Newpark Resources Inc

NYSE:NR

Earnings Call Transcript 2023-Q1

[Operator]

Greetings, and welcome to the Newpark Resources First Quarter 2023 Earnings Conference Call [Operator Instructions]. And as a reminder, this conference is being recorded.

And it is now my pleasure to introduce to you Ken Dennard. Thank you, Ken, you may begin.

[Ken Dennard, Dennard Lascar, IR]

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Newpark Resources conference call and webcast to review first quarter 2023 results. Participating from the company in today's call are Matthew Lanigan, Newpark's President and Chief Executive Officer; and Gregg Piontek, Chief Financial Officer. Following my remarks, management will provide a high-level commentary on the financial details of the first quarter results and near-term outlook before opening the call for Q&A.

Before I turn over the call, I have a few housekeeping items to run through. There'll be a replay of today's call will be available by webcast on the company's website at newpark.com. There'll also be a telephonically reported replay available until May 17, 2023, and that information on how to access is included in yesterday's release.

Please note that information reported on this call speaks only as of today, May 3, 2023, and therefore, you're advised that time-sensitive information may no longer be accurate as of the time of any replay listening or transcript reading. In addition, the comments made by management during this conference call may contain forward-looking statements within the meaning of the United States federal securities laws.

These forward-looking statements reflect the current views of management. However, various risks, uncertainties and contingencies could cause the company's actual results, performance or achievements to differ materially from those expressed in the statements made by management. The listener is encouraged to read the annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K to understand certain of those risks, uncertainties and contingencies.

The comments also today may include certain non-GAAP financial measures. Additional details and reconciliation to the most directly comparable GAAP measures are included in the quarterly earnings release, which can be found on the Newpark website.

And now with that behind me, I'd like to turn the call over to Newpark's President and CEO, Mr. Matthew Lanigan. Matthew?

[Matthew Lanigan, President and CEO]

Good morning, everyone. Our first quarter 2023 continued the momentum from the fourth quarter, marked by solid performance, both financially and against our stated key initiatives. Our financial performance was highlighted by the strongest Q1 revenue level for our Industrial Solutions business in our history with $56 million in revenue, generating $20 million in EBITDA, validating the strength of our offering and the robustness of market demand.

The utilities and industrial end markets contributed nearly 80% of our Industrial segment revenues, and we are pleased with our progress to solidify Newpark as a leader in the development of sustainable technologies and services supporting the energy transition.

Within Fluids, Q1 was highlighted by the strongest revenue quarter in our history in the EMEA region and continued solid performance in our Canadian business, along with ongoing progress in our efforts to improve the returns on invested capital.

As expected, we saw strong cash flow generation from both businesses, which contributed to a reduction of debt and the return of capital to shareholders via the repurchase of a further 4% of our outstanding shares in the quarter.

Consolidated revenues were $200 million in the first quarter, including $144 million from Fluid Systems following the Q4 divestitures, while the Industrial business contributed $56 million.

Adjusted EBITDA was $21 million for the quarter and adjusted EPS improved 28% sequentially to $0.09 per diluted share. Gregg will cover more specifics of the financial results in a few moments. However, before I hand the call over to him, I wanted to provide an update on our progress against the key priorities I laid out in our February call.

We are pleased with the progress we've made in recent months, taking meaningful steps forward to reposition our company to organize around the strong growth opportunity and performance of our Industrial Solutions business while continuing to monetize investments and reduce the cost and complexity within our Fluids business.

As discussed in February, our first priority for 2023 is to drive operating cost optimization and efficiency improvements across every aspect of our global operational footprint. Having spent most of 2022 reshaping our Fluid Systems division to be a more agile and capital-light business, our efforts in recent months have been primarily focused on overhead cost reductions that were made possible by the divestitures.

We have implemented several changes in recent weeks intended to reduce management layers and simplify our business support activities, particularly within our Fluid Systems and corporate office organizations. On that note, I'd like to extend my sincere thanks to Chip Earle, who served as our General Counsel and Chief Compliance Officer for the last 5 years and recently left Newpark as a part of these cost reduction efforts. Chip was instrumental in building the strong governance and succession processes that enabled the decision for him to leave the company. We wish Chip every success going forward.

