Teekay Tankers Ltd.

Good day, everyone. Welcome to TKTankers Limited's fourth quarter and fiscal 2021 earnings results conference call. During the call today, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question and answer session. At that time, if you have a question, participants will be asked to press star one to register for a question. For assistance during the call, please press star zero on your touchtone phone. As a reminder, this call is being recorded. And now for opening remarks and introductions, I would like to turn the call over to the company. Please go ahead.

Before we begin, I'd like to direct all participants to our website at www.tktankers.com, where you'll find a copy of the fourth quarter and annual 2020 earnings presentation. Kevin and Stuart will review this presentation during today's conference call. Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from results projected by those forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the fourth quarter and annual 2020 earnings release and earnings presentation available on our website. I'll now turn the call over to Kevin McKay, TK Tanker's President and CEO, to begin.

Thank you, Ryan. Hello, everyone.

Thank you very much for joining us today for TK Tanker's fourth quarter and annual 2020 earnings conference call. and I hope you and your families are all safe and healthy. Joining me on the call today are Stuart Andrade, TK Tankers CFO, and Christian Waldegrave, Director of Research for TK Tankers. Moving to our recent highlights on slide three of the presentation, TK Tankers reported a total adjusted net loss of approximately $41 million, or $1.21 per share during the fourth quarter, a decrease of nearly $44 million, or $1.30 per share from the third quarter of this year. Please note that our fourth quarter adjusted net loss includes a non-recurring tax adjustment related to prior quarters of $8.4 million or 25 cents per share. If this adjustment was excluded, our Q4 adjusted net loss would have been $32.3 million or 96 cents per share. Despite our weaker results this quarter, we had one of our best years ever in 2020, during what had been an unprecedented and challenging year. We reported 2020 adjusted net income of approximately $153 million or $4.54 per share, which is an increase of $89 million or $2.63 per share from 2019. We also reported record free cash flows of $277 million in 2020, an increase of nearly $100 million or 56% compared to 2019. These cash flows, along with asset sales, drove a net debt reduction of $419 million or 45% during 2020 to $510 million at the end of the year. Our net debt total capitalization also declined to 32% at the end of the year compared to 48% a year ago. And our liquidity position increased to $373 million as of year end. Our focus on debt reduction has truly transformed our balance sheet and built a resilient financial position. In addition, we continue to decrease our cost of capital through the unwinding of sell-leaseback financing a range between 2017 and 2019, which were identified as a key strategic pillar for 2020. Last quarter, we announced the repurchase of two vessels on sale leaseback for $30 million, which was completed in October. And this quarter, we declared purchase options for two additional vessels on sale leasebacks for a total purchase price of $57 million, which are expected to be redelivered into our fleet in May of 2021. Lastly, we've been proactive with several commercial activities. We've been successful in offsetting some of our exposure to the weaker freight market with several fixed rate out charters that were locked in during periods of market strength. As a result, 20% of fourth quarter days were fixed at an average rate of $35,700 per day, well above the prevailing spot market rates. We've also been active on fleet optimization, we entered into agreement to sell two unencumbered 2008-built Afromaxes for a combined price of $32 million. This was an opportunistic sale, which further delivers our balance sheet and increases our liquidity position. Based on our positive forward view of the market, we also entered into a seven-year in-charter or an eco-Afromax new building, at an attractive rate of $18,700 per day, which we expect to deliver into a strong market in late 2022. This in-charter also provides us with both charter extension and purchase options, and enables us to increase our scale and renew our fleet in a less capital-intensive manner. Turning to slide four, we look at recent developments in the spot tanker market. We are currently in the midst of a severe downturn in spot tanker rates due to the knock-on effects of COVID-19 on both oil demand and supply. This is shown by the chart on the right-hand side of the slide, which illustrates the extent to which spot tanker rates have fallen since the first half of 2020. Renewed lockdowns in many parts of the world due to a second wave of COVID-19 and the emergence of new, more transmissible variants of the virus led to lower oil demand during the fourth quarter of 2020 than was previously expected. This has kept global refinery throughput at persistently reduced levels. At the same time, the OPEC plus group of oil producing countries have shown discipline in sticking to planned supply cuts in order to rebalance the market. The global oil supply in the fourth quarter of 2020 averaging just 92.3 million barrels per day, more than 8 million barrels per day below pre-COVID levels. Finally, the amount of fleet capacity tied up in floating storage or idle due to port delays fell by around 13 million deadweight tons or 25% during the fourth