. Heath?

[Heath Sampson:]

Thanks, Ryan, and thanks to all of you for joining us today. Let's start on Slide 1 as I let Slide 3, as I'd like to review what an exciting year we had last year. 2016 was a year of dramatic transformation for Advanced Emissions, as we solidified the foundation of the Company and setting on course for future growth and opportunities. We started in early 2016 by getting our financial house in order through the filing of our 2014 and 2015 annual financial statements. That was a significant exercise, and I'm very proud on how our accounting, finance and legal teams pulled together then and how they continued to keep us on target given how complex accounting and financial reporting can be at times. Though our financial -- through our financial compliance, we were next able to relist on the NASDAQ exchange, which provided for strong liquidity and increased investor interest in our story. From there, we not only eliminated debt and enhanced our liquidity profile. We took dramatic steps to decrease our cost base across the organization, which now leaves us in a position to be a significant cash generator moving forward. We'll talk later today about our new capital allocation plans, specifically plans for our first ever quarterly dividend, given our strong projected future cash flows. Additionally, we streamlined our Emissions Control or EC business and took significant cost out of it. We delivered on our numerous equipment contracts and modestly invested in building our Emissions Control, chemical technology products from our extensive patent portfolio. Through the commercialization of a number of these patents, we were able to drive numerous successful demonstrations of these chemical technologies for our utility partners, which led to solid sales growth in 2016 and a strong growing pipeline in 2017. Further, while we are making EC business more efficient, we simultaneously reviewed its value through a strategic alternatives review that included numerous conversations with our competitors, peers and customers. We will discuss more about that later in the call. We also put other legacy legal issues behind the Company as well, and we are moving into 2017 with a clean slate. And lastly, we remain diligent in our pursuit of new refined coal closings despite the drop back of certain political obstacles. As the year progressed, we shifted our pipeline to focus on RC investors that can invest in more than one facility. Our continued confidence in that pipeline and an improved political environment, as it relates to the clean tax equity market, it certainly represented by our decision to implement a new dividend policy. So, let's get a little more granular into two businesses and their successes in 2016. Please turn to Slide 4. In terms of refined coal or RC business in 2016 distributions of 46.2 million exceeded the expectations that we laid out for you earlier in the year. This was driven in part by a record quarter to close the year, as we received $14.7 million in RC distributions during the fourth quarter. We revised Tinuum Group's future aggregate ramp payments to $590 million for the facilities we have in place today through the end of 2021. But most importantly, we've announced a few new developments today. First, we expect to close on a new lease with an existing investor for additional RC facility by the end of this quarter. This facility will be royalty bearing and other than having higher -- and other than having higher tonnage between 5 million to 6 million per year. It carries similar economics to our existing facility based. This will increase our total invested facilities to 14. Next, we're happy to announce the new potential sales channels we have developed to lease some of our remaining RC facilities through the new joint venture with an identified broker, more like a partner. This partner has a unique relationship with the large Fortune 500 company and this company is in deep in diligence on investing in number of our facilities. Although, we are optimistic about this opportunity, we're not committing to predicting any closures considering the historical precedence. Additionally, we need to consider timing, pricing and volume of all RC opportunities before you close on any facility within this new channel. We wanted to share that since we have not had an update on Refined Coal business development process in sometime and this new partner is a new sales channel with promising expectations. These expectations involve numerous facilities and if it executed upon significant economics would be shared with this partner. We are supportive of sharing these economics, if numerous facilities can be closed quickly. We will share more, if and when facilities closed under this new channel. We are optimistic on closing numerous facilities in 2017, considering this new channel our current strong pipeline and an increasingly improved political and Clean Coal tax equity environment. Shifting to our EC business and corporate, we again significantly reduced our general, administrative and operating cost through the year and have lowered our go-forward cost base dramatically. We also reduced our historical liability through the completion of the large majority of our equipment obligation and contracts, recognizing $46.9 million with the remaining total backlog of $49.5 million. Despite the significant transformation that this business underwent, we still invested strategically in our people and in key growth areas like our chemical technology products, which helped us prove commercial viability, grow a substantial pipeline and deliver significant growth in the top line of that business. The total sum of all these efforts was an increase in our cash balance during the fourth quarter of 5.6 million. With that, I'd like to turn the call over to Greg Marken, who will talk us through the financial results for the fourth quarter and fiscal year 2016. Greg?

