Afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the Tsakos Energy Navigation Conference Call on the Q3 2017 Financial Results. We have with us Mr. Takisap Aderpoglou, Chairman of the Board Mr. Nicholas Tsakos, President and CEO Mr.
Paul Durham, Chief Financial Officer and Mr. George Sadoglou, Chief Operating Officer of the company. At this time, all participants are in a listen only mode and there will be a presentation followed by a question and answer session. I must advise you that this conference is being recorded today. And I now pass the floor to Mr.
Nicholas Bounoussis, President of Capital Link, Investor Relations Advisor of Tsakos Energy Navigation. Please go ahead, sir.
Thank you very much, and good morning to all of our participants. This is Nicolas Bornois of Capital Link, Investor Relations Advisor to Tsakos Energy Navigation. This morning, the company publicly released its financial results for the Q3 9 months of 2017. In case we do not have a copy of today's earnings release, please call us at 212 6617,566 or e mail us at 10 capitallink.com, and we will e mail a copy to you either way. Please note that parallel to today's conference call, there is also a live audio and slide webcast, which can be accessed on the company's website on the front page at www.tenn.gr.
The conference call will follow the presentation slides, so please, we urge you to access our presentation on the webcast. Please note that the slides of the webcast will be available as an archive on the company's website after the conference call. Also, please note that the slides of the webcast presentation are user controlled, and this means that by clicking on the proper button, you can move to the next or to the previous slide on your own. At this time, I would like to read the Safe Harbor statement. This conference call and slide presentation of the webcast contain certain forward looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward looking statements involve risks and uncertainties, which may affect TEN's business prospects and results of operations. Such risks are fully disclosed in TEN's filings with the Securities and Exchange Commission. Ladies and gentlemen, at this point, I would like to turn the call over to Mr. Arapoglou, the Chairman of the Board of Tsakos Energy Navigation. Mr.
Arapoglou, please go ahead, sir.
Thank you, Nicholas. Good morning, everyone. Thank you for joining us on this call today. We're presenting today our 9 month 3rd quarter 2017 results, which show that despite a continued weak market, TEN remains profitable and more than capable of covering its expenses, its financial obligations and maintaining its steady dividend payment track record. We have now successfully completed our largest ever newbuilding program.
And in line with strategy, we have more than twothree of our fleet locked into long term accretive time charters with a substantial proportion of profit sharing arrangements. This secures over €1,300,000,000 of revenues for the next 3 years, providing a cover for all our obligations and enables us to capture any upside potential. We continue to maintain well over €200,000,000 in cash, and we use the opportunity of a weak market to accelerate special surveys for 3 of our vessels. So as it will be explained later, our results include approximately $3,500,000 of special survey costs that normally we would have incurred at a later stage and would have been spread over a longer period. Lastly, management must again be congratulated for the successful efforts of further reducing fleet operating costs to best in class levels.
Once again, congratulations to management and the team for perfectly executing our strategy, providing stability and positioning TEN to fully reap the benefits of the next market recovery, which we expect to start shortly. So that's it for me for now. And I pass on the floor to Mr. Nikos Tsakos. Thank you very much.
Thank you, Chairman, and we are thank you for listening in, in our call. As the Chairman said, it has been the Q3 has been a difficult quarter. I would say after that quarter has been behind us, we would say the worst is over for now at least. And we're looking at the 4th quarter, a significant recovery as parts of the industry and as of course as a company. As Mr.
Arapoglou said, we took advantage of the very weak market over the Q3 to bring forward 3 of our surveys. We used that period to complete the largest expansion in 10 to 25 or 24 year history, very soon 25 year history. And we will be starting 2018 with a 30% increase in revenues just by the minimum results of the new ships that are coming into the fleet. In the same time, we pay a lot of attention in details. We try to keep operating expenses as low as possible, and I think we have been successful to do that too.
And we are proud that our G and A expenses must
be one
of the lowest in our peer group. We're just starting $1,000 or a little bit above. For everything that has to do with running then. We're looking optimistically at the future. We're looking discussion with our clients a lot of accretive transactions.
