International Seaways, Inc.

Hello everyone and welcome to International Seawaste second quarter 2023 results call and thank you for standing by. My name is Daisy and I'll be coordinating your call today. If you would like to register a question, please press star followed by one on your telephone keypad. I would now like to hand the call over to your host, James Small, General Counsel to begin. So James, please go ahead.

Thank you, Daisy. Good morning everyone and welcome to International Seawaste earnings call for the second quarter of 2023. Before we begin, I would like to start off by advising everyone with us on the call today of the following. During this call, management may make forward-looking statements regarding the company or the industry in which it operates. Those statements may address, without limitation, the following topics. Outlooks for the crude and product tanker markets and changes in trading patterns. Forecasts of world and regional economic activity and of the demand for and production of oil and other petroleum products. the effects of the ongoing conflict between Russia and Ukraine, the company's strategy, our business prospects, expectations regarding revenues and expenses, including vessel, charter hire, and G&A expenses, estimated bookings, TCE rates, and or capital expenditures during 2023 or in any other period, projected scheduled dry dock and off-hire days, purchases and sales of vessels, of new-build vessels and other investments, the company's consideration of strategic alternatives, anticipated and recent financing transactions and any plans to issue dividends, the company's relationships with its stakeholders, the company's ability to achieve its financing and other objectives, and other economic, political, and regulatory developments globally. Any such forward-looking statements take into account various assumptions made by management based on a number of factors, including management's experience and perception of historical trends, current conditions, expected and future developments, and other factors that management believes are appropriate to consider in the circumstances. Forward-looking statements are subject to risks, uncertainties, and assumptions, many of which are beyond the company's control, which could cause actual results to differ materially from those implied or expressed by the statement. Faster risks and uncertainties that could cause international COS actual results to differ from expectations include those described in our annual report on Form 10-K for 2022, our quarterly reports on Form 10-Q for the first and second quarters of 2023, and in other filings that we have made or in the future may make with the U.S. Securities and Exchange Commission. Now, let me turn the call over to our President and Chief Executive Officer, Ms. Lois Zabrocki. Lois?

