Lionheart Holdings
Q4 2015 Earnings Call Transcript

Published: 25 Nov 2015

[Operator:]

Welcome to Cubic Corporation’s Fourth Quarter and Fiscal Year 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. If anyone has any objections, you may disconnect at this time. Now, I would like to turn the conference over to Diane Dyer, Director of Investor Relations. Please go ahead.

[Diane Dyer:]

Thank you. Good morning, everyone and thank you for joining Cubic’s webcast. Yesterday, after the market closed, we reported our fourth quarter and fiscal year 2015 results. We encourage you to refer to the company’s press release, the most recent reports filed with the SEC as well as today’s presentation slides. You can access these documents on the Investor Relations tab of Cubic’s website at www.cubic.com or on the SEC’s website. On today’s call, Brad Feldmann, Cubic’s President and CEO and Jay Thomas, Executive Vice President and Chief Financial Officer will comment on Cubic’s fiscal year 2015 results and the company’s 2016 plans and outlook. Mark Harrison, Cubic’s Senior Vice President and Corporate Controller will join us for the Q&A session. Now, I would like to turn the call over to Jim Edwards, Cubic’s Senior Vice President and General Counsel for the Safe Harbor disclosure.

[Jim Edwards:]

Thank you, Diane. Please note that certain information discussed on the call today is covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act. I caution listeners that during the call, Cubic management will be making forward-looking statements about future events or Cubic’s future financial and operating performance. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company’s business. These forward-looking statements should be considered in conjunction with and are qualified by the cautionary statements contained in Cubic’s earnings press release and SEC filings, including its Annual Report on Form 10-K and quarterly reports on Form 10-Q. This conference call contains time-sensitive information that is accurate only as of the date of this broadcast, November 24, 2015. Cubic undertakes no obligation to revise or update any of the forward-looking statements to reflect events or circumstances after the date of this conference call. This conference call will also include a discussion of non-GAAP financial measures as that term is defined in Regulation G. Cubic believes this information is useful to investors, because it provides a basis for measuring the company’s available capital resources, the actual and forecasted operating performance of the company’s business and the company’s cash flows. A reconciliation between the GAAP financial measures that correspond to these non-GAAP financial measures is contained in our earnings press release and in today’s presentation. Any discussion of non-GAAP measures is not intended to detract from the importance of comparable GAAP measures. With that said, let me turn the call over to Brad Feldmann, our President and Chief Executive Officer.

[Brad Feldmann:]

