CSI Compressco LP
Q2 2017 Earnings Call Transcript

Published: 8 Aug 2017

[Operator:]

Good morning and welcome to the CSI Compressco LP Second Quarter 2017 Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I’d now like to turn the conference over to Stuart Brightman, President and Chairman CSI Compressco and President and CEO of TETRA Technologies. Please go ahead.

[Stuart Brightman:]

Good morning and thank you for joining the CSI Compressco's second quarter 2017 results conference call. I would like to remind you that this conference call may contain statements that are or may be deemed to be forward-looking. These statements are based on certain assumptions and analysis made by CSI Compressco and are based on a number of factors. These statements are subject to a number of risks and uncertainties, many of which are beyond the control of the Partnership. You are cautioned that such statements are not guarantees of future performance and that actual results may differ materially from those projected in the forward-looking statements. In addition, during the call, we may refer to EBITDA, adjusted EBITDA, free cash flow, distributable cash flow, distribution coverage ratio or other non-GAAP financial measures. Please refer to this morning's press release or to our public website for reconciliations of non-GAAP financial measures to the nearest GAAP measures. These reconciliations are not a substitute for financial information prepared in accordance with GAAP and should be considered within the context of our complete financial results for the period. In addition to our news release announcement that went out earlier this morning, and as posted on our website, we plan to file of our Form 10-Q with the SEC on or before Wednesday, August 9, 2017. Again, thank you for joining us this morning. We do appreciate your continued interest in CSI Compressco. As previously indicated I will be acting as President of CSI Compressco as we go through the process of replacing Tim Knox. I want to think Tim personally for his three years of outstanding contributions and I remain supremely confident in the strength of our management group to continue their outstanding performance. This is the same operating team that has been in place since the date of the CSI acquisition. During the transition Tim will assist me and support the business. Second quarter results contain significant favorable trends across all the businesses it gives us confidence for the continued earnings trends, increasing as we go forward. At the end of the second quarter 2017 we had 863,577 horsepower of 1,094,739 horsepower compression services fleet generating revenue. This represents a 10,357 horsepower increase from the previous quarter. This represents the third consecutive quarter we have experienced sequential improvement in the utilization of our compression services fleet with excited at the quarter of 78.9% in improvement of 200 basis points compared to the prior quarter. The utilization of our largest equipment class 801 horsepower in above increased 90% exiting the quarter and continues to show signs of the supply of larger compression services equipment is tightening. The majority of our larger horsepower fleet continues to be deployed throughout the Permian Basin. During the second quarter we initiated construction and roughly 7,000 horsepower of additional equipment in this class support of no known needs of our primary customers. Opportunities continue to emerge to deploy the large horsepower at service rates above what we've seen in the past two years, but still below the pricing levels of 2014. While pricing remains pressured we are optimistic of improved behavior - rational behavior in the industry which will allow us as we go through the second half of the year to recoup some of the concessions provided in the prior to two years. For a 101 to 800 horsepower equipment class utilization end of the quarter at 73% up 1% from the prior quarter with a great deal of activity for mid-sized multi-state equipment being deployed in gas lift services in the SCOOP and STACK as well as the Permian Basin. Utilization of our 100 and below horsepower class remains at 63%. Continuing to the second quarter we've seen a slowing down in the bound of return activity and we have seen very encouraging signs of opportunities for deployment developing in our traditional production enhancement