Q1 2024 374Water Inc Earnings Call
Greetings and welcome to the three seven and four water first quarter 2024 earnings call.
Operator: Greetings and welcome to the 374Water First Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Heather Crowell, Investor Relations. Thank you. Ms. Crowell, you may begin.
Speaker Change: At this time all participants are in a listen only mode.
Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Speaker Change: As a reminder, this conference is being recorded.
Speaker Change: It is now my pleasure to introduce your host Heather Crowell Investor Relations. Thank you Ms. <unk> you may begin.
Heather Crowell: Hello, everyone and welcome to $3 74 waters first quarter 'twenty 'twenty four earnings Conference call. My name is Heather Crowell and I'm here today, with our President and Chief Executive Officer, Chris Gannon, and our Chief Financial Officer Adrian Anderson.
Heather Crowell: Hello everyone, and welcome to 374Water's first quarter 2024 earnings conference call. My name is Heather Crowell, and I'm here today with our President and Chief Executive Officer Chris Gannon and our Chief Financial Officer Adrian Anderson.
During today's call, we may make projections and other forward looking statements under the Safe Harbor provisions contained in the private Securities Litigation Reform Act of 1995 regarding future events or the future financial performance of the company. These statements may discuss our business economic and market outlook.
Heather Crowell: During today's call, we may make projections and other forward-looking statements under the Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995 regarding future events or the future financial performance of the company. These statements may discuss our business, economic, and market outlook, growth expectations, new products and their performance, cost structure, and business strategy. Forward-looking statements are based on information currently available to us and on management's beliefs, assumptions, estimates, and or projections.
Heather Crowell: Growth expectations, new products and their performance cost structure and business strategy.
Forward looking statements are based on information currently available to us and on management's beliefs assumptions estimates and our projections.
Heather Crowell: Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other effects. We refer you to documents the company files from time to time with the SEC, specifically the company's Form 10-K and Form 10-Q. These documents identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. All statements made during today's call are made only as of today, May 17, 2024, and the company expressly disclaims any intent or obligation to update any forward-looking statements made during this call to reflect subsequent events or circumstances, unless otherwise required by law. Our earnings release and transcript will be available on the Investor Relations page of our website. Now, I will turn the call over to President and Chief Executive Officer Chris Gannon. Chris?
Heather Crowell: We're looking statements are not guarantees of future performance and are subject to risks uncertainties and other factors.
Heather Crowell: We refer you to documents the company files from time to time with the SEC, specifically, the company's Form 10-K and Form 10-Q.
Speaker Change: These documents identify important factors that could cause actual results to differ materially from those contained in our projections or forward looking statements.
All statements made during todays call are made only as of today may 17th 'twenty 'twenty four and the company expressly disclaims any intent or obligation to update any forward looking statements made during this call to reflect subsequent events or circumstances, unless otherwise required by law.
Speaker Change: Our earnings release, and transcript will be available on the Investor Relations page of our website.
Speaker Change: Now I will turn the call over to President and Chief Executive Officer, Chris Gannon, Chris.
Chris Gannon: Thank you, Heather. Good morning, everyone, and thank you for joining us today. Before we begin with our strategic, commercial, and financial update, I would like to thank the Board for appointing me as CEO. I look forward to working with all our stakeholders, including customers, our demonstration and test partners, shareholders, the board, my leadership team, and our talented employees as we enter the next phase of 374Water's growth. I am excited to take the helm at such a pivotal time for the company, and I look forward to our future.
Thank you Heather good morning, everyone and thank you for joining us today.
Chris Gannon: Before we begin with our strategic commercial and financial update.
Chris Gannon: I would like to thank the board for appointing me as CEO I look forward to working with all our stakeholders, including customers.
Chris Gannon: Demonstration and test partners shareholders. The board my leadership team and our talented employees as we enter the next phase of 374 waters growth.
Speaker Change: I am excited to take the helm at such a pivotal time for the company and I look forward to our future.
Chris Gannon: During my first month here, I have immersed myself in the company and gained a good understanding of our markets and customers, and the technology, our historical product development and commercialization and go-to-market strategy, as well as the opportunities and challenges that lie ahead. I would like to start by outlining how I will approach my role at 374Water.