quarter of last year, adding to available fleet supply. The combination of slower oil demand growth, limited cargo supply, and an increase in fleet supply was negative for crude tanker spot rates during the quarter. Although spot tanker rates fell during Q4, T&K managed to partially mitigate the impact of lower spot rates through its fixed rate time charters, as shown by the chart on the left. This is particularly true for our Suezmax fleet, where our fixed rate charters lifted overall Suezmax earnings to around $18,200 per day, versus spot earnings of around $9,300 per day. Crew tanker spot rates have remained weak during the first quarter to date, and the market faces several headwinds in the near term. Despite the start of vaccine programs in many countries, we expect the adverse impacts of COVID-19 to continue to dampen oil demand for some time. In the immediate term, in addition to the OPEC Plus group cuts already in place, Saudi Arabia has announced an additional oil supply cut of 1 million barrels per day in both February and March of 2021, which will reduce cargo supply, though they have signaled that they may return this supply from April onwards. Thirdly, a backwardated oil structure may lead to further inventory drawdowns and release more vessels from floating storage into the spot trading fleet, while higher oil prices have translated into higher bunker costs. impacting spot tanker earnings. Turning to slide five, we give a summary of our earnings in the first quarter of 2021 to date. Based on approximately 69% and 67% spot revenue days booked, TK Tanker's first quarter to date, Suezmax and Afromax bookings have averaged approximately $9,600 and $7,700 per day respectively. For our LR2 fleet, which are predominantly trading 30, based on approximately 65% of spot revenue days booked, first quarter to date bookings have averaged approximately $10,000 per day. As mentioned in my opening remarks, we locked in fixed rate charters during periods of market strength at attractive rates, which helps to offset the current spot market weakness. The company's combined rates for the fixed and spot fleets to date in Q1 are significantly higher than the current spot market rates. Our Suezmax fleet has 75% of its Q1 revenue days booked at $18,900 per day. Our Afromax fleet is 73% booked at $11,400 per day. And our LR2 fleet is 69% booked at $13,200 per day for the first quarter of 2021. Lastly, we have brought forward our scheduled dry dockings for 2021, and we expect to have our fleet fully available for the winter months, which coincides with an anticipated recovery in rates, which I will touch on in more detail on the next slide. Further details of our fixed rate charters and our 2021 dry docking schedule can be found in the appendix for the presentation. Turning to slide six, we look at the longer term outlook for the tanker market and the factors which we believe will drive a recovery as we move through the coming months. Global oil demand is expected to improve substantially during the second half of this year, in tandem with the rollout of coronavirus vaccine programs, as shown by the chart on the left of the slide. In addition, we expect that Global oil inventories will revert to more normalized levels during the course of the year, with crude inventories expected to normalize earlier than product inventories. This process is already well underway, as evidenced by an increasing backwardation in the oil futures curve and higher oil prices in recent weeks, both signs of a tightening oil market balance. Although global oil inventory data is somewhat opaque, is encouraging to see that U.S. crude oil inventories have moved back to the five-year average for the first time in three years, while crude oil held in floating storage has been almost completely unwound. As the oil market returns to balance, and with oil prices finding support above $60 per barrel, we expect that the OPEC Plus Group will start to return supply to the market through the course of 2021, accelerating during the second half of the year as demand growth starts to gather pace. As shown by the chart, we expect both oil supply and demand to approach the 100 million barrel per day mark by the end of the year and to return to pre-COVID levels in 2022. The fleet supply side of the equation continues to look very favorably. Although there have been a slight uptick in new building orders in recent months, The order book size remains small by historical standards at approximately 8% of the existing fleet size. With new build prices starting to rise, ongoing uncertainty over vessel technology, and a restricted financial landscape, we expect the overall level of new tanker orders to remain low. More significantly, we expect tanker scrapping to pick up in 2021 due to a combination of weaker freight rates, higher scrap prices, and increasing pressure from regulatory compliance. We therefore expect tanker fleet growth to remain low during both 2021 and 2022, as shown by the chart on the right of the slide. In summary, the tanker market will continue to be challenged for the next few months due to the impact of COVID-19 on oil demand and ongoing OPEC plus supply cuts. However, We believe that tanker demand will improve as we move through the second half of the year as vaccine programs gain momentum and the OPEC Plus group return oil supply to the market. Low free growth will further help facilitate an improvement in the tanker market, particularly if we see an increase in tanker scrapping in the months ahead. I will now turn the call over to Stuart to cover our key accomplishments in 2020.

