Earnings Call: Q1 2019

Jan 11, 2019

Good day, and welcome to the Cogeco Inc. And Cogeco Communications Inc. Q1 twenty nineteen Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Patrice Wieden, Senior Vice President and Chief Financial Officer. Please go ahead, Mr. Wine. Good morning, everybody, and welcome to our first quarter conference call. So joining me today are Philippe Jatay, our CEO Andre Pinard, Carremer and last but not least, Marielle Anne Madrid, who recently joined us as Senior Vice President, Public Affairs and Communications. So before we begin this call, as usual, I would like to remind listeners that the call is subject to forward looking statements, which can be found in our press releases issued yesterday. I'll turn the call over to Fredericette. Good morning, ladies and gentlemen, and thank you for joining us to discuss the results of Cotico Communications and Cotico Inc. For our first quarter ending November 3038. Let us begin with Cogeco Communications. For the quarter, revenue and EBITDA are up 14.213.8%, respectively, in constant currency. Reported revenue reached $643,300,000 and EBITDA reached $285,500,000 generating a margin of 44.4%. Cogeco Connexion's financial results were weaker relative to last year, unfortunately, but as previously announced, as a result of the conversion of our Customer Management System, CMS, while Atlantic Broadband has performed strongly. We are, therefore, maintaining our fiscal twenty nineteen guidance. On the Wireless side, we elected not to participate in the auction process or license in the 600 megahertz spectrum band that will take place in Canada in 2019. The structure of the auction, based on large geographic areas, makes the acquisition of such spectrum uneconomical for our company. This decision is consistent with the company's commitment to pursue opportunities to enter the wireless market but in a disciplined and thoughtful manner. We will continue to explore various business models in this market. The quarterly dividend was reconfirmed at $0.05 $25 per share, a 10.5% increase over last year. Let us now look at the individual components. At Cogeco Connection, as you may recall, we implemented in April a new customer management system replacing some 22 legacy systems. The new CMS will be the foundation piece of Cogeco Connection's evolution to a fully digitized customer experience, enabling quicker response time and greater digital interaction capabilities to enhance the customer experience. The stabilization period related to the new system has been longer than originally planned, impacting the full 2018 and carrying into the first quarter of fiscal twenty nineteen. As mentioned during our last call, the PSU losses in the first quarter were similar to those of the previous quarter as a result of the longer stabilization period. But the good news is that these issues are now beyond us and our contact center. Sales and marketing operations are now back to normal. The first quarter EBITDA at Cogeco Connection was lower than last year, mainly as a result of the PSU losses from the system implementation and additional stabilization expense of 4,500,000 which are mostly related to the additional staffing in our contact centers. In addition, the timing of the annual price increase, which occurred in mid November compared to a mix of price increase in September and November and an unfavorable impact of about 2% on the quarter's EBITDA growth compared to last year. Lastly, the Copyright Board of Canada announced on December 18 that the tariffs for retransmitting distant television signals were increased retroactively to 2014, which resulted in a nonrecurring charge of $3,200,000 during the quarter. If we exclude the CMS stabilization costs, the retroactive tariff adjustment and the impact of the delayed price increase, EBITDA would have increased by 0.8% compared to last year. We expect that Cogeco Connection will achieve low single digit EBITDA growth for fiscal twenty nineteen, mainly as a result of the rightsizing of our workforce implemented in November and the further operational efficiencies we expect from the new CMS and the ongoing digital transformation. We have, therefore, maintained our consolidated financial guidelines. The rightsizing of our workforce included a voluntary departure program targeted at support functions, and the annual savings from this initiative are estimated at about $9,000,000 Our main focus is to continue to improve our highly reputable customer service, which has always been part of our DNA, and to create a more efficient and agile organization in order to accelerate our ongoing digital transformation. In Q1, we continued to expand the coverage of our gigabit speed offering and our enhanced in home WiFi coverage with the launch of these services in several new communities in Quebec. Further launch announcement will be made in the next couple of months, in line with our year end target to cover 60% of our footprint with gigabit speed. At Atlantic Broadband, again this quarter, ABB has been the prime engine of growth. Excluding last year's nonrecurring costs of USD 2,500,000.0 related to Hurricane Irma, Atlantic Broadband achieved a stellar EBITDA organic growth of 11.8% in Q1 twenty nineteen. You will recall that the first quarter of the last year was reflective of a slowdown related to Hurricane Irma and additional expense to support the continued Florida expansion and expenses in anticipation of the Metropress acquisition. The strong financial performance is mainly related to