We have the opportunity to continuously charter out a bigger majority of our fleet. So we expect the remaining of 2017 and 2018 to be a much better year or much better quarters than the Q3. We're proud that we will have another profitable year in our very long history and maintain our dividend. And hopefully, going forward, we will have chances to even increase it as time goes. So with that, I will ask George to describe what has happened in the last 9 months and the quarter, and we will be available for questions after Port Darrin, our CFO, has given us the figures.
Thank you, Nikos. The company reported today the results for the Q3 9 months of 2017. The results for the Q3 were impacted by the seasonally soft summer months, 3 dry dockings that the company brought forward in order to take advantage of a stronger market we anticipate going forward and the completion of the company's new building program. For the 9 months results, we recorded profitability, which we also expect for the full year 2017. Since the start of last year, TEN embarked in the biggest fleet expansion program of its history with 15 newbuilding vessels.
The last of these newbuildings was delivered to the company at the end of October. All 15 older vessels had medium to long term employment attached to 1st class charters ranging from minimum 2 to maximum 12 years, which will result to a 30% increase in revenues assuming only their minimum rates for 2018. The opening slides of this presentation shows the various growth phases in the company's history since inception. If we turn to Slide number 4, we see the key corporate highlights. We have currently an operating fleet of 65 vessels, where 25 vessels have ice class capabilities.
After completion of our new building program, TEN is well positioned to take advantage of a stronger freight market, which is ahead of us. The average age of the fleet is 7.6 years versus the average of 10.2 for the work tanker fleet. We have a balanced employment strategy that takes advantage of market peaks with profit sharing arrangements. In our press release today, we announced 2 more time charters for 2 vessels that were previously operating in the spot market. One charter is a fixed rate charter, the other has profit sharing arrangements.
Currently, 51 vessels out of the 65 vessel operating fleet have secured employment with an average tenure of 2.5 years. The average the emphasis is on charters with profit sharing arrangements that enable the company to take advantage of spikes and stronger freight markets. Minimum contracted secured revenue of $1,300,000,000 with potential additional revenues from profit sharing arrangements. We have built a modern diversified fleet covering client transportation requirements in crude products, shuttles and LNG and we have become the carrier of choice for many of the top oil majors, commodity traders and refiners. We have a high utilization with the 9 month figure being at 96.4%, which is almost like having full utilization.
The next slide has the main financial highlights of our press release, which Paul will present in more detail. I just want to highlight the profitability for the 9 months, the company's strong financial position and continuous cost controls that reduce daily operating expenses with the help of the company's technical manager. Slide 6 has basically the breakdown of the current 65 vessel fleet. 47 vessels are engaged in crew trading, 13 in products. We have 3 shuttle tankers and 2 LNG vessels.
Next slide has the clients of the company with all blue chip names with whom the company is doing repeat business over the years, thanks to the modern fleet, the quality of service and safety record of the enterprise fleet. On the next one, we list the strong secure coverage. We have 51 vessels out of the 65 vessel fleets fixed under secured revenue contracts, which is a combination of time charters, time charter with profit sharing and contracts of affatements. 34 vessels are on market related charters including spot, which secures this way that company's ability to immediately capture the market's upside. The revenues expected from the vessels in the fleet with secured employment covers the company's annual financial obligations.
Slide 9 shows the 15 newbuilding vessels that we took delivery since 20 16. All vessels are currently tied on medium to long term time charters. These vessels have now been fully integrated in the fleet and we expect them to contribute at least 30% increase in revenue from 2018 considering just the minimum base rate that some of these vessels have. On the left side of this slide, we see the breakeven cost for the various vessel types that we operate in the company. As you can see, the cost base is low.
And in addition to the low shipbuilding cost, we must highlight the purchasing power of our technical manager, Tsakos Columbia Ship Management and the stringent cost control by management in order to maintain a low OpEx average for the fleet, while keeping a very high fleet utilization rate quarter after quarter. 78% of the fleet operating days are tied to secured revenue contracts that cover the company's annual obligation. In addition, the combination of time charters with profit sharing COH and spot charters guarantees the company's share of the market's upside every time we have a spike or a sustained strong freight market. This is what we see in the markets. Global oil demand continues to grow above historical growth levels.
In the last 25 years, oil demand growth has averaged around 1,100,000 barrels per day. The latest forecast for oil demand growth in 2017 is 1,500,000 barrels per day. International Energy Agency is continuing to revise upward their oil demand figures, not just for this year, but also for the year to come. Also improved economic conditions in OECD countries and the low oil price environment continue to support strong demand in the United States and Europe and China where we see both consumer demand and stockpiling for strategic reserves and obviously India. On the supply side, the tanker order book is coming down.
