Eagle Bulk Shipping Inc.

Good day, and thank you for standing by. Welcome to the Eagle Bulk Shipping Report's first quarter 2023 results. All participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will hear a message advising your hand is raised. To withdraw the question, simply press star 11 again. And be advised that today's conference is being recorded. I would now like to hand the conference over to Gary Pogo. The floor is yours.

Thank you, and good morning. I would like to welcome everyone to Eagle Vault's first quarter 2023 earnings call. To supplement our remarks today, I would encourage participants to access a slide presentation that is available on our website at eagleships.com. Please note, that part of our discussion today will include forward-looking statements. These statements are not guarantees of future performance and are inherently subject to risk and uncertainties. You should not place undue reliance on these forward-looking statements. Please refer to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties that may have a direct bearing on our operating results, our performance, and our financial condition. Our discussion today also includes certain non-GAAP financial measures, including TCE, TCE revenues, adjusted net income, EBITDA, and adjusted EBITDA. Please refer to the appendix in the presentation and our earnings release filed with the Securities and Exchange Commission for more information concerning non-GAAP financial measures and a reconciliation to the most comparable GAAP financial measures. Before I turn to our earnings presentation, I would like to take this opportunity to address an incident that occurred on board one of our vessels earlier this week. On Tuesday morning, three of our seafarers were kidnapped from the Grebe Boker while she was anchored at Owendo Gabon. While this is an ongoing situation and I'm limited in what I can say, I would like to convey that Eagle's committed to ensuring the safe and proper turn of the kidnapped men and the safety of their colleagues on board this ship as a matter of utmost urgency. Our highest priority is the safety and well-being of our seafarers and their families. We greatly appreciate the support of the authorities and our maritime industry colleagues as we work to bring these men safely home. Given the sensitive nature of the situation, we will be unable to provide further comment. Please turn to slide six. Against the backdrop of the seasonally weak market in Q1, and in line with previous information provided on TCE for the quarter, we generated a net income of $3.2 million, or 25 cents per share, basic. Based on this result, and consistent with our stated capital allocation strategy, EGLE's Board of Directors declared a cash dividend of 10 cents per share, equating to 40% of net income. On the vessel sale and purchase front, we've continued to act opportunistically. Following our recent acquisition of four modern high-specification Ultramaxes during a market pullback, we have taken advantage of a recent increase in both S&P liquidity and ship values and sold three non-core, non-scrubber-fitted Supermax vessels for total consideration of $49.8 million. These ships were the only non-scrubber fitted super maxes in our fleet and were purchased opportunistically just two years ago for total consideration of $28.2 million. Based on our calculations, we generated a levered IRR of 70% on this S&P trade, inclusive of cash generated during the period. Please turn to slide seven. For Q1, we achieved a net TCE of $12,917, representing an outperformance versus the benchmark BSI index of roughly 31%, or $3,041 per shift per day. Given the seasonal low we experienced during the quarter and our general view of markets for the balance of the year, we believe Q1 will represent a low in 2023 for both the BSI and our TCE. As we look to the second quarter, spot rates have improved considerably. We will discuss market fundamentals later on in the call, but as of today, we have fixed approximately 65% of our owned available days for Q2 at a net TCE of $16,030. I would now like to turn the call over to Costa Tsudoplidis, who took over the role of CFO on April 1st. For those of you who may not be aware, Costa has been with EGLE since 2010, and most recently served as our Chief Strategy Officer. Costa?