applications and expect utilization of our smaller horsepower equipment to improve in the second half of the year. Our customer commitments for future services through the end of 2017 and into 2018 is growing. We exited the second quarter with contracts in hand for deployment of approximately 25,000 horsepower of existing fleet including all product lines in regions. Fleet make ready activity in the first and second quarter increased significantly. We completed more fleet deployment preparation work in the first and second quarters of 2017 than we did in 2016. This allows us to respond quickly to those opportunities as they arise and we expect this to continue through the second half of 2017. We've also incurred some additional cost associated with labor, freight, lube oil and other typical mobilization expenses as we turn the corner from contraction to expansion in fleet deployment. The increased expenditures in investments associated with make ready and mobilization in this up cycle set this up for growth in revenues and profits in the quarter. This contributed to the flat compression services margins as we want from the first to second quarter and it is also part of our optimism that we will see improving compression services margins sequentially for the balance of the year. Turning to new equipment sales. In the second quarter of 2017, we recognized $11.8 million revenue and received purchase orders of $12 million, carrying forward $12 million of the previously existing backlog and exiting the second quarter with a backlog of $24 million. This represents a slight increase compared to the prior quarter and represents the highest level of backlog experienced in the past year. This one-to-one book to bill ratio was a welcome result with activity as measured through inquiries and quotations very strong. Subsequent to the quarter, we continued to receive orders and received over 7 million through the beginning of August and extremely optimistic that additional projects will be awarded in the coming weeks, and at the second half of the year, we will show a bigger bookings trend in the first half and set us up favorably for 2018. Investments in infrastructure to expand existing systems and develop new systems in underserved areas can positively impact our new equipment sales and bodes well for the future to fill the expanded gathering and processing system capabilities. The sale of used equipment from our compression services fleet provided an additional $2.6 million in second quarter revenues. As has been the case in prior recovery cycles, we're finding and executing on opportunities to increase our aftermarket services business which includes parts sales. Aftermarket services in the second quarter provided $10.5 million in revenue, a 12% increase compared to the prior quarter. Customers who own compression equipment have began to repair, maintain, overhaul and redeploy their assets as well as restock inventories after a prolonged deferral of these cost. Our backlog of field and shop aftermarket services continues to grow along with the volume of inquiry and quotation for such work. We have increased our sales force dedicated to this effort and anticipate a continued amount of improvement in the aftermarket services for the balance of the year would be on. Continued instability in the commodity market during the quarter leaves us hesitant to provide full financial guidance. However, we do remain optimistic for my prior comments that the service industry and earnings will improve throughout the year and anticipate a sequential improvement in quarters three and four. The actions of our customers seem to indicate that they will not react to short-term volatility in prices and moving forward with their investment plans. The continued level of drilling activity and infrastructure support confirms this confidence. Our capital expenditures for 2017 are projected between $25 million to $30 million and increased to our earlier guidance of $15 million to $30 million. As stated previously, we continue to aggressively evaluate growth opportunities with the appropriate return and have increased the capital plan for 2017 as a result. The increase in total capital was also inclusive of increased estimated maintenance capital to get equipment back to work, now projected to be between 15 and 20 for the year. With that, I will turn the call over to Elijio.

