Fly Leasing Limited
Q4 2014 Earnings Call Transcript

Published: 11 Mar 2015

[Operator:]

Good day ladies and gentlemen and welcome to the FLY Leasing Fourth Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instruction will be given at that time. [Operator Instructions] As a reminder, today’s conference is being recorded. I'd now like to turn the conference over to your host for today Mr. Matt Dallas. Sir, you may begin.

[Matt Dallas:]

Thank you and good afternoon everyone. This is Matt Dallas, the Investor Relations Manager at FLY Leasing. And I’d like to welcome everyone to our fourth quarter and full-year 2014 earnings conference call. FLY Leasing, which we will refer to as FLY or the Company throughout this call today, issued its fourth quarter and year-end earnings results press release earlier today, which is posted on the Company’s Web site at www.flyleasing.com. We have a slide presentation that accompanies today’s call which is available to participants on the webcast. If you’re not accessing the webcast, or if you would like to just download a copy of the presentation, you can find it on our Web site under the Investor Relations Section on the presentation’s page. If you’re listening to both, the live call and the webcast today, you may want to mute your computer as there will be a slight delay in the webcast audio. Representing the Company today on this call will be Colm Barrington, our Chief Executive Officer; Gary Dales, our Chief Financial Officer; and Steve Zissis, the President and CEO of BBAM, the company that manages and services FLY’s fleet. I’d like to begin the call by reading the following Safe Harbor statement. This conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements regarding the outlook for the Company’s future business and financial performance. Forward-looking statements are based on current expectation and assumptions of FLY’s management, which are subject to uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially due to factors that are summarized in the earnings press release and are described more fully in the Company’s filings with the SEC. Please refer to these sources for additional information. FLY expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in its views or expectations, or otherwise. This call is the property of FLY and cannot be distributed or broadcast in any form without the express written consent of the Company. A replay of this call is available for -- from one week from today and archived webcast of the call will be available for 90 days on the Company’s Web site. With that, I’d now like to hand the call over to Steve Zissis, the President and CEO of BBAM. Steve?

[Steve Zissis:]

Thank you, Matt, and welcome to our fourth quarter 2014 earnings call. On a global basis, the airline industry is performing at record levels and passenger traffic is expected to grow at 7% this year according to IATA, well above the 5.5% average growth rate of the past two years. This has translated into global profits for the airlines of $19 billion in 2014 and forecast of $25 billion in profits for 2015. Our airline customers who we talk to regularly continue to grow their fleets and have shown strong interest in our aircraft types, in particular new and young narrowbodies. Lease rates for both the 737 and A320 family remains strong. The Airbus A320 has rebounded considerably over the past two years, while the 737-800 continues to be the star performer. These stable lease rates are all the more impressive given that these increases are occurring amongst the backdrop of lower interest rates. In 2014, we remarketed 25 aircraft and about half of these were extended with the current lessees. We see this as a positive sign for the industry and additional evidence that airlines remain confident and are growing their fleets. For 2015, we began with 33 aircraft coming off lease and have already successfully remarketed 75% [ph] of them. The majority of the remaining aircraft expire in the second half of the year, and we don’t foresee any difficulties successfully remarketing or extending these aircraft. Turning to the origination side of our business, I’m pleased to report that we’re continuing to find attractive acquisitions that grow our cash flow and earnings per share. During 2014, we added 22 aircraft to our portfolio, worth $952 million, easily surpassing our 15% growth target for the year. For 2015, we expect to acquire $750 million of new aircraft and in fact we’re well on our way to meeting that target with four recently closed transactions worth $142 million and an identified pipeline of approximately $450 million. As many of you know, aircraft leasing industry continues to grow with new capital sources entering the space, creating some concerns that we won’t be able to achieve our growth targets or that we will not find attractive opportunities. I can assure you that we remain highly focused on acquiring new aircraft which offer excellent value to FLY and are immediately accretive to both cash flow and EPS basis. It’s also worth reminding everyone that the size of the global aircraft market is very large with more than 120 billion of aircraft delivering yearly for the foreseeable future. BBAMS 25 year track record along with this well established relationships with the world’s airlines, and the aircraft manufacturers, uniquely position us to find the most attractive aircraft investments for FLY. But we expect the majority of FLY’s acquisitions in 2015 to come from sale lease back market. We continue to find other attractive acquisitions from non-airline sellers. Lastly, I want to remind everyone the progress we’ve made managing FLY’s fleet to keep it young and in high demand. Through the end of 2014, we sold 30 aircraft and during the first three months of 2015, we sold three more. On the last quarter’s earnings call, we announced an agreement to sell 875-7s. All of the 757 sales are scheduled to close this year. The secondary aircraft trading market remains robust as more investors seeking higher yields are attracted to the stable cash flows and strong underlying fundamentals of the aircraft leasing industry. As capital markets remain vibrant and banks continue to support aircraft investments, we will continue to sell older aircraft and reposition our fleet to improve earnings and cash flow. I’ll now turn the call over to Colm.

