NCS Multistage Holdings, Inc. (NASDAQ:NCSM) Q2 2025 Earnings Call Transcript

NCS Multistage Holdings, Inc. (NASDAQ:NCSM) Q2 2025 Earnings Call Transcript August 1, 2025

Operator: Good day, and thank you for standing by. Welcome to the Second Quarter 2025 NCS Multistage Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Morrison, Chief Financial Officer. Please go ahead.

Michael L. Morrison: Thank you, Didi, and thank you for joining the NCS Multistage Second Quarter 2025 Conference Call. Our call today will be led by our CEO, Ryan Hummer, and I will also provide comments. I want to remind listeners that some of today’s comments include forward-looking statements such as our financial guidance and comments regarding our future expectations for financial results and business operations. These statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any expectation expressed herein. Please refer to our most recent annual report on Form 10-K in our latest SEC filings for risk factors and cautions regarding forward-looking statements. Our comments today as well as the results of operations included in our earnings release contain the following non-GAAP financial measures, adjusted EBITDA, adjusted gross profit, adjusted gross margin and free cash flow less distributions to noncontrolling interest.

These non-GAAP measures and reconciliations to the most comparable GAAP financial measures are provided in our second quarter earnings release, which can be found on our website, ncsmultistage.com. I will now turn the call over to Ryan.

Ryan Hummer: Thank you, Mike, and welcome to our investors, analysts and employees, who are joining our second quarter 2025 earnings conference call. Mike will cover our quarterly financial results in more detail a bit later. I’ll speak about a few highlights for the quarter and for the first half of 2025 and we’ll also discuss the acquisition of ResMetrics, which we announced yesterday. NCS is off to a strong start in 2025. Building on solid first quarter results, our second quarter revenue of $36 million exceeded the high end of our guided range by more than $7 million, reflecting better-than-expected performance in each geography. Our performance in Canada was the highlight for us again this quarter. Our revenue for the first half of 2025 was over $86 million, which is 18% or nearly $13 million higher than the first half of 2024, anchored again by strong performance in Canada.

Our adjusted EBITDA of $2.2 million for the second quarter of 2025 exceeded our guided range of negative $2 million to breakeven and represented a year-over-year improvement of $1.3 million. Our adjusted EBITDA of $10.4 million for the first half of 2025 represents an increase of $3.4 million or 49% compared to the first half of 2024. So to reiterate, NCS has had a strong first half of 2025. In prior earnings calls, I’ve referenced NCS’ core strategies for creating value for our stakeholders. Slide 16 of our investor presentation helps to illustrate our strategy with examples of our progress. The first core strategy is to build upon our leading market positions. Our progress towards this goal continues to be reflected in our year-to-date results in Canada.

Our revenue in Canada for the first half of 2025 was $56 million, increasing 27% compared to the same period in 2004 (sic) [ 2024 ] far outpacing changes in the average Canadian land rig count. This favorable performance was most prevalent for our fracturing systems product line as more operators in the Montney have adopted our single-point entry frac technology and have experienced strong production results and increased operational flexibility. We’ve also increased sales of composite plugs in Canada, again, with customers in the Montney and the Duvernay play. Many of our customers utilizing plug-and-perf completions will strategically plan ahead to work through spring breakup, which has partially mitigated the typical seasonality of our Canadian business.

Our second core strategy is to capitalize on international and offshore opportunities. We’re seeking to build on the success we achieved in 2024, a year in which international revenue reached 10% of total revenue, an important milestone for NCS. We expect continued success with customers in the North Sea as our growing customer base and operational track record have positioned us for long-term growth in that market. We’ve had multiple successful North Sea operations this year and we expect to be busy in the region for the foreseeable future. We expect to deliver or install sleeves or to perform service walk for wells with sleeves that are already installed for 7 North Sea customers in 2025, that’s an increase compared to 5 customers in 2024 and from only 2 customers in the region in 2022.

In 2024, we signed a commercial purchase agreement with a customer in the Middle East and we’re encouraged by the pace of adoption of our well construction products and unconventional wells in the region. The increase in well construction sales has partially offset timing delays associated with tracer diagnostics projects in the region, as service companies await the award of tenders for completion services, including pressure pumping. We’re also actively working with one of our Middle East regional partners to transition away from radioactive tracing to chemical tracing in the region. Third core strategy for NCS is to commercialize innovative solutions to complex customer challenges. We have internal objectives this year that are tied to field trials for new products and for successfully entering new markets and regions.