Speaker Change: During my first month here I have immersed myself in the company and gaining a good understanding of our markets and customers are.
Speaker Change: Our technology our.
Speaker Change: Our historical product development, and commercialization and go to market strategy as well as the opportunities and challenges that lie ahead.
Speaker Change: I would like to start by outlining how I will approach my role at 374 water.
Chris Gannon: In short, my focus is to build shareholder value over the near and long term. To do this, I will create stability, engage with market participants, build shareholder trust, and ensure that we have the resources available to meet our objectives. We have begun a strategic planning process and have enlisted the assistance of industry experts to provide additional guidance as it relates to the municipal, federal, military, and industrial verticals. This strategic planning process is a crucial foundational step for our company as it will inform our go-forward approach to our product, to our markets, and to our operations. We will utilize the strategic plan, or playbook, to communicate with all key constituents going forward.
In short my focus is to build shareholder value over the near and long term.
Speaker Change: To do this I will create stability engage with market participants bill.
Speaker Change: Build shareholder trust and ensure that we have the resources available to meet our objectives.
Speaker Change: We have begun a strategic planning process and have enlisted the assistance of industry experts to provide additional guidance as it relates to the municipal federal military and industrial verticals.
Speaker Change: This strategic planning process is a crucial foundational step for our company as it will inform our go forward approach to our products to our markets and to our operations.
Speaker Change: We will utilize the strategic plan or playbook.
Speaker Change: To communicate with all key constituencies going forward.
Speaker Change: You can expect me to lay out this overarching strategy during our future calls together.
Chris Gannon: You can expect me to lay out this overarching strategy during our future calls together. Now, I will turn to a brief discussion of our technology and the market opportunities we see available to us. And then I will discuss our near-term areas of focus. First, let's discuss our AirSquo technology, which sits at the cutting edge of clean tech innovation, as it provides an important solution to the ever-increasing wastewater treatment and waste management challenges faced globally.
Speaker Change: I will now turn to a brief discussion of our technology and the market opportunities, we see available to US and then I will discuss our near term areas of focus.
Chris Gannon: At the heart of our air flow system sits our supercritical water oxidation technology, which eliminates a broad spectrum of organic waste, leaving clean water, safe minerals, and recoverable heat energy. Our technology has been shown to effectively process biosolids. PFAR. Firefighting phones like AFFF.
Speaker Change: First let's discuss our air square technology, which sits at the cutting edge of clean Tech innovation as it provides an important solution to the ever increasing wastewater treatment and waste management challenges faced globally.
Speaker Change: At the heart of our <unk> system sits our super critical water oxidation technology, which eliminates a broad spectrum of organic ways, leaving clean water safe minerals.
Speaker Change: In recoverable heat energy.
Speaker Change: Our technology has been shown to effectively process biosolids peat bogs firefighting foams like a triple out.
Chris Gannon: Residuals from water and waste treatment, landfill leachate, oily sludge, granulated activated carbon, ion exchange resins, and foam fractionates, to name just a few. Our AERSCO system also includes our pre-treatment solutions, like our biosolids dewatering skid, as well as post-treatment solutions, like pH control infiltration systems. In the future, I will go into more depth on these and other pre- and post-treatment solutions that we are developing as we continue to create modular solutions to meet individual customer needs.
Speaker Change: Residuals from water and waste treatment landfill leachate oily sludge granulated activated carbon and exchange resins and film production needs to name just a few.
Speaker Change: Our air score system also includes our pretreatment solutions like our bio solids dewatering is good as well as post treatment solutions like ph control and filtration systems.
Speaker Change: In the future I will go into more depth on these and other pre and post treatment solutions that we are developing as we continued to create modular solutions to meet individual customer needs.
Chris Gannon: We are making great strides in improving the reliability of our commercial-scale Air School 06 system. We are actively running, developing, and demonstrating our technology at our development partner's Kokomo, Indiana, facility and are seeing positive results. Before I continue, I would like to take a moment to express our sincere thanks to the Merrill Brothers organization as they are an incredible partner.
Speaker Change: We are making great strides in improving the reliability of our commercial scale aerospace <unk> six system.
