Newpark Resources, Inc.

Good morning. My name is Savannah and I will be your conference operator today. At this time, I would like to welcome everyone to the New Parks Resources fourth quarter and full year 2023 earnings conference call. Today's call is recorded and will be available for replay beginning at 1230 p.m. Eastern. The recording can be accessed by dialing 800-925-9394 domestic or 402-220-5386 international. All lines are currently muted, and after the prepared remarks, there will be a live question and answer session. If you would like to ask a question during the Q&A segment, please press star 1 on your phone. If your question has been answered, you may remove yourself from the queue at any time by pressing star 2. We do ask that you please pick up your handset for optimal sound quality. It is now my pleasure to turn the floor over to Greg Piontek, Senior Vice President and Chief Financial Officer. Please go ahead.

Thank you, Operator. I'd like to welcome everyone to the New Park Resources fourth quarter 2023 conference call. Joining me today is Matthew Lanigan, our President and Chief Executive Officer. Before handing over to Matthew, I'd like to highlight that today's discussion contains forward-looking statements regarding future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties. including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. Our comments on today's call may also include certain non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures are included in our quarterly earnings release, which can be found on our corporate website. There will be a replay of today's call, and it will be available by webcast within the investor relations section of our website at newpark.com. Please note that the information disclosed on today's call is current as of February 22nd, 2024. At the conclusion of our prepared remarks, we will open the line for questions. And with that, I would like to turn the call over to our President and CEO, Matthew Lanigan.

Thank you, Greg, and welcome to everyone joining us on today's call. I'm pleased to share that the New Park team continued to execute at a high level in the fourth quarter, maintaining our focus on operational excellence while also advancing our multi-year business transformation strategy. We entered 2023 with very clear priorities. First, a focus on operational efficiencies to drive improvements in returns and consistent free cash flow generation. Second, prioritising investment in the growth of our industrial solutions business while evaluating strategic alternatives for our food business. And finally, maintaining a strong balance sheet and returning excess cash generation to our shareholders. I'm pleased to say that in 2023, we delivered on all three. Our industrial solutions business delivered 12% year-on-year growth in rental and service revenues, which included solid improvements across all major industry sectors, resulting in a 21% increase in segment operating income and a 13% increase in adjusted EBITDA. We continue to strengthen our position within the key utilities transmission market, which is forecasted to grow robustly over the next three years, with an average of more than $30 billion per year projected to be spent annually on transmission line projects, according to recent EEI survey of asset owners. For the full year 2023, within our fluids business, our divestitures and restructuring actions, along with disciplined balance sheet management and the strong performance of our international businesses, contribute to a 15% year-over-year improvement in adjusted EBITDA and a $69 million reduction in the segment's net working capital, resulting in the segment's strongest return on net assets since 2018. Notably, our eastern hemisphere delivered 28% year-over-year growth to a record $257 million of revenues in 2023, while our Canada operations also delivered 12% year-over-year revenue growth. As a result, NUPAC delivered $74 million of free cash flow in 2023. We increased our rental fleet by 11% and continued to prioritise capital to the expansion of our rental and service footprint to serve the multi-billion dollar infrastructure markets. We also launched a process to divest our fluids business and have been working diligently to move that forward. And finally, we reduced our net debt by $54 million and returned $32 million to shareholders through the repurchase of 6.5 million shares. Across the board for full year 2023, we executed against our stated priorities and set the business up for a solid 2024. Turning now to specifics of the fourth quarter, we generated adjusted net income of $4 million, or $0.04 per diluted share, on revenues of $168 million. Within industrial solutions, while rental revenues remained in line with Q3 levels, late quarter customer project timing shifts due to non-matting related supply chain and local permitting issues impacted expected Q4 direct sales deliveries. Combined with reduced service activities, this led to a 19% sequential decline in segment revenues. The segment delivered $17 million of fourth quarter adjusted EBITDA, reflecting a 36% adjusted EBITDA margin, again highlighting the business's flexibility to maintain strong margins and returns despite mixed shifts in revenue sources across quarters. As mentioned in my full year comments, despite quarterly fluctuations, we remain encouraged with the longer-term outlook in our serve markets and our ability to continue to penetrate them. Consistent with our Q3 commentary, the Fluid Systems business revenues declined 14% sequentially, primarily reflecting the anticipated pullback in the EMEA and US regions. On the lower revenues, the segment delivered $5 million of adjusted EBITDA and a 4% adjusted EBITDA margin. Importantly, our Fluids team's disciplined focus on working capital management led to a $25 million fourth quarter reduction in the segment's net working capital, which ended the year at $171 million. With the meaningful reduction in Fluids working capital, we generated $28 million of free cash flow in the fourth quarter, which provided for a $13 million reduction of debt and a $6 million return of capital to shareholders through continued repurchases of our equity in the open market. We also invested $9 million of capex, primarily reflecting late quarter additions to our rental fleet to support our expanding rental project pipeline. We finished the year with net debt of $36 million and a 0.5 times net leverage ratio. And with that, I'll turn the call over to Greg for his prepared remarks.

