North American Construction Group Ltd

Good morning, ladies and gentlemen. Welcome to the North American Construction Group conference call regarding the fourth quarter ended December 31, 2023. At this time, all participants are in a listen-only mode. Following management's prepared remarks, there will be an opportunity for analysts, shareholders, and bondholders to ask questions. The media may monitor this call in listen-only mode. They are free to quote any member of management, but they are asked not to quote remarks from any other participant without that participant's permission. The company wishes to confirm that today's comments contain forward-looking information and that actual results could differ materially from a conclusion, forecast, or projection contained in that forward-looking information. Some material factors or assumptions were applied in drawing conclusions or in making forecasts or projections that are reflected in the forward-looking information. Additional information about those material factors is contained in the company's most recent management's discussion and analysis, which is available on CDAR and EDGAR, as well as the company's website at nacg.ca. I will now turn the conference over to Joe Lambert, President and CEO.

Thanks, Joanna. Good morning, everyone, and thanks for joining our call today. I'm going to start with a few slides showing our 2023 operational performance before handing it over to Jason for the Q4 financial overview. And then I'll conclude with our 2024 operational priorities, our bid pipeline outlook for 2024, and finish up with our capital allocation plan before taking your questions. On slide three, our record Q4 safety performance contributed positively in achieving a trailing 12-month total recordable rate of 0.29, which is the second-best annual rate in company history and remains well below our industry-leading target frequency of 0.5. We will continue to focus our efforts on further advancing our training systems and processes to identify and eliminate hazards and health risks in our business. On slide four, we highlight some of the major achievements of 2023. The McKellar acquisition was the obvious major accomplishment during the year, and with the strength of the Australian resource industry and the strength of our own team down there, I'm confident our Australian businesses will be highlighted in our annual accomplishments for many years to come. Our Fargo-Moorhead flood diversion project completed its ramp up for its first full year of construction in 2023, and we enter our largest year of Earthworks construction in 2024 with confidence in our productivity and our overall project plan. Our telematics system continues to provide more detailed and meaningful operations and maintenance data every day, and the 95% reliability is an impressive achievement. Also impressive is the $5.3 million of maintenance savings achieved in 2023 and systems operating costs more than 30% below budget. We are targeting to have this same or similar telematics system tested in Australia in 2024 with full rollout expected to commence in 2025. And last but not least, we successfully completed our Ontario Gold Mine construction project through our NAMJV partnership. and have several active bids in the Ontario and Quebec regions. Slide 5 captures all of our financial highlights for the year, and the 17% to 28% year-on-year increases include only a Q4 of McKellar contributions and a negative contribution from NUNA. Good side, I guess. I'm sorry. I'm already eager to see what this slide looks like this time next year with a full year of McKellar contributions and a new and returned operational excellence. On slide six, you will see our EBITDA and EPS results for the last five years, which I hope you agree is an impressive trend and one that we expect to continue. When people try to tell me how risky and volatile our resource-based business can be, I like to point them to graphs like these and remind them this is what was achieved with a pandemic in the middle. On slide seven, we have updated our calculation methodology and added our Australian fleet to our utilization graphs. One of the inherent benefits in the Australian market is the 5% to 15% upside utilization potential when demand is strong. We remain on trend and confident in our ability to hit our Canadian target range of over 75% by the end of this year, and we'll also be looking to similarly increase our Australian fleet to over 85% during this same period. With that, I'll hand it over to Jason for the Q4 financials.