Thank you, Gary, and good morning, everyone. Before I begin with my prepared remarks, I would like to take this opportunity to thank my predecessor, Frank DiCostanzo, for his guidance and support over the past few months, as well as my colleagues within the finance group who have helped make my transition to the CFOC a seamless one. With that, let's proceed with a discussion of our financial results. Please turn to slide nine. For this quarter, we have revamped and simplified the presentation of our finance slides to provide readers with additional insight and perspective on our financial results for the period, as well as increased visibility on the quarter ahead. On slide nine, we're showcasing our P&L reformatted slightly from the GAAP presentation. Reflective of the seasonally week Q1, market our net top line performance or tce revenue came in at 59.2 million dollars for the period and based on 4581 actual owned available days we achieved the tce of 12 917 representing a significant outperformance against our benchmark index as gary indicated earlier Special operating expenses decreased roughly 12% quarter-on-quarter to total $31.3 million, or $6,497 per vessel per day, in line with our previous guidance. OpEx for the period included one-time takeover costs related to the Gibraltar Eagle, which was delivered to the company in February. Additionally, OpEx continued to be impacted by elevated crew costs related to wages, travel, and our seafarer nationality makeup which is primarily Eastern European. As we have discussed on previous calls, the Russia-Ukraine war has created challenges for us in terms of crew sourcing, management, and support for general well-being and has ultimately contributed to the cost inflation we have been experiencing. As a result of these challenges, we have added a new crew manager in order to diversify our source makeup and are currently in the process of reallocating the crew management on 20 of our ships. This transition is expected to negatively impact our crew-related costs for the next few quarters until the management changeover has been completed. General and administrative expenses decreased 5% quarter-in-quarter to a total of $10.9 million. This decrease is attributable to lower employee-related costs. CASH G&A expenses equated to $9.1 million or $18.90 per vessel per day. It is worth noting that our G&A figure per ship per day does not include our chartered-in fleet. If we were to include those days, our G&A figure would be approximately $1,580 per ship per day. During Q1, we sold and delivered the Jaeger, our oldest vessel in the fleet, and realized a gain on sale of $3.3 million. I think it's important to note that we sold the vessel just ahead of our statutory dry dock, allowing us to save on the associated and required CapEx spend. Net interest expense, inclusive of cash interest expense, cash interest income, and non-cash deferred financing fees, came in at $2 million for the quarter, in line with our prior guidance. The unrealized P&L on our outstanding FFA and bunker swap positions as of quarter end was negative $240,000. Adjust net income, which is net income adjusted for the unrealized gains and losses in the FFAs and bunker swaps, came in at $3.4 million, or 26 cents per share basic and diluted. Please note that the convertible bond was deemed to be anti-dilutive this quarter from an EPS perspective, and as such, the shares underlying the security were not included in the diluted share count. Adjusted EBITDA amounted to $18.7 million. Please turn to slide 10. We ended the quarter with a total cash position of $155.9 million, down 33.9 million as compared to December 31st. We generated positive cash flow of 7.4 million from operations, used 18.5 million for net vessel sale and purchase transactions, and made 21.1 million in debt repayments and dividend distributions. Please turn to slide 11. As of March 31st, we owned 53 vessels and had a total liquidity equal to $255.9 million. Total debt outstanding was $329.4 million, comprised of $225 million on the term loan and $104 million faced on the convert. Based on vessel values assessment of our fleet, we estimate our net debt to fleet ratio at 15.4%. In Q2, we expect to take delivery of the Halifax Eagle and the Vancouver Eagle and make associated payments for the remaining balance due of $54.2 million. On the sales side, we closed on the Newport Eagle this week and expect to complete the sales of the Montauk Eagle and Sankity Eagle by the end of the second quarter. We expect to receive total net sale proceeds of $48.6 million for the three ships and realize a total gain on sale of $17 million. Pro forma for these transactions, our fleet will total 52 ships with an estimated total cash and liquidity of $150 million and $235 million, respectively. Please turn to slide 12. As we look ahead into Q2, we are providing you with an informational outlook. Based on our current vessel S&P delivery timelines, we are forecasting a total of 4,805 owned days for the second quarter and 4,512 owned available days after taking into consideration estimates for both scheduled and unscheduled off-hire. As Gary indicated earlier, as of today, we have fixed approximately 65% of our owned available days at a TCE of 16,030. Please note that this figure is inclusive of our pro rata estimate for realized FFA gains and losses for the period on a mark-to-market basis. On the expense side, we are estimating the following. Vessel operating expenses are expected to come in line with Q1 with an estimated range of $6,300 to $6,600 per vessel per day. This range takes into consideration two vessel takeovers, planned spend on repairs and discretionary upgrades, as well as our estimate for costs associated with the crew management changeover initiative I discussed earlier. Excluding these non-recurring items, adjusted operating expenses is expected to come in between $5,900 and $6,300 per vessel per day. Non-cash depreciation amortization expenses to come in between $3,100 and $3,400 per vessel per day. G&A cash expenses to come in between $1,700 and $1,900 Non-cash stock-based compensation to come in between $350 and $450 per vessel per day. Net interest expense to come in between $500 and $700 per vessel per day. This concludes my remarks. I will now turn the call back to Gary, who will discuss the industry fundamentals.

