Q4 2024 Russel Metals Inc Earnings Call

Good morning, ladies and gentlemen, and welcome to our 2020 for year end and fourth quarter results for Russel metals today's call will be hosted by Mr. Martin Tusky Executive Vice President and Chief Financial Officer, and Mr. John Reid, President and Chief Executive Officer of Russel Metals, Inc. Today.

Patients will be followed by a question and answer period.

Speaker Change: If at any time you have a question you will need to press star one on your telephone keypad I will now turn the meeting over to Mr. Horton Drosky. Please go ahead Sir.

Horton Drosky: Great. Thank you operator, and good morning to everybody on this lovely Snowy day here in Toronto.

Horton Drosky: I plan on providing an overview of the Q4 2024 and the full year 2024 results and if you want to follow along I'll be using the Powerpoint slides referenced that are on our website and just go into the Investor Relations section and it's located in the conference call sub menu.

Horton Drosky: If you go to page three you can read our cautionary statements.

Horton Drosky: Forward looking information.

Horton Drosky: Let me start with a little perspective on 2024, which is outlined on page five if we look back on the year as a whole I'll characterize it a year of growth with purpose focus and discipline.

Horton Drosky: Both John and I are very proud to say that the Russell team really delivered on that front and more importantly, we're just getting started as there is a lot more work to be done we look very different today than a number of years ago, and we will continue to evolve in the years ahead. So if we look at a few items on this page item one the starting point is.

Horton Drosky: Strong cash flow generation and in spite of the steel price volatility and general economic uncertainty that occurred during much of 2024, we generated $344 million of cash flow from operations, including a $103 million from working capital the counter cyclical nature of our biz.

Horton Drosky: This allows us to capture cash flow when markets turn down.

Horton Drosky: The second row of the diagram summarize our growth initiatives.

Horton Drosky: Firstly on the left increased capital investments, we were very active on the investing front in 2020 for internally, we invested capex of $90 million and externally. We completed two very important acquisitions for a little over $300 million. When we combined the M&A initiatives and Capex. This was by far and away the largest year.

Horton Drosky: Our in Russell's history for investing activities, the investing opportunities continue to grow and are multi year capex pipeline of potential projects is over $200 million. We're also remaining active in looking at M&A opportunities.

Horton Drosky: Capital deploy grew as a result of the investments that I just mentioned over the past year. Our capital grew from $1 3 billion at the end of 2023 to $1 6 billion at the end of 2024.

Horton Drosky: It is with a purpose we generate a solid return on invested capital our return on invested capital was 15% in 2024, despite the market challenges and an average 24% over the past three years return on invested capital is the most important metric in our pay for performance culture and as a result.

Horton Drosky: And the history of industry, leading returns.

Horton Drosky: And the last box and that ROE is the growth was very focused it was our growth in strategic ways. Our service Center segment now represents 67% of our revenues for 2024 versus only 53% in 2019.

Horton Drosky: We grew our U S platform, which is now 39% of revenues and will be higher in 2025 and beyond we grew our value added processing and grew in the specialty metals, such as stainless and aluminum, which was 9% in 2024 and should be greater than 10% in 2025.

Horton Drosky: Lastly, the diagram illustrates the results of our capital investments.

Horton Drosky: Returning capital to shareholders.

Horton Drosky: Frame of reference is that if we were able to successfully grow our business. It presents opportunities to grow the return of capital to our shareholders. In 2024, we returned $131 million via share buybacks and $98 million through dividends for a total of $229 million of capital returned to shareholders.

Horton Drosky: Just like 'twenty 'twenty four investments, we're the largest in Russell's history. So too was the amount of capital that was returned to shareholders.

Horton Drosky: With a record year in which $650 million was deployed for investments and returning capital to shareholders and we were still able to retain a very strong balance sheet. We also cleaned out all of our legacy debt structure and now have no long term debt have an investment grade bank deal and ended the year with a net cash position of 32 million.

Horton Drosky: In dollars and $580 million of liquidity.