Thanks, Kevin. Turning to slide seven, about one year ago, the world was set on an unprecedented course with the emergence of COVID-19. Fortunately, TK Tankers has thus far successfully navigated the logistical and regulatory challenges with minimal impact on our operations, while further solidifying a resilient financial position by delivering on our strategic priorities. Because of the efforts from our seafarers and shore staff, Along with the strong tanker market in the first half of 2020, the company generated a record-setting $277 million in free cash flows, which has helped transform our balance sheet. During 2020, our net debt has decreased by $419 million, or 45%, to $510 million, and our net debt to cap has decreased from 48% to 32%. The company's liquidity position increased by $223 million to $373 million during 2020. We also refinanced the majority of the company's debt this year and made significant progress on reducing our cost of capital. We completed $600 million in refinancings for 35% or sorry, for 35 vessels at attractive rates. And we have no debt maturities until 2023. In addition, we have reduced our exposure to higher cost debt by repurchasing two AfriMax vessels previously under sale leasebacks and recently declared purchase options for two Suezmax vessels under sale leasebacks for a combined price of $57 million, which will re-deliver in May 2021. We expect to finance the Suezmax vessels with existing liquidity and potentially a new long-term debt facility. Further detail on our debt maturity schedule is in the appendix to this presentation. We were also able to opportunistically sell $86 million in assets in 2020, which further strengthened our balance sheet. And we recently entered into an agreement to sell two additional vessels, which are unencumbered, bringing the total asset sales to 122 million since the beginning of 2020. Lastly, as Kevin touched on earlier, we have been proactive by locking in fixed rate chargers at attractive rates well above today's spot market levels. 10 vessels were committed on fixed-rate charters at an average rate of $38,000 per day for periods ranging between six months and 24 months. This has allowed us to partially mitigate the recent weak spot market conditions and means nearly 20% of our first half of 2021 ship days are locked in at over $34,000 per day, significantly reducing the cash flow break-even of our spot fleet. All of this has contributed to our balance sheet transformation where we have built a resilient financial position which provides us with the financial flexibility to face the future with confidence.

With that, I will turn the call over to Kevin to conclude. Thanks, Stuart.

In closing, I would like to say thank you once again this quarter to all of our seafarers and shore-based staff. for their continued dedication to providing safe and uninterrupted service to our customers during a challenging and historic year. It's truly been a collective effort that has embodied the TK values of both teamwork and reliability. As we hopefully move closer to a more normalized world in 2021, at TK, we will continue to focus every day on the safety and wellbeing of our seafarers as we have done every day since our inception nearly 50 years ago. They are the backbone of our organization and an integral part of our TK family. In 2020, with challenge came opportunity, and as Stuart outlined in detail, we seized that opportunity to execute on multiple fronts to transform our company. As we sit here in early 2021, we still face headwinds in our immediate path, The company, therefore, will continue prioritizing balance sheet strength and lowering our cost of capital, which preserves our financial strength and flexibility, enabling us to continue building long-term shareholder value. With that, operator, we'll now turn the call over to take questions.

Thank you. Again, ladies and gentlemen, that is star one. If you would like to register to ask a question, we'll take our first question from John Chappell from Evercore.

Thank you. Good morning or good afternoon. Stuart, if I could start with you, the sale and leaseback unwinding is obviously a very good use of your capital and you're doing it as you can. You still have a fair amount of liquidity and a fair amount of leases, but as I recall correctly, you can't just exercise those at will. There's a schedule as those roll off. So could you just remind us on what the potential for exercising options to unwind those sale and leasebacks look like through 2021 and 22?

Hi, John. Sure. In early 2021, we actually have the opportunity to unwind six of those leases, which have a total lease balance of about $132 million. And we're in a position to exercise options on an additional four throughout the year. So pretty soon we'll have six coming up. And then an additional four, we have options throughout the year. And just to remind you, we'll be taking possession of two of the vessels which are currently under lease in May of this year. So the majority of them are really exercisable during 2021.