Thanks, Matthew. I'll begin my remarks with the summary of our consolidated and segment level results for the fourth quarter, followed by an update on our outlook for 2024. Our fourth quarter was highlighted by strong cash flow generation, which provided for further expansion of our rental fleet, debt reduction, and return of capital to shareholders. Total fourth quarter revenues were generally in line with our expectations shared on our previous quarterly call with stronger than expected customer activities in international fluids markets, offsetting lower revenues from U.S. fluids and lower industrial solutions product sales. The industrial solutions segment revenue was $46 million in the fourth quarter, with more than 75% coming from rental and service. Rental and service revenues was $36 million for the fourth quarter, an 11% year-over-year decline. As we highlighted on our November call, customer activity in early Q4 was impacted by more pronounced hot and dry weather conditions, though we saw a steady improvement throughout the quarter and ended the year with much stronger rental utilization. This is a very different dynamic than we faced in the prior year, as the fourth quarter of 2022 was exceptionally robust, benefiting from strength and utility infrastructure project activity combined with the benefit of favorable weather conditions, which drove rental fleet utilization above typical levels. Direct sales, which tend to fluctuate based on timing of customer projects, declined $7 million year-over-year to $11 million for the fourth quarter as multiple customer project delays shifted the timing of expected sales into 2024. Further, the historical pattern of elevated Q4 purchases from utility customers didn't manifest this year, as these customers utilized their remaining capital budgets to fulfill other needs. On a full-year basis, rental and service revenues have increased 12%, reflecting growth across all major sectors, while product sales were down slightly. Industrial solutions segment profitability remained strong in the fourth quarter, as reflected by the segment-adjusted EBITDA margin of 36%. The fluid systems segment generated revenue of $121 million in the fourth quarter, representing a decline of 28% versus the prior year period, with a $44 million decline in U.S. land and $20 million impact from last year's divestitures, partially offset by an $18 million increase from international operations. Our eastern hemisphere contributed $63 million, or 52%, of our total fluid systems revenues in Q4. The fourth quarter result reflects a sequential decline from the record Q3 result, primarily driven by the anticipated reductions in the Congo and several European markets, somewhat offset by the restart of activity in Cyprus and an increase in the APAC region. On a year-over-year basis, our eastern hemisphere revenues improved 19%. Revenues from Canada increased 21% sequentially to $21 million in the fourth quarter, which reflects a 74% year-over-year improvement. Our U.S. operations contributed $37 million of revenue in the fourth quarter. Excluding the divestitures, this reflects a 26% sequential and 54% year-over-year decline. The sequential decline was primarily driven by the continued softening in the U.S. market activity, as well as a notable decline in the average revenue contribution from the RIGS service. With the effects of the U.S. market softness, we are maintaining our focus on pricing discipline and balance sheet efficiency, resulting in strong cash from U.S. operations. Segment adjusted EBITDA margin was 3.9% in the fourth quarter. As Matthew touched on, we reduced our net working capital in the fluid systems business by $25 million in the fourth quarter, including a $14 million reduction in the U.S., reflecting the solid progress driving working capital efficiency. As of the end of the year, the Fluid Systems business has $171 million of net working capital, consisting primarily of receivables and inventory, which represents more than 80% of the segment's net assets employed. SG&A expenses were $23.3 million in the fourth quarter of 2023, including $6 million of corporate office expense, The decreases in SG&A and corporate office spending on both a sequential and year-over-year basis is primarily driven by the impacts of short-term and long-term performance-based incentive programs. Interest expense decreased modestly on a sequential basis to $1.9 million for the fourth quarter, reflecting the effect of the lower overall debt balances. Tax expense was $2.4 million in the fourth quarter, as we were not able to recognize the tax benefit on the $3.5 million of impairment charges. The effective tax rate was 39% year-to-date. Adjusted EPS was $0.04 per diluted share in the fourth quarter compared to $0.07 in the fourth quarter of last year, reflecting the effects of lower profitability partially offset by a 7% decline in our diluted shares outstanding. Operating cash flow was $36 million for the fourth quarter, while $8 million was used to fund our net capex, with the majority once again directed toward the expansion of our industrial solutions rental fleet. We also used $13 million to reduce debt and $6 million to fund share repurchases. As a result of stronger than anticipated international receivable collections near the end of the year, our cash balance increased $10 million in the fourth quarter. We generated $28 million of free cash flow in the fourth quarter, bringing our full-year free cash flow to $74 million, a 93% full-year cash conversion of adjusted EBITDA. Let's now turn to the business outlook. Our view on the respective markets and the opportunity remains largely unchanged. For industrial solutions, we continue to see strong fundamentals for utility and critical infrastructure spending, which we expect will provide a multi-year tailwind to support our growth plan. In terms of our Q1 outlook, we expect modest sequential growth in rental and service revenues, and while we are pleased with the robust pipeline of opportunities on product sales, the timing of customer projects remains dependent upon permitting, supply chain, and other factors. the full year 2024 we anticipate total industrial solutions revenues in the 230 to 240 million dollar range and industrial solutions adjusted ebitda of 80 to 85 million with segment capex of 30 to 35 million dollars in fluid systems while the u.s market outlook remains somewhat challenged in the near term our Eastern Hemisphere and Canada business units, which contributed roughly 70% of the segment's revenue in Q4, continued to perform at a high level. Overall, we expect fluid systems revenue to improve modestly on a sequential basis in the first quarter, with international growth somewhat offset by continued U.S. softness. At this revenue level, we expect segment-adjusted EBITDA margins to improve toward the mid-single digits, benefiting from international operations. We anticipate corporate office expense will remain fairly in line with our 2023 exit rate for the foreseeable future as we continue to advance the strategic process for the fluid segment. Meanwhile, we expect interest expense and tax rates to remain fairly in line with current levels until we conclude the fluid process. In terms of capital allocations, we expect our 2024 net capital investments will remain dependent upon our projected rental revenue growth rate. Beyond our continued organic growth investments in industrial solutions, we expect our 2024 cash generation will be primarily used to build liquidity for inorganic growth opportunities following the fluid's divestiture or return of capital to shareholders through our programmatic share repurchase program. And with that, I'd like to turn the call back over to Matthew for his concluding remarks. Thanks, Greg.