I touched on several of these on the last call, and we’ll provide an update on a few notable items. During the second quarter, we successfully ran our first 7-inch sliding sleeve and service tool for a remedial cementing application. The customer was pleased with the results and has subsequently ordered additional tools. Repeat Precision has experienced strong uptake of its new offerings particularly the stage saver composite frac plug in the United States and in Canada. The stage saver is designed to derisk certain issues that can arise during simulfrac or I guess simulfrac and other operations, which includes screenouts and perforating gun misfires. We have several other products and services for which we expect field trials to begin in the second half of the year, and I’m looking forward to discussing these products and services on future calls.

I’ll now spend a few minutes reviewing the strategic acquisition that we announced yesterday. I’m excited to announce the acquisition of ResMetrics and to welcome the ResMetrics team to NCS. ResMetrics is a provider of tracer diagnostics technologies and services and has built an excellent business that we believe is highly complementary with our current tracer diagnostics product line. ResMetrics success has resulted from its end-to-end scientific approach to enable more quantitative results from cost-effective tracer diagnostic studies. Through precise chemical manufacturing, tracer injection and sampling programs and robust chemical portfolio performance testing ResMetrics has built a growing and profitable business with trailing 12-month unaudited revenue through June 2025 of over $10 million, generating an EBITDA margin of over 30%.

ResMetrics business complements our existing tracer diagnostics product line in many ways. From a product and service offering perspective, ResMetrics provides NCS with a liquid oil tracer offering, which we compare with our existing products to provide a combined offering of both liquid and particulate tracers for oil and for water, natural gas tracers and radioactive tracer services. In addition, the ResMetrics team has additional expertise in designing and executing tracer diagnostics projects for enhanced oil recovery applications such as water floods and for high-temperature applications, which we believe will be growing markets over time. Both NCS and ResMetrics have unique tracer portfolios. And in time, we believe that our customers will be better served with a larger combined high-performance chemical tracer portfolio, which can enhance the value of tracer diagnostics projects.

Although NCS and ResMetrics have historically competed head-to-head for tracer work in the U.S. our customer bases have limited overlap, and we believe that each of our respective current customer bases will benefit from the broader service offering of the combined portfolio. In addition, with the combined larger customer base and geographic footprint new service and product developments in this product line will be more scalable and impactful to NCS. Internationally, the addition of ResMetrics expands our presence in the Middle East into the U.A.E and Kuwait through strategic partnerships with service companies operating in the region. We’ve been very impressed with the team at ResMetrics while evaluating the transaction and planning the upcoming integration.

The focus of this transaction is to create the leading global tracer diagnostics business and to establish a strong platform for product and service development around reservoir diagnostics. I’m confident that we can achieve this goal through the efforts of the NCS and ResMetrics combined team. We’ll be methodical in our integration, keeping the voice of the customer in mind as we identify and implement the best practices from ResMetrics and NCS across all of the relevant workflows, many of which will take some time to validate in the laboratory. While the transaction is not predicated on cost synergies, we believe that in time, we will benefit from the implementation of these best practices as we seek to optimize chemical usage, realize economies of scale and better utilize the skill sets of our employees.

In past calls, I referred to our balance sheet as a strategic asset and this transaction is a great example of that. Our strong balance sheet and capital light business model generates free cash flow through industry cycles. We’re utilizing cash on hand to fund this acquisition while maintaining a net cash balance and robust liquidity, deploying cash on hand for the strategic acquisition of a growing and profitable business enables us to improve our return on capital, and we believe positions us to create additional value for our shareholders over time. As the North American E&P business matures and our customers consolidate to benefit from economies of scale, we believe that oilfield services providers in the industry will need to do the same, engaging in strategic horizontal combinations like this one.

At NCS, we believe that the capabilities of our people, our infrastructure and the breadth of our product lines operating in strategic geographies along with our strong balance sheet positions us well to supplement our organic growth strategy with complementary transactions like the ResMetrics acquisition over time. Mike will now review our results for the second quarter and our guidance for the third quarter.