Speaker Change: We are actively running developing and demonstrating our technology and our development partners Cocomo, Indiana facility and are seeing positive results.
Speaker Change: Before I continue I would like to take a moment to express our sincere. Thanks to the mineral brothers organization as they are incredible partners I cannot overstate how important this collaboration has been to accelerate our technology development process.
Chris Gannon: I cannot overstate how important this collaboration has been to accelerate our technology development process. We look forward to continued work together. In addition to our work at Kokomo, we are planning for multiple upcoming technology demonstrations in 2024, which I will discuss shortly and update you on during future calls.
Speaker Change: We look forward to continue to work together.
Speaker Change: In addition to our work in Kokomo, we are planning for multiple upcoming technology demonstrations in 2024, which I will discuss shortly and I'll update you during future calls.
Speaker Change: Now I will briefly discuss the waste management water treatment and other markets. We are focused on.
Chris Gannon: Now I will briefly discuss the waste management, water treatment, and other markets we are focused on, the opportunities we see there, and the recent public policy changes, which we believe will accelerate the demand side of the air squalor equation. From a market size perspective, we see a truly global opportunity measured in the hundreds of billions of dollars. Looking across municipal, federal, military, and industrial markets, we see monumental environmental challenges ahead and the corresponding opportunity to utilize our AERSQLO technology to address them.
Speaker Change: The opportunities, we see there and the recent public policy changes, which we believe will accelerate the demand side of the air Squalor equation.
From a market size perspective, we see a truly global opportunity measured in the hundreds of billions of dollars looking across municipal federal military and industrial markets, we see monumental environmental challenges ahead, and the corresponding opportunity to utilize.
Lives are are slow technology to address them.
Speaker Change: In April 2020 for the EPA released a new groundbreaking and stringent national primary drinking water regulations and of cercla designation for per and poly Fluorinated substances or P. Phosphor short, which are also known as forever.
Chris Gannon: In April 2024, the EPA released a new groundbreaking and stringent National Primary Drinking Water Regulation and a CERCLA designation for per- and polyfluorinated substances, or PFAS for short, which are also known as forever chemicals. The new drinking water rules set enforceable maximum contaminant levels at parts per trillion.
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Speaker Change: The new drinking water rules sets enforceable maximum contaminant levels at parts per trillion.
Chris Gannon: The CERCLA designation is a first-of-its-kind rule designating two PFAS chemicals as hazardous substances, providing the EPA with future enforcement capabilities. This initiative is part of a broader effort, backed by significant federal funding, to mitigate PFAS pollution and safeguard public health. The Environmental Business Journal estimates the costs of removing PFAS in the U.S. at over $200 billion. Meanwhile, in Europe, the European Environmental Agency has also been proactive in addressing PFAS contamination. Their regulations aim to not only reduce PFAS emissions and exposure but also establish rigorous environmental standards and waste management practices throughout Europe.
Speaker Change: The circle of designation as a first of its kind rule designating two P fast chemicals as hazardous substances, providing the EPA with future enforcement capabilities. This initiative is part of a broader effort backed by significant federal funding to mitigate <unk>.
Speaker Change: Pollution and safeguard public health.
Speaker Change: The environmental business Journal estimates the cost of removing P fast in the U S at over $200 billion.
Speaker Change: Meanwhile, in Europe, the European Environmental Agency has also been proactive in addressing P. Fast contamination their regulations aim to not only reduce <unk> emissions and exposure, but also establish a rigorous environmental standards and waste management.
Speaker Change: Practices throughout Europe.
Chris Gannon: This global regulatory environment is creating unprecedented demand for technologies that can effectively and safely manage and treat PFAS. This environment offers substantial opportunities for companies like ours as we anticipate these regulations will drive substantial investment from government and industry. 374Water is positioned as an attractive alternative to traditional waste management solutions where these forever chemicals remain present in the environment.
Speaker Change: This global regulatory environment is creating an unprecedented demand for technologies that it can effectively and safely managed and treat P boss. This.
Speaker Change: This environment offers substantial opportunities for companies like ours as we anticipated. These regulations will drive substantial investment from government and industry.
Speaker Change: 74 water is positioned as an attractive alternative to traditional waste management solutions.
Speaker Change: These forever chemicals remain present in the environment.