In addition, we have recently shut down our U.S. stimulation chemicals business, which was unable to demonstrate a path to profitability. And we're also in the process of winding down operations in Chile as well as closing down several nonoperational and subscale entities throughout the EMEA region.

While cost optimization efforts are ongoing, our company-wide actions to date translate to roughly $6 million in annual recurring cost savings with the benefits being realized over the next few quarters. Looking ahead, we will continue to streamline our overheads both at a corporate and divisional level as we work to further simplify our business and move decision-making closer to our key end markets, while also continuing to take decisive actions to monetize investments in underperforming businesses and evaluate our value-enhancing strategic portfolio options.

We believe strongly that simplifying our support cost structure to reflect the increasingly agile environment in which Newpark operates is critical to ensuring that our businesses can continue to deliver world-class products and services and generate acceptable returns. Our second priority is to focus investment capital on the growth of our specialty rental and services business.

To this point, I'm pleased to highlight that in the first quarter, we invested nearly $7 million in the Industrial Solutions primarily to expand our rental fleet in support of our growth in the utility sector. We also began production of our new DURA-BASE 800 series mat, which fully integrates with our existing DURA-BASE mat format and offers a nearly 15% reduction in weight therefore, driving further efficiency and transportation costs and associated carbon emissions without impacting product performance.

As we roll this new product into our rental fleet in the coming months, we are excited to showcase Newpark once again as the industry innovator for heavy-duty composite matting having the lightest weight product on the market. Our focus on growing the Industrial Solutions segment is showing tangible results, with Q1 trailing 12-month revenues now at $213 million, which reflects an 11% improvement from the full year 2022 revenues.

Trailing 12-month adjusted EBITDA for Industrial Solutions increased to $74 million, a 12% improvement from our full year 2022 results. With a strong start to the year, we are confident that Industrial Solutions can deliver a mid- to upper teens top line growth rate in 2023, while maintaining solid operating margins. Funding our continued expansion into the utilities and critical infrastructure markets remains our highest capital and resource priority.

And finally, our third priority is a commitment to maintaining a strong balance sheet and using excess cash generation to reduce our debt and return value to our shareholders. During the first quarter, we generated $23 million of free cash flow while the wind down of retained assets from last year's Gulf of Mexico divestitures generated a further $7 million of cash.

Our usage of the cash was balanced with $15 million in debt reduction and $15 million in share repurchases. I'd like to highlight that in addition to the 4.4 million shares purchased in Q4 and the 3.4 million shares that we repurchased in the first quarter, we have also repurchased 1.2 million additional shares in April. Including the Q2 activity, we've now repurchased 10% of our outstanding shares over the past 6 months, while our net leverage stands below 1 turn of adjusted EBITDA.

We believe that the combination of funding our Industrial Solutions growth plans, while balancing our debt reduction and returning value to shareholders via our share repurchase program represents a meaningful opportunity for long-term shareholder value creation.

And now I'd like to hand the call over to Gregg to provide more color on the specifics of the financials for the quarter. Gregg?

[Gregg Piontek, CFO]

Thanks, Matthew, and good morning, everyone. I'll start with the specifics of the segment and consolidated financial results for the quarter before providing an update on our near-term outlook. As Matthew touched on, the first quarter was highlighted by strong performance from Industrial Solutions, reflecting our continued success, penetrating and expanding our presence in the multibillion-dollar utility infrastructure market.

As expected, following the seasonally strong Q4 results, total Industrial Solutions revenues pulled back modestly sequentially, but grew 58% year-over-year, with the business posting first quarter revenues of $56 million, the segment's strongest first quarter revenue in our history. The first quarter once again benefited from the robust demand from utility infrastructure projects, impacting both rental and service and direct sales activity.

Following the exceptionally strong Q4 project activity, rental and service revenues pulled back somewhat to $36 million in the first quarter. The Q1 result reflects a 17% improvement year-over-year driven by a combination of stronger pricing and increased volume following our fleet expansion investments during 2022. Product sales contributed $19 million of revenues in the first quarter as the robust demand from the utility sector has improved the quarterly stability in product sales volumes.

As Matthew touched on, for the trailing four quarters, Industrial Solutions generated $213 million of revenues, including $162 million of revenue from utilities and industrial markets. And delivered $74 million of adjusted EBITDA, a 35% adjusted EBITDA margin. Notably, we've seen the stability of the segment's quarterly revenue, profit and cash generation continuing to improve as we expand our presence within the utility sector.

