Q3 2022 Rayonier Advanced Materials Inc Earnings Call
[music].
Good morning, and welcome to the <unk> third quarter 2022 earnings conference call. During today's presentation, all parties will be in a listen only mode. Following the presentation. The conference will be opened for questions with instructions to follow at that time as a reminder, this conference is being recorded.
I would now like to turn the call over to your host Mr. Mickey Walsh Treasurer, and Vice President of Investor Relations for Ryan. Thank you. Mr. Walsh you may begin.
Yeah.
Thank you and good morning, everyone and welcome again to <unk> third quarter 2022 earnings conference call and webcast. Joining me on today's call are Delisle Bloomquist, our president and Chief Executive Officer, and Marcus Molnar, Our Chief Financial Officer, and senior Vice President of Finance, our earnings release and presentation.
Cereals were issued last evening and are available on our website at Ryan Global Dot Com.
I would like to remind you that in today's presentation. We will include forward looking statements made pursuant to the safe Harbor provisions of Federal Securities laws.
Our earnings release as well as our filings with the SEC list some of the factors, which may cause actual results to.
Materially differ from the forward looking statements. We may make they are also referenced on slides two and three of our presentation material today.
Today's presentation will also reference certain non-GAAP financial measures as noted on slide four of our presentation. We believe non-GAAP measures provide useful information for management and investors, but non-GAAP measures should not be considered an alternative to GAAP measures.
Reconciliation of these measures to their most directly comparable GAAP financial measures are included on slides 18 through 23 of our presentation I will now turn the call over to the Lyle.
You Mickey and good morning.
I would like to start today by providing an update on our near term initiatives as well as some financial highlights for the third quarter before turning the call to markets to provide additional details on each of our businesses.
Aftermarket is update I'll come back and provide additional perspectives on the business and our market outlook before opening the call for questions.
Let's start by turning to slide five.
We have made very good progress against our near term initiatives are.
Our top priority remains of refinancing of our senior notes, which as you probably know mature in June 2024.
Put us in the best possible position to accomplish this objective we are working to improve our credit metrics via EBITDA growth and debt reduction.
I am pleased to report that we have improved our net leverage to five one times by reducing net debt by $16 million and.
And growing EBITDA by $35 million in the third quarter.
We will maintain an intense focus on improving our net leverage metric in order to give us the best opportunity to refinance our debt prior to these notes becoming current in 2023.
Our EBITDA growth has been driven by success in three areas.
First.
As we discussed in our last update we completed extensive planned maintenance outages at all of our facilities in the first half of this year.
As a result, we are now realizing improved productivity and reliability, leading to lower unit fixed costs.
We believe that we have further opportunities to improve the performance of our facilities, which will likely generate even better results in the future.
Our next area of focus is capturing fair value for our unique product offerings.
Generally demand for our products remains strong we.
We are capturing value for our commodity products from the current market strength regarding our cellulose specialty products, we negotiated significant price and volume increases for 2022.
As we saw inflation accelerate we implemented a $146 per metric ton cost surcharge effective April one.
We have maintained the surcharge as inflationary pressures continued.
More recently, we implemented a 20% increase effective August one.
On the small sales volume of cellulose specialties that are not under contract.
Currently we are in negotiations with our cellulose specialty customers for 2023 pricing with the objective to fully capture the fair value of these products.
Our final area of targets responding to the current inflationary environment and supply chain challenges.
While inflation remains persistent we have a multi pronged approach to help mitigate these pressures.
As already noted we implemented a cost surcharge to help offset this extraordinary inflation.
We also are leveraging our scale managing discretionary spending and decreasing the input material usage to reduce our cost.
Additionally, we are seeking alternative supply options and wood chemicals and transportation.
<unk> utilizing multiple shipping channels carriers and shipment modes to reduce shipping delays.
Prove reliable service to our customers and manage our logistic costs.
Let's now turn to page six for an overview of our financial performance.
Our revenues increased 25% from prior year to $466 million as a result of <unk>.
Price increases and strong demand across all segments, reflecting.
Reflecting a 25% increase for our cellulose specialty products inclusive inclusive of our cost surcharge and a 34% increase for our paperboard products.
Adjusted EBITDA for the quarter was $68 million up 106% from the prior year as the price and volume increases more than offset cost inflation.