Thank you, Jim. Good morning, everyone. Thank you for joining us on the call today. Yesterday, we reported our financial results for the fourth quarter and year ended September 30, 2015. On the call today, I will be referencing the presentation that we have posted on our website, which you can also access on the conference call link. I will be discussing some key items related to our strategic plan and businesses and then Jay will cover our non-GAAP reconciliation and segment level financial results in more detail following my comments. Turning to Slide 3, we show our consolidated operating highlights. Year end backlog remains strong at $2.976 billion, which is two times our annual revenue, but was down compared to last year, primarily due to unfavorable foreign exchange comparisons. Sales for FY ‘15 totaled $1.431 billion were at an all-time record high, up 2.3% over last year. Adverse currency headwinds impacted FY ‘15 sales by $52.1 million, or 3.6%. We have included non-GAAP comparisons for adjusted EBITDA, adjusted operating profits and adjusted diluted earnings per share. The presentation of this non-GAAP information is in management’s opinion useful for investors and analysts to better understand the underlying sustainable operating results of the company. Jay will discuss these reconciliations in a few moments. Consolidated adjusted EBITDA was $140.4 million this year compared to $129.6 million last year driven by improved performance in our transportation and defense systems segments. The 50 basis point improvement in adjusted EBITDA margins year-on-year reflected improved margins in our transportation segment. As part of our ongoing efforts to rebuild and modernize the infrastructure of the company, operating profits were impacted by upgrading our ERP system and a reorganization to reduce overhead costs. Operating profits compared to last year were also affected by the strength of the U.S. dollar and cost issues on two major projects, which we are working to resolve with our customers. Adjusted diluted earnings per share was $2.79 versus $2.74 last year or a 1.8% improvement. Operating cash flow was strong at $89.7 million. We developed Goal 2020 as our overarching strategy, a summary that can be seen on Slide 4. We have strengthened our strategy focus and are intensely pursuing NextCity, C4ISR and next training markets, while making essential investments in the company to drive increased productivity and efficiency. We are fortunate to have market leading positions in transportation fare collection and defense training. We are aggressively striving to expand these market leading positions through innovation, investments and acquisitions. Our vision remains centered on winning the customer to create market leading positions through innovative solutions and superior offerings. We will continue to target a 10% plus annual growth rate through both organic and inorganic growth consistent with Cubic’s historical performance. We are rebuilding the company and investing in many initiatives to improve sustainable profitability. As we leverage One Cubic, we will provide a scalable, efficient platform for the company to grow and our goal is to improve operating margins by 200 to 250 basis points by 2018. Through One Cubic, we will implement our new ERP system to drive increased productivity and efficiency while rationalizing our manufacturing and supply chain efforts. We are very excited and look forward to rolling out the first phase of our new ERP system starting in FY ‘16. We expect to see savings starting in FY ‘17. We are projecting savings of at least $10 million in FY ‘17 growing to over $30 million annually by FY ‘19. In transportation, we are excited to welcome our new President, Matt Cole, to the job. Matt has been with the company for more than 10 years and he is energized for the future of Cubic Transportation Systems. A few years ago, we established our NextCity vision, of which Matt Cole was the Chief Architect. This vision is gaining momentum. We are transitioning from a leading provider of mass transit fare collection systems to a leading integrator of payment and information solutions and related services across all modes of transportation. In defense, the mission set for U.S. Military and partner, National Security Forces, is becoming more complex across the entire range of operations. As part of our strategy, we are focused on expanding our C4ISR offerings from secure communications to network solutions and SATCOM. We have also developed our vision for the future of training called next training. Next training is focused on designing and fielding the next-generation training environment to help repair military and security forces for their next mission. Next training initiatives will also focus next-generation instrumentation systems to better capture human performance by making individual and military training more effective in an increasing complex world. Now turning to our transportation business on Slide 5, as far as noteworthy activities in FY ‘15, we