And then you have $373 million of liquidity today. Your debt paid out in the next couple of years is only $34 million. You know, I'll let someone else ask about the dividend. But, you know, is it possible to, you know, really kind of elevate the pace of these unwinding of the sale and leasebacks, just given your liquidity situation and maybe more optimistic view on the market by the back half of this year?

Yeah, it's certainly possible, and we are looking at all of those sale leasebacks and trying to decide on how many of those that we want to exercise. As I've mentioned previously, we have about half of them are at higher rates, closer to 9%, and some of them are more in the 6% range. So we would obviously have a, you know, keener focus on the 9% leases. So we are looking at those and considering exercising them, just balancing that off with the current weakness in the tanker market and trying to decide how much we should do there and how much liquidity we would use to do that. But definitely something we're strongly considering.

Okay. And then just final follow-up to that one and then one for Kevin. But, Stuart, what's the total? If you were to exercise all of the options that came due this year, what would that total outlay be?

If we were to exercise all of the options, and essentially they're all available to us, not including the ones that are delivering in May, it would be a little bit over $300 million, and including the ones that are delivering in May would be about $350 million. Of course, we have opportunities to finance those in a variety of different ways. So, you know, we could take traditional debt or put other financings on those.

Great. Understood. Thank you. And then, Kevin, just a quick one for you. You know, I was going to ask, even before I saw the press release today with the sale of the two 2008 Afromaxes, it seems like just given the current market conditions, there's still a little bit of an elevated asset price environment, especially with 15- to 20-year-old assets trading well above scrap value. You have, by my count, 10 that were built between 2003 and 2005. what's your appetite to dispose of those more quickly, both strategically, but also, you know, to raise more funds to help Stuart, you know, pay down some of those expenses, say, on leasebacks this year?

Yeah, it's a very good question.

You know, we've always looked at our fleet on a portfolio basis. And, you know, part of that is, is selling ships at the right time. It doesn't necessarily have to be older ships. If you look at today's market, for example, although the asset prices, as you say, for the older sort of series of vessels is elevated, there's not a lot of inquiry at the moment relative to what we saw at sort of the back end of 2019 and early 2020. when inquiry was quite strong, and you saw us take advantage of that when we sold the four older ships in the fleet. Today, and over the last couple of months, the inquiry has been more pronounced for newer tonnage. And just recently, we were approached with the 2008s at an attractive price, so we decided to execute on those as an opportunistic sale. I think we don't have a written formula that a ship has to be over 15 years old for us to sell it. Likewise, it doesn't mean that we will sell our 15-year-old ships. A lot depends on what we can accomplish in the market, what kind of capital we're going to have to outlay on the ship, and where we think both asset prices and freight rates are going to go over the foreseeable future. So it's pretty much a moving target.

Got it. All right. Thank you, Kevin. Thanks, Stuart. Thanks, John. Thanks, John.

We'll take our next question from Ken Hexter from Bank of America.

Hey, great. Good afternoon, Kevin and Stuart. Just a great job on the refinancing through the year. Just on timing for the rebound, you noted in 2021, are you seeing anything bubbling yet? You mentioned, you know, still seems to be bouncing along the ugly floor on the spot, but I want to understand your outlook, which seemed to be rising versus the comments on the rising order book, and maybe your thoughts on when that becomes troubling. I mean, obviously, it's the lowest levels in decades. So at what point would you start to get more concerned in terms of level of order?

Yeah. Hi, Ken.