The increases from prior year were led by our high purity cellulose segment, which delivered $53 million of adjusted EBITDA in the third quarter, an improvement of $21 million or 66% from prior year.
Paperboard delivered $15 million of adjusted EBITDA, which was $9 million or 150% favorable to prior year results driven by strong demand and higher prices.
High yield pulp contribute positively to the results was $6 million of adjusted EBITDA.
Corporate expenses improved $8 million from last year, driven by a change in valuation of <unk> shares, which negatively impacted prior year results by $8 million.
With these strong financial results in the third quarter and a solid outlook for the fourth quarter.
We are increasing our full year 2022 guidance to now exceed $175 million of adjusted EBITDA, an increase of $15 million from prior guidance.
Now I'd like to ask Marcus to take us through the financial details for the quarter Marcus.
Thank you Dale aisle, starting with the Companys high purity cellulose segment on slide seven.
Third quarter sales increased $81 million or 28% to $369 million driven by a 21% increase in total sales prices, which includes a 25% increase in CS prices from prior year say.
Sales volumes increased 7% to 240000 metric tons for the quarter, driven by improved productivity and logistics.
Net sales also included $33 million of other sales <unk>.
Primarily from Biobased energy in lignin.
EBITDA for the segment improved $21 million to $53 million, driven by higher prices and volumes, which were partially offset by the impact of significant cost inflation.
Turning to slide eight.
Our paperboard segment sales grew $14 million driven by a 34% increase in sales prices, partially offset by a 7% decline in sales volumes.
EBITDA for the segment grew by 9 million to $15 million as higher pricing more than offset increased costs for purchased pulp chemicals and logistics as well as the impact of lower sales volumes.
Turning to our high yield pulp segment on slide nine sales declined by $2 million from prior year.
Driven by an 18% decrease in sales volume as a result of productivity challenges in the quarter and supply chain congestion sales.
Sales prices increased 15% due to strong demand for global market pulp.
EBITDA for the segment declined 3 million to $6 million for the quarter.
As the higher prices, only partially offset lower volumes and cost increases for chemicals and logistics due to inflation.
Turning to slide 10 on a consolidated basis operating income improved $26 million from prior year to $29 million.
Sales price increases across each segment and volume improvements in HBC more than offset $63 million of higher costs, driven by persistent inflation on key cost inputs and logistic constraints.
SG&A and other expenses increased $2 million, primarily driven by higher variable stock compensation.
Turning to slide 11.
Our net debt declined $16 million to $748 million as we continue to repay debt.
Through October .
The company has reduced debt by $59 million, while still preserving adequate liquidity.
Liquidity ended the quarter at $283 million, including $132 million of cash.
We continue to make solid progress towards our stated goal of $725 million of net debt by the end of the year.
With lower debt and improving credit metrics, we continue to monitor the capital markets and are prepared to Opportunistically refinance our five 5% senior notes, which mature in June of 2024.
We remain confident that the company will obtain an acceptable refinancing at the appropriate time and prior to the notes becoming current in mid 2023.
With that I'd like to turn the call back over to Doyle.
Thank you Markus.
Expanding our market at this point about reducing debt.
We have a target to achieve two five times net debt to EBITDA leverage in the next three to five years.
We have made significant progress towards this goal.
Turning to slide 12.
We can see that we reduced our leverage from 10 times at the end of 2020.
251 times as of the third quarter of this year.
Reducing our debt balance by $215 million and increasing.
<unk>, our adjusted EBITDA margin from seven 4% to 10% we.
We expect that we will achieve a net leverage ratio of four one times by year end 2022.
To get to our two five leverage ratio goal, we will focus on further increasing our EBITDA margins, while also continuing to pay down our debt.
Our objective over the next three to five years is to increase EBITDA margins into the 13% to 15% range and reduce debt by another $100 million.
Let's now turn to slide 13.
We plan to deliver our EBITA margin goal by addressing four drivers of total shareholder return.
First we are focused on capturing our fair value for our products.
As mentioned earlier, we have already taken positive actions toward this objective.
Specifically, we negotiated double digit price increases for our cellulose specialty products coming into 2022.
And as we saw inflation accelerate we led the market with a cost surcharge on all our cellulose specialty products and.
And to top it off we recently implemented a 20% increase for non contract cellulose specialty business.
Beyond our core cellulose specialty products. We have also led price increases for our paperboard and high yield pulp products.
As for 2023, our objective is to realize further price increases.