Thanks, Joe, and good morning, everyone. To start, I will provide brief context regarding the McKellar transaction, which closed effective October 1, 2023. As disclosed in our financial statements, the overall purchase price for the McKellar Group was $383 million, which included $394 million of PP&E, which in our case is the heavy equipment fleet. This overall purchase price included $14 million of cash, which McKellar had in their bank accounts on close. And when factoring $35 million of equipment we purchased after October 1, the all-in cost was $405 million and consistent with expectation. EBITDA generation to date is slightly higher than initial expectation and confirms the less than 2.75 multiple we disclosed last July. The transaction and growth spending were fully funded with debt with approximately 70% of this debt being senior secured and 30% being vendor provided. At the time of announcement in July, we had targeted net debt leverage of 1.8 times by the end of 2023 and are very happy to have slightly beat that target. We've had an excellent first few months with McKellar and are looking forward to further integration and reporting progress in the months to come. Our teams are in daily dialogue between Canada and their Australian counterparts with weekly and monthly processes starting to become routine. Moving to the financials and some brief commentary. On slide nine, the headline EBITDA number that exceeded $100 million for the first time in our company's history was driven by a full quarter of McKellar results. It exceeds our previous record by about 20% and exceeded Q3 by 70%. All business units contributed to this result, with the exception of NUNA, which we will discuss later, and is a metric among many that our diversification efforts make us stronger and more consistent. Moving to slide 10. and our combined revenue and gross profit. As we will have now for four quarters, McKellar will provide step changes in quarter over quarter variances. On a total combined basis, we are up $83 million quarter over quarter. McKellar and DGI, which we combine as Australia in our results, we're up $128 million, which could have been higher if the rainfall in November and December had been less severe. This rainfall impact can be seen in Australia's equipment utilization, which almost hit 85% in October, but fell to the mid-70s in November and December. This positive variance was offset primarily by lower equipment utilization in the oil sands region. Our share of revenue generated by joint ventures and affiliates was a net $10 million lower than Q4 2022. The Fargo-Moorhead project had an excellent operational quarter and achieved the progress metrics and milestones required of the project's schedule. In addition, we had positive contributions from the continued growth of top-line revenue from rebuilt ultra-class haul trucks and excavators owned by our joint venture with the MICASU. More than offsetting these positives, the completion of the construction project at the Gold Mine in Northern Ontario led to lower quarter-over-quarter revenues within the NUNA group of companies. Combined gross profit margin was 18.4%, despite the challenges experienced by NUNA, and again, reflects the strength of a diversified business. As both Joe and I have alluded to, losses at three specific mining projects within the NUNA group of companies had a direct impact on margin. Joe will expand in his comments for NUNA moving forward, but from a financial perspective, excluding these project losses would have yielded an overall margin of approximately 20%, given the impact of $7.5 million. Gross profit margins benefited both from the operations in Australia, higher than 20% in the quarter, which is normal course, and from ML Northern, whose fleet lowers our internal costs as well as generate strong margins from services provided to external customers. Moving to slide 11, record adjusted EBITDA was consistent and reflective of the revenue commentary. The 25% margin reflects an effective operating quarter with a positive trend from the Q3 margin of 22%, indicative of where we see our business operating at. Included in EBITDA is direct and general administrative expenses, which, when excluding one-time acquisition costs, were $12.8 million in the quarter, equivalent to 3.9% of revenue and remained under the 4% threshold we've set for ourselves. McKellar runs a similar G&A profile and is not expected to change our G&A burden as a percentage of revenue. Going from EBITDA to EBIT, we expensed depreciation equivalent to 11.8% of combined revenue, which reflected the depreciation rate of our entire business, including the equipment fleet at the Fargo Moorhead project. When looking at just the wholly owned entities and our heavy equipment in Canada and Australia, the depreciation percentage for the quarter was 12.8% of revenue and reflected the addition of the Australian fleet and an overall efficient productive use of equipment in the quarter. Adjusted earnings per share for the quarter of 87 cents was 23 cents down from Q4 2022, as the impacts of higher interest are factored in with EPS, with the project losses at NUNA being particularly impactful to EPS at approximately 20 cents. The average interest rate for Q4 was over 8.5% as we're up from the Q3 rate of 7%. This effective interest rate, the highest we've paid in a long time, is a compelling indicator for us to look to pay down debt in 2024. Moving to slide 12, I'll briefly summarize our cash flow. Net cash provided by operations of $161 million was generated by the business reflecting EBITDA performance and working capital collection net of cash interest paid. Free cash flow was $111 million as sustaining capital of $41 million was invested in the fleet in both Canada and Australia. Moving to slide 13, our PP&E of $1.1 billion is up $450 million from September 30th on the $430 million million worth of McKellar assets we purchased. Net debt levels ended the year at $721 million, an increase of $326 million in the quarter as the $405 million of net debt incurred related to McKellar was offset by free cash flow generation. Net debt leverage and senior secured debt leverage ended at 1.7 and 1.4 times respectively. and are considered reasonable levels three months after a transformative debt-funded acquisition. And with that, I'll pass the call back to Joe.