In Fluid Systems, following the completion of the previously announced divestitures in the fourth quarter, our focus remains on strengthening our position within key markets where customers value our differentiated Fluids offering, while continuing to streamline our business support and monetizing working capital in areas that no longer demonstrate a clear pathway to generating sufficient returns.

During the first quarter, we reduced our net capital employed in the Fluid Systems business by $22 million, largely from the ongoing wind down of assets remaining from the divestitures. The Fluids segment generated $144 million of revenues and adjusted EBITDA of $8.7 million in the first quarter or a 6% adjusted EBITDA margin.

Excluding the Excalibar divestiture, revenues from North America land operations decreased 5% sequentially as declines in the U.S., including the effects of elevated downhole losses on a number of projects in the prior quarter were partially offset by strong seasonal growth in Canada.

Revenues from international markets improved 2% on a sequential basis as the effect of our wind down of operations in Chile was more than offset by improvement in the EMEA region, which posted its strongest revenue quarter in our history. The first quarter segment operating margin from ongoing activities was 4.7%, down from 5.3% in the prior quarter, primarily reflecting the effect of lower revenue in U.S. land.

Notably, international pricing has improved in the past quarter, though the effects in Q1 were largely offset by a weaker product sales mix. As of the end of the first quarter, the Fluids business has nearly $220 million of net working capital, consisting primarily of inventory and receivables, which represents roughly 85% of the segment's net capital employed.

SG&A expenses increased on both a sequential and year-over-year basis, primarily reflecting the effects of nearly $1 million of first quarter 2023 spending on strategic planning activities and an organizational design project. Interest expense declined sequentially, driven by reduced debt levels, but increased year-over-year, largely reflective of the sharp increase in borrowing rate throughout the second half of 2022.

Tax expense was $2.1 million in the quarter, reflecting a 27% effective tax rate. Adjusted EPS improved 28% sequentially to $0.09 per diluted share in the first quarter, reflecting both the stronger adjusted net income and the decline in our shares outstanding.

In terms of cash flow, we had a solid start to the year, reflecting the benefits of our recent divestitures and the ongoing business transformation. Free cash flow for the quarter was $23 million, including operating cash flow of $29 million, while using $7 million to fund capital investments, a vast majority of which supports the expansion of our rental fleet in the utility sector.

As Matthew touched on, we used our cash generation in the quarter to fund a $15 million reduction in debt and $15 million of share repurchases. Reflecting the full impact of the additional April share purchases, our outstanding share count now stands at 85 million, down 10% from the 94 million shares outstanding just two quarters ago.

Now turning to our near-term operational outlook. We remain encouraged by the strong fundamentals for utility infrastructure spending, which we expect will provide a multiyear tailwind for our Industrial Solutions growth.

For Fluids, while we are seeing the effects of the lower natural gas prices impacting certain basins in the U.S. in the near term, we are encouraged by the mid- and longer-term outlook for the North America and EMEA markets, as we continue to rightsize our cost structure, monetize working capital and focus our footprint on key markets that demonstrate an ability to generate a sufficient return.

As we look specifically at the second quarter for Industrial Solutions, we expect rental and service revenues to improve sequentially, benefiting from the recent start-up of several utility infrastructure projects. We also continue to see strength in the direct sales opportunity pipeline. Overall, we expect our Industrial Solutions segment will show modest year-over-year improvements in both revenues and EBITDA as compared to the second quarter of last year.

For Fluids, we expect revenues to pull back roughly 15% sequentially, reflecting the typical seasonal effect of spring breakup in Canada and a lower contribution from the U.S., which is impacted both by market softness and our ongoing focus on price discipline. International revenues are expected to remain relatively stable, benefiting from the continuing strength in customer activity.

With respect to operating margins, while we expect EMEA to see margins improve sequentially, and we begin to see additional benefits from our ongoing cost reduction efforts, the impact of the lower revenues will more than offset these benefits resulting in an operating margin likely in the low single digits prior to any restructuring charges.

Corporate expense is expected to improve modestly in Q2 prior to any restructuring charges as we wrap up our strategic planning projects. Looking beyond Q2, we expect corporate office spending will decrease further reflecting the completion of our strategic planning work and the effects of roughly $2 million of annual cost savings from actions executed to date.