The bulk of the orders placed in past years have been delivered. And despite the short term headwinds, which we have experienced in the second half of this year, longer term supply is manageable. We should note that a big part of the existing tanker fleet is over 15 years. The implementation of new environmental regulations with high compliance costs and shelter discrimination against older tonnage could lead to an increase in scrapping. We have already witnessed increased scrapping in the larger vessel categories.
The dividend on Slide 13, we view of wallet we have announced today another dividend of $0.05 per share to be paid on December 29 to the shareholders of record on December 21, 2017. In total, since 2002, TEN has paid $10.61 in cash dividends or $457,000,000 and this compares with a listing price in our IPO of $7.50 The average yield since the New York Stock Exchange listing in 2,002 is 5.25 percent per annum. That concludes the operational part of our presentation. Paul will walk you through the financial highlights for the quarter 9 months. Paul?
Thank you, George. It was expected that the quarter 3 market will be poorer than in quarter 2 for seasonal reasons, but other factors included fleet over capacity, refinery outages, high inventories and OPEC cuts. While for the 9 months operating income was $60,000,000 and net income nearly $18,000,000 For the quarter, TEN incurred a loss of $3,400,000 due to the poor spot market and as mentioned impact of brought forward dry dockings. With 9 new vessels delivered since quarter 3, 2016, contributing to the $15,000,000 increase in net revenue and with 70% of our operating days on time charter, CEN remains in a good protected position. During quarter 3, 15 vessels were operating on spot voyages, some in trading areas which were especially hit by core market conditions.
Nevertheless, the average daily net revenue was $17,430 similar to the prior quarter 3. For the 9 months, the average daily net revenue was $19,140 The 43 vessels on time charter were able to generate enough revenue to cover virtually all the voyage operating overhead and finance costs of the whole fleet including spot vessels. Total operating expenses increased due to fleet additions, especially as such vessels build up stores and supplies in their initial period, which are not treated as inventory but expensed. However, the daily average OpEx per vessel in quarter 3 fell by 2% and for the 9 month period by nearly 3% due to savings on repairs and maintenance and sundry expenses. Daily overhead costs per vessel, which include management fees and G and A fell to the low level of $10.85 Although finance costs at $15,400,000 were noticeably higher than in the previous quarter 3, This was mainly due to the financing of the new vessels and partly to increases in dollar interest rates.
However, this was down from quarter 2 and as outstanding debt declined with scheduled repayments, we would expect finance costs to fall commensurately in future periods. In quarter 3, there was $23,000,000 of new debt on delivery of a new Aframax and scheduled repayments of $47,000,000 Refinancing of 4 vessels at competitive terms resulted in a net drawdown of $8,000,000,000 Net debt to capital was a comfortable 51.5 percent at September 30. With the delivery of the last vessel in October, there's another drawdown of $23,000,000 in quarter 4 and expected quarter 4 repayments will total $48,000,000 And this concludes my comments. And now I'll hand the call back to Mikkel.
Thank you, Paul, and looking forward for a much better report in March. And thank you very much. And with this, we would like to open the floor for any questions.
Hello.
Hello, sir. I'll just advise everyone to ask a question. And your first question from Stifel comes from the line of Ben Nolan.
Great. Can you guys hear me?
Yes, yes.
Okay, good. So I have a couple of capital questions. Obviously, I think you guys well are now finished with your CapEx program and that gives you a lot of options as to how to think about deploying capital going forward. You've made it pretty clear that any expansion is going to be project oriented, which I think makes sense. But away from that, first of all, I was curious if you guys or if you might be able to call to update me on how much your debt repayment obligations are for 2018 2019?
And associated with that, how do you think about paying additional debt? Are you generating free cash flow? Is that how do you value that relative to sort of projects?
Yes. Well, that's Paul will give you the nitty gritty. But for us, as I said, we always are conservative in debt. I think it's going to be although conservative, it's going to be dropping significantly down from here. We have already refinanced a lot of the obligations that we had for 2018 2019.
And I think a priority for us, of course, is the dividend. Dividend is important for us. And if there is if there are funds left over, then debt repayment is another alternative. But here is Paul on the more details.