Thanks, Jason. Looking at slide 15, this slide summarizes our priorities for the year. I'll speak to the McKellar integration and growth in detail on the next slide, so I'll jump to the second point. This area of focus is our ongoing efforts to win strategic projects for our businesses. As we look to sustain and grow our infrastructure business, we'll need to win infrastructure work as our Fargo-Moorhead flood diversion project reaches completion. Although this project is several years away from completion, the tender qualification and the RFP process can take one to three years, depending on the size and complexity of the projects. As such, and with a strong fit potential U.S. infrastructure project in the bid pipeline, we believe this year's priority should be to qualify as part of a team on one major infrastructure project. The second part of this priority is to win a meaningful project that uses our smaller mining assets that are currently underutilized in our oil sands business. We have several active tenders in both Canada and Australia that would utilize these smaller assets, and we expect to win one of these projects this year. Item three prioritizes continued expansion of our operational and maintenance expertise. We will prioritize new technology, such as our telematic system, and continuing to in-house and vertically integrate our maintenance services and supply, including a near-term focus on identifying and sharing best practices between our Canadian and Australian businesses. We believe this prioritization of focus will continue to lower costs and improve equipment utilization, resulting in an increased competitiveness and likelihood of winning the tenders mentioned in the previous item, too. The final area, prioritizing returning NUNA back to operational excellence and setting it up for growth and consistent performance. This work commenced earlier this year, and I'm confident in the changes made that NUNA will be back on its feet in time for their big summer projects and growing up a much stronger and stable foundation before the end of the year. Slide 16 shows some key milestones in our McKellar integration plans, much of which I have discussed previously. Two points I would like to make are as follow. One, the transition team headed by our COO, Barry Palmer, is now resident in Australia and the integration has progressed smoothly and on plan. The second point, which has been a pleasant surprise, is that the Australian marketplace has shown to be even better than originally contemplated. As an example, and as you would have recently seen in our press release last week, we were awarded a five-year, $500 million contract extension at a major metallurgical coal mine in Queensland. That contract extension was achieved through direct discussion with the customers and awarded 15 months before the original term expiry date. These alliance-type contracts with long-term commitments and early negotiated renewals show real strength in both the commodity markets and the client relationships. When you combine these market strengths with the higher fleet potential utilization in Australia, it's easy to see the potential to improve returns on not just our underutilized smaller size assets, but also increase the longer term returns and internal competition for even our larger mining assets. There is a meaningful time and cost to ship our big assets halfway around the world, but the opportunity to optimize return on our assets in lower risk, longer term contracts will be compelling and should provide a healthy internal competition for assets. Slide 17 illustrates a strong bid pipeline with the addition of Australian tenders and continued interest from long-term non-oil sands contract tenders. Although we truly believe our oil sands demand will remain strong for many years to come, we also see those big blue diversified dots and continued strong heavy equipment demand in Australia as opportunities to further diversify and reduce consolidation risk. On slide 18, Our pro forma backlog sits at 3.3 billion with the award of the Queensland major metallurgical coal mine and the award of the regional oil sands tender offset by our normal quarterly drawdown from executed work. The 3.3 billion backlog is the highest in company history and provides improved confidence and predictability in our business, especially in our Australian business. On slide 19, we have provided our updated outlook for 2024. The outlook is mostly unchanged, except for some timing-based reclassification of sustaining capital to growth and some growth capital additions supporting recently announced project awards. Lastly, on slide 20, capital allocation is always a focus for me, and our projected free cash flow range of $160 to $185 million gives us flexibility in that regard. De-leveraging presents an attractive opportunity at current interest rate levels and is our default choice. However, should share price drop to where we believe the risk-weighted return is higher, we have an established history in engaging in share repurchases where we see value in that for our shareholders. The McKellar integration is a focus for 2024, but we continue seeking growth opportunities, whether organically or through acquisition, that likewise generate superior risk-weighted returns and accretion. Any and all options compete for our capital allocation, and this is something we analyze continually and seeking to always be opportunistic in directing our cash flow in a way that maximizes value. With that, I'll open up for any questions you may have.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. If you are using a speakerphone, please lift the handset before pressing any keys. First question comes from Yuri Link at Canaccord. Please go ahead.

Good morning, guys.

Morning, Yuri.

