Thank you for standing by. This is the conference operator. Welcome to the Westport Fuel Systems First Quarter 2019 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.
Call. Thank you, and good afternoon, everyone. Welcome to Westport Fuel Systems' Q1 conference call, which is being held to coincide with the press release containing Westport Fuel financial results that was distributed this afternoon. On today's call, speaking on behalf of Westport Fuel Systems is 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.
Results. You are reminded that certain statements made in this conference call and our responses to various questions may constitute forward looking statements within the meaning of the U. S. And applicable Canadian Securities Law and as such forward looking statements are made based on our current expectations and involve certain risks and uncertainties. Results may differ materially from those projected in the forward looking statements, so you're cautioned not to place 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?
Thank you, Sean, and thank you all for joining the Westport financial results. I'm pleased to share our Q1 2019 financial results and also talk to you about our key drivers advancing the clean transportation industry globally, and discuss how those forces are impacting our Services. Our strong Q1 results are a validation of our strategy. They are the latest proof point that stringent emission regulations and increasingly urgent calls for action on urban air quality and climate change are advancing the deployment of alternative fuel vehicles. Our market ready solutions align well with the market's need for clean, cost effective transportation and enable us to respond directly to our OEM customers, partners and to consumers.
We are encouraged by how the market for clean transportation is developing and by the demand we are seeing for our products. Since our prior earnings call, I've had the opportunity with even more employees, partners, customers, suppliers and shareholders around the world. Next, I'm on to South America, Japan and then back to Europe. Our Westport Fuel Systems team is committed to deliver clean, market ready, competitive technology to transportation customers around the world. Given the company's long legacy, it is particularly rewarding to see that our entrepreneurial, research and product development efforts have created a diverse portfolio of products that we sell in nearly 70 countries for applications from small single cylinder engines to large engines for commercial vehicles.
As a clean technology company, we are proud of what we're doing and we're excited to grow our business and respond to regulations and market demands. I'm also pleased to announce that last month, we published the 1st Westport Fuel Systems Sustainability Report. Guidance. It was prepared in accordance with Global Reporting Initiative Standards and encompasses our entire global operating footprint. It establishes our baseline for corporate and social environmental performance.
While the economic and environmental benefits of our products are well established, we took the opportunity to be more transparent reporting the environmental and social impacts of our global operations. This is really an important milestone for our team and documents our leadership position in the clean transportation industry. Let me now turn to our Q1 results. Q1 2019 revenue was $73,200,000 an increase of 15% over Q1 2018 and 21% over Q4 2018, results following our 18% full year increase in 2018 versus 2017 as reported during our last call. Sales of Westport's HPDI 2.0 in Europe are accelerating and we're working hard to deliver Weichai's launch of HPDI 2.0 in China later this year.
With Q1 2019, we recorded our 4th consecutive quarter of positive adjusted EBITDA. We earned a positive 7 $300,000 on an adjusted EBITDA basis, compared with negative $3,400,000 in Q1 2018. That's a $10,700,000 improvement in operating results. Segment. A trend line is positive and consistent and speaks to the sense of urgency we have to deliver results quarter after quarter.
Cummins Westport also had a great quarter with Q1 2019 revenue of $92,300,000 overall a very strong year with contributions from across the entire Westport Fuel Systems business. Let me now make a few observations that I see regarding the market. Results. As we discussed last time and as we expected, Europe has enacted its first CO2 regulations for heavy duty vehicles with a vote on April 18 in the EU Parliament. Under these new rules, heavy duty truck OEMs will be required to achieve a fleet average CO2 reduction of 15% by 202530% by 2,030 compared to a 12 month baseline that will be created starting this July 1.
Our HPDI 2.0 technology provides a 20% reduction of CO2 when implemented on current generation heavy duty truck engines, which means current generation trucks measures can meet these new regulations through 2029. If we combine HPDI with the blends of renewable natural gas, that will enable compliance with the 2,030 regulation and beyond. This means that HPDI 2.0 allows OEMs to preserve and to meet these new regulations with the technology that is clean, affordable and commercially available today. We have already seen the impact of these regulations via increased demand for HPDI. First, fleet customers are buying HPDI equipped trucks from our OEM lead customer in Europe.