Thank you, Costa. Please turn to slide 14. Dry bulk markets saw typical seasonality in Q1. The BSI started the first quarter on a continuation of the negative trend we experienced during the fourth quarter and traded down to below $7,000 by mid-February. This weakness is attributable to a number of short-term factors which we discussed in our last earnings call, including decreased trade flows, unwinding of congestion, and the seasonal low in economic activity around the Lunar New Year holidays. Since bottoming on February 13th, The BSI posted a significant rebound as China came back online after the holidays and post-COVID reopening. Rates more than doubled by mid-March and have since traded within a fairly tight range between 12 and 14,000. The forward curve for the balance of the year remains in contango with Q3 and Q4 trading at a premium to spot, reflecting the market's continued belief for demand support and a further recovery in rates buoyed by strong supply-side fundamentals. Please turn to slide 15. Fuel prices were mixed during the first quarter, with HSFO rising by 3% on the back of tighter supplies, whereas VLSFO prices weakened by 5% due to a general rebalancing that has been ongoing since late Q3 2022. As a result, fuel spreads between HSFO and VLSFO averaged roughly $193 per ton for the quarter, or down approximately $48. Performer for our recent vessel sale and purchase activity, 50 of our 52 ships, or 96% of our fleet, is now fitted with scrubbers, which solidifies Eagle's position as the largest owner of scrubber-fitted ships within the midsize dry bulk vessel segment globally. Notwithstanding contraction in fuel spreads on an illustrative basis based on the 2023 year-to-date and forward curve, we estimate that our scrubbers will generate approximately $32 million incremental net income on an annualized basis. Please turn to slide 16. Gift values continue to increase on the back of a noticeable improvement in S&P liquidity. As we indicated on our last earnings call, buying interest is coming not only from traditional dry bulk owners, but also from container and tanker owners who are looking to reinvest profits and diversify away from their core segments. To illustrate move-in values, the two 2020-built scrubber-fitted Ultramax, which we executed purchase agreements on just two months ago and have yet to take in delivery of, are now worth about 3 million or 10% more based on recently reported comparative transactions. And, as we mentioned earlier on the call, we took advantage of the recent run-up in values and improvement in market liquidity to sell our three non-scrubber supermaxes in an end-block opportunistic transaction. Notwithstanding the subdued freight market we're currently experiencing, I think the current strengthening S&P market is extremely noteworthy and exhibits participants' positive view and conviction on the fundamentals. We remain constructive and believe we'll continue to see an improvement in the market and asset prices over the medium term, given the increasingly positive supply-side dynamic. Please turn to slide 17. Following on my last comment, net fleet supply growth slowed in Q1. A total of 114 dry bulk new build vessels were delivered during the period as compared to 122 in the prior quarter. New building deliveries in Q1 were partially offset by 17 vessels which were removed from the market and were scrapped. Notably for Eagle, five midsize geared vessels were scrapped during the quarter. While still low, it was a significant increase compared to just nine midsize vessels that were scrapped during all of 2022. As we mentioned previously, despite high scrap prices, the low level of vessel demolition is not too surprising given the strength in the underlying spot market over the past two years and the apparent shared sentiment by owners generally that rates will be strong going forward. In terms of forward supply growth, the overall dry bulk order book remains at a historically low level of under 7% of the on-the-water fleet. For 2023, dry bulk net fleet growth is projected at 2.4%, which will be down about 40 basis points as compared with 2022. The main driver of this low growth rate is a continuation of muted deliveries as well as an increase in assumed scrapping volumes. A total of 34 dry bulk ships were ordered during Q1, down 60% as compared to the prior quarter, and just a third of the average over the last five years of roughly 115 ships per quarter. It's worth noting that the vast majority of ships being ordered today will only be delivered in 2025 and beyond. Please turn to slide 18. We have