[Greg Marken:]

Thanks, Heath. I'll start on Slide 5, which provides a closer look at the major components of our financial results for the year ended December 31, 2016. Revenues benefited from the growth in our chemicals business, but that was offset as we completed a fewer number of contracts in equipment sales and thus revenues declined year-over-year. In terms of expenses, cost of revenues decreased relatively in line with sales, yet we had extensive reductions in other operating expenses. Specifically, we reduced these costs by over 50% compared to fiscal 2015. As we enter 2017, we are slightly adjusting our annual operating cash cost forecast to range between 13 million to 15 million. This is an optimized cost basis with minimal resources needed to meet our remaining equipment contracts, and we can still maximize our ability to sell chemicals to operate a public company and to support our investment in Tinuum. Earnings from equity method investments, which generally represent our refined coal distributions, we're up substantially during the 3-and 12-month periods ended December 31, 2016, compared to those both same periods in 2015. The comparable 2015 numbers were negatively impacted by the operation of retained facilities as well as the installation of several refined coal facilities, both of which were not a factor during current year. We don't expect to incur material operating expenses for retained facilities moving forward and capital will only be spent for new installations as required to support anticipated transactions. Regardless, over fiscal year 2016, our earnings from equity method investments amount to 45.6 million, driven by a great fourth quarter with 15.5 million in equity earnings. Moving on, you will notice that royalties decreased in 2016 compared to 2015. This was also largely as a result of comparable 2015 royalty figures that were higher due to the operation of several retained royalty bearing facilities, all of which are no longer operating as well as decrease in the per ton margin on which the royalty is earned. Additionally, coal throughput on a broader historical basis has been declining, which may provide a future headwind. Although, we did see this trend dissipate in both third and fourth quarter with the convergence of natural gas prices. All of that said, if you look over the last three quarters, you will see that we have generally been increasing our royalty base and as the new facilities have royalties associated with them. Before I highlight net income, I need to explain the 60.9 million in income tax benefit we recognized in 2016. In total, our deferred tax asset valuation allowance decreased 72.4 million due to the 2016 utilization of deferred tax assets of 11 million and a fourth quarter release of 61.4 million of our previously recorded deferred tax asset valuation allowance. We released a portion of this previously recorded valuation allowance due to the anticipated use of these deferred tax assets in the coming years. Net income for the year was 97.7 million and our pretax income which excludes the impact of the deferred tax asset valuation allowance release was 36.7 million. This compared to a net loss and a pretax loss of 30.1 million in fiscal 2015. This is largely attributable to the increase in earnings from equity method investments throughout 2016, the result of increased cost containment initiatives, increased chemical revenues in the EC business as well as the significant tax benefit during 2016. Our cash and cash equivalents at the end of the fourth quarter were 13.2 million compared to 7.6 million as of the end of the third quarter of 2016 and 9.3 million as of December 31, 2015. Off note, we also had 13.7 million in restricted cash at the end of the year compared to 8.8 million as of the end of the third quarter of '16 that we expect to become unrestricted in the first half of 2017. So, not only have our cash balances increase, but I want to remind everyone that we paid off and eliminated our $15 million credit agreement and reduced future potential liabilities related to our former RCM6 equity method investment as well during 2016. The cost structure changes that we have carried out in recent quarters as well as our continued execution against our equipment contract obligations have both been significant drivers of the improved working capital and liquidity positions even compared to just a quarter ago. As we've discussed in the past few quarters, we expect our cash balances to grow as we move forward given our more efficient cost base. In a moment, Heath will talk to you about our expected dividend and capital allocation plans to utilize this growing future cash position. A quarter-by-quarter review of those same metrics, I just discussed, is included on Slide 6 for you. Generally, all of the drivers I discussed for the annual metrics are the same for our quarterly performance. To avoid redundancy, I'll let you walk through the bullets on this slide, but the key takeaway here is the growing momentum in the business and its fundamentals as you review the metrics for Q2 to Q3 to Q4. So net components of net income and loss are provided on Slide 7, and we're happy to say that this slide will be anniversaried in 2017. But in terms of fiscal 2016, we provided an outline of select components of net income across the respective years to offer a little more context related to the income and expense by segment and to point out certain items have impacted our financial performance over the respective years. The critical takeaway here is, as you look at the bottom table, you will see that the restructuring cost for restatement expenses, interest related to debt and other special items and their associated costs are largely behind us. I'll shift the call back to Heath to talk us through each of our segments a bit more and our go-forward strategy. Heath?