[Elijio Serrano:]

Thank you, Stuart, and good morning to everybody. Second quarter revenue increased sequentially by $9.8 million or 15% on higher aftermarket services and new equipment sales, compression services revenue of $50.3 million was down 0.5% on the cumulative impact of previously issued pricing compressions. Utilization improved sequentially from 77% – 78.9% and total horsepower deployed increased by 10,357 driven by increasing demand for large gathering system unit. We are also seen increased demand for the GasJack fleet. Based on client tariff, discussions we expect utilization to continue to increase into the third and fourth quarters as pricing above the levels we saw last year. The higher demand is coming from the areas that we have the strongest market exposure, in Permian Basin, Delaware Basin, Mid-Con and South Texas. We have initiated rules for engines and compressors to begin build-in large horsepower equipment for our fleet to keep up with the increasing demand we are seeing from our customers as they deal with associated gas from their drilling programs. We are seeing opportunities to deploy equipment internationally, specifically Argentina and are responding to those opportunities. All-in-all, we are seeing a very robust rebounding activity for equipment in multiple markets and respond accordingly. We’re beginning to push our pricing given the demand particularly in the large horsepower gathering system units. Compression services margins were 42.7%, a slight improvement over the first quarter. We continue to incur make ready costs and mobilization cost as we deploy our idle fleet. Maintenance capital was higher than normal run rate, reflecting the demand idled equipment to be deployed. We also have had resources focus on our ERP system deployment that has put some cost pressure on the organization. As our new ERP system gains traction and we deploy some of those key resources back to the field. We expect cost to comedown and compression margins to begin to improve. The better pricing we are seeing will also contribute toward expected improvements in margins. Aftermarket services, revenue increased 12% more of our customers are rebuilding parts inventory, catching up maintenance on equipment and also deployed idle equipment into their networks reflecting the demands or incremental horsepower. Aftermarket services margins were 19.6% of revenue. Equipment sales increased 156% with gross margins of 8.3%. This compares to gross margins in the first quarter, up 4.8%. During the second quarter, we recorded our non-cash fair value adjustment to Series A preferred convertible that improved earnings by $5.5 million. We’ve exclude this from adjusted EBITDA. Adjusted EBITDA of $19.5 million or $368,000 below the first quarter. In the first quarter CSI Compressco reimburse TETRA, $1.75 million for G&A support in equity in lieu of cash. In a second quarter, the G&A support was reimbursed all in cash. Normalizing for the equity reimbursement of G&A adjusted EBITDA that reflects core earnings of the business that increase sequentially by $1.4 million. This is consistent with a $1.2 million improvement in gross margins and $536,000 reduction in G&A. We are clearly starting to see the core business earnings move out. We believe Q1 was the value of the earnings when taken into account, G&A cost not reimbursed in equity. Distributable cash flow of $5.8 million. It was $1.3 million below the first quarter, reflecting the higher maintenance capital expenditures. At this time, we believe the earrings are trending in the right direction provide – it is appropriate for CSI Compressco to fund our G&A with cash in lieu of equity. The coverage ratio in the second quarter was 0.85. The leverage ratio at the end of June was 6.12 times, safely within the covenant of 6.75. Free cash flow defined as cash flow from operations less capital expenditures, net of sales from proceeds of equipment was $5.3 million and improvement of $10.7 million from the first quarter. The improved free cash flow in the second quarter is also indicative of the momentum of improving earnings, despite the higher maintenance capital expenditures. Last week on August 1, we successfully large our new fully integrated ERP system. This system harmonizes and automate our operations, sales and back office processes. We now have all our fuel technicians electronically connected to our ERP system in the field with the use of end held mobile devices. All our sales organization login in real time of quotes in proposal and we improve the turnaround time disability to our business. We anticipate annual savings of over $4 million of which we have already recognized about $1 million in the consolidation of the IT and accounting functions. The additional savings will be coming mainly at the field level. In addition, the cost savings we expect to have significant working capital improvements from better management of inventory in parts just in time deployment of components and more timely invoicing practices. We believe this is that have developed and deployed as a unique system in the sector. We have built this system on the state-of-the-art technologies from Oracle, sales force and SAP. A lot of management time and effort went into develop into this system training the entire organization and deploying out without slowing down the business. Many of our key leaders that were instrumental in this process are now going back to be in focus exclusively on operations to drive improvement in margins and grow revenue. And with that let me turn it back to Steve.

[Stuart Brightman:]

Yes, I would like to summarize a few key points from the quarter before we move on to Q&A and of taking the time to do it because we really believe we're starting to see significant change to our outlook in a favorable manner. We've now seen three consecutive quarters of improvements in utilization including this quarter's 200 basis points figure which is sequentially larger than prior improvements include the highest horsepower segment now pushing 90% utilization in demand for all horsepower classes improving. As a result we're stepping up and have stepped our efforts to make ready idle equipment by investing maintenance capital incurring additional operating costs to take advantage of these opportunities preparing to increase deployment as much as 40,000 horsepower by year end which includes the 25 that we said we have line of sight previously. These actions have reduced distributable cash flow the first half for the year but we believe this will set us up to respond to increasing market opportunities generate additional revenues and increased distributable cash flow in the coming quarters. Aftermarket is continuing to ramp up as our customers begin to catch up and maintenance and prepared their equipment from deployment two quarters of sequential revenue growth support this future growth as anticipated. New equipment sales increased to 24 million engines in the quarter. These results are ongoing and our sales pipeline quotation activity continues to pick up and we are extremely optimistic the bookings for the second half of the year will exceed the first half of the year. Noted that the SG&A is come down 6% sequentially and we expect to be able to manage the operating cost including the SG&A more effectively going forward with the deployment of our system. As Elijio mentioned and you can hear in October we work on this a long time the team has been incredibly engage building what we think is a best-in-class system in the first week we've had outstanding results we'll continue to debug it but so far exceeded our expectations and we're focused on getting both the cost in working capital savings that you heard us reference. Again, I appreciate your continued interest in CSI Compressco and thank you for taking the time to join us this morning. And at this time, I'll take - open up for questions.

[Operator:]

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Andrew Burd of JPMorgan. Please go ahead.

[Andrew Burd:]

Hi, good morning, nice to see the trends are turning in the right direction. Question on the fleet it looks like at it declined about 14,000 horsepower in the quarter were those compressors sold or scrapped.