2nd, we see demand for development activities to support customers who will add HPDI to their product portfolio. Westport's HPDI 2.0 is the only technology that is developed, validated, certified and in production and for sale today that fully and affordably responds to the new CO2 regulations in Europe. Next, we've noticed that the drumbeat for clear passenger vehicles and light commercial vehicles continues in markets around the world. There's been a rolling news feed of different countries announcing bans on petroleum and diesel vehicles. Results.
Our internal tracking counts 15 countries across Europe and Asia with target dates as soon as 2,030. Target date is an important phrase since most, if not all of these statements remains simply that targets and intent. Nonetheless, we expect the regulations will come and consumers and OEMs share this expectation. And the market signals are loud and clear. One example of the impact of this changing sentiment, especially against is the reduction in sales of diesel passenger cars in Europe.
The share of diesel cars purchased is down by 5 percentage points from 36% in March 2018 segment at 31% this March. Alternative fuel vehicles are picking up by this year. And we do hear it also from our OEM customers. Our customer in India, for example, Maruti Suzuki, announced in April that they're evaluating the phase out of diesel cars as the new Bharat Stage 6, which is equivalent to Euro 6 emissions. Guidance.
When these regulations come into effect April 1 next year, meeting this BS VI standard with diesel engines will be costly and the Indian market is very cost sensitive. Natural gas powered vehicles will pick up some share because ours is a cost effective solution. Next, let's talk about climate change and the urgency of action to address this challenge. We need to deploy market ready, cost competitive, efficient transportation solution like ours, and we need to do it now. Natural gas and renewable natural gas remain a foundational element of an all of the above transportation strategy.
There is no silver bullet to decarbonize the freight sector and all technologies have a role to play. Commercial fleets purchasing decisions are driven by economics and fleets will deploy what works best for them. Natural gas has already addressed the infrastructure, logistics and scale of challenges that are now faced by other technologies, natural gas is market ready now. The transportation sector is on the cusp of a dynamic change, it's important not to confuse trade show announcements around prototypes and demonstrations with production solutions like ours that could be purchased and put to use right now. And just to wrap up, clean fuels like natural gas are available and cost competitive today.
Natural gas for transportation is a renewable energy story. The significant increase of renewable natural gas as a transportation fuel offers another proof point that there is a pathway for deep decarbonization using gaseous fuels. Our recent report from NGV America and the Renewable National Gas Coalition highlights segment. Since 2014, RNG use in transportation in the United States has increased 6 fold, displacing over 7,000,000 tons of carbon dioxide equivalents. In California, where we had a strong penetration of natural gas in transit buses, refuse trucks and other applications, about 70 percent of the natural gas used in transportation is already renewable and suite is leading the way to a fossil free transportation sector by 2,030.
They already have 91% and renewable natural gas share in their transportation mix. These examples reflect what we hear from our customers that market trends continue to strengthen, trend that we also see in our financial results, our order book and in our development pipeline activities for future customers. The strength of our OEM and aftermarket business in key market business in key markets and the growth of HPDI in Europe and China ensure that we are well positioned to capitalize on the opportunity. Before I wrap up and hand over to Jim, let me remind you of our strategic priorities for 2019. Number 1, deliver sustained growth of our light duty and medium duty businesses through both the aftermarket and OEM channels 2, acceleration of HPDI commercialization.
This means and third, continued focus on aligning our corporate cost structure with our revenues to improve cash flow and operating results. 2019 is already off to a great start and looking forward to the rest of the year and beyond. With that said, I'll turn it over to Jim to review Q1 2019 financials. Jim?
Thank you, David. I too am pleased with the results from our Q1. All of our businesses performed well and coupled with strong results from our Cummins Westport joint venture led to improved earnings. To review our Q1 results in more detail, I'll begin on Slide 2. We closed the quarter with sales of $73,200,000 a net loss of $3,000,000 and positive adjusted EBITDA of $7,300,000 This continues our trend of positive adjusted EBITDA and importantly is a significant increase over both last quarter and the year ago quarter.
Operating expenses are trending lower, but remain elevated due to legal expenses related to the ongoing SEC investigation and one off costs associated with the executive management transition during the Q1. Our Q1 2019 adjusted EBITDA was a significant improvement over both the prior quarter and Q1 2018. And secondly, from CWI earnings. Turning to Slide 3, we look at our transportation business segment. Segment.