I think as we look at the way the market's playing out, I think we're As we said in our prepared remarks, we are confident that the oil demand environment will rebound in 21. The challenge is really the timing of everything. So many elements that come into play that down the line will impact freight rates. It's uncertain exactly on the timing of each of those elements, whether it's demand itself, whether it's oil supply returning to the market, whether it's refinery runs and margins or the winding down or complete winding down of floating storage. So we're confident about the future, but the actual timing of it, we're still uncertain. We're starting to hear more positive commentary from the OPEC Plus about increasing supply. But, you know, we're 8 million barrels a day below our pre-COVID run rate. And even if they increase in the very near term, we're not going to see 8 million barrels return all at once. So our uncertainty is around the timing of when all this comes together and when that finally results in increased tanker transformation. demand, transportation demand, and therefore freight rates. So I think we're taking each month as it comes, but we are confident that as we get closer towards 2022, we'll be in a much better position as a tanker market than we are today. In terms of the order book, we're at, I think it's a 24-year low in terms of where the order book stands today relative to our overall tanker fleet. So we still have room to absorb increased ordering. But as we've been saying for several quarters now, owners are in a quandary as to whether to order or not. There's a lot of question marks about new propulsion systems and efficiency gains. There's also a more restrictive financing environment. not to mention some of the regulatory uncertainty that we're facing. So I think while we can absorb more ordering, I think it will be muted relative to historic levels. But it's something that we've obviously got to keep an eye on day to day. And I can't speak to what other owners will do in the coming months. But what we've seen so far, I think it bodes well for or a fairly decent fleet supply picture in 21 and certainly in 2022. Thanks for that.

And then you mentioned the in charters, kind of a shift of strategy after, you know, unloading some vessels and putting things on charter out, looking to in charter, but not till fourth quarter of 22. What drove your thought process there and the timing? Is that just kind of when you can find availability at the right price or? What was your thought on the shift to the in charter?

Yeah, it's part of the fleet portfolio management I spoke about earlier with John. It's something we're always looking at, whether that's selling assets at the right time or adding. And in this case, it was an opportunity to, you know, renew or begin a fleet renewal with very little capital commitment or no capital commitment on a vessel that would add to our emissions averages as a fleet, which is something that we've got to consider as we go forward. But it was a good opportunity on a very good economical asset at an extremely attractive long-term rate, which we felt that it was worth executing on.

And just real quick for me to wrap up, can you remind us of the new break-even point on the plea, given some of the shifts in the lower debt costs?

Our free cash flow breakeven for 2021 will be about $15,000 per day on average between ApraMax and SuezMax. Great.

Thanks, Sam Stewart. Appreciate the time. Thanks, Ken.

And we'll take our next question from Randy Givings from Jefferies.

Howdy, gentlemen. How's it going? Good, thanks, Randy.

Good, Randy. Thanks. How are you?

Great, great. I guess a question on the asset values. You know, they seem to be holding up pretty well, but can you kind of quantify just changes in asset values over the last three months or so since your last call? You know, one thing that was not in your presentation again this time was your NAV calculation, which was in the low to mid-20s, I think you said last time. So where does that look? How would you view your current NAS?

So maybe starting with your first question on asset values, over the last three months, over the last quarter, they've been relatively stable. And it really depends on the age of the vessel, so maybe a little bit of increase on asset values on some of the more modern vessels and a little bit lower on vessels a bit older just because of the sale and purchase activity in the market. But overall, we're probably talking about a 2%, 3% change, so not really a lot of movement on that front. In terms of our NAV, I don't think – consequently, I don't think our NAV has changed much since the last quarterly call. I would still say it's in the $20, $21 range is sort of the house view on what our NAV is. Of course, everyone can take different views on asset values. And as, you know, the point that you made, I think, on last quarter's call, obviously the share price trading at a, you know, a material discount to that.

Yep. All right, and then, you know, you've done a great job reducing your leverage ratios, paying down debt. With that, how low do you want to reduce your debt? You know, just trying to see how much capacity you'll have later this year for acquisitions, dividends, share repurchases.

Yeah, so at the, you know, the race we're seeing in the market right now, of course, we're not really reducing debt levels at the moment with the soft tanker markets. But when looking at our leveraged levels, it really depends on our outlook for the market and where we think we might be able to deploy capital and, therefore, future needs. So at the moment, I would say that we're comfortable with our overall debt levels, and that's in a context of recognizing that we're in a place in the market where there could be opportunities for You know, we entered a long-term time charter, which is delivering in 2022, which was an opportunity, and we're continuing to look at different options in that respect. So, again, I think we're comfortable with where we are, but given the uncertainty in the market, at the moment we're going to continue to focus on maintaining our balance sheet strength, and hopefully that puts us in a position where we can be both resilient and take advantage of opportunities.

Got it. That's it for me. Thanks so much.

And we have a question from Omar Nocta from Clarkson's Plateau Securities.