the continued growth and upsizing in residential Internet and commercial services, rate increases and the ramp up of the Florida expansion plan, which is now positively contributing to EBITDA. The rate increases in the MetroCast systems were implemented in early October. The rate increases in the other systems were implemented in August. Given that marketing expense in Q1 were lower due to the timing of certain initiatives, we expect mid- to high single digit organic growth for the full fiscal year. The significant EBITDA margin improvement from 39.4 in Q1 twenty eighteen to one of the leading industry margin at 46.1% in the last quarter was related to the MetroCast acquisition and the improvement in our in other systems, including Florida. Q1 PSU trends were weaker than last year due to seasonal disconnects in the MetroCast main and new Hampshire systems, where a number of summer cottages are located. If these seasonal disconnects were excluded, the PSU trend would have been better than last year. Following this summer, TiVo the rollout in more than half of MetroCast footprint, we continued to successfully roll out the service to all MetroCast systems and to invest in sales and marketing to grow residential bundle sales and commercial services. The closing of the network acquisition from FiberLite in Southern Florida took place on October 1, and we are very enthusiastic about the growth prospects as it adds about 20,000 on and near net potential businesses in the Miami to West Palm Beach corridor. Cogeco Pier one's revenue decline of 5% in constant currency reflects the continued increase in competition and pricing pressures in the hosting and network connectivity services. EBITDA decline was entirely due to lower revenue as the expense level was reduced. Surgical Pier one continues to enhance its product offerings in hybrid hosting and in cloud environments, introducing new products such as SD WAN, which allow customers to extend their network virtually. Cogeco Peer one is also focusing on driving further efficiencies by optimizing its data center usage and implementing new customer management tools. Let us now take a look at Pugico Inc. Advertising markets in the radio business continue to disappoint and competition has increased, but we are compensating with good cost controls and continued strong audience ratings. On November 26, we purchased 10 regional radio stations from RNC, mainly in the SAGME and ABBYY regions. We are very pleased with this acquisition as the majority of these radio stations are ranked number one in their markets, and they are a great complement to our existing radio network. With the new President in place since September 1, Michel Laren, I am confident that the integration will be successful and that we will maintain our leadership position in the Quebec radio market. The quarterly dividend has been reconfirmed at $0.43 per share, a 10.3% increase over last year. In conclusion, we are focused on improving the financial results at both Cogeco Connection and Cogeco Pier one and pursuing the superior growth opportunities we have with Atlantic Broadband. We are also focused on reducing the investment levels we should achieve, and we should achieve our targeted debt leverage level by the end of this Your first question comes from the line of Aravinda Galatathige with Canaccord Genuity. I just wanted to start off on the $4,500,000 incremental cost for the additional staffing. I know you had that in Q4 as well. Can you give us a sense as to how long that incremental cost would continue in the numbers? Should we expect that for a couple more quarters? No. Actually, so it was $7,000,000 in the previous quarter and 4,500,000.0 this quarter. We're planning for very small amounts in the next quarter, which will be offset by savings. So I would say this is behind us now. Okay, great. And then with respect to the low single digit EBITDA growth that you expect in the Canadian business, that is inclusive of the some of the onetime costs, including the $2,200,000 because of the change in the copyright board decision, right? Is that correct? Yes, that's right. Okay. And then lastly, just I was wondering if you can just touch on the sort of the new seasonality we should look at on The U. S. Side given sort of the inclusion of the markets in Maine and New Hampshire. Is it in Q3, I guess, where the seasonality works in the opposite direction? Or can you just kind of give us some color on how that would change going forward? Yes. So obviously, these are new systems we just acquired. So once we've done the full year, we'll have better clarity than today. But we would expect, yes, in Q3 to see an upside from those disconnects we just signed last quarter. Your next question comes from the line of Jeff Fan with Scotiabank. Just to clarify on that last question and answer about the seasonality. You took over the system kind of Q2 last year. So the sequential increase in net adds probably would have been picked up in last year's third quarter in the summer months in The U. S, would it not? I'm just trying to make sure that we're not building on the seasonal impact already from last year on top of that. Yes, that's a good point. We indeed had it. We basically closed in early January. So that's right. You should not double count it. Yes. Okay. A couple of other questions on The U. S. You touched on the commercial side of the business. There's not much clarity in your numbers to get a sense of how well that's doing. Can you just give us some color on how that's performing