Michael L. Morrison: Thank you, Ryan. As reported in yesterday’s earnings release, our second quarter revenues were $36.5 million, our highest second quarter revenue results since 2019, representing a year-over-year improvement of 23%. Our Canada revenues improved by 49% driven by an increase in fracturing system sales. Our U.S. revenues improved by 15%, also reflecting an increase in fracturing system sales as well as higher frac plug cells at Repeat Precision. Our international revenues decreased by 17%, primarily due to the timing of tracer diagnostic projects in the Middle East, partially offset by an increase in the North Sea fracturing system sales and an increase in well construction revenues in the Middle East. Sequentially, our revenues for the second quarter decreased 27% reflecting the normal seasonal decline in Canada resulting from spring breakup, offset somewhat by favorable increases for both the U.S. and our international operations.

Our adjusted gross profit, defined as total revenues less total cost of sales, excluding depreciation and amortization expense, was $13 million for the second quarter of 2025 or an adjusted gross margin of 36%, down compared to our adjusted gross margin of 40% from 1 year ago. The decrease in our adjusted gross margin was primarily due to the mix of products sold and services provided for the respective periods. Selling, general and administrative costs were $13.6 million for the second quarter of 2025, down by $1.2 million compared to the same period last year. Other income was $1.6 million for the second quarter of 2025 and related primarily to royalty income from licenses of our intellectual property and to a lesser extent to gain on sale of fixed assets.

We recorded an income tax benefit of $1.0 million for the second quarter of 2025. Of this amount, a tax benefit of $1.4 million resulted from the reversal of a portion of our previously recorded valuation allowance on Canadian deferred tax assets, which was no longer deemed appropriate as these deferred tax assets are expected to be fully realized. Our net income for the second quarter was $0.9 million, or diluted earnings per share of $0.34, an improvement compared to the second quarter net loss of $3.1 million or a loss per share of $1.21 in the prior year. Our adjusted EBITDA was $2.2 million, an improvement compared to $0.9 million for the second quarter of 2024. Now turning to the balance sheet and an overview of our cash purchase of ResMetrics.

As of June 30, cash on hand was $25.4 million and total debt was $7.7 million, which consisted entirely of finance lease obligations, resulting in a positive net cash position of $17.7 million. The borrowing base under our undrawn ABL facility was $17.2 million and our total liquidity was approximately $42.5 million including cash and availability under our revolving credit facility. The total purchase price for ResMetrics is up to a maximum cash amount of $7.15 million, subject to a working capital adjustment. At yesterday’s closing, we paid $5.9 million. The purchase agreement includes an earn-out component of up to $1.25 (sic) [ $1.3 ] million that would be paid in the first quarter of 2026. After yesterday’s closing, our net cash position remains above $10 million and our liquidity is approximately $36 million including cash and the availability under our undrawn revolver.

Now turning to a few points of guidance for the third quarter. Ease of comparison to our prior results, I’ve excluded ResMetrics from these estimates. However, Ryan will provide guidance separately on the expected contribution of ResMetrics for the remainder of 2025. We currently expect third quarter total revenue in the range of $42 million to $46 million. We expect Canadian revenue in the range of $25 million to $27 million, U.S. revenue of $12 million to $13 million, international revenue of $5 million to $6 million. We expect our adjusted gross margin to range from 40% to 42% and our adjusted EBITDA to range from $5.5 million to $7.0 million. Our third quarter depreciation and amortization expense is projected to be approximately $1.4 million.

With that, I’ll hand it back to Ryan to discuss our 2025 full-year guidance and for closing remarks.

Ryan Hummer: Thank you, Mike. We’re making only slight adjustments to our full-year guidance for 2025. I’ll provide you with an apples-to-apples update for our guidance and then provide our expectation for the contribution of ResMetrics for the last 5 months of the year. While NCS performed well during the first half of 2025, we are a bit more cautious regarding the second half of the year as market and industry conditions have continued to deteriorate, including a further decline in the U.S. rig count, a slower-than-normal rig count recovery in Canada following spring breakup. The potential for an oversupplied oil market due to an increase in OPEC plus oil supply and ongoing uncertainties related to tariffs and trade. Therefore, we’re maintaining a wider-than-normal range for our annual operating guidance.

