Good day, ladies and gentlemen. Welcome to the Enerflex First Quarter twenty nineteen Results Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this call will be recorded.
I would now like to introduce your host for today's conference, Mark Rossiter, Incoming President and Chief Executive Officer. Please go ahead.
Good morning, everyone. Thank you for joining us. Here with me today is James Harbelas, Enerflex' Executive Vice President and Chief Financial Officer and Blair Gertzen, our outgoing President and Chief Executive Officer effective today. During this call, James and I will be providing our financial results for the three months ended March 3139, a brief commentary on the performance of our three business segments and a summary of our financial position. Approximately one hour following the completion of this call or recording will be available on our website under the Investors section.
During this call, unless otherwise stated, we will be referring to the three months ended March 3139 compared to the same period of 2018. I'll proceed on the basis that you have all taken the opportunity to read yesterday's press release. Enerflex's first quarter financial results benefited from our record backlog at December 3138. We saw strong Engineered Systems revenue and gross margin realized from projects secured in the second half of last year. Although bookings activity this quarter slowed compared to previous quarters, the company's backlog remains strong at well over $1,000,000,000 We continue to see a healthy bid pipeline for Engineered Systems globally, as well as interest for rental and build, own, operate, maintain solutions.
Enerflex continues to focus on opportunities to increase recurring revenue from our rental and aftermarket service product offerings, which was reflected in the positive results for these product lines in the quarter. In The United States, the company continued the expansion of the contract compression business, while internationally we made progress on our long term build, own, operate, maintain projects. Now looking to our regions. In The United States, results were higher when compared to the same period of 2018, driven by increased revenue across all product lines. Higher Engineered Systems revenue was due to the realization of strong bookings seen in prior quarters and continued progress of certain projects.
However, during the quarter, the company experienced delays in the timing of customer project approvals and the corresponding reduction in the conversion of opportunities into bookings. The acquisition of rental assets in 2017 added an established and growing platform that contributed to increasing recurring revenues from the segment. During this first part of the year, Enerflex continued the expansion of The USA rental fleet, which now totals approximately 240,000 horsepower. We remain focused on investing in these assets and as production continues to expand, the company sees additional potential in this high growth market. As we look forward, Enerflex remains focused on building on its successes for engineered systems products in various prolific liquid rich place.
The company has seen significant demand in The USA over the past two years and there continues to be a strong bid pipeline for future work. Continued development and key resource plays should translate into further demand for Enerflex's engineered systems products, as well as contract compression solutions to improve performance in maturing fields. The Houston manufacturing expansion will be coming online shortly, which will materially increase our throughput capacity for engineered systems sales destined for The USA and rest of world markets. We continue to monitor egress issues in the Permian Basin for any potential slowdown in product inquiries related to this basin. Our optimism for this segment is reinforced by the anticipated resolution of these egress issues in the latter half of twenty nineteen, as well as increased activity in other U.
S. Basins where we are positioned to capitalize on these opportunities. Rest of world results were down slightly when compared to the same quarter last year, driven by lower Engineered Systems revenue and higher SG and A costs. Despite a slight reduction in total revenue, Enerflex saw an increase in recurring revenue and opportunities for rental and service offerings remain strong in many of the regions covered by this segment. Looking specifically at The Middle East, this region continues to provide stable earnings from our rental fleet, which consists approximately of 100,000 horsepower in contract.
We are seeing opportunities across this diverse region, including Kuwait, Bahrain and Oman. In addition, the company is exploring new markets and opportunities in order to enhance recurring revenues with a continued focus on build on, operate, maintain projects. In Latin America, Enerflex remains cautiously optimistic about the outlook as customers recover from soft commodity prices. The company believes there are near term prospects within Argentina, Bolivia, Brazil and Colombia and mid to longer term prospects in Mexico. Enerflex made progress on the company's two ten year boom projects awarded in Argentina and Brazil in the second half of last year.
As capital investments increased to develop the Vaca Muerta shale in Argentina and to build out natural gas infrastructure in Colombia, there will be further opportunities for Enerflex's products and services in those countries. In the Canadian region, the oil and natural gas industry remains somewhat constrained by negative sentiment and the lack of consistent access to market. However, the company benefited from major project awards relating to the midstream sector from the second half of twenty eighteen, which was reflected in our financial results of this quarter. Despite progress in transportation issues and optimism for further LNG projects, there remains some uncertainty in the Canadian market as 2019 unfolds. In addition, the aggressive delivery window for new prospects during the quarter and our record level of opening backlog met the company's ability to respond to some projects with delivery times that met the client's needs was limited to the company's fabrication and supply chain capacity.