on The U. S. Commercial side? And also, the new buildings that you're lighting up in Florida, are those units of PSUs included in some of these ads now? Or should we kind of look for that in the upcoming quarters? Okay. So on the commercial side in The U. S, basically, we've made obviously, we've made the Metricast acquisition. We have the FiberLite acquisition we just closed as well, which has some commercial customers and opens up new avenues there. But typically, in The U. S, we are growing our commercial side faster than the residential side. It's true in Canada as well, but more so in The U. S. And typically, that's high single digit year over year growth on the commercial sector in U. S. Without that's organic, the acquisitions. And how big is that as a percentage of your U. S. Business now, just roughly? It's about it's slightly below 10%. Metrocas was lower than what we had at ABB, and that was one of the upsides, actually, we could we saw in the acquisition. So it's I don't have the percentage off hand, but it's probably 8% or Okay. And the new condos in Florida? Yes. Sorry, I missed that question. Can you repeat it? Yes. Just in terms of the new building that you're lighting up for the residential side, unless they're commercial. But I'm just wondering if those that are residential, are they in the current numbers now? Or should we expect some of those units and PSUs to come in, in subsequent quarters? We should expect some more to come. Basically, when we sign those units, it takes some time to ramp up, basically. So there's construction typically to it can be in the buildings or to get to the building. So there will be some more. We do expect, and we have new sales, obviously. So every quarter, we're adding some new ones. Okay. And then switching over to Canada, just quickly on the sales and marketing activities. Can you just remind us when some of those sales and marketing campaigns pick back up post the system change? And how long a lag do you think before we'll start to see the PSU numbers in Canada improve? So at the tail end of summer, we have resumed, as you will remember, Jeff, our marketing activity. So the back to school campaign was one of the first campaigns we've actually activated on our on new processes using the new platform. And as we got closer to the Christmas period, even more campaigns and we're very tactical in our marketing campaign, right? There is a broad marketing coverage, but there is also tactical local initiatives. So by Christmas, there were many initiatives out there, our go to market strategy and tactics at Amplify. Today, as I mentioned before, all the marketing in all the regions that we cover are all back to normal levels of operations. So we're already seeing in this quarter, the second quarter, Jeff, an improved amount of sales and marketing activities. The results are pointing in the right direction. Okay. Great. And top And the Jeff, if I can add two points. So on the PSUs, we should expect going forward, we don't guide directly on PSUs, but obviously, this is post the CMS implementation. We should see in Q2 back to normal, but probably slightly below what we saw last year. And in Q3, slightly above. And then Q4 would be significantly above. Obviously, last year got impacted by Darwin basically, our implementation of the new CMS system, which impacted partially Q3 but significantly Q4. And I just wanted to get back to you on we have a new note pursuant to our IFRS 15 implementation, which is Note three to our financial statements. So my colleague just gave me the right number. Actually, the commercial sales, the way it was the final numbers came out and the way we separated our revenues, it's 11.6% of the revenues at ABB, including MetroCast, are commercial. Your next question comes from the line of Drew McLennans with RBC. Line is open. Thanks very much. Good morning. Patrice, thank you for the outlook or guidance on Canadian PSUs. Can you comment a little bit on margins as we go forward normalized? I think in previous calls, the new system you've put in has improved efficiency and effectiveness. What can you kind of give us any goalposts on the margin side for the Canadian business? Yes. So obviously, this quarter has a lot of onetime elements. But you should think of so we've been able to increase it every year. We used to be not so long ago at 52%. I would say this year, it should be around between 5354%. And going forward, we'll have to see when we come out with new guidance that we should see an increase this year and not the full year. Okay. Okay. No, that's very helpful. And on the Canadian business, could you provide an update on the MediaFirst or IPTV road map in terms of timing and anything incremental that's happened there? So you've all seen the announcement. The development work is underway, and we already communicated to the market that at the end of this year, we will come out to the market and activate platform on the Canadian side. Okay. Philip. And lastly, in terms of your balance sheet looking forward to the end of this year, implied it will be below the 3x. Maybe Patrice, just provide an update on the M and A environment in The U. S, just any incremental changes since last couple of quarters? Would be great. Sure. On the leverage, we should be around 3x, consistent with what we said before, plus or minus a small amount. In terms of M and A, we as usual, we are comfortably looking for potential acquisitions. That being said, there hasn't been that much activity lately in the market. When these things