[Colm Barrington:]

Thank you, Steve, and welcome everybody to the -- to our call. 2014 was a truly transformation year for FLY with several highlights, supported by continuing very positive demand conditions in the global airline industry and a benign financing environment, FLY was able to make significant progress in several areas. Two years ago, we took a view that we should grow and rejuvenate our feet for the benefits for our shareholders. We raised additional capital and invested as a new and younger aircraft with the goal of driving increased earnings per share and increased book value per share. The outcomes in 2014, particularly as the year progressed, that validated this strategy and will show further benefits as we move into 2015 and beyond. In 2014, we increased our aircraft portfolio by 22% to total value of $3.7 billion by investing, as Steve said, $952 million in 22 additional aircraft. And we ended the year with a total fleet of 127 aircraft. This fleet growth has the effect of increasing our annual revenues by 15.5% in 2014 to $427 million. In the year we also sold eight aircraft with an average age of 12.6 years and for gain of $19 million over the net book value. Once again FLY has demonstrated the excess of the market value of our portfolio over to net book value. At the same time, our leased fleet performed very well achieving 99% utilization. And our SG&A as a percentage of operating lease rent revenue is declining as the scale of our business increases. In support of our 2014 acquisition program, we focused on raising additional capital and added $703 million of new debt financing. Including the completion of our second senior unsecured debt offering in which we raise an additional $400 million last October, as well as funding our 2014 acquisition program, this debt raising gave us non-restricted cash balance of $338 million at year-end, which provides a great funding base as we continued our fleet growth and rejuvenation in 2015. FLY continued its record of dividend payments in 2014, paying four quarterly dividends of $0.25 each for a total of $1 per share. FLY has now paid 29 consecutive quarterly dividends since its IPO in 2007, for a total dividend payment of $7.37 in the period. The 22 aircraft acquired in 2014 included five A320 family aircraft, 14 Boeing 737 next generation aircraft, and three Airbus A330s. The average age of the 22 aircraft was 2.6 years and they were leased to 12 airlines in nine countries, with lease terms that averaged 8.9 years. At year-end, 74% of our portfolios net book value was comprised of the very popular A320 and Boeing 737 next generation families, which types will continue to form the basis of FLY’s portfolio. 17% of the portfolio was A330, Boeing 777 and Boeing 787 widebodies. 4% was comprised for 11 Boeing 757s, of which as Steve said, we’ve already contracted to sell 8. For the balance of 5%, we made up of our types. FLY will continue its growth strategy in 2015 and we expect to achieve a similar rate of investment as in 2014. As you will have seen from our press releases during the last two months, we’ve started off the year well. As the pace of global air traffic growth continues, and as airlines acquire more aircrafts from Airbus and Boeing, we expect that there will continue to be attractive opportunities in the sale and leaseback sector. With the experienced BBAM team, we will continue to secure attractive transactions on behalf of FLY. The higher than expected rate of global air traffic growth and the strong financial state of the global airline industry is continuing to provide a positive environment for growth in the aircraft leasing industry. We also expect that the strength of the U.S dollar will provide sale and leaseback opportunities as airlines