So given that backdrop, we are modestly increasing our expectation for annual revenue to $168 million to $176 million in 2025 which represents year-over-year growth of 6% at the midpoint, led by Canada and also by product sales at Repeat Precision in the U.S. We’ve modified our adjusted EBITDA range to $21 million to $24 million, a modest increase to the low end with a midpoint of $22.5 million. We continue to expect free cash flow after distributions to our noncontrolling interest and excluding the cash paid to ResMetrics of $7 million to $11 million this year, further strengthening our robust balance sheet. As a reminder, our free cash flow generation is typically strongest during the fourth quarter of the year. Finally, we expect the ResMetrics will contribute an additional $4 million to $5 million of revenue and $1 million to $1.5 million of adjusted EBITDA for the last 5 months of 2025.

That would bring our combined revenue guidance range for the year to $172 million to $181 million and our combined adjusted EBITDA guidance to $22 million to $25.5 million for the year. Before we open the call for questions, I’ll close with a couple of brief comments. We continue to deliver on the core strategies that we implemented in 2025 that are designed to generate value for our stakeholders through organic growth and technology introductions. We have the infrastructure in place to support revenue growth in each of our geographic markets providing leverage to grow future earnings. We continue to benefit from the successful introduction of new solutions that meet the needs of our customers, adding to our portfolio and expanding our addressable market.

Our recent acquisition of ResMetrics complements our core strategies for organic growth. With the acquisition, we’ve bolstered our global market position in tracer diagnostics, expanding our service offerings, adding operational scale and enhancing our position in the strategic Middle East region. We maintain a strong balance sheet and liquidity position with post-acquisition total liquidity, including availability under our revolver of approximately $36 million. In addition, we expect to increase our cash balance by generating positive free cash flow in 2025, providing us with incremental financial and strategic flexibility. The strong balance sheet and confidence in continued free cash flow generation enabled us to fund the strategic acquisition of ResMetrics with cash, a transaction that we expect to be accretive to earnings and improve our return on capital employed.

With that, we welcome any questions.

Q&A Session

Operator: [Operator Instructions] And our first question comes from Dave Storms of Stonegate.

David Joseph Storms: Just I want to start — just want to start with the ResMetrics acquisition a little bit more. You mentioned there’s not a lot of overlap between ResMetrics customers and tracer diagnostic customers. I guess when we project this out a year or so, what kind of opportunities do you see for cross-selling going forward either domestically or internationally? How do you envision that playing out?

Ryan Hummer: Yes, it’s a great question, Dave. So yes, we were — we do serve a pretty distinct set of customers, especially in the U.S. And when we talked earlier we discussed where we have some gaps in our product line where ResMetrics service offering fills in and where we have some unique attributes, whether that be on the radioactive tracers and then also some field deployed solutions that we think we bring to the combination and being able to take those new technologies and bring them out to a broader customer set is certainly something that’s really compelling with respect to the deal. We do think there will be some revenue synergy opportunities. We think about ResMetrics on a trailing 12-month basis, generating about $10 million of revenue.

Our tracer diagnostics business was between $15 million and $20 million, so on a combined basis, between $25 million and $30 million for a trailing 12-month period. And as you look forward, I do think that by bringing that broader service offering to the existing tracer diagnostics customers, we’ll be able to continue to take share in that market and also just build the use cases for tracer diagnostics more broadly. So I hesitate to put a number on it, but we do think that there should be some revenue synergy opportunities as we move forward.

David Joseph Storms: That’s very helpful. And with this acquisition, you mentioned it did open up a couple of new geographies for you. I guess thinking about your international footprint, at the company-wide level, are there any regions that you’re particularly excited to start targeting? Or is the market uncertainty kind of keeping you more focused on your core competencies, do you think in the near to medium term?

Ryan Hummer: Yes. So it’s kind of a combination of geographic and product specific opportunities that we’re looking after. Certainly, looking to continue the momentum that we have in the North Sea and in the Middle East and the ResMetrics acquisition absolutely helps with broadening our presence in the Middle East. I think another thing that you can think about is most of the success that we’ve had in the North Sea has been shallow water offshore in general. And the North Sea is not the only market that’s applicable offshore for our technology. So we’re looking to push into other offshore markets whether that be Gulf of America and other operating regions that would leverage the operational success that we’ve had with our technology offshore.

