U.S. Silica Holdings, Inc. (NYSE:SLCA) Q4 2022 Earnings Call Transcript

U.S. Silica Holdings, Inc. (NYSE:SLCA) Q4 2022 Earnings Call Transcript February 24, 2023

Operator: Good morning and welcome to the U.S. Silica Fourth Quarter 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Patricia Gil, Vice President of Investor Relations. Please proceed.

Patricia Gil: Thank you and good morning, everyone. I’d like to thank you for joining us today for U.S. Silica’s fourth quarter 2022 earnings conference call. Leading the call today are our Chief Executive Officer, Bryan Shinn; and Don Merril, our Executive Vice President and Chief Financial Officer. Before we begin, I would like to remind you of our standard cautionary remarks regarding the forward-looking nature of some of the statements that will be made today. Such forward-looking statements which are predictions, projections or other statements about future events are based on current expectations and assumptions, which are subject to certain risks and uncertainties. For a complete discussion of these risks and uncertainties, we encourage you to read the company’s press release and our documents on file with the SEC.

We do not undertake any duty to update any forward-looking statements. Additionally, we may refer to the non-GAAP measures such as adjusted EBITDA, segment contribution margin, net debt and our net leverage ratio during this call. Please refer to today’s press release or our public filings for a full reconciliation of adjusted EBITDA to net income and discussions of segment contribution margin, net debt and the net leverage ratio. And with that, I will hand the call over to Bryan Shinn.

Bryan Shinn: Thanks, Patricia, and good morning, everyone. We delivered another excellent quarter to close out an exceptionally strong year for the company, which was defined by numerous achievements and accomplishments. During 2022, our talented team successfully executed our strategic plan and delivered impressive bottom-line results, while strengthening our balance sheet and positioning U.S. Silica for future success. We capitalized on robust customer demand for both operating segments and our combination of market and customer focus plus best-in-class offerings helped us maintain our industry leadership position. In 2022, we significantly raised pricing across both segments to help offset inflation. We increased contract coverage, while expanding margins in our oil and gas segment and generated significant free cash flow.

We opportunistically use this cash to retire $150 million of long-term debt, effectively reducing our net leverage ratio to 2.2 times at year end. I’m also very proud of our financial and operational achievements during the year. Revenue increased 38%; adjusted EBITDA grew by 58% and overall tons sold increased 14%. We also delivered many non-financial achievements in ’22, including our third year in a row of record employee safety performance. Industrial segment sales revenue into environmentally beneficial end users increased by 6% year-over-year. We sold enough of our organic — insecticide product to cover over 26,000 American football fields and our Rockwood, Michigan facility sold enough specialty low iron silica sand to produce flat glass for solar panels to more than cover the entirety of Central Park in New York City.

Overall, a great year and a lot to be proud of. Let’s move now to Q4. Don will discuss our performance in more detail in just a moment, but first, I’d like to review some of the important trends that we saw during the quarter. Let’s start with our Oil and Gas segment. Activity was strong through the holidays and we did not experience meaningful disruptions from seasonality or weather. Supply and demand balance remained very tight in sand proppant and last mile logistics and we continue to be effectively sold out, due to strong well completion demand, especially in West Texas. Spot prices for sand continued at attractive levels and range from approximately $40 to $50 per ton in the Permian Basin. Our contract sand and SandBox sales prices and margins expanded further during the quarter and we achieved another record for SandBox delivered loads in October.

Current customer sentiment is constructive and crude oil prices are supportive in what appears to be a multi-year upcycle for U.S. Energy markets. We are encouraged that customers continue to secure sand supply for the medium-term and we signed incremental attractive multi-year contracts during the quarter in addition to successfully realizing increased pricing on some existing customer contracts. In our Industrial segment, Q4 profitability declined sequentially as guided on our prior quarterly earnings call. As discussed, this is normal seasonality for our industrial business. Some markets naturally slow at year-end and customers trim year-end inventory to manage cash and perform annual facility maintenance in November and December. Partially offsetting these seasonal impacts were lower natural gas input costs and the previously announced November 1st price increases on most of our non-contracted industrial products.