We believe that this delivery issue is isolated to the first quarter of twenty nineteen. In the near term, Enerflex has a positive outlook globally, supported by continued strength in our backlog and high inquiry levels across all regions. The company is committed to diversifying our revenue streams across multiple markets and product lines to grow our backlog and ensure profitable margins. I will now turn it over to James Harvellous, Enerflex's Executive Vice President and Chief Financial Officer to review our financial results.
Thank you, Mark. Revenues of $485,000,000 for the quarter reflect improved results across all product lines, particularly Engineered Systems. Enerflex's service and rental product lines benefited from the company's focus on increasing recurring revenue streams and from higher activity levels, while Engineered Systems benefited from a strong opening backlog. Consolidated gross margin for the quarter was $89,000,000 compared to $65,000,000 as a result of increased revenue and improved gross margin percentage. While gross margin percentage was up due to the realization of higher margin projects, including opening backlog and the continued contributions of the service and rental product lines, these improvements were partially offset by higher estimated costs to complete certain projects and a write down of equipment related to a decommissioned facility in the Rest of World segment.
Selling, general and administrative expenses were $56,000,000 This $11,000,000 increase was due to higher compensation costs, partially offset by positive foreign exchange impacts. Increased compensation costs were the result of mark to market impacts on share based compensation and increased profit share on improved operating results, as well as higher headcount in The USA and Rest of World segments. EBIT for the quarter was $33,000,000 driven by higher gross margin, partially offset by higher SG and A costs. For the first three months of the year, Enerflex generated net earnings from operations of $17,000,000 or $0.19 per share compared to net earnings of $11,000,000 or $0.12 per share in 2018. Adjusted EBITDA was $67,000,000 versus $44,000,000 in the prior year.
The increase in adjusted EBITDA was largely driven by higher margins as previously mentioned. During the quarter, Enerflex collected the amounts owing from our customer in Oman, concluding these arbitration proceedings. The amounts received were immediately used to repay debt. In total, the company repaid $95,000,000 of debt in the quarter. Moving on to our regional results.
In The USA segment, Enerflex's bookings of $75,000,000 represented a significant decrease when compared to the prior period. The company experienced delays in the timing of customer project approvals and a corresponding reduction in the conversion of opportunities, which impacted bookings this period. During the first quarter, revenue in The USA was $293,000,000 This increase of $101,000,000 was largely due to higher Engineered Systems revenue as a result of the realization of strong bookings in recent quarters and continued progress on some large projects. Service revenues saw an increase due to higher activity levels, while rental revenues improved as a result of the organic growth of the contract compression fleet. Operating income for this segment increased to $26,000,000 driven by higher revenues across all product lines and improved gross margin performance.
This was partially offset by higher SG and A costs driven by increased compensation on a larger workforce and mark to market impacts on share based compensation. In the rest of world, backlog of $50,000,000 was lower than at December 3138, due to Engineered Systems revenue outpacing bookings in 2019. Bookings in the Rest of the World segment are typically larger in nature and scope and as a result are less frequent. Revenue in the Rest of the World for the first quarter was $94,000,000 a slight decrease from the comparative period due to lower Engineered Systems revenues, partially offset by higher service and rental revenues. Engineered Systems was down in the quarter due to a lower opening backlog, while service and rental revenues increased as a result of higher activity levels in Australia and improved performance in Latin America respectively.
Operating income of $2,000,000 represents a slight decrease compared to the same period of 2018. This decrease was a result of increased SG and A costs partially offset by higher gross margin percentage. However, gross margin for the quarter was negatively impacted by higher estimated costs to complete certain projects and a write down of equipment. SG and A costs have increased from the prior year due to increased compensation on a larger workforce and mark to market impacts on share based comp. In Canada, several project wins drove bookings of $42,000,000 an increase of $25,000,000 compared to the same period in 2018.