David Joseph Storms: That’s very helpful. And then one more, if I could. Just when we’re thinking about the guidance and the range that you’ve given us, I guess, at a high level, what would you need to see either in the macro environment or maybe in your sector specifically, that would give you the confidence to maybe tighten that guidance range in Q3. Is it just rig counts? Are there other things that you have your eye on? Anything there would be helpful.

Ryan Hummer: Yes. Look, I think given the fact that about 60% of our revenue historically has been generated in Canada. We’re certainly keeping an eye on the Canadian rig count. In the comments, I had mentioned that rig count is a little bit lower coming out of breakup versus last year. The first half of the year, Canadian rig count was pretty flat year-over-year. If we look today, I think the rig counts in the high 180s. This time last year, it probably would have been 215, 220. So we’re about 10% to 15% below where we were. So as our — as the customers in Canada continue to bring rigs back and as that gap as far as the rig count relative to next last year narrows, I think we’d have a little bit more confidence to narrow the range as well.

Operator: Our next question comes from Josh Jayne of Daniel Energy Partners.

Joshua W. Jayne: First one is just on the acquisition. You talked about potential first synergies over time. And I think you highlighted the 30% EBITDA margins. Just — where do you see the opportunity to get margins to in this business over, let’s say, the next couple of years as you scale it?

Ryan Hummer: Yes. No, great question, Josh. When I think about the synergy opportunity in the business it really is going to come down to the adoption of best practices across the 2 organizations. So while we compete head-to-head and we effectively do the same thing, right. We qualify chemicals we build them, we inject them in the customers wells, take samples and produce analysis and reports. We both do it in slightly different ways and in ways that we believe our customers value. So the next — over the course of the next 6 months, right, with the voice of the customer in mind, we’re going to identify those best practices. But we do think that within that whether it comes from the way we prepare samples, the way we calibrate our instruments, that we should be able to reduce our cost of sales through using a smaller amount of chemical or potentially being more strategic about the cost of the chemical that we deploy into the customers’ wells.

And think that in time that we can generate synergies, whether it be — I hesitate to frame it on a margin percentage on the ResMetrics business because the opportunities will come across the broader combined portfolio, but do think there’s a potential for somewhere between $1 million and $2 million over the long run as far as operational synergies that could come through running the businesses together.

Joshua W. Jayne: Okay. And then maybe you could just speak to the mindset of both your Canadian and U.S. customer base. So we’ve had a pretty volatile second quarter just from a news and macro and commodity price points, starting with Liberation Day and then just a lot of volatility from both OPEC and a lot of different pockets. And is there a case to be made that where we sit today, you highlighted the rig count is lower both in the U.S. and Canada on a year-over-year basis. But is there a case to be made that the customer base is sitting in a better spot now that things have calmed down today versus where we were, say, 90 to 100 days ago? And maybe you could just speak to their mindset and sense of urgency today of operators would be great.

Ryan Hummer: Yes. Thanks, Jayne. I’ll do my best there. So I think specifically in the U.S., I think you’re right, there is a lot of concern post Liberation Day, oil prices fell, uncertainty around trade and tariffs. Oil price has hung in there better than I think most would have expected. But I also believe that the customers are looking at the actions of OPEC+ and just waiting to see if the market really turns into an oversupply situation later this year. So I think it’s more of a wait and see. I do think that a lot of the oil-directed activity from a rig count reduction standpoint has already happened. I think it will moderate a bit as you move through Q3, but probably some further reductions. And as you move into Q4, it’s hard to tell, obviously, you could run into the situation where you have budget exhaustion, some further rig count decline there.

But I think the tone is kind of cautiously optimistic. It’s worse than feared, but folks are still looking at the fourth quarter and wondering when is that OPEC supply, when it hits the market, how will it impact the market? I think in Canada, there was a little bit of a pull forward in activity ahead of some of the tariff fears in Q1 and early Q2. and the Canadian market with breakup has a chance to kind of sit back and reassess their forecasts. You’ve also seen specific to Canada, the local gas market, AECO been really weak lately. So some of the gas directed activity has been curtailed. And I think we’ve heard similar comments from whether it be Trican or precision drilling about slower start to Q3, but some general confidence about activity picking up in the latter part of the year.

So I think we just echo the comments of some of the other more kind of Canada-exposed services companies have expressed over the last few days around that.

