Q2 2022 Proterra Inc Earnings Call
With project power and energy momentum continues to grow it for Terra power battery systems delivered in Q2 higher than Q1, which itself was higher than all of 2021 and.
Enabling another quarter of record deliveries and revenue in Q2.
<unk> power delivered battery systems.
348 vehicles in Q2 that is more than 10 times. The 30 vehicles, we delivered battery systems for a year ago, and 21% higher than the 287 vehicle units delivered in Q1 2022.
Through June 30 of 2022, we have now delivered battery system to more than 1000 vehicles.
<unk> partners.
While this figure includes some prototypes in vehicles still in production or in transit to the end user and is not reflective of the underlying kilowatt hour battery capacity power. It has now delivered batteries to more vehicles for our OEM partners than to <unk> vehicles.
<unk>, how its pace of growth is underpinned by the expansion in the number of our customers vehicle programs entering series production and by the growth in volumes on these programs as our customers scale up production.
To put it all in perspective at the start of 2021, we had established partnerships for five vehicle programs that are already delivering two one in series production.
In Q2, 2022, we had announced partnerships with more than a dozen Oems covering over training vehicle programs.
And we delivered battery systems to 15 different Oems in the quarter.
Four of which were in series production and the rest prototypes for current or potential partners.
While the full vehicle programs in series production accounted for the vast majority of our volumes in Q2, many of our other vehicle programs that are still in the development phase achieved some important milestones over the last few months than who showcased its first electric double Decker bus using our battery systems.
And we have provided the batteries to stay ahead of volatile tracks with startup production verification vehicles.
And in recent weeks, we shipped prototypes to Nicola for both its Craig bag and tray fuel cell EV vehicles.
Battery production also continued to grow materially year over year, including supply for both power and transit we produced 79 megawatt hours of batteries in Q2.
Almost double the 41 megawatt hours, we produced in Q2 2021.
And we have now cumulatively produced over 650 megawatt hours of heavy duty battery for commercial and industrial customers and vehicles.
At <unk> energy, however, significant supply chain constraints continue to impact results in Q2 on top of continued shortages and charging hardware and we are now also coping with the shortages and switch gear to <unk>.
Nevertheless, we delivered three megawatts of DG fast Charger solutions down just 300 kilowatts from three three megawatts in Q1, 2022 and compared to $4 six megawatts in Q2 2021.
However demand for our fleet specific megawatt scale charging solutions continues to expect in.
In addition to our foundational demand for the transit segment highlighted by an order from BC Transit and Canada for our megawatt scale charges, along with their order pertains VX five electric transit buses, we received multiple megawatts of orders from.
From non trials with customers in Q2, mainly in the school bus and coach by segments.
So together total for Terra power and energy revenue grew 127% year over year to a new quarterly record of $24 million.
Moving on to <unk>.
<unk> deliveries grew significantly versus Q1 2022 as production rebounded from Q1, 2022, which was particularly impacted by supply chain disruptions.
Q2 results reflect the benefits of some of our efforts to improve supply chain performance and production purchases for the current environment.
As a result in Q2, we delivered 52, new electric transit buses in the quarter as compared to 54 in Q2 2021.
This also represents 30% growth from Q1 2022, as our proactive supply chain initiatives to create more flexibility in our production system paid off.
With our highest quarterly production rate on record for our Greenville factory.
We also delivered five pre owned buses in the quarter, which continues to demonstrate the potential for a pre owned market and electric transit buses.
To be clear.
Overall supply chain issues have an improved and we continue to face constraints and wiring harnesses and power connectors amongst other items.
And the COVID-19, Lockdowns in China early in Q2, compounded some shortages, particularly mergers and other electrical components.
But all the credit goes to our team who put in an incredible effort and got the dropdown.
I'll now hand over to our CFO <unk> to provide deeper insights into our revenue gross margin and cash flow performance.
Okay.
Thanks, Garrett underscoring Kent's comments I'm extremely proud of our team for adapting to what continues to be an unpredictable and volatile operating environment.
Our laser focus on execution enabled us to achieve sequential growth in transit and power delivery and year on year and sequential revenue growth across both business units and sequential gross margin improvement. In addition, we retain a healthy balance of cash and equivalents on our balance sheet of more than five.
<unk> hundred $20 million.
As of June 30.