develop, they usually take a few months to go from a start to announcement. But it has there has to be a catalyst. Obviously, they have to be have a willing seller and obviously interested buyer. But I would say it's calmer right now in The U. S, but we are definitely looking to add to our platform in The U. S. Your next question comes from the line of Vince Valentini with TD Securities. A couple of clarifications and then a bigger picture question. One, I wasn't sure how to interpret the comment in your release regarding Internet resellers in Canada. Are you saying that they became a greater competitive headwind in the quarter? Or are you saying more of your gross adds came from resellers? Basically, we're saying they're part of the gross adds, so that was the comment. And they have been in the past as well. So it's when we look at our additions in Internet, a portion is our own ads and a portion is our the resale ads, basically in wholesale rather than retail. So that was the comment. So wholesale increased in Q1 this year versus Q1 last year, Patrice? No, not necessarily. Not necessarily. It's just that we have to highlight that a portion of our business is wholesaling as it's mandated it's regulated, basically. Okay. Same clarification. This copyright hit, is that something specific to Cogeco? Or are we going see every cable company in Canada get hit with this? And who gets this money, the extra $3,200,000 you had to pay? Well, it's a decision by the copyrights board. So it not only affect Cogeco, but it would affect everyone retransmitting distant signals. Now everyone has a programming agenda that is different, so you would have to talk to other parties to to see how they they've been affected by this. But it's a broad copyright decision that is retroactive to 2014 that touch that would touch every operation retransmitting distant signals. And if I can add to that as well, what the $3,200,000 is basically what we did not provision for because, obviously, we do pay on a regular basis, and we approve. So depending on the types of accruals being taken by every company, there could be it could be different numbers. So in our case, we did not provide enough accruals. We were basing it on the information we had. So obviously, the tribunal came in with a bigger number than we had accrued for. So if you're taking a Canadian conventional network from Vancouver and you're showing it on one of your systems in Ontario, that's a distant signal and the amount you had to pay for retransmitting that went up. Is that correct? Well, it could be directionally, it could be a good example. But it's specific to every station, every single and every agreement operators with other parties. Okay. And then lastly, the bigger picture one, probably for you, Philippe. These data center and enterprise results don't seem to be getting any better. I mean EBITDA on a same currency basis is down like 10% year over year. You guys have been lowering CapEx. You've been trying to be as efficient as you can on costs. Do you think you can cost cut your way to turning this business around? Or is it time to start thinking about participating in the pretty significant wave of M and A that's going on in that sector? And people seem to be willing to pay pretty good multiples for just the real estate value of data centers. Are you of the view that you should just keep these assets and try to fix them? Or do you think it makes sense to try to find a buyer? Well, we've said it before. We are very focused on our existing customers right now to make sure we serve them as best as we can. You try things in the market. You try to predict where the market is going. You invest a little. You put teams around some specific programs and efforts. And sometimes the timing doesn't show exactly as planned. So we've done a lot of things. We've turned around this business. Unfortunately, there are some market pricing pressure we did not fully anticipate it with this timing, and that's hitting us now. But we continue to we're committed. We know we have very good assets, very good network. And most of all, we have customers that actually love the service they're getting from Cogeco Pier one. So at this time, we continue to focus on what we have, making sure we generate we continue to generate positive cash flow. We increase the performance of the business, and we remain open to all options. We can't comment on the future. We work on the present, but we will keep all the options open. Fair answer. Thank you. Your next question comes from the line of Matthew Griffiths with Bank of America Merrill Lynch. I just wanted to go back to The U. S. EBITDA margins. So if I am understanding correctly, is the 46% that you kind of achieved this last quarter, is that a good, like, launching point for the rest of the year? And or do you see potential for it to increase? Or I mean just some clarity on that, if you could, please. Well, so first of all, the margins in The U. S. Generally are lower in the industry than in Canada. It has to do with the level of video versus the rest of the business, Internet and phone. So it's we're already at a very high level. That being said, in this quarter, we had timing elements. So OpEx was a little lighter than usual. So you should think normally as the new normal with MetroCast, between 4445% margin. So this quarter was a bit higher than usual. Okay. All right. And in the American Broadband segment, when we talk growth, it seems like the attention is all on Florida. And I was just wondering if you could give