are encouraged by the new customers we gained as well as our first contract wins for toll and mobile, all of which validates our NextCity strategy. We recently entered the toll market with a $52 million contract win from the New Hampshire Department of Transportation to deliver a new back office for the easy pass system and support services for the state’s toll roads. We are thrilled with this win and we are excited to get into the toll market as we continue to grow our portfolio beyond fare collection, leveraging our NextCity platform. Earlier in the year, we also won contracts with Irish Rail and transport for Greater Manchester. We are proud to have just won our seventh major award with Transport for London this year. TfL and Cubic’s contactless payment system was awarded the honor of Most Innovative Transport Project at the National Transport Awards in London last month. More than 180 million contactless journeys have been made across the tube, rail, bus and tram network since the system was introduced. We are focused on several key priorities in FY ‘16. We are well positioned for the anticipated FY ‘16 bid to replace the fare payment system in New York City. New York City is the largest transit system in the world and we have been the incumbent there for more than 20 years. In Melbourne, we are one of two competitors eligible to bid on the replacement services contract for the fare collection system. This is a significant long-term opportunity for us to expand our geographical presence in Australia beyond New South Wales and Queensland to include the State of Victoria. The Vancouver Project is on track to move into full-service operations. The public use of the system has been successful since the full launch on November 1. With over 300,000 Compass Cards now registered with the system. We are also focused on pursuing fare collection and toll opportunities in the Middle East, plus expanding our mobile solution beyond Chicago to more transit customers. Just last Thursday, we launched our Ventra mobile app in partnership with the Chicago Transit Authority and local bus and commuter rail operators. The mobile app gives transit riders the ability to plan, manage and pay for their journeys in one place, an industry first for fully integrated regional transit services as well as part of our NextCity strategy. The transportations team is working vigorously to cross the Ventra mobile app to additional markets. Now turning to our CGD Systems business on Slide 6, in our CGD businesses overall, we are encouraged that there is now a bipartisan budget act and are optimistic that there will be a defense authorization and appropriations bill in the near-term to provide increased funding. In CGD Systems, our C4ISR strategy is off to a great start. We are delighted with the performance of our recent acquisition, DTECH which had a positive impact on our operating performance this year. The acquisition was accretive in less than nine months and we are excited about the future potential to expand this business. We are awarded a $65 million contract for two ground combat training centers in the Middle East. And we are expanding our footprint in Australia with an $18 million contract for simulation support at the Australia Defense Simulation and Training Center. We are also awarded a contract to develop live virtual constructive system for air combat training while continuing to deliver live simulation training capability to the large Joint Strike Fighter program. As we continue to focus our portfolio to pursue goal 2020, we have exited our money-losing global tracking effort and continue to review other businesses. In FY ‘16, we expect CGD Systems to see continued growth led by international training related air and ground sales and further growth in the C4ISR space. Important bids and initiatives include launching the next training initiative, expanding on the recent addition of game-based training for commercial air crews and pursuit of the KC-46 aerial tanker training program. On Slide 7, you will note some CGD Services highlights. In FY ‘15, we are awarded a $500 million single award ID/IQ contract to provide chemical, biological, radiological nuclear and explosive support services to the Defense Threat Reduction Agency following multiple protests, which were denied. We secured a prime contract position on the $20.9 billion multiple-award ID/IQ United States Air Force Training System Acquisition III contract to support aircrew training systems globally. We are also awarded share of a $240 million contract to support the United States Army Capability Integration Center. In FY ‘16 our key priorities are winning the JRTC re-compete, where we have been the incumbent since 2001, actively pursuing higher margin domestic and international service work with an emphasis on non-LPTA contracts and expansion in the Intel and Special Operations Forces markets. This business has returned to modest growth and we expect this trend to continue. I will now turn the call over to Jay Thomas, our CFO.