While this year's investment in our new factory accelerates your cash is between 2022.
The new Greer comes from the line of facility will allow us to multiply our existing battery production capacity have return this.
This positions us for growth on revenue and margin and cash flow in the years ahead.
Now, let me give you a little color on our financial performance beginning with revenue.
Total Q2 revenue grew 27% to $75 million.
Prepare powered and energy revenue grew 122% year over year to a new high of $24 million in the quarter, representing an incremental $13 million over Q2 2021.
The growth was driven by more than tenfold increase in preparing Howard just a brief with battery system for 348 vehicle.
<unk> powered delivery growth rate exceeded the pace of revenue growth.
Because of a greater mix of lower weight vehicles with smaller battery system and.
In addition, prepare energy commissioned three megawatt fleet specific DC fast Chargers.
Five three megawatt versus Q1, 2022 and down one six megawatt year over year.
The completion of procuring energy projects continue to be impacted by shortages and delays in critical hardware components as well as permitting and site readiness delay such.
Switching to prepare transit.
The revenue in the quarter was $51 million.
<unk>, 44% growth over Q1, 2022, and 6% revenue growth year over year, we delivered 52, new electric buses and we were able to grow our revenue on Tuesday robust year over year, excluding our pre owned sales.
Our average price per box grew year over year and sequentially. This was due to a richer mix of.
Product configurations.
Electric bus deliveries in Q2 included repeat customers such as Edmonton Transit services, which received its first order for <unk> to make it the largest electric transit bus fleet with 60 Patrick.
And Mr. Lincoln Marine, Illinois, which also received its third order of preparing buses with a treat now at 17 of our patent.
We also had new customer deliveries, including EQ right in Albuquerque, New Mexico, and suburban mobility authority for regional transportation. The second largest transit agency in Michigan to name a few.
Moving on to gross margins and EBITDA.
We reported a positive gross margin of approximately $600000 in the quarter, a significant improvement versus the gross loss of $3 million in each of the last few quarters, albeit below the gross profit of $1 $3 million reported in the prior year before inflation and supply chain impacts really came to the fore.
The key to margin improvement versus the prior six months with a result of all the effort we have been diligently working on to mitigate supply chain disruption.
Some of these actions include but are not limited to qualifying alternate suppliers, expanding our broker network and continuing to make investments with our key suppliers alongside their operations to increase in throughput.
We are seeing the payoff of our efforts through higher production volume.
Fixed cost absorption and improvement in our labor efficiency.
I also wanted to give a brief update on our pricing initiatives I mentioned last quarter as you recall, we implemented new contract pricing across both business units for future sales orders on the party on the energy side, we expect to begin realizing the benefit in the latter part of the year of customer deliveries on the renegotiated contracts begin to ship.
And the trend inside of our business.
Greater lag due to the long cycle nature of the business. It will be more of a 2023 impact before we begin to see the impact of the re pricing of our contract.
Improvement in gross margin from our pricing actions assumed inflation begins to stabilize.
If we continue to see inflation trend upward we may not realize these improvements without additional pricing actions.
I am confident about our team and I am very proud of what we accomplished in the last six months. This demonstrates our agility and our ability to execute in an extremely challenging and unpredictable environment.
That said I want to emphasize that our business isn't either seasonal nor linear, particularly in transit where margins can swing based on the mix of orders or order sizes delivered in any given quarter.
In the second half of 2022 gross margin should benefit in part from a higher mix of power delivery under renegotiated pricing.
On the other hand, <unk> gross margins will not be as favorable as they were in Q2 due to a higher mix of bus deliveries with older contracts pricing subject to recent cost inflation.
In addition, we will see an increase in startup costs associated with the completion and initial ramp of our new battery facility in Greer South Carolina as is typically the case for any new facility ramp.
Any of these costs will be reflected in our gross margin performance in the second half of the year in accordance to GAAP standard yet the revenue will lag until we begin to ship product to our end customers.
Looking beyond the short term impact of ramping our new manufacturing facility, our underlying gross margin should continue to improve in the years ahead from higher pricing that balances our cost.
Greater production volumes and scale benefits and improvement in our labor efficiency more effective supply chain and greater manufacturing efficiencies overall as we bring our new manufacturing capacity online.
Our adjusted EBITDA loss of $33 million in Q2 was driven mostly by the gross profit of $600000.