[Elijio Serrano:]

Most of them were sold. Most of what we’ve done in terms of reducing the fleet in certain areas has been a tactical approach to monetizing some old assets.

[Andrew Burd:]

Okay. And how much of equipment sales revenue for that segment in this quarter relates to those used units from the fleet relative to new units that you build and sell?

[Elijio Serrano:]

It’s about $2.7 million, almost the same as the first quarter.

[Andrew Burd:]

And then the non-cash costs of compressor sold that was then added back into EBITDA, what does that relate to? Is that those units? And then what segment does that come from on the P&L?

[Elijio Serrano:]

Right. So that’s under our cost of goods sold under equipment sales and that is essentially the net book value or the non-cash cost of selling used equipment.

[Andrew Burd:]

Okay, great. So if I think about the impact on the fleet units that you sold during the quarter, it's the revenue and then also we have to impact. – impact to non-cash cost compressor, so it's really $3 million, $4 million, $5 million something like that in terms of impact on EBITDA.

[Elijio Serrano:]

Correct. And again, what that represent is the $2.7 million is what we sold in terms of revenue and there's no cash cost associated to this equipment that was built and deployed many years ago.

[Andrew Burd:]

Okay, perfect. So it's just that non-cash cost and the revenue and those are the only two items. That's perfect. And moving on to the larger units, good trends there obviously similar to peers, it looks like they're almost completely utilized or closed to it. Are you building new units to meet that increasing demand? I only asked because your peers mentioned over a year's lead time for new Caterpillar Engines, so if you're not in line now, how are you thinking about growing with demand in that segment of the market?

[Stuart Brightman:]

Yes. It's a combination of – a good portion of it is the utilization of the existing fleet and you've heard us talk about the make ready cost associated with that and we put forth growth capital as well. And some of the sizes we're looking at, it's not quite the year for that, but we're well aware of the supply chain elements of planning accordingly, but we're certainly going to be investing in growth capital in this improving market.

[Andrew Burd:]

Great. Thanks for taking the questions.

[Operator:]

The next question comes from Praveen Narra from Raymond James. Please go ahead.

[Praveen Narra:]

Good morning, guys. I guess just following up on Andy's question in terms of the number of horsepower sold. I guess can you give us a sense of how that sold horsepower by trend going forward? Are there still more of these older units to go? And how should we think about the pace similar to what happen in 1Q to 2Q?

[Elijio Serrano:]

Praveen, this is Elijio. We tend to averaging about $2.5 million - $2.7 million at quarter for the last couple of quarters of used equipment sales. And what the team keeps doing is looking at all the equipment in the fleet, seeing quite has a future for us that we can deploy either as if or going in different refurbishment and then deploy it on a longer term basis. And that equipment that is not part of our longer term needs, we're looking at monetizing that and we expect that will continue to run at that rate for the next several quarters.

[Praveen Narra:]

Okay. And then, I guess, another question on the start up costs. I may have missed it. Did you mention how much of those were in the quarter?

[Elijio Serrano:]

Start up cost can be classified into many categories where there is lube oil simply to refill the equipment and getting deployed whether it’s including freight getting into the right geographic area, whether it includes some refurbishment that we hit the P&L, it will vary, but I would say that the numbers are running under $1 million and trending downwards.

[Praveen Narra:]

Okay. And then, I guess, in terms of the smaller horsepower units. You mentioned, targeted put back concessions maybe that's more across the fleet. Can you give us an idea where we are in terms of guys are either returning units are saying that utilization start to pick up that actual – actual horsepower starting to pick up in the pace of concessions coming back?

[Stuart Brightman:]

Yes, I mean I think across the fleet we're seeing a positive trend on that. As we look at to redeploying, reactivating assets we are very aware of needing to push the price point up on those new deployments and have been successful, so you start to see the sequential units going to work with a better price. We are seeing the pace of returns slow down. So again, both the new deployments increasing the return slowing down that contributes to the net horsepower deployed. And as I said in my statements, we're also starting to see some pockets of success in the lower horsepower and we expect that utilization to go up, and most of that’s in the traditional production enhancement areas that compress goes always been very strong.

[Praveen Narra:]

So I guess from here, should we expect the pace of utilization to be kind of similar to what we saw this quarter, excess sales or how should we think about that utilization?