As we continue to reduce our debt, we expect interest expense to reduce modestly while the effective tax rate will likely remain below 30%, fairly in line with Q1. We expect strong free cash flow generation to continue in the second quarter, primarily benefiting from the anticipated solid EBITDA generation, as well as meaningful reductions in working capital, primarily in the Fluids business, as we maintain our focus on improving returns. We expect our second quarter cash generation will primarily be used to further reduce our debt and fund our growth investments in Industrial Solutions.

And with that, I'd like to turn the call back over to Matthew for his concluding remarks.

[Matthew Lanigan, President and CEO]

Thanks, Gregg. I'm proud of our execution in the first quarter as we posted double-digit growth in trailing 12 month revenue in the Industrial Solutions business while Fluids delivered record quarterly revenue in the EMEA region and another solid performance in Canada.

We also continue to see progress in the transformation of our Fluids business into a more agile, capital-light and simplified business. And we delivered strong free cash flow and improved value for our shareholders. Just like we did in 2022, we are making progress against each of our stated priorities for 2023 and remain committed to the execution of our strategy and business transformation.

Industrial Solutions is our primary profit driver today, and we expect that within the next few quarters, this business will also represent the majority of our invested capital where we believe the strong market fundamentals in the utility and critical infrastructure markets will support a double-digit annual growth rate for our industrial business for years to come.

We remain committed to prioritizing capital into our expansion in this division, further positioning Newpark as a scaled specialty rental and infrastructure services company while reducing our presence and exposure within oil and gas end markets.

We plan to continue strengthening the financial performance of our Fluids business, which has consistently been recognized by the industry as a technology and service leader in both conventional oil and gas and geothermal markets.

Optimizing investment in areas of the business that do not have a clear pathway to meeting profitability requirements will remain a priority as we seek to improve returns on the capital deployed in this division. We believe that by continuing to take meaningful steps to strengthen the financial performance of our Fluids segment and reshape our balance sheet, we will be able to generate consistent free cash flow while improving our returns in that division, which, in turn, will provide us with more flexibility as we continue to execute our industrial growth plans and thoughtfully evaluate each of our strategic portfolio options.

I'm enormously proud of our business units and our dedicated staff, and I remain optimistic about the year ahead. And with that, I'd like to close by thanking our shareholders for investing in us s and thanking our employees for their hard work and their continued focus on compliance and safety.

We'll now take your questions. Operator?

[Operator]

Thank you, sir. [Operator Instructions]. And the first question comes from the line of Bill Dezellem with Tieton Capital. Please proceed with your question.

[Bill Dezellem, Tieton Capital]

Thank you. Let me start, if I could, with the mats business. Last quarter, you said that pricing had improved for mats. And I think you made reference to that again here in your opening remarks. Would you discuss that the pricing dynamic that you're experiencing and how you see this playing out for the remainder of the year?

[Gregg Piontek, CFO]

Sure, Bill. It's Gregg. So the pricing dynamic over the past year, we've seen kind of steadily improve as we went through the back half of the year. I think that's really a reflection of kind of the robust demand dynamics that you have in the marketplace. As we had noted in Q4, that was an extremely strong quarter in terms of - it was very high utilization, had some call-out work that was at particularly higher prices that benefited.

We did see that pull back somewhat kind of modestly here as we went into Q1, which was very much what we expected. I think as you look at it today and you look at it going forward, we see it as fairly stable.

[Bill Dezellem, Tieton Capital]

And is there anything that you can do either with innovation, with the mats or with service that will move pricing up further? Or really should we anticipate any margin expansion that you would have to be a function of efficiencies as that business becomes larger?

[Matthew Lanigan, President and CEO]

Yes, Bill, this is Matthew. Look, I think on the overall pricing, it's going to be more of a mix-related issue in terms of where we're putting the product down geographically and what the specifics of the particular contracts or projects that we're working on are.

Beyond that, I think you're spot on. I think it's going to be transportation efficiencies. Obviously, longer term, as we introduce more of the lighter weight mat into the fleet, we're going to get a lift in transportation efficiency from that.

But I think when you think of pricing, it's going to be more project related in terms of that level and then the rest will come from operational efficiency.