Less operating expenses of approximately $47 million.
Plus noncash stock compensation of $6 million.
And depreciation and amortization of $3 $3 million.
Lastly on the cashback.
Our balance sheet remains strong.
With $523 million in cash cash equivalents and short term investments as of June 30.
Our cash usage in the quarter was $75 million versus $61 million in the first quarter, a sequential increase of cash usage of $40 million.
This includes $40 million of cash usage in the second quarter related to securing our long term self supply and inventory and capital expenditures, primarily tied to our new battery facility.
We made a $10 million prepayment to LG energy solution for the extension of our battery cell supply contracts announced last August for multiple gigawatt hours of supply through 2028.
We had $10 million incremental capital expenditure related to our new battery manufacturing facility as compared to Q1 2022.
In addition, we grew our inventory by approximately $20 million versus the prior quarter.
The growth in inventory is strategic we have purchased key materials in advance of production to be go live ready over the next several months and we'll continue to invest in supply chain security.
Our agree a facility will multiply our existing battery production capacity once ramp and we are strategically acquiring the inventory in advance to help protect us from potential supply chain and logistics challenges.
We recognize that our balance sheet strength at $523 million in cash and equivalents as of June 30 sets us apart from others.
The health of our balance sheet is not coincidental liquidity as a priority and it always has been and will continue to be but.
But we will continue to invest responsibly and battery capacity expansion product research and development and across our operations to support our growth strategy for the years to come.
At face value the results will appear as elevated cash burn when compared to normalized rates without the go live of our new facility.
Together inventory and capital investment accounted for two thirds of this quarter's cash burn.
I cannot emphasize enough that we understand the importance of prudent cash management, especially in such a volatile time.
Despite the challenging environment. We are all currently facing I believe we are in an excellent position to ride out any potential economic downturn on the horizon and have ample room to improve our gross margins over time as supply chain and inflation headwinds normalized and as we ramp up our new capacity to full production.
And with that I'll pass it back to Gary for his closing commentary Gareth.
Thanks Karina.
So OLED.
As you can see we delivered excellent results in Q2. Despite all the challenges we are ultimately tracking relatively in line with our expectations. So far this year.
As a result, we reiterate our guidance for revenue growth to accelerate to between 24% and 34% year over year to a range of $300 million to $325 million in 2022.
As well as for Capex.
$80 million to $100 million largely focused on completing construction of our new battery factory.
This year.
Our performance year to date is not a result of an improvement in global supply chain or for that matter economic conditions, but our teams hard work experience.
Execution orientation.
In fact at the midpoint of 2020 to the global economy is in a much different place than it was at the start of the year.
On top of the lasting effects of COVID-19 in our society, we have gained Russia, Ukraine conflict.
<unk>, the biggest jumping inflation and interest rates in almost a generation.
The slowdown in the economy and capital markets that have become much more to say.
Fortunately.
We believe we are prepared to meet these challenges as we transition from startup to scale up as I have often discussed.
Earlier this year, we began assessing our strategy of operational and capital discipline throughout the organization focused on enduring Brian .
Prioritizes margin improvement of revenue growth.
Cash preservation without sacrificing our growth investments.
And focusing on core growth opportunities that can provide the highest return on capital as well as the fastest return of capital.
We continue to be supported by a healthy balance sheet with more than $503 million in cash and equivalents as of June 30.
And I reassure you. It is not one we take for granted in any way shape or form.
We continue to make investments in our core growth opportunities and are fortunate that we have grown our soft responsibly and are not in a position where we need to reduce head count at this stage and in fact, our recruiting for many roles primarily to launch our <unk> manufacturing facility later this year.
But we are blind to the current economic and capital market environment.
We're continuing to consume cash this year because of the investments, but much of it is discrete targeted nonrecurring investment designed to increase our production volumes and improved margins and cash flow, including strategic inventory purchases prepayments was securing long term battery cell supply.
Domestically.
Of course, Capex, particularly for the new grid battery factory.
Construction of the Greer facility continues to progress.
The first battery pack line, it's starting to be delivered and tested and the automation equipment is undergoing factory testing at the vendor side.
Like anything dependent on the global supply chain Greater has also encountered a chair of equipment delay.
We have been able to work through it such that we remain on target for solid production in Q4 this year.
Bringing it all together I will conclude the call with three key points.