We also agreed to over a dozen new customer contracts or contract renewals with favorable pricing and terms during the quarter. We ramped up sales of our Diatomaceous earth filtration products to support production of renewable diesel at numerous customer facilities. And also, we drove substantial operational performance improvements across numerous facilities through enhanced maintenance and reduced contractor spend. And finally, we’re improving our (ph) processes with a focus on increasing total supply chain efficiency and product line profitability. For the rest of my time this morning, I’d like to give an update on some of the exciting developments in our industrial portfolio and then finish with a summary of our outlook for the first quarter and full-year of 2023.

Our Industrial segment strategy remains consistent and has three main drivers. The first is increasing profitability of our base business at a GDP plus rate. We have several items that support this commitment, including growing share at new and existing customers, implementing value-added pricing and continuously improving supply chain efficiency and effectiveness. Our second driver is sales growth of existing high-value differentiated products. Examples of products in this category include ground silica, diatomaceous earth powders, diatomaceous earth fine fillers, and high purity filtration substrates. These products are generally in high demand and most are sold out. We’re currently investing in new capacity to meet the strong market need for these offerings.

Our third growth driver in industrials is addressable market expansion with new high value advanced materials. Advanced materials examples include Cristobalite, Cool Roof Granules, EverWhite pigment, renewable diesel filtration media and micron scale minerals for specialty applications. We’re strategically investing in product development and new technology in these categories and we’re standing up a new technical development center near our flagship industrial mine site in Illinois to accelerate commercialization and sales of these offerings. We continue to make good progress with other noteworthy developments in our Industrial segment during Q1, including commencing shipments of our purified high purity filtration product to a large pharmaceutical company to support production of biomedical products.

Also approving investments in several growth and cost improvement projects, including adding capacity at our Millen, Georgia facility to support production of finally ground products, expanding capacity at our Jackson, Mississippi facility to increase capacity for edible oil and renewable diesel purification products. Integration of our two ERP systems on the industrial side of our business, which will deliver business and cost efficiencies along with improved data insights by year-end. And finally, implementation of a new export management system to support significant international freight savings. We also delivered on our January 1 contracted price increases as planned and lastly in 2022, we achieved the second-best safety year ever for our Industrial segment.

Now let’s turn to our business and market outlook. We believe that we are well positioned for success this year and are forecasting robust growth and strong financial performance in 2023 with company adjusted EBITDA increasing 20% to 25% year-over-year and associated free cash flow generation of more than $150 million. Our Oil and Gas segment is well positioned to continue to generate strong earnings and cash, while delivering further sequential growth. Demand in the energy sector is robust and we remain effectively sold out for sand proppant and last mile logistics. We began 20 23 with positive momentum by delivering the best January profitability in Oil and Gas segment history. Proppant contractual commitments stand at 85% of our 2023 capacity and are projected to reach similar levels in 2024, providing us with strong future cash flow visibility.

Further, the staggered nature of our contracts allows us to capitalize on market strength and we continue to secure new customer contracts at attractive pricing. We also remain dedicated to efficiently running our operations and maximizing production levels without adding incremental capacity. Additionally, we believe that the small amount of forecasted proppant supply additions this year will be absorbed by the market by increased demand. Moreover, recent constructive customer conversations support this sentiment and we expect strong proppant contract commitment levels and attractive margins over the next 12 to 24 months. Given that, we forecast Q1 volumes and contribution margin dollars to increase 3 % to 6% sequentially. We’re also commercializing additional wellsite offerings in our Oil and Gas segment, which we expect to contribute to 2023 earnings.

And we plan to discuss those new product lines in the coming quarters. Pivoting to our Industrial and Specialty products segment, we continue to monitor macroeconomic factors and fine tune our full-year 2023 outlook. Customer demand remains strong overall, particularly in the food and beverage, chemicals and refining, general industrial and absorbent end markets. However, demand in building products applications is showing some potential weakness. All in, we anticipate sequential profitability improvement as customer activity rebounds from typical fourth quarter seasonality and we realize a full quarter of price increases. Our current base case forecast is for increased sales volumes with improving margins in 2023. We expect Q1 volumes and contribution margin dollars to increase 6% to 10% on a year-over-year basis for industrials.

And with that, I will turn the call over to our CFO, Don Merril, who will discuss our financial results in more detail. Don?