any color on how you are seeing growth outside of Florida and the rest of the system. Well, we have tremendous possibilities with the investments already made in Florida. So as I mentioned, we are we now have significant on net and near net presence in the residential, in the bulk as well as on the commercial side. So the first task is really to go increase our penetration in networks where we've already invested. We've mentioned it earlier, we are always looking and interested to acquire new systems in The U. S. So with that, we'll also come other residential and business components. But at at present, we are focused on the immediate potential with on net and near net. And if I can add to this. Outside of Florida, basically, we're obviously, we're growing Internet. We've been doing it in the legacy systems of ABB. And our history on the other PSC, so we've been doing fairly well. But more importantly, the MetroCast acquisition is really a growth story because we thought and we still believe that it's underpenetrated. So we we think we have a lot of possibility. We rolled out faster speeds for Internet. We're rolling out gigabit speeds as well. We should be at 85% by the end of the year in terms of the gigabit coverage. And we rolled out our TiVo video product as well throughout the network in MetroCast. It was already there at ABB. So there's a lot of upside outside Florida as well. Okay. All right. Thanks. I'd like to highlight as well the one gigabit product is really powerful, not only because it's a good product for the residential market, but it serves very well in the small and the medium enterprise size as well. So these speeds are massive, and they fuel growth on both sides, residential and commercial. Thank you. Your next question comes from the line of Sanford Lee with Macquarie. I had a couple of quick questions on CapEx, one for the Business ICT division. With the it was a little lower, I guess, than I expected for the quarter. Can you give us just a little bit more guidance on the timing of when the spend for the Kirkland expansion won't really come in? Sure. So it's actually ramping up in Q2. There might be some in Q3 as well, but I would say Q2 will be the biggest portion of it. So for the full year, we do expect still, as we've said before, to be in the mid-twenty percent capital intensity, including Kirkland. So I would say the next quarter and possibly the Q3 as well. Great. Thanks for clarifying. And then on the Canadian CapEx side, you're targeting 16% of your footprint to have one gigabit per second by the fiscal year end, where your larger peers are kind of nearing the 100%. And obviously, you don't have the same type of competition from fiber. Have you ever stated your longer term target? Just wondering if your CapEx on the cable Canadian cable starts to fall off like guys like Shaw are talking about. So it's Philippe. The technology is there, the solution we have, we deploy in every market. So it's the answer to your question, it's really market driven. We have committed to do 60% of our footprint. That's what we currently see the appetite of the markets are for. Our networks are ready and prepared to augment this in a very, very short time period. So if we see market appetite, we can quickly dial up this number. On The U. S. Side, for comparison, you can see that we are more advanced. It's the same type of network, same technology. There, we think the markets are a little bit ahead in their appetite for that type of service. But the short term for us is a gig, and we have a platform that can support and we it was announced this week that the platform can now reach a 10 gigabit per second with the launch of the 10 g initiative. Many operators throughout North America are participating. So there's a very good story here. We're ready and deployed and commercial with one gig, and the platform can be pushed to many, many to at least tenfold of capacity and beyond that in the future. Great. Appreciate that. And then lastly, just on your decision not to participate in the 600 megahertz auction. Does this imply that your outlook for the timing to achieve more favorable, whether it's MVNO or WiFi first regulations? Has it been pushed out in your view? Because it sort of seemed that if you felt that more favorable rules were in the near term, you might have at least taken a shot at the auction to see where valuation is headed. In the worst cases, you sit on the spectrum for maybe a couple of years and sell it at 58. It's just that I don't know how many more opportunities there will be to acquire low band spectrum. Well, as I mentioned, the structure of the auction was not appropriate for our business. Now that said, 600 is not an absolute must have in building networks. We've already acquired other bands, the 23, 25. We are looking at other possibilities as well. So there there are our networks, the back end is already there in every coverage area. We have deep fiber. What we're missing is the spectrum to overlay. You've seen that we've already started. There are other bands. There will be other options, but that's for the part that we would eventually build ourselves. But as you know, we have a bias and a high preference. We think we have a very good model. We're talking with not only Industry Canada and other governments, but we think we can help consumers to get wireless services in our coverage area with new models. And that's exactly what we're working on right now. We're contemplating, we're evaluating different models. So it's not just a me too