[Heath Sampson:]

Thanks, Greg. Moving to Slide 9, you can see our leased and non-operating facilities as of December 31, 2016. This slide does not reflect the new lease we expect to close by the end of Q1 with an existing tax equity investor. Our current operating facilities are processing roughly 41 million tons of refined coal per year, and if we're able to lease the remaining non-operating facilities, we could effectively more than double that output. On Slide 10, you can see the components of our RC earnings. Greg went into detail regarding performance of RC business in the fourth quarter including the significant increase in equity method revenue, but I like to again quickly point out that year impact of no longer operating the retained facilities as well as eliminate the drag from the RCM6 facility. In terms of our operating tons processed that you can see on Slide 11, Tinuum's 13 operating facilities processed slightly over 10 million tons of coal during the fourth quarter, which exceeded the 8.8 million tons of coal processed in the same period last year. Looking at tons processed on an annual basis, Tinuum's 13 operating facilities processed over 41.6 million tons of coal during the fourth quarter, which exceeded the 37.7 million tons of coal processed in fiscal 2015. One of the key takeaways, I think for investors here is we see fairly consistent performance over the last three years despite numerous political and coal to gas switching dynamics that have occurred during the time period. Moving to Slide 12, you can see our royalty stream related to the use of our patented M-45 technology. Out of Tinuum's 13 operating facilities in the fourth quarter, seven had royalty streams associated with them. And looking at the trends by quarter, you can see that we baseline somewhat in 2015 and the first half of 2016. As we look forward, we continue to believe that most of the future facilities when leased or sold will be royalty bearing and thus should increase these earnings streams in the future. Slide 13 remains a critical driver for investors and we have a slight tweak to this presentation, so I'd like to walk you through. As a reminder, this slide represents the total expected future rent payments that Tinuum will receive from 2017 to the end of 2021, based on RC facilities that are in place as of the end of fiscal year 2016, which currently is $590 million. After deducting applicable Tinuum expenses, you need to take our interest in Tinuum which is 42.5%, and you will see that approximately $10 million to $12 million of quarterly distributions to ADES over the next five years. It's important to reinforce these projections are based on the following four key assumptions. One, retained facilities are not operated. Two, there are no unusual operating expenses. Three, tax equity, lease renewals are not modified. And four, coal fire generation remains as projected. While our future quarterly estimated distributions remain consistent, the total roll forward was slightly adjusted and reduced by 26 million compared to third quarter estimates through 2021. This is based on the modification in estimated payments due to a change in dispatch from coal to natural gas for one specific utility. Slide 13 again does not reflect the potential placement of the new 5 million to 6 million ton per year facility, we mentioned earlier. Moving to Slide 14, you can see the potential future tonnage related to the 15 non-operating facilities and their respective status. Tinuum has eight facilities that are ready to be operating as soon as they find a tax equity investor for them. There are three additional facilities that have a utility identified, but are not in place and then four remaining facilities, whose utility home remains unidentified. Tinuum is purposely keeping these four unidentified facilities open to ensure the largest coal-bearing and stable utilities are eventually selected. Let's shift gears and talk about our Emissions Control business. And first, I'd like to update you on our strategic review process. As you are likely aware, at the beginning of last year, we decided to pursue a strategic alternative review of the EC business. This business was really historical roll-up of products and services and intellectual properties and that historically utilized significant capital and had not delivered the type of returns that the capital that our investors would expect. Therefore, we thought it was in the best interest of the Company to test the market for these assets and thus we hired an investment banker to execute a formal review process. This process was rewarding in many ways, validating a few things we like about the potential of these assets. But after the thorough process, we concluded to operate EC a portion of our overall business. While we received a number of increase into various components of the portfolio and help many