Morning, Joel. Let's talk about NUNA a little bit. It sounds like you're expecting the issues that you encountered in the fourth quarter to be contained to the fourth quarter, but can you just elaborate on that? When do these three projects wrap up, and do you expect any spillover into Q1, Q2?

No, I think that's an accurate assessment. These projects are predominantly complete. There's a little bit of tail end work on one or two of them. I don't expect, you know, we've put new leadership in place. The issues we saw were really around risk management and predominantly dealing with junior minor clients, change management and contract administration. These are things that are in our wheelhouse. You know, we were blessed to have some strong bench strength here where we were able to put guys in place that had confidence in running those systems and processes going forward. So I'm very – and this is the slow time of the year for Nuna. Nuna really picks up in Q2 and Q3 with their summer work predominantly up north. And so, you know, I think the timing and the moves we've made will – We'll put it in the past very quickly, and I fully expect that our summer and our kickoff of our summer works will go as planned.

Okay. You're also, in your shareholder letter, you talked about the seasonal earnings pattern, pro forma, the McKellar acquisition. Is 20%... of EBITDA in the first quarter, is that going to be typical going forward? It looks a little bit low to me, just wondering if that's the... Yeah, again, I think you're accurate there.

You heard that we've got a little bit of an unusual year this year. I think we will be more consistent between quarters, but this particular year, like I just said, NUNA's big quarters are Q2 and Q3. Same in Australia. So Australian cyclone season is in the summer, which is our winter, so they're usually impacted operationally more in Q4 and Q1. And then with our biggest construction year at Fargo, the summer is also the biggest part of that Fargo job. So even though we had a good-sized construction year in 2023, it's even bigger in Fargo this year, and there's more infrastructure construction like bridges and road work that occurred during Q2 and Q3, whereas our previous earthworks is more year-round. And then we've just had a bit of a slower winter this year in oil sands even, and we're shuffling around some equipment in Q1. So it is going to be more consistent between quarters, but the lower Q1 this year is, I believe, a one-off.

Okay. And just to follow up to that one, I mean, which – which quarter is going to be the largest Q3?

I think so going forward. But, you know, we're going to have projects that come and go too, Yuri, depending on when they end. You know, I think we're going to be within one or two points between quarters going forward. But obviously if there's a new project start or stop in any one quarter, it can distort a year. But generally I would say it's going to be very consistent.

Okay, that's all for me. Thanks, guys.

Thank you. Next question comes from Maxim Sitchev at National Bank Financial. Please go ahead.

Hi, good morning, gentlemen. Good morning, Max. Joe, I was wondering if you don't mind, please, expanding a little bit on the comments you made in your shareholder letter talking about some of the oil sands work right now, transition to maintain rental fleets. kind of similar what you are seeing in Australia. Yeah, do you mind providing a bit of more color on that?

Yeah, I think, you know, we provided in the regional tender, we provided pricing for unit rate work, and we also provided pricing for maintained rental equipment and operated and maintained rental equipment. Historically, the unit rate work was what was awarded. And this year, about half of our big trucks are being um, rented or, um, maintained rentals with operators and versus the unit rate work. And it's just the, uh, the client believes that they have some excess assets in some categories. So they'd rather rent a piecemeal versus a unit rate. And it's believed that by doing this, uh, I believe they, they believe they're lowering their costs and we have to respect that. And hopefully it is. And, um, we're very happy to do it. It's very similar to what's being done in Australia. Um, certainly lowers our operating risk. You do take a bit of a hit on the top line, but it's not a huge difference. And this is just a, um, a contracting philosophy whereby the clients are trying to be more efficient with their own assets to, um, to lower their costs. And we're happy to participate in that.

Okay. But I guess, yeah, structurally, um, I mean, is, is how should we think about this? Is it, um, sort of lower visibility, but better sort of ROIC on the assets from your perspective or where you think that it doesn't really make a huge amount of financial difference to you at NOA level?

I think the biggest difference is in the risk. When you're in unit rate work, you wear a lot more risk of productivity and that can be in weather related stuff like that. So I guess the downside risk I would say is much lower. But I would agree that the visibility, the visibility is less so more because of the contract structure where the three years with only the one-year commitments, more so than I think this change of philosophy a bit on the unit rate work.