lock in the local currency gains in their fleets that the strong U.S dollar has provided. In 2014, we sold eight old aircraft with an average age of 12.6 years and for an aggregate gain of $19 million over the net book value. FLY has consistently sold older aircraft over the years, 30 aircraft in total and at an aggregate gain of $68 million or 14% above the net book values. These trading gains form an integral part of FLY’s business as they need to do for every aircraft leasing company. Trading gains are the verification of FLY’s conservative and focused acquisition strategy. We’ve already sold three more aircrafts in 2015 and have -- as mentioned earlier have contracted to sale eight more, being eight of our older Boeing 757s. These eight aircraft are scheduled to be delivered to the new owner during the course of the year as their existing leases end. We expect to be able to announce further aircraft sales throughout the year. The 2013 and 2014 fleet transactions have had very positive impacts on FLY’s portfolio metrics over this two-year period. First, they’ve reduced our fleet age substantially from 9.4 years at the end of 2012 to 7.8 years at the end of 2014, a 17% reduction. FLY now has a much younger and even more attractive portfolio that we had two years ago. The sales and acquisitions have also have the effect of increasing our average remaining lease term substantially, from 3.2 years at the end of 2012, to 5.3 years at the end of 2014, a 66% increase. These longer leases reduce our remarketing exposure and lock in attractive lease rentals. Meanwhile the book value of FLY’s fleet has grown by 42% from $2.6 billion at year-end 2012 to $3.7 billion at year-end 2014. We plan on investing at least $750 million in aircraft this year. Last year we grew our lease rental revenues by 19% from $325 million to $388 million, reflecting the positive impact of the additional aircraft in our fleet. Since the end of 2012, our annualized lease rentals have grown by total of 29%. Our operating lease rental revenue has now increased seven quarters in a row. Meanwhile our 2014 net income of $56 million was 7% above the 2013 results. We also focused on our liability management, raising an additional $400 million of unsecured debt during 2014 and over $300 million of additional secured debt. As we roll off and renew historical interest rate swaps, the cost of FLY’s secured debt has moved steadily downwards, dropping to about 4% at year-end. Our second unsecured notes offering, which closed in 2014, and these notes are due in 2021, was priced at 37.5 basis points below our 2013 note offering. As part of our funding strategy, FLY has begun to increase its pool of unencumbered aircraft. This pool has increased a value of $75 million at the end of 2013 to $543 million at the end of 2014. In addition to our unencumbered aircraft, our balance sheet remains strong. At year-end, we had $338 million in unrestricted cash and our gearing remained within our targeted levels. We are also benefiting from the principal amortization inherent many of our secured debt facilities, which depending on the facility can result in significant cash generation as we sell older aircraft, which have relatively low debt balances attached to them. As a result, we expect to continue to fund our 2015 growth program from existing cash, internally generated funds, and targeted loan facilities. Finally, FLY has continued to pay an industry leading dividend, which is currently $0.25 per share for quarter. The latest dividend of $0.25 in respect of Q4 2014 was paid on February 20th last. FLY has now paid a total of 29 consecutive quarterly dividends totaling $7.37 per share. I’ll now hand over to Gary, who will take you through the Q4 and full-year 2014 results.