Chris Gannon: Our company is working hand-in-hand with appropriate federal and state regulators to provide the data necessary to inform the EPA's PFAS destruction guidance. With this background in mind, I'd like to discuss the markets in which we participate. First, the U.S. municipal market, which consists of wastewater treatment plants that treat biosolids, sludges, and leachates, water utilities, which produce spent granulated activated carbon, ion exchange, and foam fractionated waste, and state and local firefighting units, which have stockpiles of AFFL.
Speaker Change: Our company is working hand in hand, with appropriate federal and state regulators and providing the data necessary to inform the epa's P fast destruction in guidance.
Speaker Change: With this background in mind I'd like to discuss the markets, where we participate.
Speaker Change: First in the U S municipal market, which consists of wastewater treatment plants that treat bio solids, sludges and Leach AIDS water utilities, which produced spent granulated activated carbon.
Speaker Change: In exchange and phone fractionated waste and state and local fire fighting units, which have stockpiles of a triple out.
Chris Gannon: All these organizations have waste streams that must be disposed of or destroyed. As an example of the opportunity in this space, U.S. wastewater treatment plants treat 34 billion gallons of wastewater daily, which translates into 292 million tons of solid waste produced annually. Current disposal options, such as land application, landfill, incineration, and deep well injection, are inadequate, and all have environmental, health, and liability repercussions.
Speaker Change: All of these organizations have waste streams, which must be disposed of or destroyed.
Speaker Change: As an example of the opportunity in this space.
Speaker Change: The U S wastewater treatment plants treat 34 billion gallons of wastewater daily.
Speaker Change: Which translates into 292 million tons of solid waste produced annually.
Speaker Change: Current disposal options, such as land application landfill incineration and deep well injection are inadequate and all have environmental health and liability repercussions I will discuss these issues more fully in future calls.
Chris Gannon: I will discuss these issues more fully in future calls. Second, we are focused on the federal market. We continue to pursue opportunities with the Department of Defense for AFFF, organic chemical, and other waste destruction; Department of Energy sites contaminated with PFOS, manufacturing waste, and radiological ways, and the Federal Aviation Agency for destruction of PFAS. Let's discuss the PFAS opportunity with the Department of Defense. In 2021, the Pentagon estimated PFAS remediation costs at $29 billion.
Speaker Change: Second we are focused on the federal market, we continue to pursue opportunities with the department of defense for a triple S organic chemical and other waste destruction department of energy sites contaminated with P Fox manufacturing waste and radiological.
Speaker Change: Based in the Federal Aviation agency for destruction of P farce.
Speaker Change: Let's discuss the P fast opportunity with the department of Defense.
Speaker Change: In 2021, the Pentagon estimated P fast remediation costs at $29 billion.
Chris Gannon: Under the new regulations, we expect this number to substantially increase. 374Water is involved in this emerging market, and we will be fulfilling demonstration contracts with each of the military services over the coming year. In addition, we are a participant in the Defense Innovation Unit's Advanced PFOS Destruction Demonstration scheduled for 2025. Beyond PFAS, there are many additional AERSQO applications with federal customers within the DoD, the Department of Energy, and other agencies for organic, chemical, and other waste destruction.
Under the new regulations, we expect this number to substantially increase.
Speaker Change: 374 water is involved in this emerging market and we will be fulfilling demonstration contracts with each of the military services over the coming year.
Speaker Change: In addition, we are a participant in the defense innovation unit advanced P fast destruction demonstration schedule for 2025.
Speaker Change: Beyond <unk> there are many additional air Squoze applications with federal customers within the Dod.
Speaker Change: The department of energy and other agencies for organic chemical and other waste destruction.
Chris Gannon: As such, I believe the outlook for our federal government business is strong. Finally, we see significant opportunities in the industrial market. This is a broad category, and we see AERSQO applications in landfill leachate, oil and gas, pharmaceutical, chemical, and petrochemical, automotive, aerospace, electronic, health care, and food and beverage, to name a few.
Speaker Change: As such I believe the outlook for our federal government business is strong.
Speaker Change: Finally, we see significant opportunities in the industrial markets. This is a broad category and we see are slow applications and landfill leachate oil and gas pharmaceutical chemical and petrochemical automotive aerospace electronics.
