Tribune Publishing Company
Q1 2018 Earnings Call Transcript

Published: 13 May 2018

[Operator:]

Good afternoon, and welcome to the tronc Incorporated First Quarter 2018 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Aaron Miles, Vice President, Investor Relations. Please go ahead.

[Aaron Miles:]

Thank you, and welcome to our first quarter 2018 earnings conference call. Before we begin, I would like to remind you that management will make forward-looking statements during the course of this call and our actual results could differ materially. Statements containing words such as may, believe, anticipate, expect, intend, plan, will, continue, estimate, outlook or other similar expressions are forward-looking statements. Material differences in our actual results from those described in these forward-looking statements may result from actions taken by the company as well as from risks and uncertainties beyond the company’s control. Some of the risks and uncertainties that could impact our businesses are included in documents publicly filed with the Securities and Exchange Commission, including our annual report on Form 10-K. I should also mention that our remarks today will include references to non-GAAP financial measures, including adjusted EBITDA, adjusted total operating expenses, adjusted net income, adjusted diluted earnings per share, adjusted EBITDA margin and net debt. And we have provided definitions and reconciliations to the most comparable GAAP measures in our earnings press release, which is available on our website at investor.tronc.com. Joining me on today’s call is Chairman and Chief Executive Officer, Justin Dearborn; Executive Vice President and Chief Financial Officer, Terry Jimenez; and troncX President, Tim Knight. I will now turn the call over to our CEO and Chairman, Justin Dearborn.

[Justin Dearborn:]