Thank you very much, James. Good morning, everyone. Thank you very much for joining International Seawaste Earnings Call. for the second quarter of 2023. Going to slide four of the presentation found on the investor relations section of our website. Net income for the second quarter was $154 million, $3.11 per diluted share, bringing our cumulative earnings over the last 12 months to over $650 million. Adjusted EBITDA was $205 million. Based on our strong results in the second quarter and strong spot rates thus far in the third quarter, we have declared a combined dividend of $1.42 per share. Following the dividend payment in September, returns to shareholders over the last 12 months include a cumulative $6.16 in combined dividends, as well as $14 million in buybacks. This equates to approximately $360 million, which represents a 17% yield on our average market cap over the period. We have returned to shareholders an average of about half of our net income. We have enhanced our capital structure. We have liquidity of nearly $500 million, comprised of $236 million in cash and an undrawn revolver of nearly $260 million. Our strong liquidity is net of our returns to shareholders and of our deleveraging initiative. In the second quarter, we prepaid $75 million of our debt portfolio, two loans on sale leaseback financing, $46 million that had an interest margin of 390 basis points above bank borrowing rates and $29 million under our largest senior secured facility. This unencumbered a modern Suez Max. Overall, in the last 12 months, we have prepaid nearly $390 million in debt and unencumbered 30 vessels, 40% of our fleet. Our net loan to value is about 22% today and our cash break even for the next 12 months is under $16,000 per day. This includes about $3,500 per day from our fixed contracted revenue that in aggregate amounts to over $350 million through charter expiry. It excludes profit sharing on applicable charters. As we continue pull all the levers with our capital allocation approach. Our third and final dual-fuel VLCC delivered in May. The three VLCCs are on time charters for the next seven years with a fixed base rate of earnings plus a profit share over the index rate on the route from the Middle East to China, TDTree. In the second quarter, the TCEs on these shifts with the profit share was about $43,000 per day, providing a nice premium on the 96 million per vessel invested. We just signed two new building commitments with two options for LR1 with K ship building for delivery in the second half of 2025. These ships will be scrubber fitted and class certified for LNG conversion. The aggregate price of $115 million for the two vessels includes strengthened decks, oversized generators, and equipment consideration. Upon delivery, these ships will deliver into our niche, Panamax International Joint Venture, which has consistently earned a premium to the LR1 broader market. The average age of the LR1 in our fleet is about 14 years old, and the overall LR1 Panamax sector has a very aged fleet profile. Even our vessels at this age, they have earned $67,000 per day year to date. We are supporting our presence in this critical strategic joint venture. On slide five, we pull highlights. Oil demand is expected to surpass 102 million barrels per day on average for the second half of the year, increasing by 2 million barrels per day year-over-year. Growth in oil supply mostly comes from the West, in North America, Guyana, and Brazil. In the chart on the lower left of the slide, the average of the EIA, the IEA, and OPEC forecasts for oil supply and demand align projecting a supply deficit in the second half of 2023. On the lower right chart, oil inventories, we are showing commercial stocks in the OECD have increased in the first half of the year as expected. We now expect that these inventories will rapidly draw early in the second half of the year as OPEC Plus cuts are felt. Sentiment from these expected cuts have largely been priced into the spot tanker rate. It will be interesting to watch now in the tanker market as the impact due to the tightening of Ural's crude to Brent pricing, which may impact the price cap part of the fleet that has been trading in accordance with sanctions rules. These shifts may come back into the commercial fleet and affect daily earnings. It is still very early to tell how this will unfold and we remain observant. On slide six, the tanker supply side. Despite some new ordering activity, this remains a compelling component to the story of our fundamentals. As you can see on the lower left-hand chart, vessels on order make up less than 15% of the fleet that is over 15 years old that should be replaced over the next few years. It represents less than 5% of the overall fleet. These orders are also spread over the next three to four years. Owners cannot easily rush to start replacing tonnage today because lead times are longer as yards continue to build in other shipping sectors, as you can see in the lower right-hand chart. Environmental regulations continue evolving. creating uncertainty toward building new vessels and selecting engine types. Flipping the presentation to slide seven. Since the IEA recently updated their oil outlook through 2028, we reiterate our stance that near-term fundamentals in this map of the world, we wanted to simply show that oil supply growth is coming largely from the Americas, As you see on the blue bars, wet oil demand growth shown in the green bars is mostly driven by Asia. These dynamics create an incredible investment case for seaborne transportation in the near term. Layer on top of this, geographical changes, a constrained supply side that is aging, compounded with trade flow inefficiencies as a result of the Russian invasion and subsequent sanctions. It sets the stage for a solid tanker environment. At Seaway, we continue capturing the strength of the tanker markets today, and we are building our future as a leading tanker owner listed on the New York Stock Exchange. With our comprehensive capital allocation approach, we are utilizing all the possible levers that build upon our track record of returning shareholders, cash to shareholders, maintaining healthy balance sheets, and growing the company. Now, I'll turn it over to our CFO, Jeff Pribor, for the financial review. Jeff?

Thanks, Lois, and good morning, everyone.

On slide nine, net income for the second quarter was $154 million for $3.11 per share. On the upper right chart, adjusted EBITDA for the second quarter of 2023 was $205 million. In the appendix, we provided a reconciliation from reported earnings to adjusted earnings. While our expense guidance for the second quarter mostly fell within a range of expectations, I'd like to point out a few items of note within our income statement. Vessel expenses were higher than our prior guidance for the quarter. The majority of the increased spend is due to the timing of purchases of spares, which is unavoidably lumpy as it is related to when a ship is in dry dock or off-hire. Charter hire, including the profit share, is in line with expectations given elevated rates. Other income for the quarter was over $3 million, which consisted largely of interest income on our significant cash balances, and we've been working hard to maximize this income. On the revenue side, our lightening business had another strong quarter, earning $11 million in revenue. With $2 million in vessel expenses, $4 million in charter hire, and $1 million of G&A, the lightening business contributed about $4 million in EBITDA in the second quarter and almost $10 million in EBITDA year to date.

Now turning to our cash bridge on slide 10.