We will also plan in the years ahead on improving our mix of cellulose specialties and capturing additional value as market demand for sustainable and renewable products increase.
The second area to drive shareholder value is around cost reduction.
We have taken several key actions to position us for success.
First we significantly invested in our assets this year to improve reliability and this investment is yielding results were.
We expect further benefits of $20 million to $30 million and fixed cost absorption as additional reliability improvement is realized.
Second we are reducing our expenses by closely managing our discretionary spending as well as more efficiently consuming key inputs in production.
Looking forward, we have set for ourselves at 2% per annum labor productivity objective, which we can realize through improved reliability increased production via new products and automation.
Third we are diversifying our logistic channels in order to bypass the constraints of a couple of shipping points.
This will allow us to reduce our freight cost improve our on time shipping experience and reduce our working capital.
The next area to improve shareholder value is reducing debt.
As discussed we have reduced debt by $59 million. This year, primarily by using the proceeds from the sale of our equity ownership in Green first and the collection of $23 million in cash tax refunds.
Looking forward, we plan to repay additional debt in the fourth quarter and then further reduce debt in the next few years with free cash flow from operations.
And reduced working capital.
Our last area of focus is on innovation.
We plan on leveraging <unk> deep experience and capability of developing specialized sustainable products.
For example, our second generation bile ethanol facility in France. This is expected to come online in 2024.
It is important to note that this strategic.
<unk> project is expected to cost $33 million.
It will be primarily financed with low cost screen loans.
In addition, our world class R&D labs are working to bring to market very high intrinsic viscosity ethers to compete with cotton linters and unique value added niche products, such as order control and non compressible fluff products.
Turning to slide 14.
Leave that Ryan offers a very compelling investment proposition.
Brian has been a renewable and sustainable company for over 95 years.
And as the world moves away from products that are made from fossil fuels.
<unk> demand more and more of our products.
Our renewable and sustainable manufacturing process starts with wood harvested from working for us.
Working for us.
Our forest that are profitably manage to supply wood related products not only for today.
But for generations to come.
As new trees are planted at the current crop is harvested.
We then utilize the full inherent value of the harvest a tree.
Today, we develop the world's highest quality cellulose products and utilize much of the lignin sugars and extractive for our own internal energy needs.
In the near future. We believe that we will have many opportunities to extract much greater value from these would constituents to produce new renewable and sustainable products as customer demand shifts away from current fossil fuel based products.
We also believe that <unk> assets and Knowhow are very hard to replicate.
We have invested over $2 8 billion and our assets and very few businesses have the technical capabilities and product know how to compete in this demanding cellulose specialties market.
Prime also has committed to do its part to reduce its environmental impact.
We've committed to reduce our greenhouse gas emissions by 40% from 2020 to 2030.
In just our first year.
We have reduced total emissions by 8%.
Regarding our renewable and sustainable products. Our specifications are some of the most demanding in the industry.
Our products are used by consumers every day, including LCD screens plastic acetate eyeglasses pharmaceuticals filtration food textiles and baby products.
Given our success in developing products that meet the existing specification of our customers. We enjoy many long term relationships, including some that span over 90 years.
We sell our products into over 80 countries with no one country accounted for more than 35% of our revenue.
Consequently, we believe that our diversity of customers end markets and geography helped.
Help mitigate our exposure to a potential global recession.
Turning to page 15, I will conclude with an update on each of our segments.
We continue to experienced strong demand for our high purity cellulose products, albeit tempered by a slowing economy.
Average sales prices for this segment are expected to decline modestly in the fourth quarter as a greater mix of commodity sales is.
As forecasted as production and logistic constraints improve.
We also forecast that key raw material inflation will persist.
Consequently, we expect EBITDA to decline slightly in the coming quarter, but will still be well above prior year.
And paperboard strong demand for packaging and commercial print products is expected to continue.
Which will drive higher prices in the fourth quarter <unk>.
Volumes and costs are expected to hold steady.
As such our paperboard business is expected to deliver strong EBITDA in the coming quarter.
In high yield pulp.
Price indices appear to be peaking we.
We expect to realize higher prices due to sales timing lag.
EBITDA is anticipated to increase as productivity and logistics improve.
Corporate expenses are expected to be approximately $45 million for the full year, which.
Which is $5 million favorable to our previous expectations driven by the strength of the U S dollar.