Thank you, Aaron, and thanks to everyone, for joining us today. I’m going to begin the call by talking about some business decisions we made this quarter and our overall start to 2018. I’ll then turn the call over to Terry to review our financial results in greater detail. Across the business, we have made significant changes to both our newsrooms and sales departments in each of our local markets and announced some important steps in our ongoing effort to become a more digital enterprise. In each market, we implemented strategies that will well position us for growth and success in the future. These strategies are rooted in delivering world-class journalism across multiple platforms and providing a suite of products and services to solve marketing problems for our clients. First, leaders from each market had been focused on reimagining how our newsrooms deliver on our journalists mission and accelerate our transformation to a truly digital media company. Excellence in journalism remains our top priority. Like other leading news organizations that have taken bold steps hasten their digital transformation, we have created new central business unit, headquartered in Chicago, called the Design and Production Studio, to produce the print newspapers for each of our markets. Second, within our sales organization, we unveiled a new vision and strategy that will allow us to aggressively compete and win in our local markets. These changes will allow us to more quickly accelerate our digital revenue growth by focusing the team on the clients in categories with the most opportunity, providing with unique products, service, tools and technology to drive their success. We also launched a digitally focused specialty agency that is designed to target rapidly growing local revenue streams in a branded content and events agency called Studio 1847. Studio 1847 will provide our sellers with a new and market-unique value proposition, that is focused on creating integrated solutions that deliver results. We are excited about the new strategies and the positive impact, we anticipate they will have for our readers, our advertisers, our employees and our company. We also remained focused on improving the economic relationship for all publishers with respect to the platform duopoly. I can think of no other industry that receives so little for its collective intellectual property when two others gain so much. We need to receive real tangible value for the content these platforms utilize to make billions of ad revenue dollars. As an industry, we have been seeking an antitrust exemption in order to negotiate with the duopoly as one. We are hopeful the exemption will be granted, and duopoly negotiates in good faith to preserve access to our content, or better yet, amends their policies proactively to avoid a portion of the enormous profits they are realizing. The Tribune was one of the three news organizations to partner with Northwestern University’s Medill School of Journalism to become a learning lab for Northwestern’s local news initiatives. This work is aimed at providing a greater understanding of how digital audiences engage with local news in finding new approaches to bolster local news business models. With respect to digital audiences, the number of digital subscribers we acquire through our paywall nearly doubled in the first quarter of 2018 versus a year ago. Our company’s digital-only subscriptions reached 342,000 at the close of Q1. A net increase of 22,000 or 7% versus the prior quarter, and up 90% versus the same quarter last year. Revenue from digital-only subscribers also strengthened in the quarter, growing 14% versus last quarter and 82% versus Q1 of 2017. The February launch of a digital paywall to New York Daily News drove over 10,000 new subscribers in the first three weeks exceeding our expectations. For our other markets with longer-standing paywalls, we experienced a record-setting quarter in terms of acquisition of the paywall. This metric peaked in March of 2018 and was 39% higher than March 2017. All of this work lays a great foundation for 2018. I also want to recognize some of our recent editorial wins across the company which highlights the quality of our journalism and how our audience engages with it. The Livingston Awards for Young Journalists honor outstanding achievement by professionals in local, national and international reporting. This is the largest all-media general reporting prize in American journalism. And we are to share that The Chicago Tribune’s Gregory Pratt and Ese Olumhense were named finalists for the Livingston Awards for Young Journalists. The Tribune’s Ray Long and Trish Callahan, alongside our partners of ProPublica Illinois, were honored with top placements in the Better Government Associations and the Driehaus Foundation Awards for Investigative Reporting. Congratulations to Dahleen Glanton, who has just received one of the most significant awards in U.S. journalism. The American Society of News Editors named Dahleen, the winner of the Mike Royko Award for Commentary/Column Writing. Trish Callahan was also a finalist for the Frank A. Blethen Award for Local Accountability Reporting for Doomed by Delay, her impactful work on the failure of the Illinois to test for Krabbe disease. We’re also pleased to announce that the Los Angeles Times took on the top prize in the Society of Professional Journalists Sigma Delta Chi Awards contest. We want to commend photographer Marcus Yam, who’s incredible Death from Above work [Indiscernible] last year won the Feature Photography category. In addition, we took home the Deadline Reporting Award for our staff work on the tragic mass shooting in Las Vegas. This was truly a team effort with staffers from national, business, arts and entertainment, DC, Metro, audience engagement, politics, sports, graphics, the editorial review board, the data desk and the copy desk all sharing the award. Additionally, we are proud to share that our San Diego Union-Tribune team has 17 journalists nominated in categories for 13 regional Emmy awards. Staff was recognized in categories for overall news, editing, on-camera talent, video and sports. Since 2011, the San Diego Union-Tribune has earned 62 Emmy nominations and 20 wins. Over the course of our history, our newsrooms have won a total of 105 Pulitzer Prizes. This year, I’m pleased to share that two of our newsrooms were recognized as finalists. The Chicago Tribune and ProPublica Illinois were recognized as finalists for the 2018 Pulitzer Prize in local reporting for their series The Tax Divide, investigating Cook County, Illinois unfair property tax assessment system. In addition, The Los Angeles Time’s Steve Lopez was the finalist for Pulitzer Prize in commentary for a series of columns that vividly illustrated how the crippling cost of housing in California is becoming an existential crisis for the state. We are all proud of this exceptional journalism. Additionally, I’m excited to share the highly anticipated podcast Felonious Florida produced by South Florida Sentinel premiered at number one on its first week on the Apple podcast chart nationwide. Veteran Sun Sentinel reporters Lisa Arthur and Juan Ortega take listeners inside two of South Florida’s most horrific crimes. The notorious Casey’s Nickelodeon Murders and the unsolved Boca Raton kidnapping of a mother and daughter that has haunted police for years. The podcast launched its sixth and final episode and is currently at 1.5 million listens. As mentioned in the release, and well documented in the press, the California asset sale to [indiscernible] has not closed. We are looking to finalize the remaining open items related to the complex corporate divestiture in a thoughtful but expeditious time frame. Depending on the seasonality of the business, these assets contribute between $1 million and $2 million of adjusted EBITDA each week. In other words, there’s $150,000 to $300,000 of value for tronc each day the closing has not occurred. Once the transaction does complete, we will look to retire our existing term loan with the net proceeds in a merge with a very healthy balance sheet. I also want to take a moment to comment on newsprint tariffs announced by the administration earlier this year. We strongly oppose the tariffs and believe they are counterproductive to public policy and to free markets broadly. A government-supported policy that makes the production of newspapers costlier, at an inflection point in the industry is unwise and unwanted. The tariffs benefited single private equity-owned mill with employs less than 1,000 people. The tariffs further increase the challenges for an industry that employs more than 600,000 Americans. I would now like to turn the call over to Terry.