[Jay Thomas:]

Thanks Brad. Turning to Slide 8, we have provided a reconciliation of EBITDA to adjusted EBITDA from net income. Adjusted EBITDA was $140.4 million after adjusting for $27.4 million in charges in FY ‘15. We consider our adjusted EBITDA to be more reflective of the true core earnings power of our business. We also show our FY ‘14 adjusted EBITDA on a comparable basis, which aggregates $129.6 million. As Brad mentioned, there was a 50 basis point improvement year-over-year in our EBITDA margin. This improvement relates primarily to higher margins from our transportation services contracts in North America. The $27.4 million of adjustments in FY ‘15 to our EBITDA consist of costs related to our One Cubic initiatives including a $6.3 million charge last year related to a restructuring and $13.2 million of expenses associated primarily with a new ERP system. In addition, we incurred acquisition related expenses totaling $7.9 million, which includes transaction costs, retention bonuses and earn-out cost. FY ‘15 operating profits were also impacted by unfavorable currency comparisons totaling $7.8 million. Slide 9 shows a reconciliation of GAAP operating income to adjusted operating income using a similar comparison of the same expenses. On Slide 10, we have provided a bridge from our reported GAAP diluted EPS for FY ‘15 and FY ‘14 to an adjusted diluted EPS. The adjusted diluted EPS includes the cost items previously discussed, net of tax, plus the impact of a non-cash U.S. deferred tax valuation allowance we took this fiscal year aggregating to $1.33 per share. Adjusted diluted EPS in FY ‘15 was $2.79 per share, up 1.8% over the comparable FY ‘14 adjusted EPS. Now, turning to our operating segments, Cubic Transportation Systems, or CTS, which is on Slide 11, CTS sales were down 5.5% in FY ‘15 compared to FY ‘14 driven by FX headwinds totaling $40 million. Absent these FX headwinds, CTS sales would have increased by 1.2%. CTS operating income in FY ‘15 showed a 15.2% improvement over FY ‘14 led by higher North American operating income from service contracts, somewhat offset by reduced performance in the UK and unfavorable FX headwinds totaling $6 million. Approximately, 70% of CTS sales in FY ‘15 were made to customers outside of the U.S. Profits were down in the UK as we completed the legacy PRESTIGE contract for which we had received a renewal in 2014 and that contract began in August 2015. We are expecting reduced operating profits in the near term in the transportation business due to the transition to the follow-on contract in London that has reduced margins compared to the legacy contracts, but expect margin improvement over time as we add consumer-driven capabilities to the base contract. Now, turning to Cubic Global Defense systems, or CGD Systems on Slide 12, backlog increased 5% due to strong orders for air ranges, ground training and the addition of DTECH. Sales adjusted for a $12.1 million FX headwind would have increased 18.4% in FY ‘15. DTECH contributed $45.8 million in sales for the 9.5 months that we owned the company or about 62% of the FX adjusted sales growth. Operating income was down 31% in FY ‘15 compared to $26.8 million in FY ‘14. Operating income was impacted by $9.5 million in losses on the LCS contract, restructuring cost of $4.6 million and unfavorable FX comparisons totaling $2.2 million. In September, we divested the global tracking product line, which had operating losses in each of the last two fiscal years of $2.3 million. We also combined our cross to main business with DTECH to capitalize on incorporating these features into the DTECH products. Going forward, these steps should improve operating income for CGD Systems. Now, turning to Cubic Global Defense Services, or CGD Services, on Slide 13, CGD Services finished the year with a slight 1% increase in sales. Operating profits dropped 15.4% from the prior fiscal year, reflecting cost impacts from our restructuring earlier in the year and the impact of LPTA on pricing. CGD Services backlog was down 21.2% at year end due to the run-off at the multiyear JRTC contract and shorter duration contract awards due to changes in DoD contracting. The environment in defense services continues to be hampered with contract award delays due to bid protest. In FY ‘16, we expect our largest contract in this segment at the JRTC will be re-competed. We have been the incumbent since 2001. Now, turning to the key balance sheet and cash flow data on Slide 14, cash, restricted cash, marketable securities totaled $318.3 million at year end. $295.4 million was held offshore by our foreign subsidiaries. AR days, net of cash advances, improved to 69 days in FY ‘15, down from 74 days in FY ‘14. Inventories increased in FY ‘15 by $24.9 million in both the Defense Systems and CTS for products that we expect to sell in FY ‘16. Gross debt increased in FY ‘15 reflecting an increase in borrowing to support the DTECH acquisition and higher working capital on our U.S. based operations. Capital expenditures totaled $22.2 million in FY ‘15. We capitalized costs totaling $16 million related to the new ERP system last year. Operating cash flows were $89.7 million, which while down from the prior fiscal year were still very strong. We had strong operating cash flows from the transportation segment. During the year, we increased our dividend by 12.5% and we made the DTECH acquisition. Our acquisition strategy remains focused on high growth, higher margin opportunities that align with our NextCity strategy and building our C4ISR business both in the U.S. and internationally. We continue to review opportunities that will leverage our strategy to invest in these strategic focus areas and utilize our strong capital position. Finally, turning to our FY ‘16 guidance on Slide 15, we are projecting modest sales growth in FY ‘16 of 3% at our midpoint guidance of $1.475 billion. Adjusted EBITDA at midpoint will be $128 million, which is down from the comparable number in FY ‘15 due to the reduced profitability expected in our transportation segment resulting from the London contract renewal. We believe this will be a short-term aberration for transportation and the profitability for this segment will improve in FY ‘17 as we generate follow-on work on our installed base. We expect we will have $34 million to $36 million in expenses related to our new ERP and supply chain improvements in FY ‘16. The expense for FY ‘16 will be unusually high as we are implementing major phases of the new system, running redundant parallel systems and making enhancements to our network. Transitioning into FY ‘17, we would expect the IT related costs will come down from the elevated levels in FY ‘16. GAAP EPS at midpoint will be $1.43 compared to $0.85 this year. And with that, I will let Brad provide his closing thoughts which you can find on Slide 16.

[Brad Feldmann:]

Thank you, Jay. To achieve Goal 2020, we will seek significant opportunities to build our market leading businesses by pursuing NextCity, C4ISR and next training opportunities, capitalizing on adjacent markets, expanding our international businesses, underwriting innovative investments, and closing strategic acquisitions. We believe our strategy is sound and that a laser focus on winning the customer inspired by innovation will enable us to deliver superior value for our customers and shareholders. The next few years are pivotal for us as we rebuild our infrastructure and increase our productivity and efficiency. We are very excited for the future and much appreciate your partnership in the company. Now, let’s proceed to the Q&A session.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Julian Mitchell with Credit Suisse. Please state your question.

[Brian Gibbons:]

Hi, this is Brian Gibbons in for Julian today. Could you touch on how the discussion with Vancouver is going and how you might expect that to affect profitability next year?

[Brad Feldmann:]

This is Brad. We are doing a great job of delivering the system and are in negotiation discussions with them. We expect a favorable outcome for us next year.