As we leave 2023 and look ahead to 2024, I'm pleased with the progress we've made to drive organic commercial growth across the enterprise while continuing to build a more efficient, competitive business. Industrial Solutions once again delivered year-over-year growth in revenue, EBITDA, and margin realisation. With our ongoing expansion in the multi-billion dollar global worksite access market, we remain optimistic about the longer-term prospects for our business. In fluid systems, our international operations continue to deliver significant year-over-year growth in revenue and profitability, offsetting declines in US land markets, with the total fluid segment delivering the highest return on net assets since 2018. I remain proud of our global fluids business as they continue to navigate the changing global landscape, streamlining US operations and overhead structures while enhancing support capabilities within strategic international markets and maintaining a laser focus on safety, exemplary customer service and working capital efficiency. Our priorities for 2024 are clear. Within our industrial solutions business, we're prioritising geographic expansion within the US across a higher growth regional footprint, utilising our unique position as a vertically integrated manufacturer of composite matting to expand our fleet and drive share gains within our existing markets. We will continue to manage to our return and margin targets, carefully balancing our pricing and fleet utilisation as we evolve our project mix towards larger, longer-duration projects that provide for more stable revenues but more competitive pricing dynamics. We will also continue to expand the usage of alternative and recycled materials in our raw materials mix, further cementing our circular plastics credentials and optimising manufacturing costs. without impacting quality, appearance or design capability of our products. While volume growth within this business isn't linear, given factors of permitting and project timing, we remain bullish on the multi-year demand outlook, given the pace of new investment within our energy and infrastructure markets, and specifically within the utility transmission market, considering the growth in spend in this space that I referred to in my opening comments. As we expand our already meaningful relationships across the country with asset owners and their construction partners, we believe this will provide strong, long-term growth and a reduction in quarter-to-quarter volume swings, such as we experienced in the fourth quarter. We believe our Madding portfolio includes the most flexible, lightweight and durable solution in the market, positioning us to win where we compete. As it pertains to our fluid systems business, our strategic review remains on track, Given the scope of our international fluids operations, diligence is time intensive. However, we're making good progress with our partners at Lazard to move the process forward and continue to anticipate it will be concluded around mid-2024. Finally, with respect to capital allocation, we continue to optimise our balance sheet while investing in the expansion of our matting fleet and service capabilities. As we move closer towards becoming a pure-play industrial solutions business, we see the opportunity to become a strategic acquirer of assets within our existing scope of capabilities, evaluating adjacent markets that enhance our unique value proposition with customers, while supporting a path towards incremental margin expansion over time. In closing, I want to thank our shareholders for their ongoing support, our employees for their dedication to the business, including their commitment to safety and compliance, and our customers for their ongoing partnerships. And with that, we'll open the call for questions.