[Terry Jimenez:]

Thank you, Justin. I will touch on our financial results for the first quarter of 2018. Bear with me as I highlight a few unique items for the first quarter. The first two items related to new accounting pronouncements that the company adopted effective at the beginning of 2018. The first is Topic 606, which covers revenue recognition, which we have previously disclosed in our Qs and K. This standard requires certain revenue transactions to be presented on a net versus gross basis, and for our company that relates primarily to Cars.com revenue. This has no income effects, but it net amounts that historically were classified as expenses to a contra-revenue to bring revenue to a net presentation. We have adopted a modified retrospective approach, whereby we are not restating our historical financials but adopting this prospectively beginning with the first quarter of 2018. The cumulative income impact of adoption of the standard was not material. The second accounting change is Topic 715 related to the recording of pension expenses. We have adopted the standard retrospectively so all prior periods have been restated. Under the new standard, the non-service component of pension expense or benefit is recorded below operating income or loss versus including that expense or benefit above the line and operations. As previously announced, we have shifted our Cars.com business to Cars.com in February of 2018, and are now simply a branding partner for Cars.com. In 2017, we had approximately $73 million of revenue, we’ve recognized from this agreement at a margin in the low-20% range. The Topic 606 that same business would have been approximately $25.7 million in revenue with the same profit dollars which have resulted in 60%-plus margins. Our new branding partnership revenue is replacing our margin dollars, thus there is a small positive adjusted EBITDA improvement, but certainly a negative revenue effect. This revenue has historically been recorded in advertising in our troncX segment. Total revenues for the first quarter of 2018 were $356 million, which is down 3% from the same quarter in 2017, primarily due to continuingly advertising revenue declines, partially offset by the New York Daily News operation and the acquisition of BestReviews.com. Excluding the revenue impact from the New York Daily News, BestReviews and the Cars.com businesses’ total revenue would have declined 7%. Our consolidated first quarter 2018 operating expenses were $374 million, up from $354 million versus the first quarter of 2017. Adjusted operating expenses were $331 million in Q1 of 2018 versus $332 million in 2017. Excluding the New York Daily News and the BestReviews operating expenses, Q1 2018 adjusted operating expenses would have decreased $34 million or 10% compared to Q1 of 2017. In the first quarter of 2018, we had a net loss of $14.8 million or $0.42 per share compared to a net loss of $3 million or $0.08 per share for the first quarter of 2017. The quarter was negatively impacted by a charge related to the acceleration of the accounting for the consulting agreement with our former non-executive Chairman. Adjusted EBITDA for the first quarter of 2018 was $24.4 million compared to $33.7 million in the first quarter of 2017. The drivers behind the year-over-year decline were a $4 million to $5 million swing on reserve adjustments, New York Daily News operating at a negative EBITDA for the seasonally weak first quarter as we anticipated, and investments we had made in our digital teams. Our balance sheet is in very solid position. We exited the quarter with $163 million of cash. Debt has declined $5 million compared to the fourth quarter of 2017, and we continue to reduce debt through our principal amortization. Pension and other postretirement plans liabilities were down $9 million to $104.5 million at the end of first quarter of 2018. Now I will touch on the performance of each of our reporting segments. Total revenues for troncM for the quarter were $308 million, which was down 1% compared to the first quarter of the prior year. We continue to experience pressure in print advertising with total advertising revenue for this segment down 12%. TroncM circulation revenue experienced a 12.2% increase compared to the same period of the prior year. We continue to see price increases offsetting volume declines along with the addition of the New York Daily News circulation revenue. Also of note, print circulation revenue was greater than print advertising revenue in the quarter, which is important to highlight, in that our print circulation revenue historically has been much more stable than print advertising revenue. TroncX had $48 million of total revenue in the first quarter of 2018, down 13.4% compared to the prior year quarter. The decline resulted from the previously mentioned Cars.com changes, but was offset by improvements in the other underlying business digital results in BestReviews. In terms of guidance. For the full year 2018, excluding the California assets, we anticipate generating $1 billion to $1.30 billion in revenue. Adjusted EBITDA, again excluding for the California assets, is expected to be $100 million to $110 million for the fiscal year 2018. This guidance reflects the following headwinds from an adjusted EBITDA perspective. Newsprint prices at historically an extraordinarily high prices, substantially due to the tariffs imposed on the Canadian suppliers. And as Justin mentioned, we believe this trade policy is an arbitrary and unfair rule that penalizes our industry, U.S. businesses, U.S. employees and U.S. consumers. Our plan to provide merit increases across our organization retain, reward and motivate our top employees that are not covered under a collective bargaining agreement. Continued investments in our digital team. Again, our guidance does not include the revenue or adjusted EBITDA from the California operations for any part of 2018. Although, those continue to build each week that the transaction does not close, as Justin referred. Our effective tax rate in 2018 should be in the range of 28% to 32%. Also, you will note in our investor presentation, that we posted online, we have set forth a few long-term goals. We believe with the investments in organic growth, layered with future acquisitions, we’ll remain in a solid financial position over the next three to five years. In that time frame, we will be in a position of consolidated revenue growth, significant margin expansion and growth to 1 million digital subscribers. BestReviews.com is a great step in this direction. We are organizing our company to achieve these goals and we’re excited about the future. With that, we’ll now open the call for questions.