We began the quarter with liquidity of $519 million composed of $261 million in cash and $257 million in undrawn revolving capacity. Following along the chart from left to right on the cash bridge, we had $205 million in adjusted EBITDA in the second quarter, less $56 million in debt service, which is composed of scheduled debt repayments and cash interest expense, less our dry docking capital expenditures of $14 million in the quarter, and a working capital benefit of $11 million. We therefore achieved free cash flows of about $146 million for the second quarter. The remaining bars in the cash bridge demonstrate the execution of the capital allocation that we announced on the first quarter earnings call. As a reminder, in Q1, we had $169 million of free cash flow, and here you can see exactly how we used it. As we committed to at the time of the call, we repaid $75 million of debt in this quarter, of which $29 million went to unencumbering a modern Suez Next vessel, and $46 million was to terminate two sailing decks that had an interest margin of 390 basis points over bank borrowing rates. Secondly, we paid $79 million in combined dividends of $1.62 per share. And finally, we repurchased a project for $14 million. These components lend us an ending liquidity of over $493 million, with $236 million in cash and short-term investments, and $257 million in undrawn or wallet capacity. Now moving to slide 11, we have a strong financial position detailed by the balance sheet on the left-hand side of the page. Cash remains strong at $236 million, Vessels on a book stand at approximately $2 billion book value versus current market values of over $3 billion. And with about $947 million in gross debt, that equates to a net loan-to-value of just about 22%, also illustrated in the bottom right-hand chart. I want to point out one last element of the balance sheet that is more of a timing issue. In the third line down from the top under assets, you see that we separated advanced payment of debt of $46 million, which is related to the prepayment of the two salebacks I just mentioned. There is a corresponding $46 million of debt embedded in the current portion of debt. Both of these are eliminated or were eliminated with the transaction when it closed on July 3rd, just after the quarter closed. On the upper right-hand side, we have recapped the debt details to reflect these payments, these prepayments. Because 73% of our debt portfolio is hedged or fixed, our weighted average all-in interest rate using current bank borrowing rates is 6.36%, which at current rates is effectively a margin of about one and a quarter basis points above today's SOFR and LIBOR reference rates. As we mentioned in our press release this morning, we expect to continue on this trajectory of a balanced capital allocation approach. We intend to use some of our cash to repay existing debt. Currently, we're exploring options on which facilities in the portfolio we would do, but we expect the total repayment may be around $50 million. We also have announced our combined dividend of $1.42 per share, which consists of a regular dividend of $0.12 and $1.30 of a supplemental dividend. These payments will be made in the third quarter as we continue to build on our track record of executing our capital allocation strategy. Turning now to the last slide that I'll cover, slide 12, reflects our forward-looking guidance and book-to-date TCE aligned with our cash break-even levels. Starting with TCE pictures for the third quarter of 2023, which I'll remind you, as I always do, that actual TCE, which we'll tell you during our next earnings call, may be different. But here you see we have a budget average TCE across all the sectors. of $38,000 today so far this quarter. On the right-hand side of the slide, you can see our cash break-evens, which we've shown for the next 12 months reflective of the delivery of the last vessel in our new building program and related payments on principal and interest, as well as the new fixed revenues excluding any profit share on our increased long-term time charts. Overall, we've reduced our break-evens by $1,000 today in the second quarter of last year. When you compare this break-even to our fixtures today, it certainly looks like the third quarter can be another strong quarter for international seaways. On the bottom left-hand chart, for the modelers out there, we've provided some updated guidance for expenses in Q3 in a total of the year. We also included in the appendix our quarterly expected off-hire and capex schedule for 2023. We don't plan to read each item line by line, but encourage you to use these for modeling purposes. That concludes my remarks. I'd now like to turn the call back to Lois for closing comments.

Thanks a lot, Jeff. I'll now summarize the details laid out on the slide 13, where you can see our investment highlights. Over the last six and a half years, International Seaway has a track record of returning to shareholders, constantly improving our healthy balance sheet, and growing our company. Our total shareholder return over this time is over 290% and surpasses our peers. Over the last 12 months, through regular quarterly dividends, supplemental dividends, and opportunistic share repurchasing, we have returned $316 million in cash returns with earnings of $658 million. This very consistent payout represents a 17% yield. We have improved our balance sheet over this time. With 75 vessels in the crude and product tanker market, we had $2 billion in assets on the books that are worth over $3 billion in the market today. We prepaid debt and unencumbered 30 vessels representing 40% of our fleet. Importantly, our cash break-even level is now below $16,000 per day. We have strategically positioned this company for a sustained, robust tanker market with a growing need for seaborne transportation created by regional imbalances. We're focused on safe reliability with our transportation in an industry that will have evolving environmental regulations, and we remain focused on being a leader in ESG. Collectively, we strive to continue to evolve these principles and provide a meaningful platform for all of our stakeholders. Thank you very much.