serious conversations with regard to potential sale of the whole business or individual assets held within it, we felt that no offer matched the value we believe was appropriate for this business. The reality is this segment remains in its early stages and thus I'm not surprised we didn't get an offer that met our expectations, as we see tremendous value in its intellectual property and early stage products like M-Prove. Some of this IP is not yet proven commercially and thus proved hard to value for outside partner, but we believe we have a plan and a platform to drive value without significant capital spend. So let's take a few minutes to help better understand, specifically, where our focus today is in the EC business. Slide 16, shows you the fairly dramatic transformation we executed in 2016. Again, this business was historically driven by selling some of our larger equipment systems. Like our activated carbon injection and dry sorbent injection systems. However, these are non-recurring sales focused on one-time compliances for regulations that are now in place. As a result, we expect to complete all the contracts associated with our legacy equipment contracts by the middle of 2018 with the majority completed this year. We have built a resource-like model to complete those contracts and maximize our profitability on them, and we expect their associated restricted cash to release back to us over this year. As we fully evaluate the portfolio of opportunities within our legacy business, we decided to narrow our focus on the growing chemical technology platform. Again, these products have strong IP associated with them and most importantly they have strong recurring revenue characteristics and a much higher margin profile. Slide 17 gives you a basic sense of what these products do. Where they operate and what the market opportunity looks like for us today. While these products were late to market, the demonstrations will be done to date have proven that our products and not only more cost-effective, they are stronger alternative to other emission control solutions in many situations. A typical deal is usually between to $200,000 to $400,000 per unit and our target utilities have approximately two to four units. As a reminder, we are selling a consumer product that will need to be purchased on an ongoing basis by the coal-fired utilities. Our research shows that this is roughly a $100 million market for the products we have today and we're only 3% of that market today. Based on our growing pipeline as well as a 58% increase in our field demonstrations, we believe that it's reasonable to capture between 20% to 40% of that market over the next few years. At those levels and through the maintenance of our lean cost structure, this business would allow the segment to be quite profitable. In fact, we expect this business to cover all of our corporate costs in the next four to five quarters. Even though, it could be associated with running the RC business. Moving to Slide 18, as we think beyond 2017, we believe there is a strong intellectual property with and around our chemicals portfolio. We plan to test and assess the commercial feasibility of these potential new products in 2017. Long-term, we see an opportunity to develop a bigger business around this chemical technology that would allow ADES to become a one-stop shop for all our utility partners. This is still in the early stages and as we learn more, we'll share our new strategies and ways we believe we can expand this market opportunity beyond what we are showing you today. Beyond our organic opportunities, with our strong projected cash flows, more focused in lean cost structure and attested position as a partner to utilities, we believe there may also be interesting opportunities to enhance our portfolio through M&A. Any potential acquisition must have a proven business model and thus must be both cash flow positive and immediately accretive to our business, I want to be clear we have a well-defined set of criteria that any target will have to have before we consider it. Our targets will not require cash flow support and should have positive income, so we could utilize our tax assets. We will expect expense synergies and ideally, also have an opportunity for revenue synergies by providing bundled products and services to common customers. Lastly, the price must be right, and I can't stress our growing financial model and future ability to return value to shareholders through multiple means. We are in no rush here. We want to be disciplined, thoughtful and strategic. So to conclude our EC business today is laser focused on this unique opportunity with a much more compelling business model focused on building recurring revenues, all of which is supported by strong IP was value will become more and more distinct, as we execute against our plan. Slide 19 shows you the components