Speaker Change: Health care and food and beverage to name a few.
Chris Gannon: While it is still early in my tenure, it is becoming clear how we will evolve and position our business. I see tremendous opportunities ahead for 374Water to grow into a leading clean technology products and services player. To ensure we build a strong foundation for the future, in the short term, we will be focusing on first meeting our contractual obligations with Orange County Sanitation and the City of Orlando, as well as completing multiple military waste destruction demonstrations throughout 2024.
Speaker Change: While it is still early in my tenure it is becoming clear, how we will evolve and position our business.
Speaker Change: I see tremendous opportunities ahead for 374 water to grow into a leading clean technology products and services player.
Speaker Change: To ensure we build a strong foundation for the future in the short term, we will be focusing on first meeting our contractual obligations with Orange County, sanitation and the city of Orlando as well as completing multiple military waste destruction demonstrations throughout 2000.
24.
Speaker Change: We believe success here will drive demand across the municipal market and federal government and defense markets.
Chris Gannon: We believe success here will drive demand across the municipal market and federal government and defense markets. Second, we are expanding the application of our AirSquad technology and will continue to invest in our product development efforts. We are pursuing opportunities within the industrial markets as they are all affected by PFAS contamination, have difficult-to-treat waste streams, and lack sustainable treatment solutions that eliminate waste without creating potential future liability. Third, we are in active discussions with major treatment, storage, and disposal facility operators to form strategic partnerships. We believe these partnerships will be critical for both parties as we scale our technology and as the TSDFs improve and expand their service offerings to include safe destruction technology.
Speaker Change: Second we are expanding the application of our <unk> technology and will continue to invest in our product development efforts.
Speaker Change: We are pursuing opportunities within the industrial markets as they are all affected by P fast contamination have difficult to treat waste streams.
Speaker Change: And lacks sustainable treatment solutions that eliminate waste without creating potential future liabilities.
Speaker Change: Third we are in active discussions with major treatment storage and disposal facility or TST F operators to form strategic partnerships.
Speaker Change: We believe these partnerships will be critical for both parties as we scale, our technology and as the TST ups improve and expand their service offerings to include safe disruption technology.
Finally, we will invest in our internal engineering and operations capabilities to increase the pace of technology innovation and product commercialization.
Chris Gannon: Finally, we will invest in our internal engineering and operations capabilities to increase the pace of technology innovation and product commercialization. In the near term, we will transition to a dedicated manufacturing facility to greatly increase our production velocity as well as scale our engineering capability to develop and test our technology more rapidly. Furthermore, recognizing the need for rapid innovation and problem solving, we plan to expand our engineering and field teams to increase our capacity to develop innovative solutions and respond to market needs.
Speaker Change: In the near term, we will transition to a dedicated manufacturing facility to greatly increase our production velocity as well as scale, our engineering capability to develop and test our technology more rapidly.
Further recognizing the need for rapid innovation and problem solving we plan to expand our engineering and field teams to increase our capacity develop innovative solutions and respond to the market needs.
Chris Gannon: At the same time, we will build out our leadership team to navigate the massive market opportunities ahead. As part of our engineering and R&D efforts, we developed a smaller version of our AERSQLO system, which allows us to perform rapid treatability studies of many waste streams in a laboratory environment. We use this system to qualify the treatability of waste streams and the process parameters needed for our commercial-scale air flow system.
At the same time, we will build out our leadership team to navigate the massive market opportunities ahead.
Speaker Change: As part of our engineering and R&D efforts, we developed a smaller version of our <unk> system, which allows us to perform rapid treated ability studies of many waste streams in a laboratory environment.
We use this system to qualify the treat ability of waste streams in the process parameters needed for our commercial scale Air Squoze system. In addition to being a vital R&D tool. This is a revenue generating business for our company and a sales tool for demonstrating our capabilities.
Chris Gannon: In addition to being a vital R&D tool, this is a revenue-generating business for our company and a sales tool for demonstrating our capabilities. I will discuss our laboratory business and our capabilities there during future calls. Now, I would like to spend a moment on our pipeline. While we will not address our pipeline in specific terms, our decision to move to a new manufacturing facility can be considered an indication that there is significant market demand for our technology. While we have a lot of work to do, the future is bright, and I'm excited to be here. With that, I will turn the call over to Adrian to update you on our financial...