[Stuart Brightman:]

Yes, I expect the pace of that utilization to be similar, if not better sequentially than what we saw during the second quarter. I expect the rate of new equipment bookings to increase the second half of the year versus the first to get into quarterly buckets and that’s particularly lumpy. But I think if you compare the two halves, we're very confident versus what we physically have received in the first five weeks of the new quarter plus what is at various stages of the quotation process negotiations, good aftermarket, we think that will continue to improve as well. And again we have a very strong focus on all of those pieces. The way we've organized the business is to be able to focus on all those elements.

[Praveen Narra:]

Okay, perfect. Thanks a lot guys.

[Operator:]

The next question comes from Stephen Gengaro of Loop Capital. Please go ahead.

[Stephen Gengaro:]

Thanks. Good morning. Just following up on the prior question, you talked a little bit, Stu about the pricing. When you think about your existing fleet that's operating and you think about the assets that you talked about maybe going to work in the back half of the year. Can you give us a sense for the a) how big a price cap there is kind of the leading hedge in terms of the older stuff from a margin perspective? And then b) sort of when does stuff generally slip as far as contract and it was a yearly – can you give us – any color on that?

[Stuart Brightman:]

Yes, I mean we’re about getting to the specific price changes from peak to trough I would say by definition most of the agreements a 12-month duration. So you'll have a lot of those coming up for repricing over the next six months on areas where we would have had get price concessions a year-ago, so that's an element that that will have an opportunity to review that in tight utilization to determine how we allocate those units. You're having the new deployments I referenced which are going out at a higher price than the ones prior months to prior two months. In some cases that’s higher than what the averages and some cases it’s lower until those contracts continue to turnover those numbers are going to be in my opinion fairly flattish. But I think these are leading indicators of future improvement on that. And again I think the other part gives us confidence that we'll see our compression margins improved the second half of the year as we both Elijio and I referenced that there were a lot of make ready cost that took place and in the next 30 to 60 days, a lot of our operating leadership will be full time only on that part of the business and not in the implementation of the ERP system. That's been a big project. We had our best and brightest working on that and I think we'll get a double benefit of the effectiveness of the system and our ability for that leadership team to work full time one of the day to day business. So there we're very excited that the system is in. It’s working. At the same time, we’re seeing the business inflection. I think the combination of the two gives us a lot of confidence going forward.

[Stephen Gengaro:]

Okay, thank you. And then just as a quick follow-up, you talked in the press release about the capital spending expectations for this year. Any guidance going forward or at least maybe sort of some a sense at after what you think year-end, utilization will be worsening into CapEx of 2018?

[Stuart Brightman:]

Yes, I mean I think as we go through the end of the year clearly we think we're at 78.9%, as I said I think the second half of the year will look at the sequential improvement similar to what we saw in the second. So my definition that should put us well north of 80% utilization and a lot of the capital we referenced for the updated guidance is going to be driven by lead time. So you'll see new capital coming in the beginning of the year that were ordering and looking at and I would expect next year we have a large growth CapEx significantly this year and I would expect the maintenance CapEx fees would come down as we reactivated the fleet and kind of got those underutilized assets and what in some cases sold as Elijio referenced in other cases more importantly reactivated generating earnings.

[Stephen Gengaro:]

Okay. Thank you.

[Stuart Brightman:]

Thank you.

[Operator:]

And the next question comes from Sharon Lui of Wells Fargo. Please go ahead.

[Sharon Lui:]

Hi, good morning.

[Stuart Brightman:]

Good morning.

[Sharon Lui:]

With regards to expect the cost savings from the ERP system do you anticipate to realize or realizing that benefit starting in the third quarter and how should we think about the timing?

[Stuart Brightman:]

Good morning, Sharon. We believe that we want to give the system plenty of time to stabilize and make sure this function perfectly with what we anticipated and after one week we're really pleased in terms of its performance. I would envision that we have started seeing some of those savings that we targeted to occur in the middle of the fourth quarter.

[Sharon Lui:]

Okay. And I guess in terms of higher CapEx spend and leverage maybe talk about I guess your outlook on trying to manage leverage going forward for the balance of the year?

[Stuart Brightman:]

As you recall when we had the last earnings call we mentioned that we had amended our covenants and pushed them up to 6.75 for this quarter and the next quarter. Then 6.5 or the next two quarters before they drop to six in a quarter for the next two quarters. So we think that those amendments are more than adequate to fund what we believe is the capital that we need to deploy under the existing pricing they we’re seen out there and we're very comfortable with that leverage and those covenants covering everything that we've laid out in our plan.