[Operator:]

[Operator Instructions] And our first question is from Michael Kupinski with Noble Capital Markets.

[Michael Kupinski:]

Can you just tell me what is the, at this point, what is the holdup with the transaction that you have? And is it the TSAs you still have to kind of figure out? And then maybe if you can just give some color of when you think this might close.

[Justin Dearborn:]

Sure, Michael. It’s Justin, thanks for the question. So it is related to the TSA. So we are working through how that will unfold. And basically, we have an obligation to provide services for 12 months, but it’s a fairly complex operation as we spent -- and predates me by a long way. But we spent 20 years kind of trying to realize efficiencies and combining on single systems across the company -- provides services across the company. So to unwind those in effect is taking some time. And I think as we alluded to earlier -- on an earlier call, there wasn’t a diligence period leading up to this transaction. It was familiar with the business given Dr. Soon-Shiong’s involvement of the company and board seat. But when we got down to the infrastructure of the company, there’s 300 plus systems that support the entire company from one instance in most cases. So it’s taking time to work through that. But I think we’re close and still remain very positive over the transaction.

[Michael Kupinski:]

Do you expect this -- are we talking weeks versus months versus quarters? Or what -- can you give us a little time frame?

[Justin Dearborn:]

Definitely not quarters. Weeks to a month, I would -- I’m hopeful.

[Michael Kupinski:]

Okay. And then obviously, you’re going to be in a very strong financial position. Can you talk about your plans, the allocation for capital at that point, you have things in the pipeline do you see? Just kind of give us some thoughts about how quickly you plan to kind of deploy your balance sheet and some of the cash that you have?

[Justin Dearborn:]

Yes, as mentioned, we’re focused on our term loan, cleaning that up. And we’ll have the ability to retire that fully if we choose. And still would be remain at a very large cash position. So we’ll continue to be active in the M&A markets as we have. And really, I think, with respect to our peer group, a very, very clean balance sheet with very low liability, which is coming from the pensions side. So in a great position to do some M&A and grow the company inorganically as well as organically.

[Michael Kupinski:]

I’ve always thought that the newspaper industry had great content and always surprises that there wasn’t -- you won’t try to extract some value out of that. Can you talk about the process of this antitrust exemption that you’re talk that you’re filing in? When there might be a ruling and what -- can you just describe the process that you’re going through right now?

[Justin Dearborn:]

Sure. I’ll keep it at a fairly high level. But the news media alliance is really taken on the flight here. So we’re a member along with the vast majority of all publishers in the U.S. and now some international publishers joining as well. Axel Springer joined recently. So they are doing the work on the ground. So we have been working with congressional members, as you might imagine in our districts, to gain some support on the ground [Indiscernible]. So it is up for vote at the end of this summer. So what we’re asking for is an antitrust exemption so we don’t get penalized for negotiating as one with the duopoly, which is ironic as that sounds, is the real concern. So if that were to happen, the exemption granted, I think it’s a great clear path to get them to the table, although, there has been some positive movement that has been pretty visible publicly with Facebook for one and trying to engage a little bit more. So hopefully, again, the exemption won’t be required, and we can negotiate for our content.

[Michael Kupinski:]

And in terms of just your print advertising side being down 12%, can you give us a little thought about whether or not we start to see some stabilization there? Or in terms of the revenue, it looked like it was a little bit of an acceleration from the fourth quarter, but certainly not down as much as it was in the first half of last year. Any thoughts about the trend line of advertising?

[Terry Jimenez:]

Yes, I think -- this is Terry, Mike. I think we’re seeing relatively consistent trends. There’s a little bit of 100, 200 basis point swings quarter-to-quarter. But overall, directionally, it’s roughly the same.

[Michael Kupinski:]

And in terms of the troncX, what are we to look for in terms of margins on that side of the business?