Revenues for the Q1 improved by 15% to $73,200,000 as compared to the same quarter in 2018, segment, primarily due to strength in HPDI sales. Excluding the decrease in the euro against the U. S. Dollar, Transportation revenue would have been approximately 19% higher than Q1 2018. Despite the lower euro, Q1 2019 independent aftermarket revenues increased by $900,000 or 2% over the prior year quarter.
Q1 2019 OEM revenues increased by $8,500,000 or 48% over the prior year quarter. HPDI product sales were the primary driver for the OEM increase. As a result of higher revenues, gross margin increased to $17,200,000 in Q1 twenty nineteen from $14,600,000 in Q1 twenty eighteen. R and D expenses decreased by 21% in Q1 2019 compared to the prior year quarter from $8,400,000 to $6,600,000 but were consistent with the Q4 of 2018. We expected this year over year decrease in R and D spend as we transition to the commercialization phase of HPDI 2.0.
Current year R and D expense was also lower as a result of the lower euro and Canadian dollar compared to the prior year quarter. Due to the fundamental market forces that David mentioned, 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 and reduced R and D spend, adjusted EBITDA in our transportation segment improved significantly over both last quarter and versus Q1 2018. Turning to Slide 4, we'll review the results of the CWI joint venture. CWI had a strong quarter and recorded revenue of $92,300,000 in Q1 2019, a 77% increase over Q1 2018, but consistent with Q4 2018.
CWI revenue in the Q1 of 2018 was impacted by pre buy activities in the Q4 of 2017 in advance of onboard diagnostic compliant engines. And during the quarter, Westport Fuel Systems received cash dividends of $6,000,000 results. Turning to Slide 5, we'll review our corporate segment. SG and A costs increased over the prior year, mainly due to legal expenses related to the Investigation, which were $1,800,000 net of expected D and O insurance recoveries. As noted previously, we have not received any new subpoenas since August 2018.
We continue to review our corporate expenses and expect to see reductions through the rest of 2019. Turning to Slide 6, this shows our cash walk. We started the quarter with $61,100,000 and ended with $46,000,000 The cash decrease is primarily due to increased accounts receivable balances associated with the higher sales. Other key movements in the cash balance were principal and interest payments of $5,900,000 capital expenditures of $2,000,000 net cash outlays relating to litigation of $600,000 and as mentioned CWI dividends received of $6,000,000 in the quarter. We continue to service and pay down our debts on schedule.
In April, we paid Cartesian its annual royalty payment and other amounts. And during the remainder of the year, we expect to reduce our term debt by approximately $7,000,000 We will continue to repay out of our existing cash flows and financing facilities and do not have any specific plans to raise capital. We are maintaining our annual revenue guidance of $265,000,000 to $295,000,000 for 2019. Year. The year is off to a strong start, but as mentioned in our previous call, the Weichai volumes resulting from the launch of HPDI product in China results are heavily weighted to the latter half of the year and difficult for us to forecast at this point in time.
Results. We look forward to attending the Oppenheimer Investor Conference in New York City next week and the Craig Hallum Investor Conference later in May in Minneapolis, and we'll meet with many of you then. With that, I'd like to turn it over to the operator for questions.
Our first question comes from Rob Brown with Lake Street Capital Markets. Please go ahead. Mr. Brown, your line is live.
Hi. Thanks for taking my call. On the HPDI business, you had nice growth in the quarter. Could you give us a sense of how that's developing? Is it moving from I think last time you said it's moving from small trials to larger kind of grouping rollouts, sort of how is that trending in terms of the order flow and then has it shown up yet in the numbers?
Yes. Hi, Rob. Good to hear you. So what we see from our end is a good order flow from our European launch customer. And then we see the same kinds of reports that are available to the others in the marketplace regarding fleet buying units here and there.
And so Overall, we're very pleased with the forecast and the order book. But I can't I struggle to give the granularity that I'd love to give because At the end of the day, I'm the supplier, I'm not the OEM of the product. So we don't have real crystal clear detail on all those sales in the marketplace. But certainly, the pull is good. Guidance?