[Brian Gibbons:]

Great. Thanks. And then maybe if you could give some color on pipeline for overseas acquisitions, if you are looking more towards the NextCity or what you are seeing there in terms of outlook.

[Brad Feldmann:]

We continue to – our acquisition pipeline continues to be robust. We continue to see many opportunities, both onshore and offshore and we are keen to invest that capital.

[Brian Gibbons:]

Okay. Thank you very much.

[Operator:]

Thank you. Our next question comes from Jim Ricchiuti from Needham & Company. Please state your question.

[Jim Ricchiuti:]

Thank you. I appreciate the color on the profitability of how you see transportation systems and the defense systems business. I may have missed it, how are you viewing the services portion of the business from the standpoint of operating profitability in fiscal ‘16?

[Jay Thomas:]

Jim, this is Jay Thomas. We will see a little bit of an uptick relative to this year, primarily because the amortization expense is going to reduce and that’s kind of spelled out in the 10-K. Margin wise, I don’t think we are going to see more than a 25 basis points or 30 basis point improvement, so the pricing is still pretty difficult.

[Jim Ricchiuti:]

Got it. Okay. And Jay is there any way you can perhaps give us a way to think about the growth rates for the businesses transportation, defense systems services, just given the overall range of revenues that you are forecasting for this year?

[Jay Thomas:]

So I would say on transportation, I think this year and this is assuming no FX headwinds, probably in the 1% to 2% range. Same I would hold for the defense services business. And then we will probably see more positive growth, maybe in the 2% to 4% range on the defense systems business. And again, we are not assuming any FX headwinds in our guidance.

[Jim Ricchiuti:]

Got it. Just in terms of the New York opportunity, do you have a sense as to when we might see that proposal?

[Brad Feldmann:]

We believe – this is Brad.

[Jim Ricchiuti:]

Hi Brad.

[Brad Feldmann:]

We believe we will see – how are you?

[Jim Ricchiuti:]

Good.

[Brad Feldmann:]

We believe we will see the RFP during this fiscal year. I think we are close for it being released and we are very savvy that we will continue that work. As you know, that system is somewhat behind compared to other systems in the world. And we are very excited to apply our knowhow from other major cities around the world to help folks in New York City.

[Jim Ricchiuti:]

Got it. And one final question, if I may Brad, if we think about the inorganic opportunities that you see in the businesses, do you see more in the transportation business or some more opportunities in defense?

[Brad Feldmann:]

I think we see them in both. We see good acquisition candidates, as I said both in transportation with our vision of NextCity, we are focused on expanding in tolling, parking, data analytics and so forth. We are thrilled by the acquisition we did with DTECH and C4ISR and we look forward to expanding that. Both of those markets, as you know are higher margin, higher growth and we are very much focused on those market segments.

[Jay Thomas:]

And Jim, I will just add a comment that typically because the defense market is bigger, we just see more – there tends to be a larger pipeline of opportunities than in the transit marketplace. But as we are sort of going into some adjacent markets beyond just pure fare collection, we have sort of widened our scope.

[Jim Ricchiuti:]

Got it. Thanks very much.

[Operator:]

Thank you. Our next question comes from Brian Ruttenbur with BB&T Capital Markets. Please state your question.

[Brian Ruttenbur:]

Yes, thank you very much. A couple of questions, first of all, in terms of one-time expenses for this next fiscal year, you state $4 million to $6 million of acquisition related, is that divestiture related expenses?

[Jay Thomas:]

No Brian, that will be – that’s actually more retention and earn-out cost is what we are projecting in those numbers.

[Brian Ruttenbur:]

Okay. So in there, is there – do you have any projected costs for any divestitures, it sounds like you may be doing some divestitures and do those typically cost a significant amount of money or is it relatively small?

[Jay Thomas:]

There is nothing projected in the numbers for divestitures.

[Brian Ruttenbur:]

Okay. Thank you. And then post the Paris situation, have you seen any pickup on either your services side or your systems side. And then I was actually thinking maybe even the transportation side, maybe widening of scope or opportunities to widen into additional security within transportation?

[Brian Ruttenbur:]

We certainly are seeing an uptick of enthusiasm for systems related to counterterrorism. We have an ability to build shoot houses for security and police forces as well as we have some special operation forces services. And we are seeing an uptick there around the world. And we have been working on transportation security for some point. We are not quite yet seeing an uptick of demand signal there.