Thank you. Hi, Kevin. Hi, Stuart. I wanted to maybe just kind of touch on Randy's question towards the end. You know, you get the question a lot, and obviously about fleet renewal and expansion, clearly the chartering is very interesting and unique. But in general, how do you feel about deploying capital outright to acquire shifts? Obviously, you've been deleveraging, you've been selling vessels, and you've been lowering the cost of capital. But what's the appetite now? And as you mentioned, the sale and purchase market maybe has picked up here recently. When do you think the time is to start thinking about sweet growth from here?

Stuart, can you take that for a second?

Because I would cut out. through that question.

Okay. Hi Omar. So maybe just first putting it in context, I guess that, you know, my comments to Randy about wanting to maintain balance sheet strength. And we also have, as John was inquiring about, we have a number of leases coming up this year, which are relatively expensive from a cost of capital standpoint that we would like to pay down. But at the same time, we recognize that you know, the asset values have come down over the last year and given our forward view of the market and we think that, you know, it will strengthen into the second half and into 2022, this probably is the right time to think about asset purchases in terms of the cycle of the market. So, we need to balance those things off in terms of paying down our capital, maintaining our balance sheet strength, and then also thinking about how we can take advantage of opportunities. So, So from a cycle standpoint, I think this is a sensible time to think about investment. Again, as you saw in our long-term charter for a new building delivering in 2022, we took an opportunity to do that in a less capital-intensive way. So we'll continue to look for deals that allow us to add shareholder value.

Okay. And I guess as I hear you and as I read that, it does seem like maybe it is kind of a transition. If I recall, maybe the past 15, 18 months, it's been really focused on selling ships and paying down debt. And now it appears like, okay, expansion may be on the horizon now.

I think, Omar, if I could just clarify that, I wouldn't look at things as sort of an expansion. I think like any tanker company or any shipping company, as each year takes by, our fleet gets older, so we constantly have to look at how we manage the portfolio. That might mean that the portfolio itself may shrink for a period of time until we find the right opportunities to rejuvenate and renew the fleet. We're not looking for expansion here for the sake of growth. It's more around How can we rebalance our portfolio as we go into what we believe will be a stronger market? Because at some point we are going to have to harvest, once again, as we did in 2020, harvest some of those older assets that we may not want to put more capital towards. So I'd look at it more as a rejuvenation process. in just in the normal process of managing a tanker company rather than an expansion.

Thanks, Kevin. I appreciate that. And that's definitely fair and makes sense. And I guess when you think about the AfraMax target in now for seven years on delivery, I guess maybe one, how repeatable do you think that is? And then Two, do you feel, is that more of a preferred method of adding tonnage when it's time? Is that how you prefer to do it as opposed to buying shifts?

I think generally we will look at every opportunity. There isn't a particular formula that we want to follow. I think we have to remain agile and essentially look at this as if you will, an asset trade. So when the opportunities present themselves or you can go and get the opportunities, you'll see us execute. You know, is the one that we've done repeatable? I would love to repeat it a few more times if we can find it. You know, at the moment, we have conversations with people But, you know, nothing is firm at this point, and we haven't been able to repeat the one we've just reported.

Got it. Thank you. And maybe just one more for me. Seeing your guidance on the LR2s in the past, they've generally been a bit more in tandem with the AfriMaxes, but obviously there's a separation. And I recall you mentioned last quarter shifting some of those vessels back from the dirty trays into clean. Where are you in that process? Can you give a perspective on how many of the ships are now trading clean?

Yeah, two out of the nine have been cleaned up and are fully trading in the clean space. You know, as we have vessels coming in end of Q1, Q2 that are going to dry dock, we may look at transitioning. some of those as well into the clean trade. But again, that market is in the same sort of doldrums as the crude market and LR2 rates on a round trip basis aren't worth expending any extra additional money to clean up a vessel to get into. So that's more of a, if you will, a week to week kind of view on where we think the market's gonna go.

Yeah. Great. Thanks, Kevin, and thanks, Stuart. That's it for me. Thank you. Thanks, Omar.

And there are no further questions in the queue at this time. I would like to turn the conference back over to the company for any closing remarks.

Well, I'd just like to say thank you to everybody for joining us today. We hope you all and your families remain safe, and we look forward to speaking to you next quarter.

Once again, ladies and gentlemen, that concludes today's conference. We appreciate your participation today.