The outlook is good and we continue to be encouraged by the feedback we get from our European launch customer for that product.
Okay, good. Thank you. And then with the new EU regulations, I guess, will you see that impact first in development partnerships Or do you see fleets actually taking steps now to try to meet those ahead of time?
Yes. So we have as mentioned in our remarks, we have really good pull from the marketplace and we're seeing those development programs starting. And so that is encouraging to us. There is some lead time, of course, to go from making the decision to move forward to having it in production. And so we have to work through that development, production validation and launch.
Now just like we're doing right now with Weichai, of course, they made their decision guidance back last year and we were able to announce at that time. And so we're looking forward to making announcements in the future as additional customers reach those important milestones and production decisions.
Okay, great. Thank you. I'll turn it over.
The next question comes from Eric Stine with Craig Hallum Group.
Hi, David. Hi, Jim.
Hi, Eric.
So just sticking with HPDI, I mean, obviously, one of your key objectives is securing additional partners. Just curious in your conversations, I mean, do you sense that those partners are looking for a solution that's similar to your launch partner or are they looking for a unique solution? Just trying to get a sense of kind of thoughts about time to market for these partners?
Yes, that's a great question. So thanks for asking it. Basically, what we see is that customers are In kind of some element of urgency as this new regulation has hit the books. And so they know that regardless of Whether they take kind of a strictly off the shelf solution from us and simply apply it to their vehicle or whether some adaptations are required, They need to go quickly. And I can tell you as a general principle, therefore, they want to do the minimum amount of work to get the product in the field with quality.
But nonetheless, the reality is everybody's engine, everybody's vehicle and everybody's home requirements are different OEM by OEM. And so we've got some year. Years of work to do in the development and validation before the production hits. So we had the European launch customer last year, we have the Chinese launch customer this year and we're looking to be other ones to follow-up in subsequent years.
Got it. And then I know you just mentioned that we're talking about the CO2 standards And voted on, approved. I know it still needs to be officially signed into law and that might be Late May, mid June. I mean is that kind of the thing where you think that sets off that urgency? Or maybe you're seeing activity behind the scenes that obviously is not seen in the public, and that activity is already starting to ramp.
Yes. As a supplier to the OEMs, we do see the activity in advance of when it's seen in the marketplace. And so we see it already. And that's I don't think anybody is waiting for anything further with respect to innovation. What actually happens, I would tell you is that inside the major OEM, they need to make the decisions.
And they're big companies and they have their processes and procedures. And frankly, they do have alternatives. Other things they consider doing to respond to this regulation. But I think when they finish the analysis and we see this with our internal deliberations and support of our customers, When they finish those analyses, they come back to the conclusion that this is the best way forward to respond to the regulation. And so we're quite busy with those discussions right now.
Got it. Maybe last one for me and then I'll turn it over. You mentioned that in the OEM business that the majority of the year over year increase With HPDI, I'm curious if you're able or willing to just disclose kind of that mix between the two, between your traditional OEM light duty business and HPDI?
I don't have those figures handy at this moment in time. I I think Jim said it well in his comments that basically we see strength in every element of our business from our aftermarket business to our light duty OEM business business in India, basically everything around the world, including HPEI, as you mentioned specifically. But in terms of our breakout, I don't think we have those numbers at this juncture, but We'll take it under consideration and perhaps we'll have benefit next round. Okay, got it. Thank you.
The next question comes from Colin Rusch with Oppenheimer. Please go ahead.
Good afternoon. This is Kristen on for Colin. Thank you for taking our questions.
Hi, Kristen.
Just wanted to dig in a little bit on the light duty opportunity. You talked about some of the demand drivers going out to meet some of those long dated targets. I was really hoping to get some color on what you're seeing in terms of the demand expectations over the next 12 to 18 months, call it, in the EU?
What we see is that basically, to respond to the CO2 requirements and really customer pull. If you think about the light duty segment, we're already supporting the customers directly through our aftermarket solutions. So these are customers that already own the vehicle and decide they want to save some money and change their vehicle from running strictly on petrol to running with LPG or CNG. And so they add our technologies, they can take advantage of the cost effectiveness of those gaseous fuels. And so what we're seeing is basically OEMs saying, I can do that for the customers and deliver it as an OEM solution.