Backlog for the Canada segment remains strong at $378,000,000 This market is seeing investment focused in the midstream sector Enerflex offers solutions to maximize the value of Canadian production. Revenue in Canada was $99,000,000 which was consistent with the comparative period. Engineered systems revenue decreased due to weaker bookings seen in the first half of twenty eighteen, which was offset by higher service revenues on increased part sales. Operating income increased by $3,000,000 due to higher gross margin on improved project margins, while SG and A costs were consistent with the comparable period in 2018. Turning to the balance sheet, Enerflex continues to spend capital on rental equipment to expand the fleet in The USA and rest of world segments, consistent with our strategic objective of increasing recurring revenue, which grew by 20% on a year over year basis.
The company also remains diligent in managing working capital to retain flexibility to pursue opportunities as they arise. In managing liquidity, the company has access to a significant portion of its bank facility for future drawings to meet the company's future growth targets. As at December 3138, the company held cash and cash equivalents of $3.00 $5,000,000 and a drawn $28,000,000 against the bank facility, leaving it with access to $655,000,000 for future drawings. The company's net debt to EBITDA ratio currently stands at 0.2:one. Demand for natural gas is growing globally, continuing to drive demand for Enerflex's products and services.
Strong market conditions in The USA and rest of world segments and midstream activity in Canada all contributed to a record opening backlog, which provides visibility for Engineered Systems revenue through 2019 and into 2020. Bidding activity for Engineered Systems remain strong across all regions. However, the conversion of those opportunities into bookings and backlog has slowed to start 2019. The company expects quarterly bookings this year to be more in line with historical activity and we continue to see interest for rentals and build own operate maintain solutions in The USA and rest of world segments. Building off the success of adding assets, which contributed to recurring revenues, the company remains committed to this strategy in 2019 and going forward.
This completes the formal component of the webcast. Additional details can be found in our May 2 press release. We will now be happy to take any questions. Operator? Operator?
Thank you. And our first question comes from the line of Greg Colman with National Bank Financial. Your line is now open.
Thanks very much for taking my questions. Wanted to start by focusing on the backlog, the $1,200,000,000 that you've got there going forward. James or Mark, could you give us a little bit of color as to the duration of that? How far in the future it lasts? And if it's even weighted or if there's quarters that it should be a little bit more lumpy as that $1,200,000,000 works through?
Yes. In terms of the backlog at the end of the quarter of roughly $1,200,000,000 that's probably another 12 to 16 months of visibility. In terms of how we expect it to come through from a reporting standpoint, we said even at year end that we would expect a step change in Q2 as the additional capacity in Houston comes online and and we start to move product through it. So we would see a material increase in Q2 relative to Q1 and then Q3 and Q4 would be pretty consistent with where we expect Q2 revenue to be. The additional capacity is about a 30% to 40% increase in throughput.
So that's what we would expect to see as the year progresses.
And then taking that and running with it for a minute, on the capacity on the engineered systems side, you've been kind of running in the low $300,000,000 revenue range on a quarterly basis for the past few quarters. Can you give us an idea of first of all and then this quarter was $345,000,000 Can you give us an idea of how much of your capacity is being utilized at that the current revenue level? And then would it be correct in taking that 34% to 40% you mentioned there and saying that then just adding that to whatever your total capacity is at the moment from a revenue perspective? Just trying to figure out what on a quarterly basis you would be able to push through Engineered Systems in a 100% utilization environment?
Yes. Well, I think that when you guys are all referring to 100% utilization, it could be a little misleading, right? And let me answer your question and I want to come back to that. So in Canada, obviously, where we had some of these opportunities where the delivery window was aggressive and we consider that isolated to Q1, the shop is very busy and Canadian revenue reflects a very busy shop. In The U.
S. With that additional capacity coming online, that's where we would expect a 30% to roughly 40% increase. And the rest of world segment on the engineered system side is driven by project work in the field. It's not a capacity issue or a delivery window relative to the facility. So I come back to the comment I made to your previous question, we would expect that with that additional capacity coming online to see a meaningful increase to engineered systems in the magnitude that I've already described.
In terms of capacity, we were never 100% booked. It really depends on the delivery window, right. And if those are aggressive, as we saw in Q1, in Canada specifically, then we can't hit those delivery windows. That's where we get pushed out. But we see that as an issue that's isolated to Q1, Greg.