Don Merril: Thanks, Brian, and good morning, everyone. As Brian stated, we reported improved sequential results in Q4, driven by increased pricing and margin expansion in our Oil and Gas segment. Compared to the prior quarter, total revenue decreased 1% to $412.9 million. Adjusted EBITDA increased 1% to $104.2 million, total company contribution margin increased 2% to $134.4 million with overall tons sold of $4.6 million. Selling, general and administrative expenses for the quarter increased 3% sequentially to $35 million, driven by higher overall spend and inflation in the quarter. Depreciation, depletion and amortization expense decreased 4% sequentially to a total of $33.2 million in the fourth quarter. Our effective tax rate for the quarter ended December 31, 2022 was 25.8% including discrete items.

Now let me move on with a detailed review of our operating segment results. The Oil and Gas segment reported revenue of $273.7 million for the fourth quarter, an increase of 2%, when compared to the third quarter. Volumes for the Oil and Gas segment increased by 2% to total tons and SandBox delivered loads increased 3%, compared to the prior quarter. Segment contribution margin increased 11% quarter-over-quarter to $94.4 million which on a per ton basis rose 9% sequentially to $26.47. These positive results were driven by ongoing strength in customer demand, improved pricing for proppant, especially in the Northeast and West Texas markets and increased margins for Last Mile Logistics. Our Industrial and Specialty Products segment reported revenues of $139.2 million, an 8% sequential decrease, when compared with the third quarter.

Volumes for the ISP segment decreased 8%, when compared to the prior quarter and totaled 1.038 tons. Segment contribution margin decreased 14% on a sequential basis and totaled $40 million, which on a per ton basis was $38.54. The sequential decrease in the results for the ISP segment were due to the expected lower levels of seasonal demand typical customer year-end inventory management, inflation and customer facility maintenance, which we opportunistically paired with our own facility maintenance. These seasonal impacts were partially offset by price increases and the benefit of lower energy costs from the reduction in natural gas prices. Turning to the cash flow statement. During the fourth quarter, we delivered $93.3 million of cash flow from operations a sequential increase of 41% and we invested $24.5 million of capital primarily for facility maintenance.

The company’s cash and cash equivalents on December 31, 2022 totaled $280.8 million after completing a $50 million loan extinguishment in October at a discount to par. At quarter end, our $100 million revolver had zero dollars drawn with $78.5 million available under the credit facility after allocating for letters of credit. Our initiatives and actions to strengthen the balance sheet have been successful. At the end of the fourth quarter, our net debt to trailing-12 month adjusted EBITDA ratio was 2.2 times, significantly below where we began the year and handily beating our 2023 target of 3 times net levered basically one year ahead of schedule. In 2022, we generated a total of $262.7 million of cash flow from operations, which represented a 55% year-over-year increase.

We utilized this cash flow to opportunistically extinguish a total of $150 million of our term loan at a discount to par meaningly reducing our gross and net leverage. Looking forward, today we believe that we have good visibility for 2023 given the high level of profit customer contracts in the Oil and Gas segment and our sticky and diverse customer base in the Industrial and Specialty Products segment. We are forecasting continued robust operating cash flow generation this year with free cash flow expected to increase year-over-year. This is expected to provide us with the flexibility to further delever our balance sheet and organically fund our business growth. We will continue to be disciplined in our capital spending, managing accordingly with an emphasis on effectively maintaining operating levels at our facilities and investing in selective growth projects for the ISP segment to maximize future profitability.

Our capital spending forecast for the full-year 2023 is expected to range between $50 million and $60 million with investments in new product plant capacity expansions, IT and equipment upgrades along with routine maintenance and cost production projects. We guide full-year 2023 SG&A expenses to be down approximately 5% to 10% year-over-year, primarily due to the supplier contract termination and merger and acquisition-related expenses that took place during the prior year that are not expected to recur. Full-year 2023 DD&A expense is anticipated to decrease approximately 5% to 10% and our estimated effective tax rate for the full-year 2023 is approximately 25%. In conclusion, the pricing cost and contracting actions that we have taken and continue to improve are allowing the company to effectively manage inflation issues and provide stability for future quarters for our two business segments.

Our capital allocation priorities remain consistent. Strengthening our balance sheet, using free cash flow generation to extinguish debt and to organically invest in the growth of our Industrial and Specialty Products segment. Our goal for year-end 2023 is for our net leverage ratio to be below 2 times, which we believe should be very achievable. With that, I’ll turn the call back over to Brian.