[Terry Jimenez:]

Yes, so we’ve got relatively healthy margins today. I think what you’ll will see short term as we also have some investments that go into that segment that certainly mute some level of the profitability. I think as that business scales, you’ll see some great margin acceleration both on the troncX side but as well that will contribute to significant expansion in the margins on the consolidated size as well.

[Operator:]

Our next question is from Doug Arthur with Huber Research.

[Doug Arthur:]

In troncM, Terry, you said print advertising was down 12%. Is that -- I assume that includes the Daily News. Is there a pro forma decline without adjusting for the Daily News?

[Terry Jimenez:]

Yes, so there’s another 4 or 5-point decline, if you exclude out the Daily News.

[Doug Arthur:]

Okay. And the Daily News is -- I mean, you said the loss was as expected I mean that you obviously, you’re pleased with the paywall, are there have been major surprises there?

[Terry Jimenez:]

I wouldn’t say any major surprises. I would say the positive surprise, we did certainly come out of the gate with a stronger growth of digital subs. That’s certainly been one. I think the second is, we were able to move faster on consolidating the printing function from Allentown, which we have talked about before into the new facility. So we’ve had those as, I think, positive surprises. I don’t think there’s really been anything on the downside that’s surprised us yet.

[Doug Arthur:]

And in terms of troncX, you called out of the Cars.com conversion. How long does that impact linger around for?

[Terry Jimenez:]

So yes, it will be a little bit of a messy point of view. Without the transaction itself, it would have been -- with the revenue recognition change, we would have been explaining it away every quarter anyway. So we’ll likely have this conversation for essentially the next eight quarters.

[Operator:]

Our next question comes from Lance Vitanza with Cowen.

[Lance Vitanza:]

First, just to go back to the like-for-like comps on the revenue side for a second. I want to make sure I’ve got these right. It sounds [indiscernible] total revenues down 7%, print ad revenues down 16% or 17%. Could I also get the print circulation revenue comp and digital revenue comps all on a like-for-like basis, excluding Cars.com? Do you have that handy?

[Terry Jimenez:]

Yes, on the print circulation side, we would have been up roughly 3.5%. If you take out the Daily News. And then -- Lance, I’m sorry on the digital side, are you looking for digital total or are you looking at advertising?

[Lance Vitanza:]

Well, both if you have it.

[Terry Jimenez:]

On the consolidated level, we would have been up a couple of points. I’ll have to go back and look at the ad component of that.

[Lance Vitanza:]

Okay, that’s helpful. And I think you touched on this around the edges or maybe I missed it if it was more direct. But unique visitors are down despite the rising digital-only circulation. So I was just wondering, what’s going on there? Is that an issue? How big an issue? What are you doing to kind of remedy that situation? Or is it just a function of the paywall?

[Terry Jimenez:]

Yes, so there’s definitely some element of the paywall that’s coming to play when you look at sequentially from Q4 into Q1. We’d also gone through a transition in LA through our new CMS system. And I think we’re very pleased with that transition. But there were certainly some bumps as we went through that. We’re now live in New York, and any of the bumps that we saw in LA, we were able to get ahead of on the New York transition side. I think overall, Lance, we’ve got as a percentage of the total unique visitors. Our paid subscribers are still a pretty small percentage. And I think what we’re really focused on is, how do we take the larger audience and monetize that more effectively through paid subscriptions or even advertising. So we’re not overly worried about the decline in unique visitors. We’re comfortable with the value that we have for customers long term.

[Lance Vitanza:]

Great, okay. And then on the adjusted EBITDA, you talked about a couple of factors there. I think I saw the New York Daily News and then the digital investments as primary factors in something I read, but sounded like when you went through it there was a third factor a well. In any case, I was hoping that you could sort of help me qualify. Of the $10 million negative EBITDA downdraft, how much of that was kind of the negative EBITDA at the Daily News versus the digital investments and so forth?

[Terry Jimenez:]

Yes, it’s roughly about one third to 40% for the Daily News, and year-over-year reserve adjustments. And then the balance essentially is the third component.

[Lance Vitanza:]

And then can you remind me when did you close on New York Daily News?

[Terry Jimenez:]

The beginning of September of 2017.