Speaker Change: I will discuss our laboratory business and our capabilities there during future calls.
Speaker Change: Now I would like to spend a moment on our pipeline.
Speaker Change: While we will not address our pipeline in specific terms our decision to move to a new manufacturing facility can be considered as an indication there were significant market demand for our technology.
Speaker Change: While we have a lot of work to do the future's bright and I'm excited to be here with that I will turn the call over to Adrian to update you on our financials.
Thanks, Chris.
Adrian Anderson: Today I'll discuss our financial results, which reflect the current stage of our business evolution as we begin scaling our business and enhancing our cash position to support sustained growth. Q1 2024 results are indicative of a period where strategic investments take precedence as we are taking the necessary steps to lay down a robust foundation as we chart our path to profitable growth. With that, I will touch on a few key metrics.
Adrian Anderson: Today, I'll discuss our financial results.
Adrian Anderson: Which reflect the current state of our business evolution, as we began scaling our business and enhancing our cash position.
Adrian Anderson: Support sustained growth.
Q1, 2024 results are indicative of a period, where strategic investments take precedence as we are taking the necessary steps to lay down a robust foundation as we chart our path to profitable growth.
Speaker Change: With that I will touch on a few key matrix.
Adrian Anderson: During the quarter, the company generated revenue of approximately $315,000, which compares to $801,000 for the three months ending March 31, 2023. As we start to reach the end of the assembly and fabrication work on our sold unit, our direct costs declined, which has a direct correlation to our decline in revenue of $468,000 this period under our percentage of completion revenue recognition method. Total OPEX increased marginally from $1.8 million in the first quarter of 2023 to $1.9 million in this period's quarter, driven primarily by an increase in research and development expenses.
Speaker Change: During the quarter the company generated revenue of approximately $315000, which compares to $801000 for the three months ending March 31 2023.
Speaker Change: As we start to reach the end of the assembly and fabrication work on are sold unit, our direct cost decline, which has a direct correlation to our decline in revenue.
Speaker Change: $468000 this period under our percentage of completion revenue recognition method.
Speaker Change: Total opex increased marginally from $1 $8 million in the first quarter of 2023.
Speaker Change: $1 $9 million and this period's quarter, driven primarily by an increase in research and development expenses.
Adrian Anderson: As of March 31, 2024, we have working capital of $11.7 million, consisting of $13.3 million of current assets comprised primarily of cash, receivables, and inventory, offset by $1.6 million of current liabilities comprised of accounts payable and accrued expenses arising from the normal course of business. We currently have no outstanding debt obligation. We are actively working on optimizing our operational efficiencies and exploring new market opportunities, all aimed at long-term value creation, while remaining steadfast in our commitment to innovation and excellence. A primary financial goal for the company is to extend its runway while scaling the business, and we are pleased to have Chris at the helm to achieve these objectives.
Speaker Change: As of March 31, 2024, we have working capital of $11 $7 million.
Speaker Change: <unk> of $13 $3 million of current assets comprised primarily of cash receivables and inventory offset by $1 $6 million of current liabilities.
Speaker Change: Apprised of accounts payable and accrued expenses.
Speaker Change: Rising from the normal course of business we.
Speaker Change: We currently have no outstanding debt obligations.
Speaker Change: We are actively working on optimizing our operational efficiencies and exploring new market opportunities.
Speaker Change: All aimed at long term value creation, while remaining steadfast in our commitment to innovation and excellence.
Speaker Change: Primary financial goal for the company is to extend its runway while scaling the business.
Speaker Change: And we are pleased to have Chris at the helm to achieve these objectives.
Speaker Change: Thank you Adrian and thank you everyone for joining our call today, we look forward to providing updates during future earnings calls. In addition, I hope to share time with everyone at our annual shareholder meeting in June Bye for now.
Chris Gannon: Thank you, Adrian, and thank you, everyone, for joining our call today. We look forward to providing updates during future earnings calls. In addition, I hope to spend time with everyone at our annual shareholder meeting in June.
Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Speaker Change: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.