discussed on prior calls how this chart shows the favorable supply dynamics over the next few years. Based on delivery of the current order book and expected scrapping levels, the midsize fleet is expected to surpass the record age of 12 years in mid-2024 and continue increasing from there. A positive from this trend is that there's an ever-increasing number of older ships that will inevitably need to be recycled during the coming years. Given the relative cost advantage of secondhand ships versus new buildings today, as well as uncertainties surrounding decarbonization and future fuel propulsion technology, we believe ordering and the result in order book will remain low for some time. We expect these dynamics combining a near record low order book with a near record fleet age to further improve the supply side in terms of fleet development in the coming years. Please turn to slide 19. The IMF is currently projecting global GDP growth to reach 2.8% for 2023, down 10 basis points as compared to the previous forecast. The macro outlook appears to be modestly improving as the economic shocks of the pandemic, supply chain disruptions, and Russia's invasion of Ukraine recede and China's activity rebounds following the reopening of its economy. And with central banks being at or close to the end of their tightening stage, notwithstanding continued uncertainty, I believe we could see an improvement in general confidence in the market going forward. In terms of dry bulk, total trade demand growth is expected to improve by 470 basis points in 2023 to reach a level of positive 1.8% on a core basis and improving further to positive 2.5% once factoring in the ton-mile effect. Please turn to slide 20. Looking into the details of dry bulk demand on this slide, we note that for 2023, forecast for most commodities has improved since our last earnings call. Iron ore demand growth has been revised upward by 120 basis points to 1.8%, primarily on an upward revision in Chinese demand of 19 million tons. Coal demand has also been revised upward by 100 basis points to 2.8% growth for 2023, an increased demand from India for both thermal and coking coal, as well as an increase in Chinese seaborne demand for thermal coal. Demand for minor bolts is generally holding steady with an overall upward revision of 30 basis points to 0.8% growth on an absolute basis for 2023. In terms of grain, trade demand growth has been revised to 3.1% in 2023. While a significant year-over-year improvement, it's a downward revision of 270 basis points compared to the growth forecast of February. This revision is primarily due to a decline in Argentine crop yields caused by drought. Export levels this year from all other grain exported are expected to see growth of about 6.5% around the same levels forecast in February. We should note also that current grain forecasts include a meaningful increase in Ukraine exports for 2023, which assumes the UN grain agreement will continue. As has been in the recent news, the official extension of the agreement, according to the UN, runs until July, but Russia is only acknowledging an extension through May 18th and has recently signaled that it will not agree to another extension if a list of demands to facilitate Russian grain and fertilizer exports is not met. Negotiations are ongoing, and the outcome of these will be impactful at the eventual export volumes. While overall demand has been challenged in recent quarters due to various reasons, it's worth reiterating that dry bulk demand has grown on a ton-mile basis in 20 of the last 22 years, and we believe there's considerable upside to the current growth forecast when macroeconomic and geopolitical headwinds abate. Please turn to slide 21 for a recap. Given our exclusive focus on the midsize segment with an ability to carry all dry bulk commodities and a commercial platform with a track record of meaningful outperformance, we continue to be in an optimal position to maximize utilization and capitalize in a rapidly evolving environment. Looking forward, we remain positive about the medium-term prospects for the dry bulk industry, particularly given strong supply-side fundamentals. With a fully modern fleet of 52 predominantly scrubber-fitted vessels, and over $250 million of liquidity at quarter end, Evo is in a unique leadership position to continue to take advantage of opportunities, and we're looking forward to continuing to deliver superior results for our stakeholders at large. With that, I would like to turn the call over to the operator and answer any questions that you may have. Operator?