Got it. Okay. And I mean, not to put words in your mouth, but I am looking to wrap some numbers around it and just rough ideas. If your Q1 revenue was $345,000,000 and it was to the point where you were unable to deliver on tight schedules in Canada because it was fully capacity utilized, then adding 30% of that 30% to 40% would be an additional $120,000,000 or so in total revenue. Should we be thinking about approaching $500,000,000 on a quarterly basis as sort of a perfect Engineered Systems revenue number?
If all of the equipment is available for us to put it into a shop floor, then that wouldn't be out of the realm of reasonableness.
Got it. Okay. And then on the backlog staying there, I know we've talked about margin profile in the past. Can you give us an idea now that you're starting to churn through the record backlog? Is the margin profile of the backlog still, as you've said in the past, superior to the margin profile of the trailing twelve months Engineered Systems?
It is. It is. And we stay we stand by the comments we made in Q4. You will see sequential increases as the quarters unfold throughout 2019 and you have seen it in Q1 as well. If you normalize for stock based comp and the acceleration of some of that stock based comp, then margins in The U.
S. Are over 10%. And that's what we would have relative to where they were in Q4 of twenty eighteen. And we would expect to see sequential improvements as we see some of that higher compression and gas processing work coming through the facilities as the year unfolds.
Got it. Okay. That makes sense. And then on the sort of forward looking statements, you're talking about returning to the historic level of bookings for a period here in the future. There's a lot of history.
And so I'm just saying, if we look at your previous comments on bookings, we've sort of looked at $250,000,000 to $300,000,000 as being a historically normal level of bookings. Is that a reasonable level to be thinking about or should we be thinking materially higher or lower than that?
No, I think if you look at historical averages, that's our math as well. It's $250,000,000 to $300,000,000 but we did we have said in our statements that we still see a very healthy inquiry pipeline. I just think that that pipeline we feel that that pipeline is going to be back end loaded as opposed to in the first half of the year.
Got it. And then last one for me. With the cash received in the quarter with the debt being paid down, your net debt is versus trailing twelve months is incredibly low. And it looks like over the next year or so as the backlog moves through, you're going to be getting a ton of free cash flow coming out to you. How do you think of the deployment of that free cash flow?
What sort of your internal waterfall of these are our priorities for using cash?
So for us, it's always been organic growth and we feel that the opportunities that we're seeing in The U. S. Rentals is going to be is going to continue to be healthy throughout 2019. We've obviously got a couple of very significant boom projects that we announced in the back half of twenty eighteen that we're going to be fully funding through the year as those are built out. And then we've always with the balance sheet being where it is and very little in the way of drawings on the facility, we've always looked to dividends as a way of returning capital to our shareholders on a consistent basis.
So those capital allocation priorities haven't changed for us. That's going to continue to be our focus.
Excellent. That's it for me. Thanks for taking my questions.
Thank you. Thank
you. Thank you. And our next question comes from the line of John Morrison with CIBC Capital Market. Your line is now open.
Good morning, all.
Good morning. Good morning.
When you think about the missed opportunity because of some of the field execution tightness, does that make you think about adding incremental installation capacity or people or ultimately that would feel like a fairly bad idea for what was a fairly short pipe time horizon and you're comfortable with the overall staffing levels?
John, this is Mark. I'd say the latter, we're comfortable. And I'd like to point out that acute issue is specific to Canada. And it's a matter of just balancing the opportunities with the backlog and make sure we're being smart about what we're approaching. So we wouldn't feel that because of that experience in the first quarter, we would have to fundamentally change our staffing levels or facility in Canada at this time.
Okay. And the general outlook in Canada isn't different. So it would be it would feel like a misstep to take one quarter and kind of extrapolate into the future? Absolutely. And this is generally across the platform, not just a Canada specific question, but does the slowing book law or bookings in the quarter materially change how you think about the overall business in 2019?
It doesn't materially change how we think about it. When we think about the positives, we have a big backlog, we're growing recurring revenue, U. S. Contract compressions, BOOM opportunities and service globally are all healthy. If we we haven't seen material downshift in any of that stuff.
We haven't seen any cancellations of projects in the backlog. So when I think about all those good things, it doesn't make us believe that we're running into a really big downturn. We really feel like we said in the statements that it's a matter of deferment and sort of slowdown of customers funding projects over sort of a quarterly time period.