Thank you. And at this time, if you would like to ask a question, please press star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Again, that is star 1 to ask a question. And our first question will come from Aaron Spahala with Craig Hallam. Please go ahead.

Yeah, good morning, Matthew and Greg. Thanks for taking the questions. First for me on the industrial business, I know we had a tough comp year over year with weather, but could you give a little more details on some of the project pushouts? Sounds like it was supply chain permitting. Was that broad-based or just a handful of projects? Have those started in the first quarter? And then maybe just discuss how the pipeline sits today compared to the past few quarters as we think about growth for 2024. Thanks, Aaron.

Yeah, on the Q4 shift, it was really, you know, two specific projects at the end of the day. One was related primarily to steel products not being available for the full scope of the project, which caused them to push that. As it stands to its timing, it looks like, you know, the utility moved on to other projects and are now planning that for a little later in this year, so it has not yet commenced. was related to a local permitting issue that caused that delay, and that permitting issue is also still not resolved. So not necessarily what I call a systemic issue related to two specific projects in this case. As it pertains to pipeline, if we look at where we are on, you know, a quoted volume this time, This year versus last, we're seeing sort of strong mid to high teams growth in our quote rates, which is really underpinning the confidence that we're referred to in the call.

All right. Thanks for the color there. And then, you know, appreciate the margin guidance for the year. You know, it looks right around the mid-30s, but it's down slightly a little bit year over year. Can you just talk about how you're thinking about price, you know, versus volume and mix in 2024, especially with lumber prices where they are, and maybe how recycling factors into that as that starts to grow as a percentage of your mix?

Yeah. You know, I'll start it and then I'll let Matthew add to it. But I think, you know, the growth that we see in 2024, I think, is going to be much more so driven by volume, volume expansion as we penetrate the markets. You know, as Matthew mentioned in his comments, You know, we are intentionally pursuing some of these longer-duration projects, which obviously come at a different price point. You're kind of trading utilization and predictability for a little bit of price. I wouldn't expect price to be a big movement there. Probably kind of gradually reduce as we progress through the year and make that progression a longer-term project.

Ben, I think you got it.

All right. And then just maybe one more, you know, I know you didn't guide for fluids explicitly as you have in the past, but just with the decline in the fourth quarter relative to the past few quarters, are there any other less profitable areas that we need to still step away from? Just want to understand a little more on what drove the 4Q performance and how we should be thinking about that business from here.

No major changes in the overall business makeup or business changes in the way. Obviously, we're in the midst of the process. And so continuing to do kind of the take of the common sense actions to streamline the overall organization and really adjust to that mix shift. But, you know, as we kind of framed out, this thing has shifted pretty dramatically over the past year with now, you know, 70% of our revenues here coming from the international piece of the business. So I think as we look in the near term, I don't see any major changes in that. You continue to have the market dynamics of international is where we see the greatest strength, and the U.S. market continues to be struggling as a general market as a whole.