Thank you. And as a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw the question, simply press star 11 again. Please stand by while we get our Q&A queue. One moment for our first question. That comes from Omar Nocta with Jefferies. Please proceed.

Thank you. Hey, guys. Good morning. Thanks for the update. Morning. Yeah, Gary, you spent a good amount of time talking about the market. I just wanted to see if you could expand just a bit more on it. I wanted to sort of get your sense on the pulse of the market. You highlighted that the first quarter represents hopefully the bottom for the year. How do you think about how rates are going to progress from here? Obviously, we've seen the bounce. Rates are still not that exciting, but it does seem that we're fundamentally in a tighter spot than we were. But I just wanted to see if you could expand a bit more on how you think the rate structure of the market will proceed as we kind of move forward here over the next couple of quarters.

Sure. I mean, I think, you know, you're right. It's not, you know, particularly exciting, you know, where we are. But we're seeing, you know, we see demand growth this year, right, which is important against last year, which was one of the two negative years in the last 22 that I talked about on a 10-mile basis. And so we're seeing growth in things, particularly like grain. Brazil exports are moving up. China is importing more soybeans. We've seen Indonesian coal exports to China up significantly in the first quarter. So there's definitely positive momentum here, but it's taking time. I mean, the China reopening... You know, I think we all expected, you know, it was going to take time, you know, for the economy to come back and there's stimulus, but that takes time to work through the system. So, you know, we're seeing good demand overall. Our ships, which we do a lot of cross-trading between the Atlantic and the Pacific, you know, we're seeing meaningful amounts of cargo flows in both directions, which is helpful overall. especially from an operating standpoint in terms of outperforming the market, you know, bringing ships into, you know, areas that we see, you know, moving upward in advance and things like that. So, you know, we'd all love it to move more quickly than it has, but I think it's notable, right, that the market, you know, bottomed out in mid-February at below 7,000 and we're up significantly. And as I mentioned in my prepared remarks, you know, the forward market remains in contango so so you know we're we're positive and anytime you talk about rate development you know i just think it's we always go back to the supply side you know i say it all the time right it's all always in my career now 35 years it's always about supply and the order book is just you know incredible you know really low against that rapidly aging fleet so so you know it may take a little bit longer than we all would like but but directionally really positive

and and the supply side is really supportive of future rate development yeah thanks gary that's a good color and then maybe just to touch a bit more on the you mentioned the s p market and how it's been active and you took advantage obviously you got that nice gain on those three opportunistic super maxes you bought a couple years back um how is the s p market here currently has is it still fairly active and how should we think about eagle going forward? I know you guys have been obviously busy fine-tuning the fleet. Should we expect the same going forward?

Yeah, so the S&P market is really robust, especially when we talk about the fact that, you know, rates are better, but, you know, they're not rocketing up. And I think it's because people see the same dynamic, right, that the relative value of a second-hand vessel on the water earning positive cash flow from day one against the You know, if you go and order a ship today, you know, you're looking at two plus two to three years out, depending on on when you know where you're going to build that ship. And so, you know, that's why we're seeing it. We also mentioned we're seeing a lot of investment from outside of traditional dry bulk owners. as people look to redeploy and diversify capital. So not a doubt in my mind, the secondhand market is bid right now, and we're seeing values move up from where we were. And I think we continue to see that. In terms of Eagle, I think I'll use the word we use in our prepared remarks, opportunistic. we saw a low in the market, you know, came off at the latter part of last year. And, you know, although there was uncertainty in the market, we decided to act you know, trying not to, you know, perfectly time the market, but, you know, cost average at that point. And notwithstanding, you know, a week Q1, we saw a lot of people come into the market and move up. So I think, you know, we'll continue to look at that. We don't feel a lot of pressure to go out and continue to buy a certain number of ships. But as we see opportunities based on where we see the market, you know, we have the ability to you know, to go out and purchase more vessels. I think the sales that you saw were really an opportunistic approach to these what we call non-core because they were non-scrubber fitted. Super is the only ones that we had. You know, but in general, we don't have any ships that are more than, you know, 14 years old now. So we don't see ourselves needing to sell any more ships in the current environment, giving our positive view on rate development.

Got it. Great. No, thanks, Gary. I'll turn it over. Thank you. Thanks so much.

Thank you. One moment for our next question, please. And the question comes from the line of Ben Nolan with Stiesel. Please proceed.

Thank you. Hey, good morning, Gary Costa. And again, good morning, Costa. It's been a long time. I'm happy for you. I have a couple of questions. The first is, from a macro level, there's been an awful lot of financial chaos. We all remember, at least three of us remember, the last time this happened in 2008, and Eagle in particular, was hit by the lack of trade liquidity and You know, being able to get letters of credit or actually customers being able to get letters of credit doesn't feel like that's happening right now. But I'm curious if that has been at all, you know, something that you've run into or something that you'd be concerned about, given all the big financial institutions that are, you know, pretty volatile at the moment.

Yeah, so no doubt I remember 2008 well. We haven't seen absolutely anything at all in terms of inability for people to transact. Obviously, a lot of headlines and concern around macro, but I can say on the desk, and I'm sitting here next to our chief commercial officer who's looking at me as well and nodding, we haven't seen any impact whatsoever in terms of trade credits.

