Thank you for standing by. This is the conference operator. Welcome to the Westport Fuel Systems 2nd Quarter 2019 Financial Results Conference Call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.
I would now like to turn the conference over to Sean Severson with Alpha Direct Advisors, Westport's Investor Relations representative. Please go ahead, Mr. Severson.
Thank you, and good afternoon, everyone. Welcome to Westport Fuel Systems' 2nd quarter conference call, which is being held to coincide with the press release containing Westport Fuel Systems financial results that was distributed this afternoon. On today's call, speaking on behalf of Westport Fuel Systems' Chief Executive Officer, David Johnson and Acting Chief Financial Officer, Jim McCallum. Attendance at this call is open to the public and to media, but questions will be restricted to the investment community. You are reminded that certain statements made in this conference call in Our responses to various questions may constitute forward looking statements within the meaning of the U.
S. And applicable Canadian security laws and such forward looking statements are made based on our current expectations and involve certain risks and uncertainties. Actual results may differ materially from these projected in the forward looking statements, so you are cautioned to not place any undue reliance on these statements. Information contained in this conference call is subject to and qualified in its entirety by information contained in the company's public filings. I'll now turn the call over to David.
David?
Good afternoon. Thanks for joining the Westport Fuel Systems Q2 2019 conference call. I'm pleased to share our latest financial results, highlight market drivers that are advancing our clean transportation industry globally and showcase a few trends and data points specific to our markets and our customers. Our excellent results validate our strategy. They are further proof that our cost effective market ready products combined with stringent emission standards are driving our company's growth.
Let me turn straight to the financial results. With strength in OEM sales and our independent aftermarket channel, transportation revenue was $82,400,000 up 12.6 percent over Q1 of 2019. Adjusted EBITDA of $8,100,000 is our 5th consecutive quarter of positive adjusted EBITDA and also the 2nd quarter of positive EBITDA. We generated $2,500,000 of positive cash flow from operations this quarter compared to consuming $2,000,000 during Q2 a year ago. Our Cummins Westport JV contributed $5,900,000 to our bottom line in Q2 and $14,500,000 in the first half of this year.
Overall, another strong quarter with contributions from across the business. Our financial results align well with market trends that we expect will not only persist, that will accelerate. We're witnessing a real time market response to new regulations. Europe's new heavy duty CO2 regulations require truck OEMs to achieve a fleet average CO2 reduction of 15% by 202530% by 2,030 compared to a 12 month baseline that's being created right now. That is from the beginning of last month through the end of June 2020.
This regulation is driving OEM decision making. In May, along with Delphi Technologies, we presented a joint technical paper at 2019 Vienna Motor Symposium. There were 3 important takeaways for OEMs, customers and regulators. First, using natural gas in diesel cycle delivers equivalent performance to that of conventional diesel engines. 2nd, HPDI enables a 20% reduction in CO2 versus diesel engines.
And 3rd, HPDI will help OEMs respond to increasingly demanding regulations. In my view, this is really just the starting place as HPDI offers further CO2 reductions when renewable natural gas is blended with or replaces fossil natural gas. Best means that HPDI 2.0 allows OEMs to respond to the new regulations while preserving their considerable investments in existing engines and existing trucks. Combining HPDI with RNG offers a compliance pathways to and beyond the 2,030 target of a 30% CO2 reduction. Westport's HPDI 2.0 is the only technology that is developed, validated, certified in production and for sale today that fully and affordably responds to the new European CO2 regulations for trucks.
These regulations are driving 2 important trends, increased customer demand for HPDI and the expansion of the LNG refueling network. First, fleet customers are buying HPDI equipped trucks from our lead OEM customer in Europe. For example, in Q2, food distributor Lidl deployed 20 HPDI trucks supported by the first LNG stations in Switzerland. Their project titled Goodbye Diesel Hello LNG earned 2019 HANSI Global Award for demonstrating sustainable logistics and profitability. United Kingdom is another important launch market.
Gas Rec Operates U. K. Largest network of natural gas refueling stations for commercial vehicles and they've recorded a 3 69% rise in demand for natural gas versus the prior 6 months. They note that heavy duty vehicle launches have begun to have a real impact as customer deliveries are now replacing pilots and demonstrations. The second trend is the growth in the number of natural gas refueling stations across Europe.