But their process to go from making those kinds of decisions to bring into production does take 12, 18, 24 months depending on the OEM, exactly what we need to do and their capabilities and our capabilities to support them. So, but as a general premise, the cost effectiveness is there. As oil prices go up, The cost effectiveness gets even better and the demand gets stronger.
Okay. That's very helpful. And then just wanted to switch gears a little bit here. Rating cost structure?
I would tell you that, as mentioned, we're looking forward That someday we're not paying costs for SEC lawyers and so forth. So that's an opportunity that we're keenly focused on, but unfortunately don't have a lot of control over. So, but it is on our list of things that we look forward to. Beyond that, we do see some opportunities for efficiency In terms of our operations, but I would tell you that's more around getting higher top line and a better absorption of our SG and A than anything else.
Great. Thank you very much. We'll take the rest offline.
Thank you.
The next question comes from Amit Dayal with H. C. Wainwright and Co.
Thank you. Good afternoon, David, Jim. In regards to HPDI, you're not breaking down specific dollar contribution levels over here, but can you talk about percentage growth maybe that HPDI-two has seen year over year or even sequentially?
Yes, the growth curve is rather significant. I'll let Jim provide any figures if we're able to. And we recognize, let me be real clear at start, we recognize your desire and your colleagues' desire to have more transparency in the business and breaking out some of those things. And so We're working on how and when we'll be able to do that. Certainly adding second and third and fourth customers will really help us to provide that kind of data in the future without divulging customer specific information.
So I apologize that we can't be more specific, and we look forward to doing that in the future.
No problem. Is all of this growth that you saw in And HPDI all is in Europe, right? I mean, Weichai hasn't hit yet for HPDI 2?
That's correct. The launch of Weichai, It could include some of the early preproduction units that we've shipped them, but that would be a relatively modest amount. So I would say the majority of the growth is due to our European launch customer in the European market.
Got it. And Just one final one from me.
And if I could, I mean, this is along the lines of what we expected and what we're planning for us. So it's very encouraging to see that the market take the product and our European customers continue to order more of it. So We're really excited about the results and of course eager to add second and third customers and we'll add the Weichai volumes later this year.
So then in that context, do you expect this level of momentum to continue for HPDI-two in Europe
or was this sort of
Onetime type situation?
No, I think it's more of the former. So, we expect that we're on a launch curve. And so it will continue to grow and we're not expecting linear growth either. We're expecting solid growth as guidance. The marketplace recognizes that this is not only a very robust and good solution, but it's one they can buy right now.
So So as we discussed in prior calls, fleets will go out and buy a handful or 10 or 2 and then the next order will be a bigger number as they recognize that the product actually delivers all that's promised, including the CO2 reductions and the cost savings. So I do expect and then there's a market this happened last passenger vehicle market. You see your neighbor with that product and then you want it too. And so as the fleets compete with one another, We expect that this is something that will really grow and be very exciting for us.
So why a little conservative on the guidance, I guess, given the momentum you're seeing, strong year over year growth, good margins. On the top line, you are being a little conservative, it feels. Is there a possibility you might raise guidance or update your guidance later in the year?
Well, as Jim mentioned and as you recognize, we indicated that we'll maintain our guidance at this juncture. Certainly, as the market develops, We reserve the right to revise guidance in the future, but that would be some future event that we'll talk about in that future. So I apologize for that, but At this juncture, there's a big tail on our plan, our business plan for the year, which is the launch of Weichai. And I think I may have mentioned it before, but launches almost never get pulled ahead and have a fairly good chance of being delayed. We're working very hard to avoid that delay.
But then, of course, when this once the launch happens, there's also what is the rate of the launch and what rate is achieved. Guidance. And sometimes that can be slower than is hoped for. So that's really, I would say, a major consideration. Of course, the other consideration you see it already in these results, it's kind of buried in there, is the foreign currency exposure and how that continues to move.
So that's also a risk to the business plan. And with those two risks in mind, we thought it was a better path to maintain guidance at this juncture.
That's fair. Understandable. Just one last one for me, David. Can you talk about the fueling infrastructure that is coming up to potentially support the uptake of these types of vehicles in your key markets?