offering, but we're looking for some differentiated offer. Your next question comes from the line of Neher Yaghi with Desjardins. Your line is open. Thank you for taking my question. I wanted to start maybe just talking about the pricing power that you have in Internet in The U. S. You're you're investing quite a bit in improving your network speeds. The TV market in The States is still undergoing tremendous shifts, and the cable companies are trying to get the list out from from their Internet offerings to offset the the pressure that they're seeing on the TV side. I wanted to see how much more list can you get on Internet as you increase those speeds, how much pricing power you're getting in terms of increasing your customers' bills on Internet by them taking higher speeds? And I have a follow-up question to that. Sure. So I'll take this one. So on the first of all, on the build, the additional CapEx we're investing in The U. S. Is primarily targeted towards increasing our presence in Florida as opposed to upgrading to a gig. We are doing that, but it's not a major component of our capital deployment. We can do this very efficiently using DOCSIS 3.1. That being said, in terms of pricing power, Internet is something that people need and and over time want higher speeds. So it's it's something where there's a there is a demand. We're we're typically increasing our pricing across the board in US, including video, phone, and and Internet at around 5% per year. It does it does reflect also some increases we have on our side in terms of comp and cost on video. But definitely, on the Internet, where we don't have those cost increases, there is appetite from customers to increase over time. The good news also is with the gig, our average customer definitely does not take a gig, takes much less than this. As you know, a gig is a is a tremendous amount of capacity for a house. So we have a lot of runway in front of us. And eventually, if if we wanna go there, CableLabs, which were part of the, basically, release that we can actually run 10 gigs over coaxial networks. That's for the future, but it provides a lot of runway in front of us in terms of being able to upgrade our network and eventually our pricing as well on Internet at reasonable capital deployment cost. In our markets, our customers are still very interested with video offerings, whether it comes from conventional legacy on demand or even OTT. But we have the means to distribute this rich content with our broadband network. So it's not really a concern how they consume. We will adapt and continue to aggregate and present a very cool experience to the customers. And because we can invest very little to adapt as to where video is coming from, it provides for a good business with a healthy margin. Great. And my second question was on your plans for 2019. So if I heard you right, the CRM is taking a bit longer than expected to offer the the upside that you're expecting to get. It's delaying some of the advertising and promotions that you'd like to do. And on on the ICT business, it's, you know, seeing additional pressure more than you have probably expected on on the pricing like you said, Philippe. So so I'm just kind of wondering what is making the difference to for you to continue to have the same outlook for 2019 overall for the company. Well, we've talked about the rich portfolio of opportunity we have with Atlantic Broadband in The U. S. So on The U. S. Side, there is strong growth. On the Canadian side, the turnaround with the CMS, these problems are behind us. We see a reasonable growth ahead of us, although we need to and we know we're in the process to do that, but we are coming with new products. You've seen the announcement of IPTV. We are improving the interface to our system. But not only that, the digitization program allow for an efficient trade off. So more flexibility for the customers with self serve, self learning, self install. But at the same time, on our side, it's increased efficiency. Operations are simpler. Resolutions to customer questions faster. So it's good on it's really good on both sides. So that's why I'm very optimistic, and we can continue to commit to current guidance. Yes. And if I can add maybe two points as well. As you know, we've reduced our workforce as well. Philippe mentioned $9,000,000 on an annualized basis. In the year, that's $7,000,000 so that plays into it. And also, Philippe mentioned the growth at ABB. Obviously, as I explained earlier, the this quarter, the margin was abnormally high, and the year over year growth was abnormally high as well, partially because last year's numbers were in preparation for the Metricast acquisition. You should expect that ABB to have, on an EBITDA side, a year over year growth, mid- to high single digit growth, just to make sure that you are not necessarily using the recent close to 12% year over year growth. Very, very solid results. That's still quite good. Still quite good, mid to single to Absolutely. High single digit And this is we're very happy with this. But obviously, 12% would be would not be a number to use. So Okay, very great. Thank you very much. Thank you. There are no further questions at this time. I turn the call back over to our presenters. Okay. Well, thanks, everyone, for participating. We're always available if you want to do follow-up calls, and we're going to be on our next call in early April to discuss our second quarter results. Thanks very much. Have a good day. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.