NGV Europe announced a significant milestone in May at the 200th LNG refueling station was opened. The growth in LNG stations is happening in parallel with a dramatic increase in the number of CNG stations to more than 3,600 across Europe. And Finnish company, Gasim, has announced its goal to build a 50 station network of LNG refueling stations across the Nordic countries. Gasim opened its first LNG and biogas refueling station in Sweden in Q2. While Sweden has been an important first market, expansion of the refueling network across the Nordic countries is really exciting news.
And finally, with the increase in large orders and the build out of the refueling network, We see increasing demand for development activities to support customers who will add HPDI to their product portfolio in the years to come. Heavy commercial vehicles are a critical lever in global transportation because of their duty cycle, heavy loads going long distances. Light vehicles are another key lever because of the quantity sold and in use each year. Calls for cleaner passenger and light commercial vehicles have resulted in an increased number of registrations for alternative fuel vehicles in key markets. Today in Italy, almost 10% of the new light The reasons are quite clear, low incremental purchase price and fast payback of that incremental cost, fast refueling and good driving range and greater availability of fuel.
Recognizing these customer demands, OEMs are responding quickly by leveraging our delayed OEM services that convert 0 kilometer vehicles to run LPG or CNG. We've seen a significant increase in demand in 2019 and anticipate this trend will continue. Our D OEM business continues to perform well with 2 additional OEMs with planned start to production dates yet this year. The story is not limited to Italy or Europe. In January 2018, we announced a development and supply agreement with Tata Motors in India to upgrade their 3.8 liter and 5.7 liter 4 and 6 cylinder natural gas spark ignited engines and to supply fuel injection engine control systems based on our WP-five eighty two engine management system.
I'm pleased to report that the development and certification of these engines has been completed. Integration and validation of the engines on Tata trucks and buses is underway and the new BS VI compliant vehicles should be launched in early 2020 in advance of the BS VI standard taking effect in April of 2020. The Indian government has made a major step towards cleaner air by moving directly from Bharat Standard 4 Bharat Standard VI, which is roughly equivalent to the Euro VI standard. Implementing BS VI will result in an 87% reduction in NOx emissions compared to BS IV and includes onboard diagnostics to ensure that the emissions are continuously monitored for compliance. Perhaps one more data point to share.
Westport Fuel Systems has produced and sold 29% more CNG tank valves in the first half of twenty nineteen in the first half of twenty eighteen. You can consider that a leading indicator for CNG vehicle sales and registrations in Europe later this year and into 2020. Tanks and tank valves are at one end of our product line with the injector being at the other. We offer complete systems and a full range of components, including AMS hardware. Westport Fuel Systems products offer both criteria air pollutant and greenhouse gas emissions reduction benefits.
Now we have a new customer that we are supporting who will enable emissions reductions through improved operational efficiencies. In Q2, our BRC Electronics division signed a strategic supply contract with Nexeo AG, a Swiss company and a global leader in the development and delivery of digital supply chain management solutions. Our electronics division will manufacture supply Nexeo with the Globe Hopper smart sensor module, which is developed and built to track logistic assets like railcars, tank Standard Dry Containers. It's designed for ultra low power consumption and equipped with a solar panel. We are excited about this new contract and that our innovative technology enable the more efficient and secure movement of freight.
And finally, our story is also a renewable gas story. The significant increase in the use of renewable natural gas shows that there is a pathway for deep decarbonization of transportation by using gas as fuels. In May 2019, UPS announced a 7 year agreement to purchase 170,000,000 gallon equivalent of RNG for the medium and heavy duty natural gas fleet. It was the largest purchase of RNG in U. S.
History and it will be a result in a reduction of as much as 1,000,000 metric tons of greenhouse gas emissions over the lifetime of the agreement. The Renewable Natural Gas Coalition recently announced that the RNG industry in North America has now surpassed the 100 facility benchmark. There has been 150% growth in the number of operational RNG production sites in the past 5 years, more evidence that RNG is the RayNow alternative fuel. This real time market intelligence validates what we hear from our customers around the world. Trends that we also see in our financial results, our order book and in our development activities for future customers.