Okay. Thank you so much. And then another comment talking about sort of the TAM in Australia being dramatically larger than Canada for your type of work. Do you mind maybe expanding a little bit in terms of how you came up with that number and at what point that could be potentially realized? I mean, I presume it's a long-term, obviously, opportunity, but maybe if you can provide any brackets that would be helpful for us.

You're referring to the 10 times market item there? Yeah. Yeah, I think it's from... We get that from industry numbers in the Australian mining industry and how much work is contracted out. And the coal mine data, it's just a huge marketplace. There's a much higher propensity to contract mine there. The two main operations we're on, we're the only operators there. The client's not operating next to us. It's just a different marketplace It's a huge resource industry, very similar to Canada. But the big separator is that the producers there allocate their capital more towards producing an extra ounce or a pound or finding the next deposit than they do on owning yellow iron like we do. And so it's just a much bigger, stronger marketplace. And as I discussed earlier in my slides before my Mitch McConnell moment there, I was talking about the coal marketplace where there's 50 mines of which we're only on six of them. It's just a great opportunity, great marketplace there, Max.

Okay, that's super helpful. And then one last quick question for Jason, if I may. In terms of the rollout of ERP, do you mind providing some milestones in terms of when it should be up and running and how you're testing this and so forth? Thanks.

Yeah, so we've obviously the go live date is obviously the most important date. So we've circled September 1 as our target. Project team is fully engaged at the moment and they're at peak capacity currently. So it's pretty exciting actually for our organization to be going through an ERP like this, rolling out what we do here, there is generated a lot of excitement. So if all goes to plan, it should be pretty seamless. And then, yeah, we'll start to see hopefully some margin improvements post go live. And that would be seen more in 2025. Okay.

And sorry, and just clarification, are you kind of capitalizing, expensing? What are you doing from an accounting perspective?

Yeah, we would capitalize, but it's not big dollars. We're talking in the one to $2 million range for this. You know, we're doing really a, cut and paste here, copy and paste. We're not using a lot of external resources for this, so it's not what you see in a typical ERP implementation.

Okay. McEller was actually in process of bringing this exact same system online at the time when we purchased them, so they really had already started progressing this ERP transition even before we bought the company.

Okay, that's great. Thanks so much.

Thank you. Next question comes from Aaron McNeil at TD Cowan. Please go ahead.

Morning. Thanks for taking my questions.

Morning, Aaron.

Morning, Joe. It looks like you've got a thermal coal mine contract that comes up for renewal in 2025. Do you see any regulatory hurdles or broader issues with demand for thermal coal that might prevent your customer from giving you You know, that similar five-year contract extension that you just obtained from the met coal customer. And ultimately, I'm just trying to understand how you're thinking about the outlook for met coal versus thermal coal in Australia.

You know, from the industry information I've seen, I think all the coal, particularly in Queensland, is a very strong, long demand. I don't think there'll be any issue in renewing contracts at these coal mines. Most of them are already, they're all permitted already and they're generally permitted for multiple decades in advance. There's no re-permitting. We don't know of anyone that's got to go back out or has that kind of risk in our current operations. Queensland, I think the numbers, both thermal and met, is about 90% of Queensland coal is export to an extremely strong and high demand in the Asian Indian marketplace. It predominantly competes with Indonesian coal, and it's far superior in its efficiency and its burn and its price per BTU and the cleaner burn it has. So I don't think we're going to see any impacts in that market. You know, although, you know, that carbon footprint's going down, there's more and more electricity requirements. And, you know, from the numbers we see in the, like the Queensland Coal Mining Associations and that, they've seen strong demand, you know, going into the next two, three decades. Make sense.

So, I mean, I don't want to put words in your mouth here, but we could potentially see a renewal in the near term on that site as well. Yeah, for sure. One more question is probably for Jason. Are the costs to move or revenues associated with the move of assets contemplated in the 2024 guidance like you mentioned in the prepared remarks that there's the potential to move the smaller assets either within Canada or to Australia?

Yes, they are. We would expect that shipping costs would be capitalized through through the McKellar group, given the low cost that's on our balance sheet for the actual cost of the units for units that are shipped. And the revenue contemplated in Canada does have some allowance for units coming out of the region. So it is included in our guidance, but we haven't laid it out specifically in our forecast. Understood. Thanks, guys. We'll turn it back. Thanks, Aaron.