You talk about the order inquiry remaining strong and apologies for getting granular on this, but obviously it's the largest market focus today. But when you use the reference what is the reference point when you use the term strong? Is that in a general sense? Is it strong compared to what we've seen over the last three or four quarters? Just trying to get any sort of a sense of whether there's been any material rate and change of order inquiry on a sequential basis?
Yes. So I think it would be fair to say that when we if you compare it to Q3 and Q4, those were obviously and we've characterized it as such. Those were high watermarks in terms of bookings. And I think it would be fair to say that those were also high watermarks in terms of the opportunity set in front of us. So if we're comparing it relative to the back half of last year, yes, the inquiry levels are down slightly.
If we're comparing it to what we've seen historically, they continue to be very strong, especially relative to the last downturn that we came out of in 2016. This is by no way where we kind of retrace what we experienced in 2016 with respect to the opportunity set.
Okay. James, would you say that there's been any material change in order inquiry by any bucket of customers, whether that be private producers, the independents, midstreams or any geographic region or not really?
Well, not really in terms of public versus private, but we have seen a shift in the last couple of years, especially in Canada that is more heavily weighted to midstream infrastructure being built out and that's still the kind of opportunities that we're seeing in Canada for the balance of 2019. The U. S. Has been pretty steady in terms of midstream producer split.
Okay. Did the growth in the international product support surprise to the upside based on any one time events in the quarter? Is that really just the growth trajectory that's unfolding that businesses? You've got a larger installed base globally and ultimately your rental fleet continues to grow in those markets.
John, I think this is Mark, it's the latter. The growing aftermarket service globally is important to us as a strategic imperative. And I would say the growth in the quarter is more reflective of a long term effort from the team in the regions to achieve that goal.
And Mark, earlier you made the comment about there's been no cancellations in the backlog. There's been no conversations around cancellations of the backlog or pushing at it either. Would that be a fair statement?
That'd be a fair statement.
Okay. Just the last one for me. Just on the timeline for the BOOM projects that have been previously announced, all of those hold at this point and we shouldn't be shifting anything around when we think about capacity coming online?
No, nothing to shift around. We've said that those are only going to become contributors to EBITDA in 2020 though, right? And I just want to remind everyone of that.
Yes, for sure. Appreciate the color. I'll turn it back.
Thank you. Thank you. Our next question comes from the line of Jeff Federle with Peters and Company. Your line is now open.
Good morning, guys.
Good morning, Dan.
Follow-up on the bookings side. So if you're expecting more traditional or bookings in line with historical levels, how do you think about maintaining a book to bill and ultimately replenishing backlog? Because if you're running at, as Greg said, dollars $345,000,000 of Engineered Systems right now and that number obviously in The U. S. Is scaling, do you not need to push harder on the booking side in order to sustain the manufacturing business?
We always push hard on bookings, Jeff. So I wouldn't say that we have to push any harder or less hard in any given quarter. We've got teams of people that push hard all the time And we consider book to bill ratios. Definitely, we look at that when we look at our numbers. But in general, we're just trying to book the very best work we can in each of the regions.
Yes. And look, I guess, we've never come out and said that $1,400,000,000 of backlog is suddenly the new normal. I mean, the Engineered Systems business is going to fluctuate and we think that the back half is going to give rise to additional opportunities. But yes, we will see backlog turn just given the throughput of the facilities, plus what we expect bookings will look like in the first six months.
Sorry, let me ask you in a different way. Do you think the market right now is strong enough or in the foreseeable future strong enough to support a book to bill ratio of one times, especially with your expanded capacity?
How far out are you looking? Let's call
it now in the end of the year.
I would say no, where we're sitting today.
Yes, I agree.
Okay. The project cost overruns on the in the ROW side, what's that related to and is there risk for any additional cost overruns tied to specific projects or to specific projects or any other projects that you could see a risk on?
It's tied to a specific project in the rest of world region and we think we got a good handle on it.
And are there any others that you're concerned about in terms of potential cost overruns or any of these potential delays?
We're always concerned about every project, doing our very best, but I wouldn't say there's any other particular ones that we need to highlight at this time.
Okay. And just a follow-up to John's question earlier. On the service side, so I understand your comments, Mark. The growth in the service side, is that more because of the strategic focus on adding service business or are you benefiting from an installed base that you see either yourselves or on a broader market basis in some of these regions?