[Sharon Lui:]

Okay. And I guess in terms of update on the distribution policy given the coverage this quarter what’s the sustainability of the current run rate?

[Stuart Brightman:]

I think our view - is with the projections we have in front of us in some of the earnings trend that we feel comfortable with where we are on that, maintenance CapEx should start come and down in the second half of the year respect earnings to continue. So you know we're comfortable where we are at the moment.

[Elijio Serrano:]

And Sharon also pay attention we’ll publish the key what you can see how the cash flow statement looks but we mention both in the script and also in the press release that our cash flow from operations and free cash flow has been quite strong. So we expect to operate on a positive cash environment even after distributions on a go forward basis.

[Sharon Lui:]

Okay, great. Thank you.

[Operator:]

The next question comes from Selman Akyol from Stifel. Please go ahead.

[Selman Akyol:]

Thank you. Good morning and congratulations on the ERP system that’s always nice to have behind you.

[Stuart Brightman:]

Thank you.

[Selman Akyol:]

Question, is your hiring picking up well with the positive trends you're seeing?

[Stuart Brightman:]

Yes. We're certainly adding to the headcount and have plans to further add to it and dealing with the wage challenge and labor challenges particularly in places like the Permian, but so far we've been able to manage through it and expect to be able to continue to do that.

[Selman Akyol:]

Okay. And maintenance capital came in higher than our expectations, but I guess that’s really preparing I guess, some of your idle fleet to get back to work, did I get that correctly?

[Stuart Brightman:]

Yes and if you can imagine if we were going through the downturn over the last couple of years, we’re working on conserving cash and equipment that was coming into an idle equipment pool. We were mothballing without investing significant capital not knowing when the market will recover and none of that demand is out there and we're seeing a better pricing we're making in the investment on that maintenance capital to get that equipment ready.

[Selman Akyol:]

Gotcha. And then just a few housekeeping items if I can. Can you say what the total debt was at the end of the quarter?

[Elijio Serrano:]

Total debt at the end of the quarter $509 million, round it to $510 million.

[Selman Akyol:]

Okay. And then what was the share count at the end of the quarter two?

[Elijio Serrano:]

Our share count at the end of the quarter – well, I don’t have that handy, let me get that back to you.

[Selman Akyol:]

Okay. And then, I guess the other one I was looking for was how much cash you had on the balance sheet?

[Elijio Serrano:]

Cash on hand at the end of the quarter were $5 million. Normally if I were to do – I mean we sweep call cash and pay down revolver at the end of the every quarter.

[Selman Akyol:]

Gotcha. Thank you.

[Elijio Serrano:]

Appreciated.

[Operator:]

The next question comes from Chris Colvin of Breach Inlet Capital. Please go ahead.

[Christopher Colvin:]

Hi, thanks for taking my question. I think they were primarily answered, I guess my only question, I appreciate the bullish commentary and I guess call it downside scenario. If EBITDA doesn't grow, is my math right that you'll be coming up against that leverage covenant that governs liquidity, and as I said you've already somewhat answered this, but just want to get kind of your thoughts if the growth doesn't come through that you expect or we take another dip how you plan to handle kind of balancing the distribution verses meeting your covenants?

[Elijio Serrano:]

Chris, we've just come out of what we believe the first quarter to be the value of the earnings on the coal business. If the market pulls back some, we've demonstrated that we can pull back on capital expenditures that will reduce debt. We've also demonstrated that we've got a very strong and financially sound parent that we can have discussions with about providing an increment support whether it would be the form of our G&A being reimbursed in equity in lieu of cash or other mechanisms. So I think that the ability to either manage capital expenditures or rely on a very strong parent with a solid balance sheet will keep the company strong and safe through this cycle.

[Christopher Colvin:]

Okay, great. Thanks for the response. End of Q&A

[Operator:]

And this concludes our question-and-answer session. I would now like to turn the conference back over to Stuart Brightman for any closing remarks.

[Stuart Brightman:]

Thank you. I appreciate your participation and the great questions and we'll look forward to updating the third quarter in a few months. Thanks again.

[Operator:]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines. Have a great day.