The strength of our OEM and aftermarket business in key markets and the growth of HPDI in Europe and the upcoming launch in China ensure that we are well positioned to capitalize the opportunity. Before I wrap up and hand over to Jim, let me remind you of our strategic priorities for 2019. 1st, deliver sustained growth of our light duty and medium duty business through both aftermarket and OEM channels. 2nd, acceleration of HPDI utilization, including more volume with existing customers, successful launch in China, adding new customers and lowering our costs and increasing margin. And 3rd, continuous focus on aligning our cost structure and our revenues to improve cash flow and operating results.
We're pleased with the first half 2019 and we're looking forward to the rest of the year and beyond. With that said, I'll turn it over to Jim to review the financials.
Thank you, David. Q2 was a strong quarter on many fronts, and I'm pleased to see the continued strengthening of our balance sheet and improvement in operating results. Our businesses performed well, which led to strong revenues, strong earnings and positive cash flow from operations. To review our future results in more detail, I'll begin on Slide 2. We closed the quarter with sales of $82,400,000 net loss of $2,300,000 and positive adjusted EBITDA of $8,100,000 our 5th consecutive quarter of positive adjusted EBITDA.
Our Q2 2019 adjusted EBITDA was an improvement over Q1 2019 and almost matched our strong year ago performance. Improvement over Q1 is a result of strong sales during the quarter. The decrease over Q2 2018 stems primarily from lower margins lower CWI earnings. Turning to Slide 3, we look at our Transportation business segment. Transportation revenue was up 6%, absent the effect of foreign exchange, but due to the devaluation of the year over versus the U.
S. Dollar, We are reporting an increase of 2% as compared to the same quarter in 2018, primarily due to strength in our HPDI and delayed OEM sales. Similarly, the aftermarket business would have been 2% higher absent the effect of foreign exchange, but due to the weaker euro, We are reporting a decline of 2%. Q2 2019 OEM revenues increased by $3,100,000 or 13% over the prior year quarter. HPDI product sales were the primary driver for the OEM increase.
Gross margins were in line with expectations in prior quarters, but were lower than the extraordinary results of Q2 2018, partially due to a favorable warranty adjustment in Q2 2018 and partially due to a change in product mix. As mentioned on our last quarterly update, we continue to experience strong demand for our market ready technologies and have a number of development programs underway for both light duty and heavy duty vehicle applications of our clean affordable technologies, including HPDI 2.0. As a result of the increased sales, adjusted EBITDA in our transportation segment improved over Q1 2019, But due to lower margins was lower than the prior year quarter. Turning to Slide 4, we'll review the results of the CWI joint Sure. CWI recorded revenue of $84,000,000 in Q2 2019, a 3% decrease over Q2 2018 and a 9% decrease from Q1 2019.
The prior year quarter benefited from $3,700,000 in favorable warranty adjustments as compared to $600,000 in current quarter. Lower sales and warranty adjustments led to lower net income for CWI as compared to the prior year quarter. In Q2 2019, CWI recorded net income of $11,700,000 or 14% of sales. During the quarter, Westport Fuel Systems received cash dividends of 7,400,000 Turning to Slide 5, we look at our corporate segment. SG and A costs decreased over the prior year, mainly due to lower stock based compensation expense, lower salary expense and lower discretionary costs, which were partially offset by higher expenses related to the SEC investigation.
During the quarter, we recorded a $4,500,000 expense to reflect the company's estimate of cost to complete the SEC proceedings. Notwithstanding the SEC charge, operating expenses are trending lower, which is an important contributor in reaching our goal of becoming a profitable, sustainable company and excluding this charge, the company would have achieved positive net income. Turning to Slide 6, this shows our cash walk. We started the quarter with $46,000,000 and ended with $45,400,000 We were pleased with our cash management with the key movements in the cash balance as follows. Principal and interest payments for debt and royalties of $7,800,000 capital expenditures of $1,600,000 CWI dividends received of $7,400,000 in the quarter and cash flow from operations net of 1,400,000 We continue to service and pay down our debts on schedule.
Not reflected in our June 30 balance sheet is a $4,500,000 prepayment on a European loan we made during July. We continue to repay principal out of our existing cash flows and financing facilities. $305,000,000 for 2019, up from $265,000,000 to $295,000,000 We look forward to meeting with investors during September. And with that, I'd like to turn it back to the operator for your questions.