Bryan Shinn: Thanks, Don. I’m very proud of what our team accomplished in 2022 against the backdrop of high inflation and market uncertainties. We’ve been very successful in expanding our market leading positions, securing future cash flow visibility and strengthening our balance sheet. We also continue to execute on numerous growth initiatives to further position us as a marked leader and I expect that 2023 will be another record setting year for U.S. Silica. With that, operator, will you please open the lines for questions?

Q&A Session

Operator: Thank you. We will now conduct a question-and-answer session. Our first question comes from Stephen Gengaro with Stifel. Please proceed.

Stephen Gengaro: Thank you and good morning, everybody.

Bryan Shinn: Good morning, Stephen.

Stephen Gengaro: So just to start, you mentioned €˜23 EBITDA growth, I believe of 20% to 25%. Can you talk a little bit about the components of that? I’m assuming a lot of its oil and gas driven given your comments from the ISP side? But can you add any clarity to how we should think about the pieces?

Bryan Shinn: So we don’t have specific guidance by the individual segments for you all this morning, but I think you can infer from our on both segments that we expect both parts of the company that have a really good year in 2023. In the oilfield side, we expect to continue to constructive macro backdrop, strong oil and gas demand overall. We don’t expect to see a lot of, kind of, demand destruction on the industrial side of the business. So we mentioned that things look pretty good over there in general in spite of some of the headwinds out there. The only place we’re seeing any kind of headwinds at all in industrials right now is a little bit in the building products sector, but we don’t think that’s going to have a material impact. So expectation is that we’re going to have a really good year in 2023 on both sides of the company.

Stephen Gengaro: Thank you. And when you mentioned 85% of your oil and gas capacity is contracted for €˜23. What is that capacity right now given where your different mines sit?

Bryan Shinn: So in total, we’ve got about 15 million tons of active capacity on the proppant side, Stephen. And we’re not adding any incremental capacity per se, but our teams are always pretty creative in finding ways to squeeze out another ton here or there. So we’ll continue to do that, but no capital expansions planned or any capacity increases that we would invest in specifically.

Stephen Gengaro: Thanks. And then just one follow-up to that. When you talk about the sort of laddered approach to some of your contracts, when we think about the pricing embedded in the contracted oil and gas volumes, is it supportive of current or higher contribution margins?

Bryan Shinn: So we had a number of new contracts that we signed in Q4 for example. And I think in each of those, we got additional price. So expectation is as we look at 2023, we’ll continue to get some price in oil and gas and SandBox side. I think we have the same kind of dynamic; things look pretty good over there.

Stephen Gengaro: Okay, great. Thank you.

Bryan Shinn: Thanks, Stephen.

Operator: The next question comes from Samantha Hoh with Evercore ISI. Please proceed.

Samantha Hoh: Hey, good morning, guys. Congrats on the great quarter.

Bryan Shinn: Thanks, Samantha.

Samantha Hoh: I wanted to maybe talk a little bit about the strong start that you’re seeing in 2023 with January being the best months of oil and gas. Can you maybe speak to some of the maybe weaker numbers that you’re seeing in February? Is there a mix component geographically with just what you’re seeing on the gas replace versus the Permian Basin?

Bryan Shinn: So I would say in general, supply and demand remains really tight in the proppant side and last mile. As we think about the January that we had, as we said, the best January ever for our oil and gas business, since we’ve been in that over the last decade or so. I think the rest of the quarter is going to be very strong as well. Proppant demand is super strong almost everywhere. SandBox is doing really well also. And I know one of the questions we’ve gotten from investors is what happens to our business with some weakness in natural gas pricing and that’s sort of interesting. We see that weakness mostly impacting the Haynesville and we decided several years ago not to invest in any proppant mines in the Haynesville just because that’s always the — kind of the swing basin, if you will, for natural gas.

So we have pretty limited exposure there, just a few SandBox crews. And ironically, I think — it might just tighten things up in other basins as budgets perhaps shift a bit and service companies focus on basins outside the Haynesville, but we’re really seeing strength everywhere right now, Samantha, and there’s a few other ironic things that have happened. I think it’s been widely reported that a local profit mine that was opened up a year or so ago, up in the Northeast, was actually recently just shut down and that’s really tighten things up in the Marcellus and the Utica. We’re seeing really strong demand for Northern white sand and prices are going up there as well. So even in a basin that it might be a little counterintuitive to see pricing going up right now with the trajectory of natural gas.