Lastly, we remain committed to managing our capital expenditures to within our original $140 million to $150 million guidance for the full year.
With that operator, please open the call to questions.
Thank you ladies and gentlemen, the floor is now open for questions. If you do have a question. Please press star one on your telephone keypad at this time, if youre using a speakerphone, we asked that while posing your question you just pick up your handset to provide favorable film quality again, ladies and gentlemen, if you do have a <unk>.
Question or comment please press star one on your telephone keypad at this time, please call ethylene poll for question.
And we will take our first question from George Staphos from Bank of America. Please go ahead George.
Thanks, Operator, hi, everyone. Good morning, Hi, guys. Thanks for the detail.
Couple of questions and I'll turn it over first of all to the extent that you can comment how are you.
Your customer negotiations and discussions going this year I realize theres not much perhaps you can say, but where you can order kind of the key issues.
How might they vary from past negotiations that you had this time of year are calling back.
Good morning, George This is <unk>.
Really can't say much given that discussions have just started.
But we do believe that the momentum that we have experienced in 2022 will be sustained as we go into 2023, because the drivers really arent changing much.
Dan we're starting to see some softening in the economy, but the end of the day, we still got to cover inflation, we still believe that many of our products are such that.
There is few substitutes forum and we believe that we still got.
Some room to go before we capture full fair value for them. So we will continue to be pressing.
Four.
Some price increases in 'twenty three.
I understood.
<unk>, capturing our fair value and again I realize there's not much that you believe youll say on my call but.
Or what are you trying to illustrate to your customers in terms of where you feel there's a gap to fair value. How are you. How are you demonstrating that our you're demonstrating that in terms of the value of their product.
And the final market relative to the cost of your product. How are you doing that and then a couple of quick follow ups.
Well, primarily the way I look at it as I just look at my EBITDA margin and compare that to the rest of the world.
Right now I believe that there is room to go.
With respect to that so that's <unk>.
<unk> principal metrics okay.
We wish you well.
That effort and then just.
Yes volumes increased 7%, how do you feel about that.
Continuing at that pace, recognizing we're seeing a bit of a slowing economy as you as you pointed out.
And would there be any situation, where there might be some pre buying ahead of next round of pricing that you are talking about now that would have driven that 7% how should we think about the sustainability of that growth rate. Thank you.
With respect to pre buying I don't think we've seen that as of yet.
Through the end of the third quarter, there may be some of that in Q4, although.
I would suspect that.
Folks are probably trying to conserve cash so they probably wouldn't want to build much inventory.
So I don't think thats going to be a big play this year going into 'twenty three.
With respect to.
The impact of.
The economy in general GDP on our business going forward.
With respect to.
The cellulose specialty demand I would say that a good two thirds of our demand is.
Largely recession resistant.
For example, our one of our largest segments is.
Going to acetate that goes into tow applications.
And I don't see I don't see that that demands can be much.
It's going to be much impacted by whats going on with respect to the economies right now and there is another number of other applications, particularly with our ethers and either go into food and pharmaceutical applications.
And even in our fluff applicator fluff products. So don't expect that there'll be a lot of impact with respect to.
Any decline in the economy.
That being said.
Third there is roughly a third of our business that will be.
So we're not immune to it.
What's going on.
But.
Fortunately I would say that a good chunk of R. R.
Our businesses.
Somewhat resistant.
Just a quick one I'll turn it over.
<unk>.
Screen sales technology sales are you seeing any kind of negative effect in your business, perhaps to what we might've seen headlines.
That's a great question, but I would suspect very little right now.
<unk> again is a small portion of our business.
So.
The small change in the demand is going to be really relatively de minimis.
Thank you for the detail.
Thank you and we will take our next question from Paul Quinn from RBC Capital. Please go ahead Paul.
Yes, thanks, very much morning, guys.
Good morning, I thought I'd follow up on George's question on the one third of HCC, where youre sensitive one of those products.
Are you seeing on the demand side for those products.
Okay.
You're talking about the one third that's exposed.
<unk> provided to them.
Yes, so the construction ethers, particularly in Europe .
<unk>.
We're seeing exposure there right now so we're seeing some softness in construction ethers.
Anything thats related to automotive end markets, including tire cord and filtration.
Seeing some softness.
Unexpected that would be.
Highly correlated to GDP activity.
And then obviously viscose right now.
The the very low operating rates that we're seeing in China.