Horton Drosky: Let's turn to market conditions on page six.

Horton Drosky: Starting with prices of.

Horton Drosky: Sheet and plate in the top graph, we saw carbon sheet and plate prices exhibit downward pressure during 2024, but they did stabilize in the latter part of the year and have recently exhibited some increases the recent price increases are a function of an improving outlook and some is likely related to.

Horton Drosky: The impact of a potential U S tariffs and the potential retaliatory tariffs.

Horton Drosky: Oh, let me talk about tariffs for a moment and obviously, it's a bit of a moving target.

Horton Drosky: But we do not have any material direct impact from tariffs is where generally our costs through business and the impacts are more on steel producers in particular, those who exports cross border.

Horton Drosky: Contrast, we generally sell our products to local customers the indirect impacts relate to steel prices supply chain disruptions currency movements in the business activity for some of our customers who may export finished equipment. There are some industries like automotive that are integrated in their cross border supply chains and.

Horton Drosky: I expect that industry to face some challenges, but we do not serve that industry. The key thing from our Russell perspective is that we have a very flexible business model with an ability to flex to whatever circumstances may unfold.

Horton Drosky: And if we look back to the introduction of the section 232 tariffs in 2018 that was actually a positive for North American steel prices and that was good for Russell.

Horton Drosky: On the bottom chart, we've added a new piece and this is the first time, we've shown aluminum and stainless prices as those are now a more meaningful part of our product mix as I mentioned earlier, the around 10% of our 2020 for revenues and as you can see from the chart. These products don't as exhibit as much volatility as carbon plate and sheet.

Horton Drosky: As aluminum and stainless have very different supply and demand dynamics. The two charts on the right supply chain inventories in both Canada and the U S remain modest.

Horton Drosky: On page seven there's a snapshot of our historical results. If we look across the various charts going from the top left our revenues were down in Q4, 5% versus Q3 due to some seasonal dynamic.

Horton Drosky: EBITDA was $61 million, which was down from Q3 EBITDA margin was flat at 6% and earnings per share was 47 per share.

Horton Drosky: Our Q4 annualized return on invested capital came in at 10%, which is pretty good considering the significant increase in capital for acquisitions during the latter part of 2024.

Horton Drosky: At a time, where there is generally a seasonally down in Q4 as mentioned earlier our capital structure is in really good shape and we have a net cash position of $32 million.

Horton Drosky: I'm going to page eight we have more detailed snapshot of our financial results starting at the top from an income statement perspective, I covered several of the highlight.

Horton Drosky: A high level items.

Horton Drosky: On the previous page, but a few other items to note.

Horton Drosky: Revenues of $1 billion was down due to seasonality compared to Q3, we did have an offset from the full quarter impact of the Samuels acquisition that closed in August and so we only had a partial quarter in Q3 and a full quarter in Q4 and then in Q4, we had a pick up from the Tampa Bay acquisition that closed in early December.

Horton Drosky: Sember and so when we look into 2025, we will benefit from a full quarter of the Tampa Bay acquisition as wells are more normal run rate from the Samuels acquisition as we get out of the seasonal Q4 period grew.

Horton Drosky: Gross margins and EBITDA margins were generally flat on a quarter over quarter basis, and looking at the line items below EBITDA. There was an increase in DNA as well as interest expense. Both a result of the two acquisitions that were done in the latter part of 2024.

Horton Drosky: And our Q4 results were impacted by a few items of note Samuel integration continues with some nonrecurring costs of about $1 million in the quarter. The integration process is continuing to unfold with efficiency gains expected to material materialize in the latter part of 2025 once we're onto the same systems. In addition, we are.

Horton Drosky: <unk> to actively explore location rationalization opportunities.

Horton Drosky: Mark to Mark on stock based comp was 2 million expense versus $5 million. In Q3. There are also a couple of small noncash related write offs of $1 million referred to related to deferred financing costs and that increased our interest expense by a little bit and $1 million related to the write down of some legacy the legacy equipment.