In Q2, we delivered excellent growth in volumes and revenues driven by both of our business units and also improve gross margins sequentially from Q1 levels.
Sure.
Trading conditions have not improved and there are growing risks to the economic outlook, but are clearly demonstrating its ability to execute.
We are focused on targeted investments to continue to grow revenue and improve margins and cash flow.
And three.
We believe our investments are putting us in a strong position to enter 2023.
With our new factory multiplying our battery capacity secured supply of our key battery module and pack raw materials.
Supply on development agreements to provide battery systems for more than 20 vehicle programs.
Charles Good in a strong position to take advantage of more than $800 million of new annual federal funding of electric transit buses for the next few years.
And a well capitalized balance sheet.
So finally to close I would like to thank the incredible people, we have a per terror for their dedication and commitment to our mission.
With both a winning team and.
And I have great confidence in them to execute on our goals.
With that I'll open it up to Q&A.
Operator.
Yes.
Thank you and at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad and we'll pause for just a moment to compile the Q&A roster.
Okay.
We will take our first question from Steven Fox with Fox Advisors. Your line is open.
Hi, good afternoon, everyone.
Two questions if I could first off you mentioned.
Pete increase on the transit side related to the mix of bus configurations. I was curious if you could give some more details on that and whether there's any kind of trend line to extrapolate going forward and then secondly, Korea can you just.
Maybe you.
You gave a lot of detail on the cash burn to date I'm just trying to understand maybe a timeline for when some of the nonrecurring events, maybe start to die off and when we could start thinking about sort of the cash burn starting to come down in a sustainable manner. Thank you.
Hi, Stephen let me start on the pricing topic, and then pick up the cash topic.
So.
Specifics on the actual numbers on pricing is not something we would.
We will provide because thats, obviously competitively sensitive information but.
I can share with you that yes, we have price for all forward.
Future business in any bank, both on powered and transit and.
Proposals that we have been made oil for example in the low <unk> pricing.
That has been.
Well covered we're also.
Continuing to work through our existing customer contracts, we've made very good progress there.
As we mentioned on our last earnings call. The majority of the contracts have been reviewed.
There are a few sizable ones that are still under negotiation.
On both sides of the business, both holiday and trials, but we feel confident that we've made very good progress there and are obviously.
Im looking to recover the supply side inflation pressure that <unk> in our business.
Hi, Stephen this is Kurt I'll.
I'll go ahead head and tack on the cash burn question. Then do you have any follow ups, we're happy to take that so regarding the cash burn, but theres no doubt that it's been an accelerated cash burn a phase due to the prep for growth specifically tied to the manufacturing expansion and our strategic.
Supplies securing inventory we need to go live.
If I were to two.
Kind of blinded I'll tell you I would expect us to continue to carry.
That higher inventory and beyond accelerated burn until we go live and start producing.
Shipping to customers out of our credit facility.
Great. That's helpful. And then just a clarification on that on the first question is there anything to consider in terms of your mix.
Integration mix going forward that is sustainable that helps add skus beyond what you mentioned a contract pricing.
I don't think I have anything significant to add there.
Yeah.
The only comment I would make is obviously.
Charles what side of the business there is a mix of sort of.
Yes business that comes out of the loan.
Protests as one example, and then rfps on the other side where.
Got it.
And in some cases it's.
Direct sourcing.
There is a mix of of the kinds of business that you have and obviously.
Yes, how those processes are put into the market is different in each case.
It's very difficult to sort of.
Uniquely answer that question because as you know in the transit business. Many of them have very specific requirements on the configuration of the product.
And so yes.
There are nuances across every customer.
Great. That's helpful. Thank you.
And we will take our next question from Mike <unk> with D. A Davidson your line is open.
Good afternoon, and thank you.
Can you comment on the kind of the Big news of the week, which was Nicholas purchase of colonial power or at least the announcement that came out yesterday.
Can you maybe share what that means for your Nikola contract is it going to be.
Business as usual going forward from what you know and then maybe the second part of the question. They also announced at all there.
All of our non nuclear business is going to be exiting that as soon as they can find other battery suppliers.
There are some opportunities for you to pick up some new business that way.
Yes, hi, Mark Thank you.
First of all we are enjoying a very constructive and healthy relationship with the team with Nikola from the very beginning of our discussions.