It's having some impact on demand as well as on pricing.
So those are probably the big areas.
That I would suggest.
We're seeing some exposure.
Okay. Thanks for that and then just on the.
Volume.
Last year.
913000 tonnes on HBC volume.
Okay.
54 year to date, which equal last year, it's kind of 59 for the quarter is that something that you are capable of doing and how.
How weak is the mix shift going to be in Q4.
Well again, we think for the full year in terms of.
H PC demand.
Should make the 930, you said 913 right.
That said you did last year.
Right in fact, I think it will exceed that number this year.
And with respect to Q4.
Sure.
We're not expecting a significant drop off in demand in Q4 versus Q3.
The issue around that.
The change in EBITDA really it would be a change in mix versus.
Our cellulose specialty business, and our commodity and a commodity business.
Okay, that's great and then just.
Just wanted some background on the refi.
<unk> Im sure Youre Youre talking to.
To that group quite extensively based off your expectation of where your leverage where your net debt is going to be.
Please proceed any issues or they say and yet if you get there youre good or.
Can you just help us out.
Try to understand the potential debt refi.
Well our strategy all along has been to improve our credit metrics.
This year and so.
We believe that we're going to go out of this year at a four times leverage ratio and I think we believe that that puts us in a pretty good position.
Two.
Go into the credit markets to refinance the 22.
For unsecured notes.
But I will tell you know obviously the credit markets are.
Fragile right now so and we recognize that so we're keeping all of our options open.
Having discussions with a number of parties looking at different different possibility as to what we can do there.
We're very confident we'll be able to refinance the notes.
But.
How are we going to do it we're still in discussions.
Okay. That's great and then just lastly, defend and Nomura and invest in a couple of years ago. Just wondering how that if you could give us an update on that.
Yes, we actually had our first commercial sales this year.
Really the sales were fairly de minimis, but they were sales that we made too.
Customers that will that needed the product for product.
Qualifications.
We expect that we will go into full commercialization in 'twenty, three and 'twenty four.
With the goal of breakeven.
Mid 'twenty five.
Okay great.
Thanks, guys.
Okay.
As a reminder, Thats star one if you do have a question or comment.
And next we'll take Roger Spitz from Bank of America. Please go ahead.
Thanks, and good morning.
Good morning.
First with the repayment of $9 million of additional debt in October was that the five five and a half.
Roger Good morning, it's markets that was on our co Gen facility up in Canada that we paid that principal payment.
Got it.
And then.
Can you tell us what kind of working capital dollar inflow.
You might be thinking about in Q4.
Among other things gerrick.
Yes.
Debt of 880, now you want to get to $7 25.
155 repayment.
$9 million in October .
So that suggests that there is.
Unless you take your cash balance is down.
John .
Further that youre going to be generating.
Some free cash operating cash flow less capex.
Yes Roger.
As you mentioned, we're focused on the working capital item you can see year to date.
The changes in working capital on our cash flow statement that we disclosed was was around $68 million.
We're going to be focused on working on our accounts receivable and improving that cash conversion cycle too.
To support that next step to the 725 target.
Got it.
Are there any.
Assets that you can see.
Hi, could consider selling or perhaps a sale leaseback to further reduce debt.
Roger This is lyle.
Not right now we don't see that we have any assets that are available and.
Readily readily available to to sell so we're going to have to kind of monetize the working capital.
Manage and tightened down our custodial capex other elements too to make sure at the end of the day, we will have the free cash flow to pay down our debt going forward.
Yeah.
Got it thank you very much.
Yeah, and Roger Thanks for the questions Mickey and I will plan to be down at the conference at the end of the month.
That youre hosting.
We look forward to that thank you.
Thank you.
We'll take another question from George Staphos from Bank of America. Please go ahead George.
Thanks, very much hi, guys. Just a couple quick from me to finish up just and this has come up I think in past calls as you think about the high yield pulp.
Pulp markets that you operate and we've obviously been going through a couple of years of very very strong pricing.
Our earnings have improved somewhat but.
It would seem like pricing has gone up a lot more in this cycle is probably.
Closer to a peak then closer to a trough so how what would you say to us as we try to figure out what your earnings trajectory can look like when we may be looking at pricing. That's plateauing, if not now declining over the next few quarters and then separately can.
Can you give us a bit more color, you've probably talked about this in the past just the interplay.
Some of the production issues that you had.