We’re actually getting positive incremental margins there. So it’s pretty exciting time on the oil and gas side for sure.

Samantha Hoh: Okay, great. My follow-up — well, another question I guess, I’m curious actually in terms of the progress that you’re making on the ISP side with the new products, I think in years past, you’ve kind of give us an update in terms of the run rate towards that contribution margin target? Can you kind of maybe give us another update like for year-end 2022 into that initiative?

Bryan Shinn: Sure, sure. So as I mentioned in our prepared remarks, we have three kind of growth engines in ISP. One is just the base business, some of the things that we’ve had for a long time and we’ve been consistently growing that at a GDP plus rate, so that continues. The second, kind of, growth engine that we have is selling more of our existing high value products. So things like ground silica, diatomaceous earth powders, other diatomaceous earth high end products in the fillers markets and some of our high purity filtration products. But those products across our system are mostly sold out. So one of the things we’re starting to do now is increased capacity for those products. And so one of the things that we’re announcing this morning is a nice investment for new capacity for fine ground products and that’s going to be at our Millen, Georgia site.

And that plays right into our overall strategy of growing the ISP business and that should increase our fine ground capacity across the company by about 10% to 15%. And those are some of our most profitable products. So we’re doing things like that. We’re also kind of working on that third growth engine, which is the new advanced materials, that’s like cristobalite, Cool Roof Granule, our EverWhite pigment products and a variety of other things. There, we’re also making an investment that we announced this morning or talked about it in prepared remarks that we’re opening a new market and product development center up in Illinois with the, kind of, equipment and people staffed up by the end of the year. That will really allow us to kind of turbo charge some of the market development.

So we feel really good about that, I would say in general, we’re doing everything we can to get these new products out as fast as we can, but we’re probably a little bit behind. Some of the initial expectations that we put out there. And I would say there’s a couple of reasons for that. Just generally the pandemic and post-pandemic in that environment, customers have just been slower to respond to things like new products, mostly dealing with their own issues and priorities, but we’re really seeing that improve in the back half of €˜22 and into €˜23. And another thing that was an issue for us is that as we work to scale up these products to go from lab scale to on a pilot scale and then eventually commercial, we didn’t have the facilities to do the pilot scale production.

So we might have a customer that likes one of our new product, but they need five truckloads to try it out on one of their commercial side lines. We didn’t have the facilities to produce that. So that’s the facility that I just mentioned a few minutes ago that we’re going to be starting up in the Illinois area probably by the end of this year. And so getting the facilities in to do that scale up work, I think will help us out a lot. And then the other thing in the background is we had a choice to invest in some of these new products or to repurchase debt in some cases. And just given the rising interest rate environment, we diverted some cash over to do that and as Don mentioned in his remarks, we repurchased about $150 million in debt at a discount.

So there’s really attractive margins there. But I think now with the cash generation in the company, we can continue to repurchase debt, continue to improve our balance sheet and make the investments we need to make in industrial. So all that said, I would say as we exited 2022, we’re probably in the $25 million to $27 million range in terms of the new product offerings and I would expect we’ll continue to grow that in 2023, probably be in the $32 million to $35 million range. So we’re definitely ramping up, and some of these larger projects that we have to increase capacity for some of our highest margin, best-selling, kind of, sold out products that will really start to kick in as we get into 2024 once those facilities are up and running.

So it’s a probably a longer answer than you wanted, but it’s a complex area and it’s something we’re putting a lot of effort and energy into Samantha.

Samantha Hoh: Thank you so much for all that details and best of luck on that.

Bryan Shinn: Thank you.

Operator: We have a follow-up from Stephen Gengaro with Stifel. Please proceed.

Stephen Gengaro: Thanks. I guess two things. One, there was a sand IPO filed recently. And I was curious, they seem to be a pretty big player. Can you — has there been any change in industry dynamics over the last year plus, as far as new mines coming up the way they’re acting the way pricing is structured, et cetera, because it feels like the ease of capacity additions that we saw in prior cycles hasn’t materialized. And I’m just kind of curious your take on that and just sort of overall sand supply and demand?