All right. Thanks for taking the questions. I'll turn it over. Thanks, Anne.

Our next question will come from Amat Dayal with H.C. Wainwright. Please go ahead.

Thank you. Good morning, everyone. Good morning. On the industrial outlook, is that news supported by some concrete backlog Are we just sort of, you know, using our pipeline to, you know, give that outlook?

Yeah, it's really pipeline-driven. I think, you know, in this business, you know, backlog is a harder concept for us. We just look at what our quoted volumes are with various start times throughout the year. They typically tend to be more – here and now type project activities that we are actively quoting on in the pipeline. So it's really just looking at pipeline volume changes year over year and period over period, which as I sort of said to Aaron, we're looking at, you know, high-teens sort of growth in our quoted volumes and a fairly stable conversion rate on those, which is really driving the forward guidance.

Yeah, and, you know, just adding to that, just as we saw in Q4, even when you do have, you know, firm orders and locked-in projects, we find that the timing of those projects starts slide because they are dependent on some other things that are beyond our control.

Yeah, and I mean, the interesting thing there is Back a year ago they slid in our favor and we had a really strong Q4 with all these leads lining up in the quarter. This year it appears that that couldn't be repeated. So there are swings and roundabouts.

Understood. Thank you for that. And the capital that's going on into the industrial segment, is that mainly going to support the rental business or some other projects?

Yeah, primarily it's supporting fleet expansion. There are some maintenance CAPEX needs at the plant, but the primary focus is on rental fleet expansion as we look to grow those geographic regions forward and continue to penetrate new customers in the space.

Yeah, and in rough round numbers, roughly 75% of our CAPEX here this year was really driven by supporting that growth of that rental fleet. So As we look forward, the growth rate in the rental fleet is going to be kind of a key driver of our level of capex in the business.

That's good to hear. And then on the fluid business side, it still seems, I mean, Lazard is still working on potentially getting some interest. I mean, should we assume that there is no sort of formal bids on the business yet?

Yeah, you know, without getting into too many details on exactly where the process is, you know, we followed what I would frame up as a typical, you know, marketing process. As we had mentioned previously, you know, that process launched in September, and then you go through your phase one, phase two diligence, as Matthew mentioned in his comments. as you can kind of naturally expect when you look at the international complexities and the breadth of the operations. The diligence phase takes, you know, a reasonable amount of time. But having said that, we're still seeing kind of a mid-year 24 expectation to get the process substantially wrapped.

That's all I have, guys. Appreciate it. Thank you. Thank you.

And our next question will come from Bill DeZellum with Teton Capital. Please go ahead.

Thank you. You had mentioned that in 2023 that 75% of your CapEx was from or directed towards rental fleet expansion. Do you anticipate that same ratio this year?

I would not expect any major changes in that. Yeah, I think you still have at least 75% or so of our capex will be in the form of the fleet expansion.

And directionally, what geographic regions are you looking to expand in?

Yeah, really, we see some nice growth in sort of the Midwest region. uh and north and northwest markets opening up as well as you know a lot of continued activity within our you know the more traditional markets in the southeast and southwest but in terms of new activity i think i think really it's a midwest focus and then once you have accomplished what you're referencing in the midwest and the northwest

parts of the country would you still be under-penetrated in?

Yeah, I don't know how to describe it as under-penetrated. I think it's really just, you know, we can move fleet fairly efficiently and we can move crews fairly efficiently. You know, what we want to do is, as we see sustained activity levels set up, set up more permanent establishments there, it's really going to be a case of using our logistics efficiency to service those, you know, those project-specific areas versus, you know, a sustainer level of activity in a geographic area. Another way to say that is we cover the country now, but as we look at where we want to have more established presences for what we see as more sustained activity long-term, they're the areas where we're looking to move fleet to.

Understood. So there aren't any areas in the country that you are just out, not in at this point, or at least once you get into the northwest and midwest?

That's right, Ben.

If I just think about a map of the United States, the Northwest and the Midwest encompass a really large geographic area. How does that relate to the size of revenue possibility? Does geography equal revenue with these transmission lines, or is it really more tied to population basis?