Thank you, sir. We will now begin the question and answer session. You will hear a tone acknowledging your request. Our first question comes from Rob Brown with Lake Street Capital Markets. Please go ahead.
Good afternoon.
Hey, Rob.
I think you mentioned under the OEM business, you had a couple of new OEMs. Are these new OEMs to the program or are these new model lines and product lines with prior OEMs?
Yes. So we do see an expanding interest in our D OEM business going quite well. And what we're finding and seeing in the marketplace, Rob, is that People OEMs are recognizing the need to respond to their customers and the DOEM facility allows them to do that in Very quick way as opposed to a full on development program they have to execute themselves. So what we've seen in the new OEMs are, I I think one is a new model from an existing OEM and another one is a new OEM. But I'd have to follow-up with you specifically on that to be 100% certain.
Okay, great. And then on the Weichai HPDI program, you said it was kind of coming this year, but can you a sense of how that rollout might progress just in terms of timing? Is it initial shipments this year and then more of a ramp next year? Or just sort of kind of directionally, how do you see that rolling out?
I think you said it well, initial shipments this year to kind of prime the pump and get the system working through the manufacturing system at Weichai Westport and then out to their customers, the truck OEMs. I think you probably are well aware that the market in China has been extremely robust with respect to And our customer, our partner Weichai is very excited to climb the ramp and get the product to the customers. So we're really excited about that. The launch is in process, so not done yet, but the outlook is very strong.
Okay, great. Thank you. Congratulations on the good quarter.
Thank you very much.
Our next question is from Colin Rusch with Oppenheimer. Please go ahead.
Thanks so much guys.
Just looking at the balance sheet, there's been a pretty significant increase in working capital Even though the cash is balancing out pretty well, can you just talk a little bit about what's going on there and how that might unwind as you go
forward? Yes.
Thanks, Colin, for the question. Yes, we certainly had strong sales in Q2, which is driving our receivables balance primarily. And we had some accruals that we spoke about. So that's increasing our working capital. Yes, as we play out, seasonality will come into effect a little bit.
Our Q3 is generally a little bit slower than And our Q2 results, so we will see some reduction in working capital and hopefully an improvement in cash as we see the pay down in receivables.
Okay, great. And then just on the DOEM business, can you talk a little bit about any potential pricing power, margin trajectory, Particularly as you start ramping with Weichai, which we understand may be a little bit of a drag initially on the gross margin line.
Yes, I think it's a good point, Collin, That's you raised that basically launch basis of any product whether it's a vehicle or HPDI technology for us tend to be an expensive period of time and not the super profitable time. So we will see some pressure on margins from the launches. And frankly, we're still in the low volume team with our European launch of HPEI-two. So that's just the facts. Our DOM business for us is Good business.
We don't break out the margins there, but I can tell you that it helps move the margin in the other direction, let's say, for the company.
Okay. And then just can you talk about how robust the conversations are with any potential new partners? Obviously, you're not going to give us too many details, but It seemed to me that you were building some momentum with some of those folks and getting closer to potential additional licensees. So could you just give a sense of how that's progressing?
Absolutely glad to do so. But you're right, I can't talk too much, but I'll tell you what I can tell you. Bottom line is that the regulation in the marketplace and what's Happening with the build out of infrastructure, the leadership of our lead customer in Europe, the The coming product in China with a very, very strong and capable partner Weichai with what they're doing. All of these things are coming together To really accelerate and deepen the conversations and even the work that we're doing with customers to accelerate For its production, so for us, it's a very busy time. As you know, in our business of being a Tier 1 supplier, We don't get to make the announcements of when SOPs will be.
That's something for our customers to do, but we're looking forward to that and that's We can see it coming and unfortunately can't give much more detail than that.
Okay, perfect. Thanks guys.
Thank you.
Our next question is from Sameer Joshi with H. C. Wainwright. Please go ahead.
Thanks, David. Thanks, Jim, for taking my questions. Just a clarification, in Europe Or rather for this year, most of your HDPI sales will come from Europe, right? China is not going to be a big part
That's correct. Most of our sales for 2019 will be European based.
And what is the cadence and how are you seeing the ramp up from each partner that you sign up? And do you have any Like is it similar to the first partner you had or are you seeing any differences there?