Operator Daisy, if you would please open it up for questions.

Of course. If anyone would like to register a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure you are unmuted locally. So it's star followed by one on your telephone keypad to register a question. Our first question today comes from Chris Robertson from Deutsche Bank. Chris, please go ahead. Your line is open.

Hey, good morning, Lois and Jeff. Thanks for taking the time to take our questions. This is around the 2023 off-hire day guidance for Q3. It looks like it kicked up just slightly since the last update. So I was wondering if this is due to pulling forward any dry docking into the third quarter or if this is due to just some delays that are out there.

Some of our dry docking from the second quarter got pushed into the third quarter. That, I think, is our only change, isn't it, Bill?

I'd have to go back and look for those. But we have looked at moving some forwards. And we've looked also from 2024 to the end of 2023. And then also some have moved in later in the year. So we've got a bit of both.

And the third quarter we anticipate will hopefully, you know, this will mark the low point of the year. And we expect, you know, a pickup and race in the fourth quarter. So that's, you know, a bit of the concentration there.

Yeah, that makes sense. Thanks for that. my second question is just around the corpus christi ship channel dredging project uh do you think this will have any impact on the lightering business or could it be offset by maybe some more positive uh impact on vlcc demand you know uh i think the project has moved forward uh you know very successfully you know it is still the case that you know you can now load a suez max

and then pop up to a VLCC that has been the case for the last couple years. You still need an under keel clearance, you know, that the channel dredging, you know, allows for, you know, nice safety levels. So we don't really see a big impact on the lightering business, except for the fact that Corpus Christi is just increasingly busier, and that actually increases the amount of exports from that port and consequently some of the lighterings.

Yeah, it seems like it's good all around for all segments. Okay, yeah, thank you very much. I'll turn it over.

Thank you, Chris. Thank you very much. Our next question today comes from Omar Nocta from Jefferies. Omar, please go ahead. Your line is open.

Hi, Lois and Jeff. Good morning. wanted to ask about i feel like a lot of times i'm asking you about the panamaxes but uh you know you clearly you you've ordered the two lr ones that got a pretty attractive delivery schedule i'd say for for 2025. um you know clearly that piece of your business has done really well and it doesn't doesn't really seem to be feeling the effects of seasonality or the opec cuts and you know just looking at your averages so far this year of 68 000 in the first half um you know it seems like that's probably at least you know perhaps double what the broad LR1 market average has been. So across your fleet, that's, say, $50 million, if we calculate that, or just over a dollar a share. So pretty meaningful outperformance, especially for you guys. My question is, are there risks that owners start to bring vessels into this niche market and crowd out the premium you've been able to consistently achieve here over the past several quarters?

Well, I would say, Omar, that I think the base trade, you know, in the Americas on these vessels and in this class, you know, has, you know, also benefited from, you know, what the overall tanker market, especially the mid sector of the fleet, enhanced ton miles with all of the sanctions and the trade that has benefited us. But, you know, there are lots of Panamaxes engaged in this trade. It's an aging sector. The overall trade is strong. And we're supporting our joint venture and making sure that Seaway is going forward. We're nearly 20 years. In 2025, it'll be 20 years that we've been in this joint venture, and it's been very successful. And we look forward to supporting that trade, our customer base, and our partners.

Thanks, Lois. And it sounds like clearly you're ordering those two ships to perhaps maybe get deeper into that trade. In terms of, say, looking at a broader fleet renewal in general, I guess where we've seen a bit more of your activity recently in terms of adding or kind of just been in the LR1s, how are you thinking about the MRs as it is right now? Any plans to reinvest in that segment? And as you think about that, do new buildings similar to the LR1s make sense? Are there opportunities that you think maybe more appropriate in the secondhand market. Any color you can give there?

I mean, Omar, you know, what I would say is that, you know, we have been highly selective, you know, so you're really looking for, you know, in an environment where we do feel that cyclically asset levels, value levels are high, we're looking for those opportunities where it's strategic and overall fundamentals are very strong. You know, what the VLCCs that we just took delivery of and the Panamaxes or LR1s that we just ordered, those two sectors have in common, their order book is 2%. And I think that's very strong. I think that as we look at our broader sectors, you know, one of the beauties of being diversified and being present in all of these different markets is having more in-depth knowledge about, you know, all of those fundamentals. And we're looking for the opportunities to provide a strong return. And that may be, in MRs going forward, it's something that we will continue to study, but it's not something that we're teed up for today.