I have always emphasized their intention to follow a dual source strategy for their battery packages both are there.
Battery electric vehicle and the fuel cell vehicle.
They reiterated that again on the call this week.
If you consider their production targets, it's likely that that would require multiple ore sources of battery suppliers too.
And we have a lot of confidence in our product we have the cells, we have the production capacity coming.
And we have leading technology.
And our battery packs. So we feel confident that it's business as usual for us with the nickel achieved.
To your second question.
They did indicate that they do not intend to pursue merchant battery business.
And so today Roni R is a competitor and I guess by inference.
It means that that might not be the case in the future and obviously.
We have confidence in our products in the market and look forward to continuing to bring good solutions to customers in the commercial vehicle market as theyre going to need them.
Okay, Okay fair enough. Thank you.
Also wanted to follow up with.
Any comments on opening Greer they run this year.
I recognize that the Dod.
Youre getting this really kind of set up in a very labor light way, but do you have the people that you need at this point higher to fully turn our production over there.
Coming to the next quarter or so.
Yes, we are busy with the setup proceeds for grid, both in terms of equipping the facility and oversee.
Hiring so we are well underway with that process.
As <unk> mentioned.
Part of setting up a new factories, you've obviously you got to invest ahead of the startup.
And yes, we're well underway with that and again we feel.
Very excited about going live with start of production at <unk>, because it's a significant moment for us to increase our scale materially.
Okay.
Okay, Great and last one for me just about your R&D spend in the quarter.
It's been up most of the quarters over the last year or two just because of the growth of the business in your new plans, but.
Is the $15 million level, roughly decent number to go with from here or could there be further expansion.
Over the next 18 months or so.
Well, maybe let me start off screen to add some thoughts as she has.
I think the R&D spend that you see at the moment is really driven by two factors. The first is obviously continuing to invest in our product portfolio as we.
Set the course to have the right product for the market in the long term.
But also as you bring customer programs to life. There is an investment you have to make in those programs ahead of this auto production. So there's a lot of engineering.
Spend in our engineering team that goes into setting up the success for the growth of the business.
As those vehicles come online.
I think the only additional color I would add is kind of even just broader than than RMB. If I take a look at the kind of total opex. The way I think about it as about a third of the growth that you see is really tied to I'll call. It administrative type public company growth requirements that we have but.
Two thirds is not just arent heavily focused on R&D, but other call at SGA SG&A type initiatives that help support the customer program. So in that two thirds of it.
We see it more as an investment in.
And the growth in the future growth of the business rather than defense I recognize that it's hitting the opex line within the P&L, but it's what we feel we need to do to help support our future growth strategy.
Yes, I think.
Karina touched on a very important point that highlights.
One of our uniqueness is as approach era.
Yes, those those interfaces between our customer facing team and engineering resources and commercial vehicle.
Oems.
Is is where we really bring to life the richness of our experienced not just in our battery technology, but the experience we have in battery electric powertrains as we work with them to bring high quality products to market.
Got it.
Thanks to you both I appreciate the discussion I'll pass it along.
Thank you thank you Michael.
As a reminder, it is star one if you would like to ask a question.
And there are no further questions I apologize, we do have a follow up from Mike <unk> with D. A Davidson your line is open.
Thanks, well, if it's just me I'll ask one or two more if you don't mind.
I was trying to get someone else a.
Chance obviously, thank you for taking the follow up here.
I guess I kind of wanted to get a feel for.
Just the inventory piece of it.
I know you had mentioned some one time startup and then you had that prepayment there was no absolute inventory incentives by the prepayment was just the cash payment is that correct.
That's the only when you have to make or other additional prepayments to come here.
Yes, So let me take that in two parts first the $10 million prepayment youll see us in other asset on the balance sheet. So.
That's for the future purchase of a cell.
Right now we don't expect to make any additional payments in 2002, our contract is based on milestones. So as certain milestones are achieved that's when kind of the payments trigger so as of right now that is the only anticipated payout.
<unk> 2002, and regarding the the rest of it we had about.
About it if I look at kind of in a six month, we had about $10 million growth in the first quarter and $20 million kind of sequentially this quarter.
It's all tied to in order to be ready to go right you need to have everything in place.
And not only are we getting ready to go live on our new battery facility, but as you see our demand is continuing to grow.
An accelerated rate within our power business and we need to continue to be able to make strategic investments on our transit business as well everything scholarship. So.