Horton Drosky: Which impacted our operating costs by a little bit.

Horton Drosky: From a cash flow perspective, as we always talk about the countercyclical nature of the business Q4, we generated $54 million from working capital there was $113 million decrease in accounts receivable of $42 million decrease in inventory of which some was offset by a $96 million increase in.

Horton Drosky: Accounts payable we closed the Tampa Bay acquisition in December for $75 million, which is lower than the announced value of 79, and a half due to a favorable adjustment related to working capital at closing.

Horton Drosky: Share buybacks were $14 million before tax and the cumulative share buyback since August of 'twenty. Two has been a little over 10% of our shares outstanding for $240 million or an average of $36 97 per share.

Horton Drosky: Our quarterly dividend was increased in may of this year to 42 cents per share and we remain at that level for the current quarter. This 42 per share level level will be payable in mid March.

Horton Drosky: Our capex of $21 million brings the 2024 total to $90 million and I expect our 2025 capex to be comparable level to the 2024 level as our multi year pipeline is greater than $200 million and we're continuing to greenlight a series of projects that keep coming to the table, particularly related.

Horton Drosky: To value added and additional modernization opportunities.

Horton Drosky: From a balance sheet perspective, we remain in a net cash position even after funding the Tampa Bay acquisition with a net cash balance at the end of the year of $32 million.

Horton Drosky: As I mentioned earlier, we are in 2004, we cleaned out all of our legacy term debt and in the quarter. We redeemed our last series of high yield notes and we no longer have any term debt outstanding the FX movements towards the end of the quarter were meaningful and it did have a positive impact of $69 million in the OCI shareholders equity.

Horton Drosky: Amounts and lastly, our book value per share grew again and it was over $29 per share at the end of the year.

Horton Drosky: If we go to page nine there is a reconciliation of our EBITDA variance between Q3 in Q4.

Horton Drosky: And looking at service centers are the volumes were up a bit compared with Q3, well there was an increase in margin dollars, but a comparable increase in operating costs, which translated into a $1 million increase in EBITDA for service centers for Q4 versus Q3.

Horton Drosky: Energy field stores were down $4 million due to some seasonality, while steel distributors were down $4 million due to market conditions.

Horton Drosky: In the other bucket there was a favorable impact from lower Mark to Mark Mark to market excuse me on stock based compensation.

Horton Drosky: On page 10, we have our segmented P&L results service centers revenue was up versus Q3 due to the Samuel and Tampa Bay acquisition.

Horton Drosky: Acquisitions that I mentioned earlier and I'll go through more detailed metrics on the service centers on the next page energy field stores, we're continuing to see solid performance Q3 revenues were down as I mentioned, some seasonality, but margins were up as a result, overall EBITDA was down a little bit.

Horton Drosky: Distributors revenues were down due to market conditions, and some cautious buying activity by our groups amidst the market volatility, but margins did improve overall EBITDA was down for that setting versus Q3.

Horton Drosky: On page 11, we have a deeper dive on the metrics for our service Center business.

Horton Drosky: The top right graph is ton shipped if you look at Q4 2024 of the top right hand data point volumes were up 6% versus Q3, reflecting the Samuel and Tampa Bay acquisition contributions they were down 1% on a same store basis volumes were due to the seasonality, but this 1% decline in Q4.

Horton Drosky: It is less than we typically see in Q4s, which reflect some solid ongoing market activity.

Horton Drosky: On the bottom left graph, we have the revenue and cost of goods sold per ton revenue per ton or price realizations and cost of goods sold decreased by similar amounts in the quarter, leading to flat profit per ton on the bottom right hand graph.

Horton Drosky: On a same store basis, however, and there is noise continuing because of the acquisitions that occurred in both Q3 and Q4, but on a same store basis gross margin per ton was up slightly.

Horton Drosky: On page 12, we have illustrated our inventory turns this chart shows the turns by quarter for each segments energy and read service centers in Green steel distributors and yellow. In addition, the black line is the average for the entire company overall, our inventory turns came down in Q4 to three six which is consistent with what Tim.