of earnings and our performance of the EC segment in 2016. This slide validates the transformation I just talked you through. Our equipment business will continue to run off. Our chemicals business should grow significantly in 2017 and 2018. As it does, those higher margin recurring revenues will replace lower margin lower one-time revenues. Slide 20 summarizes our corporate expenses year-over-year. The highlights year some of the bigger categories like payroll, legal or professional fees are down substantially. In fact, our headcount is down 70% since the start of 2016. Turn to Slide 21 for a picture of the extensive year-over-year costs related to the EC business and corporate costs. The progress of annual costs containment is again obvious here, but as we look forward, we're now projecting our total cash cost basis to range between 13 million to 15 million moving forward. This number was slightly refined and is in line with our original forecast last year. But the key is that it represents roughly a 70% reduction compared to fiscal year 2015 and about a 40% reduction to fiscal year 2016. Tinuum Group and ADES cash flows are provided for you again, on Slide 22. Both Tinuum and ADES increased their cash position by several million dollars in 2016, specifically, ADES cash equivalents and restricted cash position increased of roughly 27 million at December 31, 2016 from 21 million last year. And, as Greg said, we eliminated our credit agreement and reduced a number of other liabilities as well. Let's move to Slide 23, so I can conclude with a discussion of our priorities for fiscal year 2017. First, I'd like to provide a few comments on the regular to the environment. As it relates to the recent election and the political or regulatory environment, there are still different opinions in the market today. Historically, a Republican slate has been good for industry. Given current political discussions, we could eventually see federal tax reform. The uncertainty of tax reform is the main discussion point with many of our potential new tax equity investors. Although tax reform poses some risk to our RC portfolio, the consensus around the timing and the extension of the reform should be manageable, considering our relationships and contractual structures with our current tax equity customers. In general, as I noted earlier, the political and tax equity environment around coal is increasingly improving and we are optimistic on how it will accelerate RC closures in 2017. Beyond the regulatory environment, our priority should remain clear. We look to expand our RC facilities to new tax equity investors, which will in turn expand our potential future cash distributions. We will look to complete our field demonstrations, execute against our pipeline and drive new recurring sales in our chemical technologies or EC business. Further, we will continue to evaluate the commercial feasibility of the patents we own within this business in an effort to find new avenues to grow our EC opportunity. We'll also remain open to potential to do strategic bolt-on acquisitions in the future. And we'll start to evaluate what opportunities are available using a very disciplined approach based on our core set of criteria. Shifting to our capital allocation approach, I saved our most exciting news for last. I'm happy to announce our new dividend policy. As we've discussed, we expect to be -- have significant cash in the future. While it's prudent to continue to add cash to our balance sheet, it makes us more credible and enables future strategic decisions, we also believe that our shareholder deserve a return of capital. So our Board of Directors is expecting to authorize an initial dividend of $0.25 per share during the second quarter of 2017. At yesterday's closing stock price, the $1 per share annual dividend will result in approximately a 9% annualized dividend yield. I want to reinforce that this is just a first step in our approach to capital allocation. This expected dividend returned $22 million to our shareholders on an annual basis, assuming today's levels of shares outstanding. That leaves us with substantial potential free cash flow, especially, as we are able to lease or sell new operating RC facilities. We would like to have a balanced approach for capital allocation, so our board will also continue to review several options, including investing in the business at controlled levels, accretive M&A, share repurchases, increased quarterly dividends and future one-time dividends. Over the next number of months, we'll continue to prioritize those options and we'll report back to you, as decisions are made. So to conclude, 2016 was a significant transformation. And I believe we are now shifting into 2017 to a year that can start to really hone in on value creation and shareholder return. With that, we'll open the line for questions. Operator?