[Gary Dales:]

Thank you, Colm. As Colm mentioned, it was a good quarter for FLY. We're reporting net income of $15.5 million, or $0.37 per share, on total revenues of $120.3 million. This compares with net income of $13.4 million and $0.32 per share for the fourth quarter of 2013. The increase in net income was primarily due to higher operating lease revenue. Total revenues increased over 40%. There was a 19% increase in operating lease rental revenue compared to the same quarter in 2013 as FLY significantly grew its fleet in 2013 and 2014. Additionally, there was $21.7 million of end of lease income in the fourth quarter of 2014 compared to none in the same quarter of 2013. For the year ended December 31, 2014, our net income was $56.1 million or $1.32 per share as compared to net income of $52.5 million or $1.50 per share. Total revenues are up $57.2 million or 0.155% driven by the increase in top line operating lease rental revenue, which has increased by $62.9 million or 19.4% to a total of $387.8 million. The increase is due primarily to rents generated from aircraft acquisitions. And the lease income was $39.8 million in 2014 compared to $47.6 million in 2013. During 2014, we recognized gains of $18.9 million on the sale of eight aircraft. During 2013, there were 10 aircraft sales generating $6.3 million. 2014 was a particularly robust market to monetize mid aged aircraft. We continue to see strength in this market looking forward into 2015. Total expenses for the fourth quarter of 2014 were $102.3 million, this compares to total expenses of $73 million for the same period in the previous year. On a comparable basis, the expenses increased $19.5 million or 23.6% excluding aircraft impairment and the net gain and loss in extinguishment of debt. The fourth quarter 2013 expenses benefited from an $18.6 million net gain on some extinguishment of debt. The increase in expenses is primarily due to depreciation on aircraft acquired in 2013 and 2014, and interest expense associated with the recent issuances of senior unsecured notes. There is currently a negative drag on FLY's earnings associated with this interest expense as FLY has yet to fully deploy the cash from that debt issuance. As of December 31, 2014 as Colm mentioned, FLY has $338 million of unrestricted cash. The cost of FLY secured debt has actually decreased over the last year from 4.26% at the end of 2013, just over 4% at year end 2014. We have also had a decrease in the cost of our unsecured bonds with the most recent issuance which I think Colm mentioned. The interest expense in the fourth quarter included $4.3 million of non-cash interest charges reflecting amortization of fair value adjustments relating to debt assumed in the GAAM transaction original issue discounts and amortization of loan fees. Fourth quarter 2014, depreciation expense includes an addition of $2.4 million relating to accelerated depreciation on the eight 757 aircraft to be sold later this year. The $2.4 million is the increase in depreciation on these eight aircrafts when compared to the depreciation of the same aircraft reported in the third quarter of 2014. For the year ended December 31, 2014, total expenses were $362.3 million compared to $311.4 million in 2013, an increase of $50.9 million. The increase is primarily due to increases in depreciation expense as a result of the aircraft acquired and the increase in interest expense associated with our senior unsecured notes. These increases were partially offset by decline in maintenance and other costs. At December 31, 2014 our assets totaled $4.2 billion of which $3.7 billion was invested in flight equipment held for operating lease. As Colm mentioned, this is a 22% increase in the net book value of our fleet year-over-year. Our total cash balance is $476.7 million of which $338 million is unrestricted. Finally let me cover a few items of guidance for the first quarter of 2015. We are expecting operating lease rental revenue to be between $102 million and $105 million which excludes approximately $5 million of lease incentive amortization. Our end of lease income was expected to be at least $10 million. As you know end of lease income is a regular part of our operating lease revenue, however it is lumpy and the timing of its accounting recognition is difficult to predict. Depreciation expense will be between $49 million and $51 million and includes approximately $2.2 million of additional depreciation related to the scheduled 757 aircraft dispositions. We expect book interest expense of between $38 million and $40 million. We terminated the availability under our aircraft acquisition facility in January and in tandem close the facility and replay all amounts outstanding. This will require us to write off approximately $4 million of unamortized debt issue cost. This charge will be reflected in our income statement as a debt extinguishment cost. We are closing this facility as we can currently finance our acquisitions more attractively through bank markets and we’re also exploring opening up a new revolving credit facility on more attractive terms. Lastly maintenance and other expenses are also difficult to predict, however we believe they will be between $2 million and $3 million during the first quarter of 2015. With that, let me turn it back to Colm for his closing remarks.

[Colm Barrington:]

Thank you, Gary and thank you everyone for sticking with us. I hope that over the last few minutes we have given you a depreciation of the continuing progress we are making at FLY. Our enhanced fleet utilization, our continuing success in selling aircraft at premiums to book value, our fleet growth and improved metrics that we achieved in 2014 on our prospects for growth for 2015. With that, we are now ready to take your questions.

[Operator:]

[Operator Instructions] Our first question comes from the line of Richa Talwar of Deutsche Bank. Your line is open, please go ahead.

[Richa Talwar:]

Hi, everyone, good morning. Thanks for the time. So first, I just wanted to ask about the three aircraft you had off lease at the end of 2014, can you tell us what aircraft those are and how quickly you expect to get them back in revenue generating service?

[Colm Barrington:]

Yes, there are two A320’s and one 737-900, they’re all signed up to new customers and the transition process is in train right now and should be done during the first quarter.

[Richa Talwar:]

Okay, great. And then secondly your exposure to SpiceJet, I believe present you have one aircraft with the carrier, how is that lease performing and do you expect to take that aircraft back sooner than originally expected given what we’re continuing leading into [indiscernible] by the Company’s financial issue.