Yes, we've seen announcements and we continue to see installations. I don't have specific numbers for you, but we'd be glad to follow-up with you on that and talk about kind of what market intel we We have country by country throughout Europe primarily, but also we see the growth in India and China putting infrastructure in place. But I don't have those statistics all handy, But I'd be glad to separately go through that with you and share what we know.
That's all I have guys. Thank you so much.
Thank you.
Thanks a lot.
The next question comes from Christopher Souther with Cowen and Company. Please go ahead.
Hey, thanks for taking my question and congrats on the great quarter here. Taking the Q1 forward, essentially, the rest of the year was flat. You're already at the high end. So to kind of piggyback on the question before on guidance, what are some of the puts and takes Looking at obviously there's the big factor of the Weichai launch, which is not in your control. But can you maybe discuss some of the other markets, Maybe some of the legacy things, kind of the puts and takes that might lead to the low end to the high end or above the current guidance?
Yes, just I'll add. We talked so thanks for your question. We added you just talked about the fact that we're not sure exactly can't Confirm and know what's going to happen, what the launch curve looks like with Weichai, both timing and the volume of that curve. We don't know so can't predict with certainty foreign exchange. But adding just another fact that I have to give you some more flavor about the business.
Some of our markets respond strongly because of government actions, incentives and other programs that are in place that really help our customers to realize the financial gains associated with our technology. And sometimes these get stopped. And so there's other uncertainties in the marketplace that really aren't within our control. Frankly, our products are very competitive and they do offer our customers and our whether those be consumer customers or OEM customers and A strong lever for responding to the forces of the marketplace, but sometimes those forces do change. And so we thought at this time maintaining guidance was the best path forward.
Okay. No, that certainly makes sense. And then just wanted to make sure there's nothing kind of to flag beyond typical seasonality for the Q3 in Europe with Aftermarket type business, anything else cadence wise we should be looking at?
My inclination is to no. Jim, do you have a further comment?
Nothing other than what you've mentioned, David. I think the Weichai launch is the biggest thing in the second half.
Understood. And then to kind of shift gears, I wanted to see if there's any update on the hydrogen side. It seems to be a bit of momentum in that space from some OEMs. And you guys have discussed in the past interest in the space as well, given there's kind of some transferable technology from the natural gas side. Could you guys maybe discuss that market a little bit and any updates there?
Yes, absolutely. I'm glad you raised it. It is a part of our business and one that we're very excited about. Frankly, the hydrogen Fueling a fuel cell with hydrogen requires tanks and valves and regulators just like fueling with natural gas And the other fuels that we deal with. So this is an area of our expertise.
We have specific products that support the growing hydrogen marketplace. Most of the business that we're supporting is relatively low volume and preproduction units in development. But nonetheless, Our customers are giving us strong indications that, 1, we're a competent and capable supplier with products that they need to support their hydrogen fuel cell products and 2 that we compete in the marketplace and they see a future of this technology and we're glad to support it.
Thanks. And then just the last one. I wanted to make sure that are there any time periods or exclusivity with the European OEM Or with Weichai that we should kind of be aware of as far as launching with new partners. I know there's going to be obviously testing and that kind of stuff, but want to See if there's any time period before you'd be able to start any of that kind of activity.
No, I don't think we have any issues in that regard that would slow our growth curve in any way that we need to delve into.
Results. This concludes the question and answer session. I would like to turn the conference back over to David Johnson for any closing remarks.
Thank you very much. I really appreciate the chance to bring these results to you today. I'm thrilled to have such great progress. I mentioned in the first earnings call that I joined you for back in March that we're on a continuation path, the strategy that was outlook in place over the past few years. And I'm very encouraged by the results bearing out that strategy and really the market forces that are supporting our growth and our response to helping clean up transportation on a global basis.
We have a lot of work ahead of us. We have huge growth opportunities. On a global basis, our share is still small. And so really, we see that the time is right for our technology. And we're pleased that We can bring that technology to the market at this time, as we've called it market ready.
There isn't a long development time lines to develop new technologies and research. We're simply talking about one application after another and we can grow the market and respond to the need for cleaner air and saving money. So with that, thanks very much for your time. We look forward to seeing you all and talking to you again in the future.