[Bill Dezellem, Tieton Capital]

Great. That's helpful. And then I think you called out that the U.K. was a bit slower with the mat revenues. Would you talk through that and the dynamics that you're seeing in that part of the world?

[Gregg Piontek, CFO]

Yes. The U.K. has been actually relatively stable over the past few quarters. Look at Q3, Q4 and into Q1, it's been a pretty consistent contributor. Now that is a fairly small piece of the business. We're talking mid to upper single digits in terms of the percentage of revenue that comes from the U.K.

[Bill Dezellem, Tieton Capital]

Got it. And I can either go back in the queue or I've got a couple more questions that I'll hit you with, if you'll allow.

[Gregg Piontek, CFO]

Keep going.

[Ken Dennard, Dennard Lascar, IR]

Keep going.

[Bill Dezellem, Tieton Capital]

Okay. So the Fluids business, you had the facility exit costs. Does that tie back to the businesses that you referenced that you exited the stimulation chemical and closing down Chile? Or is there something more to that?

[Gregg Piontek, CFO]

For the most part, the cost that we incurred in the first quarter, you do have a certain piece of severance and such that went along with the organizational changes, stimulation chemical, et cetera. But the lion's share of it was actually Gulf of Mexico related. That's just kind of the follow-on wind down of that facility here following the Q4 divestiture transaction.

[Bill Dezellem, Tieton Capital]

Okay. Thank you. And so there was not a lot of cost to exit the - either stimulation chemicals or Chile?

[Gregg Piontek, CFO]

Correct.

[Bill Dezellem, Tieton Capital]

All right. Thank you. And then I think that there's also a reference to efforts to flatten the Fluids organization. Would you talk through that, please?

[Matthew Lanigan, President and CEO]

Yes. Sure, Bill. I'll address that one. I think as we look at the business and the way things are playing out here in terms of some of the layers that we've added on the corporate overhead structure to manage product lines, stimulation being one of them that we're now kind of exiting, we're not seeing a pathway to acceptable returns there and starting to think of the business more regionally than with a kind of global oversight moving decision-making closer to the customers, and kind of looking at potential efficiencies between divisions and eliminating layers, that's really where we're looking to drive that level of efficiency.

[Gregg Piontek, CFO]

Yes. And really, as you look at the - simplifying the business, streamlining the overall operation, that has a knock-on effect, not only at kind of that division level, but then the corporate overhead as well because you're just organizing differently.

[Bill Dezellem, Tieton Capital]

That's helpful. And then I believe that the corporate expenses included some consulting costs, which were reasonably meaningful. In the past, when we have seen you all spend larger amounts on consultants, there were some reasonably meaningful outcomes that came from that.

Would you - and not to have you disclose too much too early, I mean, not that I would be opposed, but would you please kind of walk us through what the dollars are being spent on and what outcomes that you're driving towards with those consulting efforts?

[Matthew Lanigan, President and CEO]

Yes. Thanks, Bill. Yes, I think you're right. If you look at it sort of every 4 years, roughly, if you go back in history, we have looked to kind of refresh and revalidate our strategy. And we haven't done that since '19. So we took the decision to do another look at it here in the first quarter. What I will say is every dollar that was spent was really just kind of looking at further growth opportunities on the industrial side of the business.

Part of it revalidating our existing strategic assumptions, part of it looking for adjacencies, really looking at the exploration of core competencies beyond the rental and service business and how we may add some additional revenue streams on that side of the business.

So you're right. I'm not going to go into too much detail as to what that was on this call, but it's fair to say we're going to continue to distill this work as we lock that into our longer-term strategic growth plans.

[Bill Dezellem, Tieton Capital]

Great. Thank you. We'll look forward to hearing more about that later. And then finally, how much more are you anticipating that there will be in terms of restructuring costs, et cetera? Maybe not dollars as much as timing, are we essentially done here in the second quarter? Or will there still be more to go after this?

[Gregg Piontek, CFO]

Yes, that's a tough one to answer. I will say that I think we - the big pieces that we had in front of us were completed, but I will say that it is an ongoing effort as Matthew had described. And it is a function as the business evolves and changes and simplifies, each step you take you look at how -- what the knockdown effects of that is to your overall overhead structure. And is that another opportunity to simplify.