Operator: And our next question comes from Gowshi Sri from Singular Research.

Gowshihan Sriharan: My first question is, given your comments about kind of the traction you’re having in Canada, given your outperformance, can you disaggregate on how much growth is coming from new customer wins versus the expanded activity with the existing core clients, especially in light of the overall Canadian U.S. rig count?

Ryan Hummer: Yes. We’ll do my best there. And I think even in our investor presentation, the slide that I highlighted, page 16 shows our Canadian revenue relative to the rig count for the first half of the year. So we’re — we’re clearly outpacing the underlying activity level that a lot of that has to do as I mentioned in the prepared comments about the fact that we’ve grown our customer base in the Montney, which is the most active region in Canada and for us, the region where customers will run the highest number of sleeves. So the opportunity on a per well basis for us in the Montney is greater than it is in many other regions. We’ve also had some interesting trial opportunities in some other markets that would represent growth initiatives for us.

And in certain other regions in Canada, some of the customers are simply drilling longer laterals or experiencing tighter stage counts, so running more sleeves per well. So there are a number of factors that are kind of driving us outperforming the underlying rig count. And we do think that can continue in the second half of the year, maybe not that same degree of outperformance but it’s also why I think if you unpack the revenue guidance, we’re probably flat to down a little bit in the back half of the year versus 2024 with the backdrop of the Canadian rig count currently being 10% to 15% below where it was last year. So expectation for continued outperformance relative to the market there. And if the market firms up a bit, we would certainly benefit from it.

Gowshihan Sriharan: On the margin side, were there any competitive price concessions, product mix, or input cost headwinds, most responsible? How much pricing power do you believe you can maintain if the softness continues into H2?

Michael L. Morrison: Yes. This is Mike. I think the question was kind of the margin, the 36% to the 40% compared to last year, how much of that was concessions. And the answer to that, not really much, if any, kind of as I said in my prepared remarks, it was really more of the — just the mix of products and services. Just in the Middle East, we had a little bit fewer tracer projects during the quarter compared to how we ramped up 1 year ago. That’s high-margin work, so it did have somewhat of an impact. So I think overall, yes, we see it as we can maintain kind of who we are.

Gowshihan Sriharan: Okay. And on the integration with the new acquisition, how are the project level profitability payment terms trending for the recent Middle East, North Sea jobs? How do you see that sensitized? Are these margins potential, any execution risks or payment delays? Or how does the integration and the project level profitability will trend in the Middle East?

Ryan Hummer: Yes. I’ll talk to maybe a little bit overall first. And the North Sea and the Middle East are different markets, I guess, with respect to payment terms, maybe similar with respect to our kind of margin profile that we expect in the markets. Generally, when we participate in projects internationally, we’re being brought into those based on technical and technological differentiation that we provide, and we tend to be able to earn a better than average corporate margin as a result. So the work in the North Sea and the Middle East is generally pretty good from a more margin standpoint. It’s a good question with respect to payment terms, and they are different between the 2 markets, in the North Sea, our customers are some of the best and quickest paying customers in our portfolio.

In the Middle East, we tend to operate through local operating partners, and that process tends to extend payables a bit as a result. So we need to make sure that we kind of price that working capital drag from operating in the region into the price we charge our customers and the margin that we receive and we think we do that appropriately. But yes, if we were to grow disproportionately in the Middle East, you might see our receivables term out a little bit as a result, but we account for that in the way we scope the projects and price them.

Operator: Thank you. I’m showing no further questions at this time. I’d like to turn it back over to Ryan Hummer for closing remarks.

Ryan Hummer: All right. Thank you, Didi. So on behalf of our management team and Board, we’d like to thank everyone joining the call today, including our shareholders, analysts and especially our employees, including the team that just joined us from ResMetrics. I truly appreciate the tremendous work and dedication demonstrated by our team as we implement our long-term strategies and as we welcome and integrate ResMetrics aligning on best practices within tracer diagnostics. We’re only as good as our people who continually demonstrate why I believe we have the best team in the industry. Our team continues to provide excellent service to our customers while developing new products and services that will enable our customers and NCS to be even more successful. We appreciate everyone’s interest in NCS Multistage and look forward to talking again on our next quarterly earnings call.

Operator: This concludes today’s conference call. Thank you for participating, and you may now disconnect.