Aftermarket service always grows with installed base primarily and we can also grow it by just adding technicians and servicing other people's equipment, which really speaks to the installed base. In the Rest of World segment specifically, it's a matter of us having more time in the saddle and building up a good team and getting our name out there and making sure that clients in that region are aware of what our capabilities and what our desires are with executing that business. In more mature areas, North America, it really ebbs and flows with the installed base and with our customers' maintenance CapEx budgets, as long as they're healthy that business can grow.
Last question, the comment in the prepared remarks around pursuing rental opportunities in other EMEA countries, whereabouts are you looking or what type of opportunities are you looking at there?
Well, we mentioned Kuwait, Bahrain, Oman. And I would say that what we're pursuing is what we've done in the past, which is primarily build on operate maintain contracts.
Sorry, if I misunderstood, but did you not say after that that you were looking at expanding your EMEA presence with BOOM projects?
We are, like we're always trying to get more BOOM projects everywhere in the world. Within EMEA, within those countries I just mentioned, we would love to add BOOM projects in the future.
Okay. Thanks for the color. Appreciate it.
Okay. Thanks.
Thank you. And our next question comes from the line of Tim Monachello with AltaCorp Capital. Your line is now open.
Hey, good morning, everyone.
Hey, Tim.
Just a
couple of questions on bookings here. How many or how much of the bookings in The U. S. In the quarter were destined for international markets?
So there was out of the total U. S. Bookings, there was probably about 40% of it that was destined for international markets.
Okay. And then were there any potential bookings or opportunities that you saw that you had to turn down because they're lower margin than you would have wanted to have? And if so, can you quantify how much that would have been?
Tim, I don't think that we would say there was. I would say that the situation in the first quarter was our customers that had projects on the books delayed decisions on those. That's really the main driver of why the bookings number in The USA is lower than prior quarters.
Okay.
You mentioned an O and M agreement in Bolivia. I was wondering if you guys could give a little bit more color on that.
What kind of color are you looking for?
Term, size, anything you can speak both those two things would be great.
No, I mean, we're not going to talk about size. That's just competitively sensitive information. I mean, as far as term goes, it is a longer term agreement that takes you beyond just this year. And I think it's an important watershed in terms of being able to establish an aftermarket service presence and start to compete for work in Bolivia, but we're not going to talk about individual contract values.
Okay. That's fair. In terms of the Mexico rental contract that you mentioned, was that basically a partial renewal of those two expiring contracts?
That's correct.
Okay. And then one more question here. Can you speak to the pace that you expect to see The U. S. Rental fleet grow through the rest of the year?
We would say it's going to grow very much like it has in the back half of twenty eighteen and what you saw in the first quarter of twenty nineteen. So we spent about $30,000,000 on The U. S. Rental business.
Okay. And then the 240,000 horsepower that you have in The U. S, was that at the end of the quarter or is that today?
That's at the end of the quarter.
Okay, awesome. I'll turn it back. Thanks a lot.
Thank you.
Thank you. And that does conclude today's question and answer session. I would now like to turn the call back to James R. Billish for any further remarks.
Since there are no further questions, we would like to thank you for joining us on this call. This is Blair's last quarterly webcast, I think it's been 60 in total. Am I right with that number? Yes. As Enerflex' President and Chief Executive Officer, Mark, the executive management team, the Board of Directors and I wanted to recognize Blair's tremendous leadership and invaluable contributions in building Enerflex into the global energy services leader it is today.
Well, thank you, James and Mark. And to the employees, my peers on the executive management team, the Board of Directors, thank you for continuing to demonstrate Enerflex's ongoing commitment to our customers and our shareholders, the communities we work in. It's been a real privilege to lead Enerflex alongside this highly effective team. I also wish to extend my gratitude to our customers and suppliers. It's been an honor to partner with you as we delivered safe and reliable solutions for the natural gas industry.
And lastly, to our shareholders and the investment community, thank you for your continued trust in the vision, the long term strategy. I wish you all the best. The business is in great hands with these two leaders and I look forward to reaping the benefits as a shareholder in the future years. Take care.
Thank you, Blair, and we wish you all the best as you start your retirement. Thank you once again to everyone for joining us on the call. James and I look forward to giving you our second quarter results in August. Have a great weekend.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program.
You
may all disconnect and everyone have a great day.