Yes. For 2018, we're looking at total scheduled repayments of around $180,000,000 And in the year after that, about $150,000,000 And that's based on current existing debt, not taking to the potential refinancing or whatever.
Okay. So actually, it could be a little lower than that, I guess?
Yes. Yes.
Okay. And then secondly for me, and this will do it, but something that I don't know that I've ever heard you address, but a few of the preferreds that you've done in past years become callable next year. They're not too terribly big. But as you do begin to have free cash flow, certainly depending on what this market allows, Is that something that you would consider doing as well perhaps calling back some of those preferreds to reduce the cash flow component of those?
We've taken into consideration refinancing or redemption of those preferred stocks over the next few years. And we feel that we can comfortably
redeem them.
In any account at the moment, we are on a relatively small scale buying back where possible. We have been doing that, and we can always revert that to buying back and gradually lowering the amount of total number as we redeemed.
Okay. Now that's helpful.
We feel fairly comfortable given our full year forecast that we can manage to redeem them quite successfully.
Okay. No, that's I was unaware that I appreciate the color there, Paul. That does it for me. I'll turn it over. Thanks.
Thank you.
Thank you very much, sir. Now your next question from Morgan Stanley comes from the line of Fotis Giannakoulis. And your line is now open, sir.
Yes. Hi and thank you. Nick and Paul, you mentioned the focus on maintaining the dividend. Can you remind us, are there any potential covenants or that they can put any pressure on this dividend or shall we consider that this dividend is fixed and the current level is the absolute floor?
Well, as far as covenants, we do not have any restrictions. I said that we expect that the Q3 looks to have been the worst being behind us with a poor Q3 for the whole industry. And our intention, as you know, we are very large shareholders, the management is very large shareholders close to 40% together with the Board. So dividend is very important for us. And as long as we can logically increase it, we will logically increase it.
And I will leave it to that.
Okay. Thank you. And Nick, can you give us your outlook for the tanker market next year? I remember last time that we discussed you were probably the most optimistic from for 2018 compared to your peers. And how has your outlook changed, if it has changed at all compared to the previous quarter?
As you know, we live in a country with a lot of sun that makes us optimistic. Most of our peers are up north. So that's basically the reason. But joking apart, I don't think I am optimistic for our company because we took a lot of effort. We brought the company in its largest growth program.
We built in 18 months 15 state of the art vessels from shuttle tankers to LNGs, all of them successfully, all of them, believe it or not, with almost no delays, all of them chartered very so very optimistic for what we have in the book, which is, I think, as Paul mentioned, dollars 1,300,000,000 of income going fixed going forward at the minimum level. So I think and as long as this part of the business according to our strategy is good enough to pay for all our obligations for the whole fleet, including the spot vessels. If the market moves the way we believe it's going to move, and I have a feeling that '18 and 'nineteen, for reasons that I think you are all aware, I mean, you are much more analytical than I am. But we are looking, I believe today in the tanker market, we are where we were exactly a year ago in the dry cargo market. And I know who that Morgan Stein, all of you analyzed dry companies and we were looking at CAES at $6,000 The Q3 of 2016 was the weakest for the dry cargo.
And then the market gradually is what it is today at $25,000 on the Capes and has a gradual uptick. I believe we're going to be facing the similar situation for tankers. I mean, we're looking at small rays of hope or just listen that the Chinese are opening up their teapot refineries to import almost a 50% increase on the quotas. That's equivalent of a 37% increase in Chinese crude imports from year to year. That's huge.
I mean for us, we with tankers, China is a very big importer. We have technological regions that are delaying or taking out a lot of the oil components. So in general, regardless of the sun or not, we are optimistic and we have positioned the company to take advantage. I think that quarter the last quarter was a quarter which we actually used it in order to finish some of our special surveys.
Thank you, Nick. Sorry, one last question about given your outlook and your the cash that you have in the balance sheet, I was wondering which asset class looks more attractive for potential investment. I remember that you have mentioned in the past many times that vessels with long term charters is going to be your plan for expansion. Are these kind of deals available? And if you can also comment about the potential expansion in either LNG in the LNG market that has seen a significant improvement in 4th quarter or even in the shuttle tanker market that we saw some of your peers ordering additional new buildings?