Lee.
My inventory balances wouldn't be as high but I recognize that this is what's required and what we needed in order to have a successful go lives.
We will invest in it in the short term until we are able to stabilize the capacity.
Normal lineup.
Mark I'm going to just add one or two sentences onto our carina said around the broader sort of outlook on strategic inventory.
It's.
Something that the team is extremely focused on.
<unk> capital position to set us up for success as we.
Great.
But we also have developed a very.
Strong leadership team with great experience in scaling and scaled businesses.
So I think we are starting to see the benefits of the leadership experience, we've been bringing on board.
And having leaders who know how to focus.
You invest in the right areas, where we know we're going to get return, but then also be very disciplined in areas, where we know we're entering a time where that discipline is absolutely required.
Yeah.
Got it.
Maybe one other question.
Can you maybe just discuss.
The pipeline of platforms that the team is bidding on looking at for the power business.
Yes.
Outside of the things that might come to market, which are pretty sizable what might be giving up.
What did you actively pursuing today.
Has the platform and the pipeline of platforms increased quarter over quarter or year over year.
Do you think you've gotten a lot of what you were hoping to get in now Youre just kind of delivering on some of those some of those first sign contracts.
Yes, Mark as we've indicated on our last call we gave.
Backlog and order updates once a year so.
We're not we're not going to do an update on that in any detail, but I will say that.
Demand in the market has remained healthy obviously supply chain remains constrained.
When you consider the infrastructure Act.
The funding that has been made available just for transit buses in school bus alone.
The.
Demand in the market remained healthy and on the commercial vehicle side as we've indicated the growth in AR.
OEM customers and vehicle platforms.
Demand is again, it's healthy and we have high confidence that our products are well matched to what the market needs right now and obviously, we're going to continue.
Continue to seek to grow our product portfolio with.
The rock product in the right segments, where we know we can add value for our customers.
Okay, Okay I'll leave it there. Thank you so much.
Okay.
And we will take our next question from coming in with Morgan Stanley . Your line is open.
Hey, good afternoon, guys. Thanks for the question I, just had one kind of longer term strategy question on my side.
I think during the public market process the idea around the trends of the business is more sort of demonstrate the kind of strength.
Battery packs and battery systems, obviously, let's look at the delivery cadence and the uptake on that side. There was a pretty high level of adoption going on and I think customers are definitely recognizing the kind of compelling suite of technology brands. So I guess, just given the level of uptake given the strength in deliveries.
Greer coming online here by the end of the year does that change the thinking around how long you want to keep the transit business I mean I. Appreciate this will generate a lot of laundry revenues today, but just curious at what point.
In terms of when you could actually.
Point at what level.
<unk> powered deliveries would you feel comfortable maybe not holding on to the transit bus anymore.
Yes, thanks for that question.
Now we have a <unk>.
Very well constructed product portfolio, our transit business was that the Genesis of.
Of our innovation track and has proven to be a valuable asset as we can.
Use it to essentially.
<unk> demonstrate the capabilities of our own product in the powertrain business.
And so yes for us.
That gives us that added level of confidence that what we're building and the pilot side of the business really is.
Ready for market and we are transit buses running from East Coast West Coast, North to South on flat terrain mountainous terrain Hot and cold you name. It we have 30 million miles of.
A real world testing on.
The vehicles, so it's added tremendous value for us.
And so it's helped us build out the powered business successfully.
And of course, the energy business, where the charging systems that.
We went into retail charging for the transit bus business because of the fleet operators really didn't have solutions for that and so that's also helped us.
Grow and scale the energy product portfolio. So we like the product mix, we have today and we're going to continue to develop all of them as we see the economic opportunity in the market and.
Yes that plan changes, we would update the market, but for now we're very comfortable with the product portfolio we have.
Got it sounds good thanks for the time.
There are no further questions at this time I would like turn the call back to Mr. Gareth Jenkins for any additional or closing remarks.
Well, thank you and really I guess declines I would just like to thank you all for your time today and.
We appreciate what you are bringing in helping us understand the message of who we are as a company and.
And thanks for the confidence you have in us.
I appreciate the time today and enjoy the rest of the day.
Okay.
Ladies and gentlemen, this concludes today's conference call and we thank you for your participation you may now disconnect.
Okay.
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