[Colm Barrington:]

Yes. Well if you’ve been following FLY since we went public in 2007 you’ll know that we had five aircraft at SpiceJet. Over the last two and a half years we’ve managed that exposure down. We sold two aircraft subject to existing leases for healthy gains. And then we early terminated two other aircraft and put those on leases to other airlines around the world, so we’re left with one aircraft that we have currently there. Right now they’re not performing on their obligations to us and to other less source, but we have taken action to get the aircraft back and expect to have the aircraft back in the next quarter.

[Richa Talwar:]

Okay. Are you willing to share what the financial impact of that is, than not to join your obligation [ph]?

[Colm Barrington:]

I think eventual the impact Richa, it will be in the guidance that Gary gave you little earlier, and it’s within there.

[Richa Talwar:]

Okay, great. And then if I could just sneak one more in, we just came back from the ISAAC conference earlier this week and we heard a lot of optimism from various market participants about the leasing space. Particularly I read, [indiscernible] announcement which suggested that lease rates from the popular narrowbody aircraft that you have in your portfolio have improved pretty remarkably over the last 18 months. So it seems that from your prepared remarks you share that level of optimism, but I’m wondering if you can comment further on the lease rate trends you’re seeing now versus maybe three to six months ago and not just in actual lease trades but maybe even comment on the terms you’re seeing now versus a couple of months ago?

[Gary Dales:]

Just in general terms, we have noticed a firming in A320 lease rates over the last 12 months. And we do expect that to continue through 2015 as we see less supply of those aircraft type in the market place. And then on the next gen, certainly the 737-800 have been very stable, but there has been a recent softening given some aircraft coming our of Russia and then all the talk around SpiceJet and Skymark aircraft possibly being available. So there has been a temporary softness but we don’t expect that to last very long.

[Richa Talwar:]

Okay, and anything on terms -- terms you’re getting from new leases that you’re striking out.

[Gary Dales:]

It’s hard to generalize, it depends on the aircraft age and pedigree and maintenance condition, but lease rates have been pretty consistent with what we’ve indicated in the last 12 months.

[Colm Barrington:]

And Richa, I think if you’re referring to lease terms, the length of leases I think we generally find them going a little longer than in the past few years. Airlines are a bit more optimistic about the future and are tending to want to lock in for little bit longer.

[Richa Talwar:]

Great. That’s all I had. Thank you.

[Operator:]

Thank you. Our next question comes from the line of Gary Liebowitz of Wells Fargo Securities. Your line is open, please go ahead.

[Gary Liebowitz:]

Thank you operator and good afternoon gentlemen.

[Colm Barrington:]

Good afternoon, Gary.

[Gary Liebowitz:]

So what is your calculation of FLY’s return on equity for 2014? Where do you think you can go over the next couple of years and what specifically do you think gets you to there from here?

[Gary Dales:]

Various things, I think gets us from there to here or from here to there. I think we had, about 12% lease rate factor in 2014 and that’s …

[Gary Liebowitz:]

Well, [indiscernible] the question was about return on equity, not lease rates.

[Gary Dales:]

I was starting in there Gary; I’m getting there, okay. Our return on equity -- well for the year we’re calculating about 7.4 return on equity, which is thought to be simple calculation just looking at net income over our book equity without doing any adjustment. And I think the way we -- we plan on improving that in two ways Gary, is one is we want to reduce the number of older aircraft that have been re-leased in the last few year at lower lease rentals and to try and get some of those lower producing aircraft off our balance sheet, and secondly by investing in new aircraft, where in the say, lease back markets due to the prices that BBAM has been able to secure and the lease terms they’ve been able to secure, we’ve been able to get higher returns and we’re averaging for the portfolio as a whole.

[Gary Liebowitz:]

And was that on the expense side, perhaps I saw your financing cost ticked up a little bit because of the unsecured issuance in the fourth quarter, but do you think there’s room to bring it down the overall average borrowing cost, I saw you did a debt extinguishment, does that have a meaningful impact on your debt cost?