So as I said, we are quite diversified. So we're not if you look at our fleet, it has to make sense with the customer, the duration of the contract and, of course, the returns. And we are seeing right now in all the spectrum, and it's not very usual in shipping, but we are seeing long term businesses. And when I say long, it's 5 years and over in all categories. So we are looking in strategic relationships from VLCCs to as you correct, you said LNGs where our 2 vessels are doing our 2 vessels are doing better and better every quarter with renewing them at higher levels.
So I think there is a lot of appetite.
Thank you very much, Nick.
Thank you.
Thank you very much, sir. And just before we move on to the last question, And now from Maxim, you have a question from the line of James Yang.
Yang.
Can you just go over how the Handysizes performed during the quarter?
Yes, Paul? Yes, the Handysize.
Yes.
If you look at our Handysize fleet, I think a big part of it is on time charter. But I think I would say we have 6 vessels that are on the spot market. And most of them trade the Mediterranean area where we have how did the average for?
The average time charter equivalent during the quarter during the 9 months was about $11,000 to $12,000 a day. In the quarter, it was a little less than that. So yes For
the vessels of the spot?
Yes, the spot vessels.
Of course, the vessels, if you include the non spot vessels, it will be a higher level, but the promotions on the spot was about this for the second quarter, but they have significantly improved in the Q4.
Okay. So I'll look at because yes, I know the Handysize, I mean, the Global Fleet Day was really difficult in terms of the spot earnings, right?
Yes.
So I was just wondering if like you said, so for the Q4, we should look at a nice increase? Or is it a steady increase?
We're seeing the 11% to 12% going up to around the 13% to 14%. Today, it's 15%, but on average, I would say, let's say, around 14%. So it will be a good increase, yes.
Okay. And so the next question is about, I guess, OpEx is going to it seems like they're going to extend the production cuts. A lot of players are okay with $60 to $65 oil. And you guys have mentioned previously that you guys are working with a U. S.
Oil major on projects. Are there any opportunities near term to fix some of the spot, the Olm 6 Aframaxes on some of these projects out of the U. S? Or I mean, like what's the plan short and medium term for these?
Well, we are seeing higher and higher increase of exports from the U. S. I think we have seen a 200% increase in exports from year to year. Now we're at about 1,300,000 barrels a day of exports, which is unprecedented in the past. And of course, then we have a decrease in imports by 3%.
So the Caribbean market, I think you're very correct to say that right now, the Caribbean market because of the U. S. Exports is the start of the Aframax market and we're enjoying this. We have a big concentration of our Princess vessels in the Caribbean, and I think they are close to the 20,000 levels today.
Okay. So any plans to, I guess, fix these out on longer term charters? Or are you happy operating them on the spot market for now?
As you know, we have a big concentration of ships on Aframaxes, on long term charter. And we are enjoying the spot market with those ships because we do not want to disappear from the spot market, because otherwise you lose the clients. So I think at this stage we're satisfied by keeping the mix the way it is.
Okay, great. And so another thing is just on
the macro side, how do you see
the crude trading market shaping up for 2018? If OPEC does, let's say minimum they extend the customer 6 months, right? Do you see more exports, long haul exports developing to China and India? Or do you think that pricing is still going to win out and ton miles won't expand as much?
We have seen that's a good point because we're starting we have seen a very big increase on long haul cargoes, basically the Aframax and the Suezmax in the last year. And we're studying this because we have seen that a trade which was not very usual, the Black Sea, the Black Sea Russian crude going to China and India on Suezmaxes and Aframaxes. In 2016, I think we were able to report 12 export cargoes. So far this year, we're about 80. So that has increased significantly the ton miles.
So I think we're expecting to see more and more of that rate.
Okay, great. Thank you for that. And my last question is just on fleet renewal. DHT and Euronet, they've been selling off some of their older tonnage. And I know that you guys have mentioned that you guys were looking at possibly selling some of the older tons that you have.
What's the plan right now? Are you still happy operating the older vessels, especially like the Millennium? Or will you
Yes, that's a very good point. I think we are at the stage, I think, hopefully within this side of the year, we'll be announcing the sale of some of the older vessels that we have on the fleet. The Millennium has been a vessel that we we build it from scratch. She operated it very successfully for us for almost 18 years now. She's on a storage business in Singapore, making $17,000 a day with very minimum.