Okay, that's good to hear. And then as it relates to capital allocation, I know you guys have the dividend policy in place, but asset prices have been going up, the share price has been going down. Any thinking about maybe opportunistically either with the convert of the shares, just saying, okay, well, the more expedient or higher value use of capital is

uh is something in in a buyback of either of those two maybe as opposed to the dividends yeah look i mean i think you know our our board you know uh followed through with our divin policy and right right right you know down the middle so to speak with the 10 cents i think our view our view is you know that the capital allocation policy that was put in place at 30% or the 10 cent minimum was done so that we had capital, the ability to use it as best for the benefit of our shareholders. And in the fourth quarter last year, we did buy back some convert. And given the weakness in the shares, it's definitely something that is know a possibility as well as we have a 50 million dollar share buyback authorization too so as i like to say you know it's it's a matter you know not nothing to report at this time but these are definitely options in terms of you know returning capital to shareholders through various means and and fully appreciate the value of a buyback the one thing on the convert side is and i mentioned this so i know at least one time previously is that the negative carry at the moment against cash, right, given the positive interest that we're able to achieve on cash in the bank, whereas when you buy back the convert, the value includes future coupons. So that all goes into our calculus, but absolutely we're fully, you know, not just aware, but we're evaluating all possible uses of capital for the benefit of the shareholders. Okay.

And then last, on my end, Early on, you mentioned sort of retooling the labor side of things and sourcing sailors from other parts of the world other than Eastern Europe. And you did say that there was going to be a couple quarters of cost associated with that. I'm curious from a longer-term perspective, though, is it neutral to – to the cost of labor, or does that maybe enable you to actually save a little money on crewing?

Yeah, we think this will be beneficial from a cost perspective, and it's not just around the actual salaries paid, but crew repatriation costs have been extremely high given the war in Ukraine. and around Eastern Europe. And so that's part of it. Length of duration on board ships is also different, which impacts the cost per contract, if you will, because people will tend to spend longer. So overall, directionally, we think this will be beneficial to our OPEX costs. you know, going forward once we get through it. And worth noting that, you know, as Costa gave in his remarks in terms of guidance, you know, that's in our forward. We expect the, you know, next quarter's or second quarter op-ed effectively in line with first quarter, inclusive of those numbers for the transition over. All right.

Cool. I appreciate it. Thank you, guys. Okay.

Thanks, Ben.

Thank you. And as a reminder, ladies and gentlemen, to ask a question, simply press star 11 to get in the queue. One moment for our next question. And it comes from the line of Liam Burke with B. Riley Financial. Please proceed.

Yes, thank you. Good morning, Gary. Good morning, Costa. Good morning. Gary, on the macro, you talked about coal being a driver of demand. Is this a function of just overall consumption, or are you looking at a combination of consumption and longer ton miles here?

Yeah, at the moment, we've seen in the first and into the second quarter, it's really been a function of more volume. China's import has increased significantly, particularly Indonesian coal. So, you know, at the last few quarters ago, Kind of in the early days of the invasion of Ukraine, we were moving coal, Indonesian coal, to Europe. That's abated on the Supermax, Ultramax side. I know there's still a significant amount of coal moving to Europe, similar to last year's volumes, but it tends to move on the larger sizes. So the increase in coal movements for us have been primarily Indonesian coal exports year to date.

Good. And as you look, I mean, obviously we're dealing with volatility and commodities, but moving into the second half of the year, is there anything that concerns you more or less in terms of overall in-market demand?

No. You know, I think the concerns, you know, going back to, you know, Ben's comment is more about macro and, you know, global GDP growth. and shocks to that. But in general, as we think interest rate increases abate and those headline risks hopefully abate as well, that we'll just continue to see it. So there's nothing in particular that's concerning to me out there. Across the board, we see growth across the commodity spectrum and ton mile as well. bringing it up to around 2.5% this year, which we think is, while not robust, is healthy, especially against the supply side, the net supply side expected to come into the market, which is going to reduce going forward in the second half of the year and into the first part of 2024 as well. Thank you, Gary.

Thank you.

Thank you.

And with that, ladies and gentlemen, thank you for your participation in the Q&A. I will turn it back to Gary Vogel for his closing comments.

Thanks very much, operator. We don't have anything further at this time. So I'd like to thank everyone for their time and joining us today and wish everyone a good weekend.

Thank you, ladies and gentlemen. This concludes the conference call and you may now disconnect.