And your non cellular especially markets relative to demand then what kind of latent or incremental demand pickup could you get once those are resolved.
Okay, then let's say the next one to two quarters. Thank you.
Yes, it's Marcus I can touch on the high yield question certainly.
<unk>.
Given our range of products that we produce in the high yield our customer base is very focused on <unk> board and packaging.
Which as you know in this economy really resonates from a sustainability.
Footprint.
And.
We're seeing our product well placed.
In that market, you're right there is more capacity in the future, but given given the bulk attributes of our products.
Seeing the ability to perhaps be positioned in a niche where we will.
On a mix basis versus BK still have a pretty good position.
George just asked my question on that does that answer that one question before we try to address your sector.
Yes, its helpful. I appreciate it.
Why don't we move on to the other ones guys that would be great. Thank you alright, George can.
Can you can you just articulate your first question again, just to make sure I got it right.
Yes.
The first question was on really the high yield outlook, which I thought you were.
Largely covering but.
Really the.
Any other questions.
Referring to yes, just can you had production issues in your non cellular specialties markets, which implicitly have impacted your demand what kind of demand pickup can you get once you've gotten those issues resolved over the next one to two quarters.
Alright, and we're talking about HBC, our kind of our commodity HBC business is that's your question, Yes, and also I think paperboard you said you've had some issues there.
So quickly about.
Talk about paperboard.
We've got largely the issues around paperboard are addressed and will be addressed.
In Q4.
We believe that business will remain sold out.
As we go into 'twenty three in fact.
We are very confident that we will realize higher prices in 'twenty three for our paperboard business. So as I mentioned earlier, we believe that we should have a very strong year in 'twenty three.
With that with that particular business.
With respect to you know.
Our HBC column the commodity grades.
I think you were referring to whether its the fluff business. The <unk> business has already touched on the <unk> business a little bit.
There's a lot of excess capacity in that market pricing is going down.
<unk>.
But.
So we're not really tar.
Targeting that business, we look at that business as a business to fill up capacity, if we need to.
At our mills.
But it's not a business that is particularly attractive right now.
Fluff business again.
<unk>.
<unk> spent a lot of money and made a number of investments to improve its reliability in 'twenty two.
And we see that as a business that we can differentiate ourselves on.
By bringing in.
Some new.
Product characteristics for example, the order control or non compressible fluff products that were hoping to launch in 'twenty three.
And so we continue to look at that as a business that we will continue to consider strategic.
And we'll take our product differentiation strategy as we go forward there.
On paperboard, one last one and I'll turn it over and good luck the rest of the quarter on pricing for paperboard I assume you're referring more to just pricing that's already.
Recognize generation like in that you'll have a benefit from on an average basis in 'twenty three versus 22 are you, suggesting you think you can see further pricing incremental pricing and 23 new pricing.
Well I think.
Certainly the the pricing that we have.
The momentum that we've had in 'twenty two will be sustained into 'twenty three.
It's too early to tell whether it will be able to get anything higher than impressed be able to press further prices and 43 right now.
Thank you guys.
Thank you and we will take another question from Paul Quinn from RBC capital. Please go ahead.
Yes, thanks, very much just one other one you already stated that youre trying to improve your <unk> mix in 'twenty, three just wondering where youre sitting.
On your commodity.
<unk> mix between fluff and viscose, where are you happy to know what's your ability to switch from discussing.
Those markets are really weakening.
Yep.
Marcus you may have better insight on the wireless markets.
Definitely a larger weighting to fluff given the <unk> adjustment.
And then at Viscose.
It's mainly to <unk>.
So certainly a larger weighting to fluff.
And as you know the market market is holding pretty good for fluff right now and on softwood, we're still getting the premium versus hardwood viscose in the market, even though it's softened a bit.
Okay. That's helpful. Thanks, a lot guys.
Okay.
As a reminder, that star one if you do have a question or comment.
Okay.
And there appear to be no further questions at this time I would like to turn the floor back over to Mr. Bloom Quest for closing remarks.
Sure.
Well. Thank you everybody for your time today.
I am very proud of the accomplishments we made this past quarter and confident that we will continue to execute on our near term initiatives to improve our profitability and to reduce our debt.
And I look forward to our next update until then if you have any questions or need to reach out to us. Please feel free to do so.
Thank you ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation you may disconnect. Your lines at this time and have a great day.