Thanks, Lois. Thank you. And just one final, just quick follow-up. You were just highlighting the profit share on those three VLCCs. You know, they're based off of the TD3C. Is that basis just general bunker fuel, or is that an LNG fuel component?

Derek Salon, our chief commercial officer, is going to handle that.

Hey, Omar. It's Derek. Yeah, it's based on BLSFO pricing, not LNG pricing. But in the negotiation with the charter, we were able to work some advantages to that BLSFO pricing.

Got it. Okay. Thanks, Derek, and thanks, Lois.

Thank you.

Thank you. Our next question comes from Liam Burke from B Reilly. Liam, please go ahead. Your line is open.

Thank you. Good morning, Lois. Good morning, Jeff.

Good morning, Liam.

Lois, the Suez Max are out-earning the VLCCs. Is that a function of the redistribution of crude supply, and do you think this will continue?

Yep. Derek will take that.

Hey, Liam. It's Derek Stallone here. Yeah, I think that's a function of changing trade-in patterns around the Russian invasion of Ukraine. where we've seen the mid-sector, the Suez and the Afras, and as Lois has talked about the other ones, sort of outperform the larger crew. So expect that to continue while we have these continued hostilities in Europe.

Great. And Jeff, on the capital allocation side, How much does new builds, after you've ordered two new LR2s, how do new builds come in in balancing your allocation of capital now?

Well, I think Lois touched on it.

You know, if we look at assets today, they're generally at the high end of the cycle of pricing, as we know. So when there's going to be a new building, if there is to be a new building allocation, it's going to be a specific value proposition. And that's what we found with respect to these LR1s is that they work out well taking into account the financial metrics of making them conversion ready and even considering a conversion in the future in the DCF. So that's a specific value proposition. So I don't, as Lois said, we'll evaluate that in other sectors, but we're not expecting anything at this time.

Great. Thank you, Jeff. Thank you, Derek.

Thank you. Our next question comes from Ben Nolan from Stifel. Ben, please go ahead. Your line is open.

Yeah, thanks. Hey, guys. Good quarter. uh actually if i could just follow up to you're just talking about jeff on the uh on the lr ones that you ordered they're they're lng ready i'm curious um you guys trade those in a pretty distinct pattern um was there any thought about actually making them lng equipped and uh and why not just just go ahead and and go full tilt on that

Let me ask one of my colleagues to answer that question.

Yes, our Chief Operational Officer and Head of Sustainability, Bill Nugent. You know, just highlight, Bill, if you would, how you're preparing us with this order for a multi-fuel future.

So, thank you. You know, my responsibility to Lois and Derek is to provide them with safe, reliable, quality ships to trade. And as we look forward as to how those ships may trade, right, and as the rules evolve and the regulations change and we kind of consider IMO's latest announcements and tightening of restrictions, you know, we want to make sure that we're prepared for a multitude of different scenarios. So these ships can operate on biofuel as a drop-in fuel. We have made considerations in the design for the potential for carbon capture, if that becomes the viable logistical uh technology you know viable technology and then we have the ability to also consider the lng as a fuel so you know what i've tried to do is make the ships as flexible as possible so that derek has the ability to trade them you know in whatever way he wishes to do so so i i realize i've sort of answered all of the questions there yeah so ben it's jeff again so to

As you know, people talk about something future-fill-ready, and that can be not much, or that can be a fully fleshed-out program. And what you hear, what we've done in this case, is to have a lot of optionality built into these shifts, and we've factored in the future costs of that into our decision-making.

I hope that answers your question. Yeah. no that's helpful um well and actually if i could just i i assume you even priced that for for something like an lr1 what's the incremental cost of of having it be lng equipped versus just ready any any framework around that okay yeah i mean maybe what i would say is the you know one of the distinctions um that

bill led the team to achieve is that we have a classification right go ahead bill that we're certified for to carry lng with the conversion well yeah i mean it's important that that that uh dual fuel ready is not just lip service correct that the deck is so so yeah i mean but even beyond that right that the actual equipment is um

certified has been on other ships converted and provided or operates on dual fuels of the boilers the engine main engine generators could all do that and are sized for that future service right so that's a key distinction specifically that the adder for it to deliver that ship in the market today is dual fuel somewhere that the 12 to 13 million dollar range

We estimate would be the cost, but again, Ben, we've prepared for that in the future. We are not undertaking that today.