So yes, one thing to comment on that Samir is that in the development phases, we can do the development phase more quickly with our second, 3rd and 4th customers than we did with our first one. So I think that's something that our follow on customers are really appreciating Is that off the shelf would be too easy, but basically it's a developed technology that we can apply to an engine, get it to production and It's not a research project. So I think that's material in the rollout of the development phases. In the actual production, let's say, realization and commercialization phase, that's more dependent on our customer and how they do those processes. And everybody is a little different, but I would say generically, they're We're saying than they are different in terms of the cadence and then it's really driven by the market.
So we could imagine, for example, And the signals from China are that we'll see a different ramp in China that we've seen in Europe. But it all So all the guessing game for everybody in the industry, even the experts. So we'll see.
Right. That's a good segue in my next question actually, which is About the fleet markets, are you seeing like do you have any visibility on how the fleet markets are The OEMs and are OEMs telling you this and giving you this information or are you you have other sources?
So we have some tidbits and some insights from our various different connections with the industry at OEM level, both existing and developing customers. But it ends up being a tapestry of tidbits as opposed to a comprehensive view. So from that perspective, we follow the market in the same way you do. And we do hear this LNG infrastructure build out fleets like the ones I referenced that have bought 20 vehicles in Switzerland and so forth, Lidl. These kinds of things, these anecdotal stories of fleets going from, I had 1, it ran it for 6 months, love it, now I'm going to buy 10 or 20 or 30.
We've seen quite a few stories of them and they come from time to time. And we expect those to continue to increase in terms of the quantity and the frequency and that's already been the track record.
Understood. One last one from me. Given the CWComet's acquisition of Hydrogenics or pending acquisition, I should say. Do you see any synergies between CWI and that relationship there?
I'm missing your question, Jeez. Synergies between I'm sorry, maybe you could state it again.
Synergies between Cummins Westport joint venture and the Hydrogenics business?
No, I wouldn't say so. I think these are essentially competing technologies in some way in terms of how to decarbonize and how to take Again, it's next generation transportation that's cleaner. But what we do see an opportunity is that basically in all those companies Like Hydronics and others that are in the fuel cell business, they need to store and regulate and deliver hydrogen to the fuel cell stack. And so this is a business that we are consider ourselves a leading provider of those kinds of equipment to those kinds of customers. So we would see the new entity within Cummins to be a customer of ours with respect to our hydrogen capable regulators, valves and so forth.
Understood. Thanks for taking my questions.
Thank you, Sameer.
Our next question comes from Chris Souther with Cowen and Company. Please go ahead.
Hey, thanks for taking my question. I was wondering if you could just walk through kind of The guidance raised, the puts and takes there as far as is this increased activity with HVDI in Europe? Is this kind of better visibility into the ramp with Weichai or is this some of the legacy businesses that are just looking stronger at this point?
Yes. Thanks for the question, Chris. Yes. So we've raised our guidance and also narrowed the range as you've seen. And yes, there's a number of things.
It's really the result of our strong first half. We've done We've had 2 really excellent quarters in Q1 and Q2. Our existing businesses have been performing well in the independent market, the light duty space and in the HPDI ramp. So we're pleased with how all of our businesses have performed and We're reasonably comfortable with the guidance range that we've given. David spoke to the Weichai launch.
There is some We don't know exactly when that timing will be later this year. So it probably won't have a huge impact for 2019, But the rest of the business is performing well and that's why we've raised the guidance as we have.
Understood. And then you talked about kind of the HPDI not yet profitable. Do you have kind of a Breakeven kind of target range, either sales in dollar amount or percent of sales or number of customers that you're kind of thinking about at this point or Is it still kind of developing?
You can be sure we have targets and we come to work every day to make sure we meet and beat those targets. But To kind of come back to the fundamentals of your question, from our perspective, it's we need more than 1 customer in more than 1 market and we need the market adoption. We need to get to Some more volume. Frankly, the volume outlook we see in both Europe and China are material to us. But perhaps, perhaps the outlook is that China could be the real driver for the volume increase that allow us to get the economies of scale that allow us The other thing that is happening is the development programs are tend to be paid for by our customers.
And so that's also good for the business and We'll show up I think as we unroll the business in the months quarters ahead.
So, do these developments Got it. And then
they're not all the same. So there isn't just one answer, but yes, there's revenue in those contracts for us typically. Okay.