[Gary Dales:]

Well absolutely, I would not say the refinancing there is going to have individually a significant but each time when we finance an aircraft or get a new aircraft we’re seeing improvement in the borrowing rates and as Colm mentioned the cost of our secured borrowing is going down each quarter. We continue to see that as well as even the cost of our unsecured this last time was less than it was initial time we did it. So we’re focused on our cost of capital and we - hopefully we’ll see some improvements of that over the course of 2015 and beyond. I mean if you know Gary, we have taken a recently conservative interest rate policy whereby we’ve hedged our financing to match the terms of our leases. So some of those old hedges have rolled off and renewed them, obviously we’re locking in much lower interest rates than when we took out those slops maybe four, five, six years ago. So that’s having a pretty significant positive impact on our cost to debt.

[Gary Liebowitz:]

I see. I see. Also a question for Steve. Steve, I noticed that BBAM added a couple of A380’s in the fourth quarter; it’s not an asset we usually see less source get involved with. Can you just talk about that investment and if it’s possible that, that type of asset could ever end up in FLY’s portfolio?

[Colm Barrington:]

Well certainly I can answer the last one, which is no.

[Gary Liebowitz:]

Okay.

[Colm Barrington:]

And with respect to the 380 and what BBAM did on that transaction is really not relevant to FLY and FLY shareholders, so I don’t think it’s Gary worth time spending on this conference call. But I’m happy to talk to you separately on it.

[Gary Liebowitz:]

Okay. And then just one more maybe for Gary, you sold three planes; you announced already in the first quarter, the guidance doesn’t include any gains on sale, it is -- I mean are the gains effectively running through the end of lease number, how does that work?

[Gary Dales:]

No, we expect to report small gains on those transactions. I think as we mentioned earlier Gary, those -- sales were completed for strategic reasons. One is to reduce our exposure to certain airlines and so we’ve made a small gain on the sales. But it will be shown in our first quarter results.

[Gary Liebowitz:]

Thank you very much.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from the line of Nathan Hong of Morgan Stanley. Your line is open. Please go ahead.

[Nathan Hong:]

Hi guys. Thanks for taking the question. It seems like some of the metrics and focus such as fleet age or remaining lease terms have been moving in the right direction as you grow your fleet. And you also talked about strong demand on new young narrowbodies. I’m just wondering if this is somewhat suggestive of a new direction for FLY in terms of managing the fleet portfolio. Should I actually anticipate that FLY focus more on newer aircraft today than it has in the past?

[Colm Barrington:]

Well, I think yes, -- I mean, I think the simple answer is yes Nat. But I think if you look back at FLY over the last three years, during the financial crisis, FLY tended to concentrate its capital on share and cash buybacks. So we didn’t buy many new aircraft during the financial crisis, because we effectively found we could buy own shares at a significant discount to markets or to the value of the shares, so we could buy our own fleets back cheaper than we could buy new aircraft. So we concentrated our capital on buying back equity and debt. So only -- really in after our capital raises in 2013, we began to try and expand and rejuvenate our portfolio and that’s the progress you quite rightly reflected there in your question. So I think you will see more of that now over the coming year.

[Nathan Hong:]

Okay, great. And I think some of your peers on the margin talked about incremental opportunities to sell older aircraft, given where [indiscernible] as today. I’m just wondering if you’re seeing similar opportunities. I know you guys do have some contracted sales, but just wondering if you care to share your thoughts here.

[Colm Barrington:]

Well, I mean, later we look at the aircraft we sold, the 30 aircraft which we mentioned in our call, those are an average 12.6 years of age. So we’ve already sold older aircraft. The eight Boeing 757s as we contracted to sell this year have an average age of about 15.5 years, I think by the time they’re sold, they will actually be closer to 16.5 years. So those are older aircraft and we’re seeing ongoing opportunities in the market to sell older aircraft and hopefully we will be able to announce some of those during the course of this year.

[Nathan Hong:]

Okay, great. Thanks for the time.

[Colm Barrington:]

Pleasure. End of Q&A

[Operator:]

Thank you. And with no further questions in queue, I’d like to hand the conference back to the Company for any closing remarks.

[Matt Dallas:]

Thank you very much for joining us for our fourth quarter earnings call. We look forward to updating you again on our first quarter 2015 earnings call, which will be held on May 7. Bye now.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may all disconnect. Have a great rest of your day.