[Jay Thomas:]

And Brian we a number of years ago, we have developed a capability to do explosive detection. And we really never found a home for that marketplace. So I think it’s something – we will just have to see how this environment shifts, but we had the ability to do trace particle detection. So it’s something that we are looking into again.

[Brian Ruttenbur:]

Okay. And then last question, back on the New York City opportunity, you mentioned RFP likely out in fiscal ’16, what would be the timeline of award, is it going to be 1 year or 2 years, I don’t know how long the award cycle is on the transportation side, especially if something this bureaucratic in New York City?

[Brad Feldmann:]

It’s always hard to guess timing, but I think FY ‘17 for award.

[Brian Ruttenbur:]

Okay. And do you have estimated size of that opportunity?

[Brad Feldmann:]

We don’t tend to get that information out, but it’s big.

[Jay Thomas:]

Yes. It will be a large bid for us.

[Brian Ruttenbur:]

Okay. Thank you very much.

[Operator:]

Our next question comes from Josephine Millward with The Benchmark Company. Please state your question.

[Josephine Millward:]

Good afternoon.

[Brad Feldmann:]

Hi, Josephine. How are you?

[Jay Thomas:]

Hi, Josephine.

[Josephine Millward:]

I am doing well. Hi, Jay. Hi Brad. Question for you guys, your guidance implies more than 100 basis point decrease in your overall margin. So other than the ERP investments, is most of it coming from the London contract, should we see an improvement in margin for defense systems?

[Jay Thomas:]

So yes, the contraction is really related into transportation in London and as we kind of said in the call and we will see an overall improvement in the defense systems business.

[Brad Feldmann:]

And Josephine as you know, we have been working hard to create a C4ISR business and we are doing that. And those – that business tends to have higher margins.

[Josephine Millward:]

So what kind of a negative impact are we going to see from London, because it’s implying a fairly large decrease from London in terms of profitability?

[Jay Thomas:]

Yes. We haven’t provided specific guidance on the segments. But you can go through – and I think we will be in sort of a normalized range, which I think the normalized range is sort of now 11% to 13%. So it’s going to be in the lower quadrant at an operating profit level.

[Josephine Millward:]

Okay, that’s helpful. And for transportation in the past, you had talked about the possibility of Washington DC and Philly potentially coming up for rebid, can you give us an update on that?

[Brad Feldmann:]

In Washington, I think there is a chance that pieces of that will come out for rebid and as well as the leadership in WMATA has recently changed. So we will see what the leadership decides. I think that’s all the information I have on that.

[Josephine Millward:]

Great. What about cost recovery on Vancouver, do you think we will have news on that soon and would it happen sometime this year in the coming quarters?

[Brad Feldmann:]

We believe we will have positive news this fiscal year.

[Josephine Millward:]

Thank you.

[Operator:]

[Operator Instructions] Our next question comes from Paul Coster with JPMorgan. Please state your question.

[Mark Strouse:]

Yes. Hi, this is Mark Strouse on for Paul. Thanks for taking our questions. So I just wanted to go back to something from the prepared remarks kind of a follow-on to Josephine’s questions, but when you are talking about operating margins expanding by 200 basis points to 250 basis points by 2018, is that just what you are expecting from the One Cubic initiative or is that more of a target for the overall company?

[Brad Feldmann:]

That’s just One Cubic. As you know, we are rebuilding our infrastructure in the company. We are putting SAP and then Workday as well as many other improvement initiatives, so we are investing. And we strongly believe that we will create savings both in SG&A spend as well as rationalizing supply chain.

[Mark Strouse:]

Got it. Okay. And then that based off of the expansion, is that based off the 2016 guidance or the 2015 actuals?

[Jay Thomas:]

That’s really kind of coming off of the 2015 numbers.

[Mark Strouse:]

Got it, okay. Thank you very much guys.

[Operator:]

Thank you. There are no further questions at this time. I will now turn the conference back to Bradley Feldmann for closing remarks. Thank you.

[Brad Feldmann:]

Thank you all for joining us this afternoon. As always, we appreciate your continued support and interest in our great company. We are available if you have any further questions. Thank you very much.

[Operator:]

This concludes today’s webcast. All parties may disconnect. Have a good day.