I just kind of look at it simply when you look at our overall SG&A run rate, we're call it 12%, 12-plus percentage and that's a number that we'll continue to evaluate as the business evolves, how do we get that lower. But I don't necessarily have a firm target or an end date of when that is.

[Bill Dezellem, Tieton Capital]

Okay. That's helpful. I am going to kind of push a little further on that. So for example, Chile, that was not a region or a business line that I was familiar with. Are there more opportunities like that, that maybe those of us on the outside haven't been particularly focused on that may have opportunities to streamline further that don't have a path to a solid ROI? Or are those really now few and far between?

[Gregg Piontek, CFO]

Look, I think - I would say there is more opportunity. But when you look at this, where we find it particularly challenging to reach the economic hurdles are subscale markets. I think Chile is a great example of that. It was a relatively small market, it was generating in the area of $5 million of revenues annually. And so we do have a large footprint internationally.

There are a number of those markets that are pretty small. And so you remove one market like that, and it doesn't necessarily change the picture, but the more steps you take in addressing those markets that don't have a clear pathway to generating sufficient return and you shrink your footprint, okay, now you're talking about something that does have the knock-on effect of your overheads and your corporate oversight. So I'm not sure if that's helpful, but that's kind of how we're looking at it.

[Bill Dezellem, Tieton Capital]

Understood. I think understood anyhow. So what you're saying is if you were to take more actions like that, then there could be then a domino effect that, that would then free up the opportunity to simplify the organization further up from some of those small markets.

[Gregg Piontek, CFO]

Yes, I think that's fair.

[Ken Dennard, Dennard Lascar, IR]

Great. Thank you both allowing our questions.

[Ken Dennard, Dennard Lascar, IR]

Great questions, Bill. This is Ken. As we always get e-mails prior to the call, here's one, Gregg, Matthew, that came through. It said much of the improvement you experienced during the quarter was due to strong demand and favorable pricing in the utility and industrial sectors as well as your EMA markets in the Fluids business.

Do you expect -- the question is, do you expect the fundamentals in those markets to continue improving or at least hold at current levels? And how sustainable is elevated spending we are seeing in the electric utilities infrastructure space? Just to combine those.

[Matthew Lanigan, President and CEO]

Yes. Look, on the first one, the fundamentals, I think we're continuing to be encouraged in the -- I'll start with the oil and gas first, in the EMEA region. I think we've worked hard on repricing a lot of those contracts and getting the margin expansion that we needed off the back of the kind of supply chain inflation issues that we saw through last year. So off the back of that and with a stable kind of demand there, we see that sort of being sustained, which is encouraging.

And then on the utility side, I think as we've touched on it before with a very stable historical kind of spend in that space with then the infrastructure investment and the Jobs Act, et cetera, giving more stimulus to that. We see that being sustained for years to come, which I think we also touched on in the call.

[Ken Dennard, Dennard Lascar, IR]

Great. So about the - so did you get that second one there with the sustainability?

[Matthew Lanigan, President and CEO]

Yes.

[Ken Dennard, Dennard Lascar, IR]

Okay. Any other additions for you guys? Oh, Bill's back. Let's open the call back to Bill.

[Bill Dezellem, Tieton Capital]

I have one additional question. Relative to CapEx and just thinking about free cash flow this year, I think CapEx last year was $28 million or somewhere in that neighborhood, how are you thinking about '23 on a full year basis?

[Gregg Piontek, CFO]

Overall, I would say that '23 looks a lot like '22 in terms of the overall CapEx. As you see in Q1's results, 95% of our CapEx was in the Industrial Solutions business. So similar to what we've seen in recent years, I would expect you'll see the vast majority of that spend will be in Industrial Solutions and supporting that growth.

[Bill Dezellem, Tieton Capital]

Great. Thank you. Congratulations again on a great quarter.

[Gregg Piontek, CFO]

Thank you.

[Ken Dennard, Dennard Lascar, IR]

Thanks, Bill. Appreciate it.

[Operator]

At this time, there are no further questions. And I would like to hand the call back over to Gregg Piontek for closing comments.

[Gregg Piontek, CFO]

All right. Thanks again for joining us and for your interest in Newpark, and we look forward to speaking with you again next quarter.

[Operator]

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines. And have a great rest of the day.