And then just the last one. The infrastructure activity really seems to be accelerating, in Europe. And you talked about a couple of the key markets where it is expanding. I just wanted to get an idea of In your what you're seeing from kind of the OEM in those conversations, is it your product that's driving some of the infrastructure or The infrastructure build out that's driving people to come to you, just understanding kind of the chicken and the egg that seems to be getting solved here. Do you have an idea on that?
The good news, Ray, yes, I have I can give you a little bit commentary. The good news that I see is it actually We talk about it being chicken or egg, but actually it doesn't turn out to be chicken and egg. It's more like hand and glove, right? They're together. So the signals from the marketplace From the OEMs and from the fleets are, I'm going to need fuel in this location in order to use this vehicle and the infrastructure is being built.
Meanwhile, the infrastructure being built is enabling the fleets to tell their OEMs I want these products. So and certainly the advent of more products like our lead OEM Customers brought to the marketplace in Europe that also drives the cycle. So all these ingredients are coming together and really supporting one another. What I would tell you right now is I haven't heard a single story from any fleet or OEM that says sales are being constrained by lack of infrastructure. So and in fact, I was checking the NGVA website or European website today, and now it's 212 refueling stations as of August this date.
So it's really expanding quite strongly. They are doing that Because they see the signals of more products, more product being sold, more fleet saying, I plan to do this, more trucks lining up to get the fuel. So all these things go, like I say, hand in to build the marketplace and really achieve our goals.
I appreciate the color there. I'll hop in the queue. Thanks.
Thank you. Thanks, Chris.
Our next question is from Eric Stine with Craig Hallum. Please go ahead.
Hi, David. Hi, Jim.
Hey, good afternoon, Eric.
Hey, so jumped on a little late. I apologize if this has been asked. And I do Appreciate that you're somewhat limited as to what you can say with your launch partner in Europe. But is this something that we should think about sequential improvement This is the Q1. And is that something that I guess do you expect seasonality in that business?
And is that something you expect as you head into 2020?
I don't Have a look on seasonality so much. Basically, we see the forecast from our customer. They give that to us and then it moves around And then we deliver to their orders. And so we're really kind of on the tail of this as opposed to the spear tip of the spear and we are a supplier to That customer of ours and we react. But as a general premise, I don't know of any specific seasonality in that marketplace.
I'm sure there is some. But I'll be able to tell you more about that in a few years than I can right now.
Yes. But did you see sequential growth versus the Q1. Is that something you're able to disclose?
Yes. We've seen some modest growth. So we characterize launch is a ramp and we're in a ramp. Yes. Of course, we'd always like to see it steeper.
So and we're working towards that with our customers and And adding customers, but yes, it's a ramp for sure.
Okay. And then maybe just bigger picture on HPDI, as you Get out in the market, you mentioned the presentation you gave as the pipeline builds. I mean, do you have any thoughts about where you see the long term mix HPDI versus Spark in the market?
Yes. I don't have a mix between the 2, but what I do think About is how do the OEMs comply with the regulation, right? So 2025 is for the OEM business, as you know, right around the corner. Actions need to be taken, products need to be developed, launches need to be achieved in order for those OEMs to achieve natural gas offering a 20 percent CO2 reduction and the OEMs need to achieve a 15% reduction on their fleet. Seems like the mix is going to be pretty high.
And so I think that bodes very well for us. And I've been really racking my brain around what other alternatives could be in the mix. And Certainly, there will be other things, but I don't see them on the marketplace today, right? So you can't go buy a long haul electric OEMs achieved their goals. So I see that it's a very bright future for the technology and we're excited about what we're doing with our Customers kind of behind the curtain right now and then out in the field with our launch customers.
Yes, absolutely. Okay. Maybe last question for me. You mentioned the provision, the $4,500,000 provision estimated cost to complete and resolve the SEC process. Is that something that we should take as a positive sign that you're getting close
Yes. We can't say a lot about it, Eric, but Clearly, we have an estimate now that we're able to accrue for the cost that we think that we're going to have to complete and resolve the investigation.
This concludes the question and answer session. I would like to turn the conference back over to Sean Severson for any closing remarks.
Great. Thank you everyone for joining us today. If you have any follow ups or any additional questions, please reach out to us at Westport Fuel Systems Investor Relations at 604-718 2046. Thank you.
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.