Yeah, I mean, it's really more tied to what activity is going on in those spaces in terms of renewable tie-ins. Is it renewable project tie-ins? Is it just infrastructure upgrades? Is it interstate connections? What the activity levels are to support the kind of the supply goals of the utilities in those geographies. Higher populations, higher demands, that would drive that kind of thing, but I think it's more generally related to what's actually going on in those markets from an alternate supply and then a reliability perspective.

Yeah, I think you do have some issues, you know, some geographies that have more of an issue with aging of their infrastructure, so therefore need for them to harden the grid, et cetera.

So what geographies are in need of grid hardening the most? And then second, is our perception correct that the renewables, specifically wind and solar, are most active in terms of new installations in the Midwest, basically from the Mississippi West?

Yeah, Bill, I think on a project basis, you know, the call out of the focus in that Midwest area is where we see the activity levels really supporting our push into that space as it pertains to project activities, you know, specifically around the renewable times and et cetera. I think as you've called out the geographies and where you see those projects, that's where we're going to be.

And the grid hardening, where is that most needed?

I think as you've seen, you know, as we move through the southeast and the southwest regions where you've got more exposure to extreme weather events, you know, particularly in the form of hurricanes and things of that nature. But generally, as Greg touched on it, I think the grid across the country is kind of at the outer edge of its age limit. So there's a full court press here to upgrade that to meet the reliability standards and the capacity requirements that society needs.

Thank you. And then one more totally different direction here. Would you please detail what you hinted at relative to the quote rate increase for the map business and provide us more perspective on that, please?

Sure. I mean, as we look at our quoting activity, which we're capturing in our systems, and we see the level of that from a volume perspective of what's out there in the marketplace, we look year on year and we see that at a point in time this year, the volume of quotes that we've been asked to participate in is up in that sort of 15% to 19% year over year, which... which gives us confidence that the longer-term demand in the activity levels are lining up with the macro themes you're hearing in terms of utilities, expanding CAPEX budgets and talking about the need to upgrade their infrastructure. We're seeing that flow through into project requests. What we've kind of alluded to in the call is be it supply chain-specific or permit-specific, the timing of those, is becoming less easy to predict. So hopefully that covered what you're after, Bill.

Great. Thank you very much. Of course.

And next we have a follow-up from Aaron Sparhala with Craig Hallam. Please go ahead.

Yeah. Hi, again, just a couple others for me. You know, on the free cash flow, can you just maybe talk about how you see that trending in 2024, some of the moving pieces there? I mean, you had a really strong year in 2023 from, you know, working capital benefits. Just how does that look as we head into 2024?

Yeah, you know, the working capital benefit we saw in 23, you know, that provided a pretty significant tailwind, and that's really the overall revenue driven. You know, as I look to 2024, what I would say is, you know, the fundamental model, you still see strong free cash flow generation. You know, the one thing that would work as a headwind to that is if you do have a very sharp growth rate in the revenues, that would consume working capital and work against you. But absent that, we see a solid free cash flow generation for the year. Q1, I would say I would expect that to be somewhat muted in part because we had a very strong Q4. Q1, you also have certain impact of like payout of your annual incentives. So that kind of works against you as well. So I would expect kind of a muted free cash flow generation here in Q1, but solid for the year.

Got it. Thanks. And then just maybe one last one. On the 800 series launch, just maybe an update on the progress there. How has uptake been given the performance benefits? And just is that something that kind of helps accelerate growth given kind of the value proposition there?

yeah and on the on the 800 series we've deployed the majority of that product into our internal fleet so we're we're seeing the the transportation advantages from from the lighter weight in our own internal um fleet use and so really that's what we wanted to do to kind of put that put that product to work in our own fleet first and then look to expand that um to to customers into this year and beyond. So I'd say it's all going on track. The performance of the product, as we predicted and expected, is performing like a traditional DuraBase product with just that weight advantage that's really helping on the transportation side.

Great. Thanks for taking the questions. Appreciate it. No, you bet. Thanks, Aaron.

And that will conclude our time for the question and answer session. I would now like to turn the conference back to our Mr. Greg Piontek for any closing remarks.

Thank you. That concludes our call today. Should you have any questions, please reach out to us using our email at investors at newpark.com. And we look forward to speaking with you again next quarter.

And that will conclude today's conference. Thank you for your participation.