Thank you, ladies and gentlemen. As a reminder, should you have any questions, please press star 1. Next question comes from Kevin Ganey at Thompson Davis. Please go ahead.

Good morning, Joe and Jason. Congrats on the Q4. Maybe if we could start on the bid pipeline in Australia. You guys have tendered well, a pretty big announcement recently. Could you go into more details about that specific and what you're thinking as you look forward?

Into that bid in particular? Yeah. Is that what you're asking?

Yeah.

Yeah, I think we see continued opportunity. That bid was one where, you know, this is the second of a five-year, second turn of a five-year contract, and then we extended it to another five. The long-time customer But I do think that those kind of contracts are typical, especially in the Queensland coal fields. And I think there's opportunities to lock in more of them on other sites with growth. And that's some of that bid pipeline you'd see in Australia. And I think the Western Australia and other areas of Australia resource marketplace, we're starting to see more activity in those areas as well. And, you know, gold and iron ore have typically been the strong Western Australia side, but there is some copper markets that are picking up there, and we have one of those in our tender pipeline. So, you know, overall, just a really, really strong bid pipeline.

Thank you for that. And then maybe we could talk about Q1 as well. Has it started slower recently? for McKellar and then just the oil sands in general as well.

This is kind of what I was talking to Yuri about earlier. We're having a little bit more slower of a winter, but I think the biggest reason why Q1 is different is the addition of McKellar. McKellar is a lot more consistent year-round, but their rainy season is summer, which is our winter, so Their November to February is slower than the rest of the year, so that's taken us to more counter-seasonal Q2, Q3. Noon has always been that way. And then we see Fargo, even though last year was big, it was predominantly all earthworks, and it was very year-round work. It is a little higher in the summer, but this summer will be much higher just because there's a lot more concrete work and big bridge construction, which has to occur in the summer. And so, you know, all of those factors just push, you know, our top line more into Q2 and later.

Thanks for that, Joe. And maybe for Jason, just a bit on the forecast for DNA in 24, maybe cadence as well about that as I look at the model.

Yeah, we touched on that too. We expect to be in the 4% range on reported revenue moving forward. We've had some questions on the Q4 metric, which did include $6 million of acquisition costs in the quarter. So Q4 is not indicative of our run rate. But I think for modeling purposes, 4% is still where we expect to be in 2024.

Perfect. I appreciate the time, guys.

Thanks, Sean.

Thank you. Next question comes from Sean Jack at Raymond James. Please go ahead.

Hey, morning, guys. So quickly just wanted to switch over to the acquisition point that was talked about earlier. Overall, do you expect in Australia that there's any more sort of material acquisitions that you guys could make that would be able to be done at the multiple point that McKellar was done? Or is that kind of standing as a pretty unique deal for you guys?

I think there could be other opportunities. I think it'd have to be very compelling now because I think we can grow a lot of stuff ourselves. So, you know, I don't think we, if there were an opportunity, we certainly wouldn't be paying any huge premiums because most of us, we feel very comfortable that we can, we can build up from brownfields right now.

Right. Okay.

That's a good color. Um, and then looking forward, obviously you guys got a lot of stuff to do or just, you know, a process out of you on your plate for the integration. Like, When does acquisitions actually and bolt-ons become a priority or something that's very realistic? Is that maybe far deeper into 2024 or is that actually an opportunity in the coming months here?

I think small bolt-ons can happen fast. If there was big acquisition opportunities, historically they've taken us many months, years. McKellar was a two-and-a-half-year process. So even if we had one on the desk today, it'd probably be 2025 or later kind of thing, unless it's a smaller bolt-on acquisitions. Those things, ML Northern, DGI, we were able to process pretty quickly. And so, you know, our focus will be on the McKellar integration this year. And regardless of what acquisition activities occur, I think we'll be able to maintain that focus for the year and get that integration done. Done smoothly.

Okay, perfect.

Yeah, I'll jump back in the queue. Thanks.

Thank you. We have no further questions. I will turn the call back over to Joe Lambert for closing comments.

Thanks, Joanna. Thanks again, everyone, for joining us today. We look forward to providing the next update upon closing of our Q1 2024 results in early May. Thanks.

This concludes today's conference call. Thank you for participating. You may now disconnect. Have a good day.