[Lance Vitanza:]

So then on the balance sheet, net debt it looks like, if I’m reading it right, increased $22 million in the quarter versus $24 million of positive EBITDA. And I did see obviously the $26 million of restructuring charges that were added back to EBITDA. So presumably, those were almost entirely, if not entirely, cash items. But even if they were there’s still some other -- can you help bridge us from the EBITDA to free cash flow in the quarter?

[Terry Jimenez:]

Yes, so -- well, I think the first thing just to highlight on from the cash balance point of view and effectively net debt is we had the investment for BestReviews come into play. So that was about a $33 million -- nearly $34 million cash draw for that acquisition. So that’s a big chunk there. What we’ve put in, in the release is, the net cash provided by operations was about $21.5 million and CapEx $7 million. And then we had the debt reduction and some pension reduction as well.

[Lance Vitanza:]

And then I think just two more for me, if I could. The first is -- well, actually, you know what I think covered this. Let me jump to the last one. The timing of the LA Times we just talked about, but would the Merrick equity stake sale to McCormick -- and I apologize if I’ve missed something, but is that still on? Has that closed? Or what’s the timing of that? Could you give us an update there?

[Justin Dearborn:]

Yes. Lance, this is Justin. So to our knowledge it hasn’t closed. But we’ll read about it when 13-D or an 8-K is filed. So that was a private transaction, so we’re not involved in that in any way.

[Lance Vitanza:]

But I mean, it’s going to be a big change and it’s a big shareholder that’s coming in. And I’m wondering if there’s any read-through that we should have with respect to -- is the McCormick team, do you expect that they will be passive or seek to be active as Merrick was?

[Justin Dearborn:]

Unclear really. I’m not trying to avoid the question. I really haven’t had any -- not really -- I haven’t had any discussion with anyone representing the buyer. So I assume they will reach out to us when they obtain the shares. But we haven’t had any conversations. It truly was done as a private transaction. They did not contact the company in advance, no communications.

[Operator:]

[Operator Instructions] And our next question is from Dan Jacome with Sidoti and Company.

[Dan Jacome:]

Just following up on the expected closing of LA Times. Just thinking kind of if that was adequate. What would have to go wrong for it not to close in the current quarter? And if I read you correctly, there’s no issues on the financing side. Because I mean, everything we’ve been reading in the headlines, some of it’s been surrounding the financing, but it sounds like it’s more about stripping out the LA Times from all the parent-level infrastructure complexity.

[Justin Dearborn:]

Yes, it’s more the later. So there is a back-end date of closing of August 7. So that was in the initial transaction and we’ve been discussing. I don’t envision in taking that long, but it is complex. As I think we mentioned on a prior call, but if we didn’t, I’ll mention now, this wasn’t bundled up and marketed. So we weren’t in a great position from an infrastructure and a technical capability perspective to carve this out. A lot times the companies do divest assets, they prepare for it in advance and you get segmented, we didn’t do that.

[Dan Jacome:]

You said something about August 7. Can you -- what would -- can you repeat that again?

[Justin Dearborn:]

So August 7 is a back-end close date on the transaction. So that was in the original purchase agreement.

[Dan Jacome:]

Okay. And then, this new studio. Can you talk a little bit about how exactly do you envision that could leverage your current pretty vast publishing portfolio? And then I was wondering if the personnel that are running that, are they coming from the Tribune, I imagine, or anything there would help? And that’s about it for me.

[Tim Knight:]

Sure, it’s Tim Knight speaking. So studio is comprised of three different areas, essentially our digital solutions group, our content and creative group and then our live events. And so they’re -- actually the content and creative is where we see the biggest opportunity with large regional advertisers in each of our markets. We’re able to use the sales leadership in each of those to develop strong connections and grow that business.

[Dan Jacome:]

Okay. And the personnel came from -- they were already with the company ahead of time from the Tribune arm?

[Tim Knight:]

Yes, most have been with the company -- yes, before -- they have all have been with the company.

[Operator:]

Thank you. And ladies and gentlemen, this concludes our Q&A session for today. I would like to turn the call back to our Chairman and CEO, Mr. Justin Dearborn for his final remarks.

[Justin Dearborn:]

Thank you. And thank you, everyone, for your interest. We have and we’ll continue to strategically position our organization, while remaining focused on consistent execution of our strategy. We look forward to updating you on progress next quarter.

[Operator:]

And with that ladies and gentlemen, we thank you for participating in today’s conference. This concludes the program, and you may all disconnect. Have a wonderful day.