I understand. Just trying to frame in the value proposition a little bit, but I appreciate that. My last question. Again, you guys are maybe a little bit more on the West Coast with the ELRs, but in particular with the MRs all over both the Gulf and the Pacific Coast. And there's been a lot of noise about Panama and congestion and low waters and everything else. Is that having any specific impact on the business that you guys do? And have you thought at all about sort of uh or or if you know if not then um i'd be curious to hear that but if it is in any sense of uh how you would quantify what that impact is you know the the panama canal uh for the trading uh you know within the joint venture of panamax international you know is an integral piece of the trade routes uh

we are constantly calling there. And, you know, Derek, do you want to talk about the delays?

I mean... I think to Ben's point, there's been... I think, Ben, you're speaking specifically about the most recent building delays at the Panama Canal, yeah?

Well, yeah. I mean, it's been for months now, but it's just getting worse and worse, right? Right. So, you know, in some instances... That's right.

Yeah, we have... We have seen increasing delays for both the MRs and the Panamaxes. I think that the delays at the Neo Canal have grown larger than at the old beam-restricted canal. So, you know, that's why longer term we've built the LR1s with the 32.2-meter beams so they can continue to use the older Panama Canal. But some of the delays have had an impact on the TCEs as we picked up longer-weighted delays to go through. So we've seen that. In one instance, we sent a ship from Argentina over to the West Coast and didn't utilize the canal. We went around Cape Horn. So, you know, I think that the chartering teams have to play that game of delay versus cost in each and every voyage, and you've seen it impact us.

Interesting. Okay.

All right. That does it for me. And again, thanks and good core growth.

Thank you.

Thank you. Our last question is from Sharif El-Makrabi from BTIG. Sharif, please go ahead. Your line is open.

Good morning. Thanks for taking my question. I realize it's a bit early to see the full impact, but on the dark pool trading Russian crude, are you seeing tankers leave that pool and return to their regular trade? as East Asia started buying more Middle East and crude? Is that something that can happen quickly, or will you have a lot of visibility as that unfolds?

Sharif, hi. It's Derek Salone again. Maybe I can answer this one. Lois touched on it in her remarks. I think as crude has increased overall, Ural's crude has increased, and we're starting to see Ural's crude above the set you know, there's a differentiation within the Russian trading fleet. There's the gray fleet who are more comfortable sanction busting, if you will, will carry crude at any cost. And then there's the compliant group of owners who are willing to load Russia, unlike us, but who are willing to load Russia, provided it's in accordance with the price cap that's set. So as the price goes up for Europe, we... Some of those ships come back. They don't come back necessarily completely efficient, though, because when they come back, there's a lot of customers, a lot of charters who are not keen to take ships that have called Russia. So they'll have to take disadvantaged business to sort of clean up their cargo history. So I think to your point, they'll take a little bit of time to see how that impacts the market.

That's helpful. Thanks. Really, I'm just trying to kind of gauge the volatility there. And then you exercised two repurchase options during the quarter. Going forward, how are we thinking about exercising more sale and leaseback repurchases versus, you know, other parts of the capital allocation strategy?

Yeah. Hi. It's Jeff. You know, I think that, It's probably the last of the repurchases you might see for a while, just based on the terms of the other sale leasebacks that are out there. So nothing imminent. And as we said in our remarks, we will look at the whole portfolio of other debt instruments we have in terms of this incremental debt prepayment that we've been doing and will continue to do as it nicely brings down our cash breakeven. But it will probably be spread somewhere else in the debt portfolio.

Okay. Thanks for taking my question.

Thank you. Thank you.

Thank you. As a final reminder, if anyone would like to register a question, please press star followed by 1 on your telephone keypad now.

We have no further questions, so I'd like to hand back to Lois for any closing remarks.

Thank you very much. I want to thank everyone for joining us today on our second quarter conference call and a very strong quarter.

Thank you very much. Thank you, everyone, for joining today's call. You may now disconnect your lines and have a lovely day.