[Operator:]

[Operator Instructions] Your first question comes from the line of Sameer Joshi with Rodman Renshaw.

[Sameer Joshi:]

So, the first question relates to the EC business and I know you showed in the slide, there is around 49.5 million of unrecognized revenue that you expect over the next six quarters. Should we expect most of it in the first half or second half of 2017?

[Heath Sampson:]

Yes, so the EC equipment business and the revenue recognized through the quarter. Is that what your question is?

[Sameer Joshi:]

Correct. The equipment.

[Heath Sampson:]

Yes, so most of it's going to be in the early part of the quarter, but early part of the year kind of the first and second quarter, primarily in the second quarter. But those are for a couple of big, so the timing on those depending on when close gets slip a little bit. But based on our current projection, most of that will occur by the end of the second quarter.

[Sameer Joshi:]

Substantially, most as in 50%, 60% of the total $49 million? Or

[Heath Sampson:]

Actually, it's even higher than that, it's more in the kind of 75% 80% range will be by the end of the second quarter. With the bulk of it really being right now in the second quarter, I don't want to guide too much to it is in the first through the second. It's really just when we finish off these installations and the customers except that. So, some of that could slip into the first quarter, again our current schedule is to have 75% to 80% of that total backlog to be completed by the end of the second quarter.

[Sameer Joshi:]

And moving on to the partnership that you have with this broker and that you are treating as a new sales channel. Is it mainly for deploying most of the four unidentified utility partners, RC units or like what is the target for that? Is it the units?

[Heath Sampson:]

Yes, so to think about the Refined Coal business, the utility relationships that we have are different from the brokers that we used to find tax equity investors. So, the facilities that we have installed or even uninstalled, we feel good about where we are currently and the potential to fill those once out. Where the brokers and the brokers just in general have been helping us for the last number of months, it's been a move for us to strategically focus on those. And the new ones that we have signed up, it's really a broad partner, has kind of strategic relationships with certain large companies. So -- and we view this relationship that we've just entered into as really important to really get a large number of these facilities closed on. We can think more of it like a bulk-type sale. So that's this the new relationship or partnership that we've just got into. They are helping us do that and as I said in my script comments that there really focused on 1 large company right now that's in due diligence with us right now.

[Sameer Joshi:]

I have question on Slide 12 where you show the operating tons. In Q4, the operating tons were quite low compared to the Q3 tons. And it looks like Q1, Q2 and Q4 are roughly at the same level. Was there something

[Heath Sampson:]

The main difference is the seasonality of coal bun and where our specific plants are. And then if you look at the difference prior year, you will see that but the main correlation to why it's a little bit higher, a little bit lower is the additional plants that we have coming on. They also get some noise in the prior year in 2016. You have some coal to gas switching. So, in general, when you see the Q3 to Q4 reduction, it's primarily seasonality and coal bun.

[Sameer Joshi:]

So going forward, you expect roughly at the Q4 levels and then Q3 maybe slightly different based on seasonality?

[Heath Sampson:]

Yes, yes. There might be different based on if we bring more plant, but the difference between Q3 and Q4, you should expect to see that in similar manner as you see on this page.

[Sameer Joshi:]

Okay. I just have one more question on the chemicals sales and an outlook given was very bright and positive. But what level do you expect those sales to reach? Do you expect it to completely replace the EC sales that you are not having in the future?

[Heath Sampson:]

Yes, so the equipment sales that we have, those were -- I don't expect that to happen at that large extent. Like we said earlier, in the current market, it's about $100 million market for what we're going after. And we said, we're going to get potentially 20% to 40% of that over the next coming months and years. We could get more continue where that is. But right now we think it's reasonable and achieve able to think about 20% to 40%. So therefore, between $20 million and $40 million annually, it could be larger. If we got 50%, it could be $50 million or so forth. So we want to give them really kind of fair and conservative guidance around that 20% to 40% on $100 million market.

[Sameer Joshi:]

Got it. And just one last one from me. Have you already identified any M&A targets? Or are you in any discussions with any of these targets?

[Heath Sampson:]

We are not. This is early stages and we're in the scanning phase just beginning that. And we look forward to keeping the disciplined approach and seeing what's coming in. So, none yet.

[Operator:]

[Operator Instructions] There are no further questions at this time. Mr. Heath Sampson, I turn the call over to you.

[Heath Sampson:]

Great. Thanks, again, for your time today and your continued support. We hope to see some of you at the two investor conferences we will be attending in March, which include Roth, which is today, and the Sidoti Conference at the end of the month. So thanks, again, and have a great day.

[Operator:]

This concludes today's conference call. You may now disconnect.