And here, actual special survey due is next autumn. So we will be milking the ship We will be milking her up to her special survey, which will be next autumn. Of course, if there is an offer which is significantly above scrap, we will consider selling it. But it's been a very good but that will be the last that will be the last bag, I suppose,
for Kielo to say. I see. Okay. So I had a like special survey. We can assume that will be taken care of?
Yes. We will not pass a special survey.
Okay. And so if that does happen, I mean asset prices are still okay. I mean, they still look pretty good from the BL side. Would you look to acquire more tonnage? Not with a project in mind, but just speculatively?
Or are you guys going to still stick to the strategy of project linked asset acquisitions?
We are right now digesting
a very big bite.
As we said, we increased the feed by 30%. We will stick to project transactions right now.
Okay. All right. Thanks for the call guys.
Thank you.
Thank you very much indeed. Now from JPMorgan, we have a question from the line of Noah Poquette.
I just wanted to give
you guys thoughts, have you had any discussions yet with your counterparties, the longer term charters on how you're going to meet the 2020 emission regulations
and how you guys are thinking about that? I was worried nobody will ask the 2020 question, which is the yes, thanks for bringing this up. And I think this is something that I think very few of owners, but much, much fewer of the shareholders have understood that we are going into a head on collision that will have very, very positive effects for rates as soon as the middle of 2019 2020. And I think for those who are not familiar, wind shipping were very tight because we have to deal with it every day, is that we have to reduce our emissions from 3.5% on New Year's Day in 2020 down to 0.5%. So this is a herculean task being Greek, as you say, but there are solutions.
So the oil companies are pushing owners to put scrubbers on the ships. Owners have not reacted positively at all. They were hoping that by today 40% of the world fleet would have scrubbers, less than 3% has scrubbers today and we're talking about a couple of years that this has to happen. And we as Entertainco, which I happen to turn our position is that the ships are not going to become refineries because it's not good for the environment and it's not good for the human factor. Refiners have to be on land.
So we believe that there will be enough of fuel at the time. And if there is not, we can cover our obligation by slow steaming. And I think this is the key because as you know, by slow steaming, there will be much more demand utilization will grow and there will be much more demand and we hope this will help the rates. But so we have calculated by reducing our speed at by 25%, we can meet our obligation of burning 0.5% of an issue. So I'm not a very technical person, but that's where we're going and we expect this situation to create a lot of positive for the market.
Okay. Thank you. That's all I have.
Thank you very much. And now from Credit Suisse, your next question comes from the line of Gregory Lewis. And your line is now open, sir.
Yes. Hi. Thank you and good afternoon. I wanted to dive a little bit into the winter season, right? Clearly, as we look at rates, it's not really showing up in your in Aframax rates, which I know you guys have a lot trading in spot.
But I imagine you have a good understanding of how long your voyage times are taking. And really what I'm wondering is between less daylight hours, between maybe some starting of inclement weather. Has there started to be any delays building on any of your trades that you're involved in? Or is that at this point, it's business as usual?
Well, I think the large delays we had had to do, of course, with the disruption we had because of the hurricanes in the Gulf 3 months ago, 2 months ago. I think right now, we're almost up to refining capacity where it was at that period. And as the winter comes in, we're seeing the, I think, the Black Sea getting heavy on vessels and which will affect positively the rates in the Mediterranean, which have been very poor. So already in the Black Sea, we see 4 to 6 day delays, which means that the ship is on a demarriage. Usually, the demarriage with the spot market is at 12 for an Aframax, the demarriages are about double that.
So that helps us with the earning for the Q4.
Okay, perfect. I thank you for the time guys.
Thank you.
Thank you very much indeed, sir. And as there are no further questions, I'll now pass the call back to you for closing remarks.
Well, thank you very much for your questions. As we said, we're looking forward for an exciting 2018. Ten will be 25 years old at the time, the most seasoned publicly traded tanger company. And I hope we will have much better news to report in our next quarter. Our team is going to be visiting New York for the Capital Link events in a couple of weeks, and we'll be very happy to see you and explain more about the company and to wish you all the best for the holidays.
Thank you very much.
Thank you very much indeed. And with many thanks to our speakers today, that does conclude our conference. Thank you all for participating. You may now disconnect.