Bryan Shinn: No, I’d say it’s an astute observation, Stephen and I would say there have been some changes. But regarding the IPO and you’re obviously talking about the Atlas S-1 that got filed, Atlas has been a great competitor and they’ve been in the market for quite some time. So there’s really — there’s nothing new about them in the market. It’s not like they just showed up one day, they’ve been around for a while and we of course compete against them as well as many other companies that are currently private. But to your point, I think we’ve definitely seen a slowing of capacity additions. The things that we have seen coming online have been much less frequent and we’re not seeing many, many mines coming in like we did in the early days.

Certainly, there’s been a few mobile mines have come up in one or two other sites. But I feel in general that the industry has been very disciplined much like the rest of the oil and gas value chain. I think our competitors just like us are thinking about cash generation, thinking about their balance sheets and perhaps at some point being able to return some of that cash either into other investments or back to investors or something like that sometime in the future. But it feels very different than it did a couple of years ago, much more disciplined and kind of settled. It doesn’t feel like the Wild West anymore to me. So it’s been quite a change over the last few years.

Stephen Gengaro: Great. And then just the only other question I had and I got cut off for a second. So you may have answered this when to Samantha’s questions. But in the ISP business, are there — like as we look at, are there any key products that are having the most success that we should be thinking about, kind of, driving the new product innovation in €˜23 and €˜24?

Bryan Shinn: So I think there are a few things that are really interesting. You’ve heard us talk about the fine filtration products that we have for the biomedical industry. And so it’s a really big, kind of, up and coming industry. So a lot of the kind of biologic drugs that you see out there today are basically derive off of blood plasma and you have to do certain things to that plasma and separate proteins out, things like that. And our products are very good at that. And that’s probably ultimately a $35 million or $40 million market today into which we’re entering and that’s a CM market. So that’s going to do nothing but grow. So I think that’s one that over the next five to 10 years is a real target for us and there’ll be lots of opportunities coming there.

I think the other one that’s a really big market just because the addressable market is so large, it’s a big market for us, is the white pigment market. So this is TiO2 trying to replace that with perhaps our EverWhite product, so that’s a really large market sector. There’s a lot of other smaller product lines, things that are $5 million, $10 million, $15 million in ultimate potential products for us. But we’ve got quite a few of them and a number of other things coming in the pipeline that are more like Generation, Generation 2, Generation 3 products. So a lot of exciting stuff and one of the things I like best about our product line is not like we’re dependent on just one or two big hits. There’s a lot of singles and doubles in there as well.

And we just have to continue to bring those along and do it in a way that we have the whole sort of chain together to be able to get those products out in the market. So we have to be able to do the product development on the bench scale we’ve got to do the scale up work at kind of the pilot size and then we have to be able to commercialize that. And I think my response to Samantha’s question was more just talking through some of the challenges as you go through all that, particularly in the pandemic and the post-pandemic era. There were a lot of additional challenges there and so probably a little bit behind where we originally aspire to be, but most of the product lines still there, green diesel, a lot of the things that we’re going after, just a question of getting the products and getting them out to the market.

Stephen Gengaro: Great. Thanks for the color.

Bryan Shinn: You’re welcome.

Operator: Thank you. At this time, I would like to turn the call back over to management for closing comments.

Bryan Shinn: Thank you very much, operator. First, I want to thank my more than 2,000 colleagues at U.S. Silica for all their hard work and dedication to make 2022 an outstanding year for U.S. Silica. You’ve heard us talk today about the strong sales, the profitability, the cash generation and meaningful improvements in numerous areas of ESG. So certainly a lot to be proud of over the last 12 months or so. Second, I want to reaffirm that we’re committed to market and capital discipline. We also are delivering meaningfully on our promise to further strengthen our balance sheet and we expect to continue to sustainably generate significant free cash flow in 2023 and beyond. And finally, as we look ahead, we remain confident that our industry leading business segments, robust product portfolio, focused organic growth strategy, best-in-class execution and continued emphasis on creating a diverse and inclusive culture will deliver substantial value for our shareholders and other stakeholders.

Thanks again for joining our call today and we look forward to speaking with you all again next quarter. Stay safe and be well everyone.

Operator: Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time and thank you for your participation. Have a great day.