Horton Drosky: <unk> happens towards the end of the year.

Horton Drosky: By sector, our service centers remain strong at 4.0, which was similar to Q3.

Horton Drosky: Energy field stores was two eight which was down from Q3, but consistent with Q4's of the past few years and lastly steel distributors decreased from three.

Horton Drosky: To three one from $3 six.

Horton Drosky: On page 13, we have the impact of inventory turns on dollars total inventory was down slightly compared to the end of September and if we exclude the increase from Tampa Bay, which was about $14 million Canadian or.

Horton Drosky: Our same store inventories would be down 2% compared to the end of Q3.

Horton Drosky: On page 14, we have the overall impact of capital utilization.

Horton Drosky: And returns as I said earlier, our 2024 acquisitions in Capex resulted in growing our capital deployed to over one $6 billion and this is in spite of pulling out $400 million from the <unk> line pipe business over the 21 to 2023 period, so at one $6 billion of capital.

Horton Drosky: Deployed.

Horton Drosky: It's up from where it has been for the last couple of years as we continue with our growth focus on a return basis. Our three year average return on invested capital was 24% and if we look back over the last few years, we continue to achieve industry, leading returns and at levels that are greater than our cycle average target of 15%.

Horton Drosky: On page 15 have an update of our capital structure and as I said earlier there are a number of changes during 2024 in May and then in October we redeemed the legacy high yield notes in July we closed the revamped bank deal our.

Horton Drosky: Our bank group has recognized the significant evolution of our credit profile and we now have a more traditional investment grade type bank structure that is no borrowing base formula is unsecured and is flexible financial covenants and with these changes we now have a very clean slate going forward with significant flexibility.

Horton Drosky: In terms of the year over year change in cash we deployed 90 million for acquisitions $329 million for acquisitions $230 million was returned to shareholders via dividends and share buybacks for total capital outlay of about $650 million given our strong operating cash flow in 2024, and the strong starting balance sheet at the beginning.

Horton Drosky: 2024, our net cash position only came down by about $300 million and we remain in a slight net cash position.

Horton Drosky: Lastly, as I mentioned earlier.

Horton Drosky: QWERTY based per share continues to grow in spite of share buybacks and dividends over the past year and we've grown our book value per share is now $1 87 per share higher than at this time last year.

Horton Drosky: Page 16, just a quick summary of our capital allocation priorities on a go forward basis.

Horton Drosky: Our strong balance sheet. We continued this multi pronged approach investment opportunities I mentioned earlier, our average target return is greater than 15% over the cycle and as already discussed we have delivered well above that target.

Horton Drosky: Going opportunities are continuing to identify the value added projects and there are a lot on the go facility Modernizations, we've mostly completed the five projects that have begun over the last couple of years other than a few refinements of some equipment coming into certain of those locations and we have more projects on the drawing board in terms of acquisitions has set a couple of.

Horton Drosky: Times, we closed the Tampa Bay acquisition that was closed on December 4th and were continuing to explore other potential opportunities returning capital to shareholders. As said earlier, we have adopted a fairly flexible approach. It included both dividends, including the dividend increase in may as.

Horton Drosky: As wells fluidity on the and CIB approach.

Horton Drosky: If we go to page 17, I want to provide a context for our reinvestment program in.

Horton Drosky: In 2024, we invested $90 million in Capex, which is a level higher than in the past and as we are continuing to identify more opportunities I expect that we will remain in the plus or minus $25 million per quarter zone over the next while as additional discretionary projects come to fruition.

Horton Drosky: On page 18, you see our acquisition history over the past few years and the history is a combination of both small and medium sized transaction with a fair number over the last few years being in the more medium sized category in particular three of them in the past five years.

Horton Drosky: Going forward I expect to see opportunities that are both the small tuck ins like alliance was in 2023 Sandborne in 2020, but I also expect to see some medium sized transaction like Boeing in 2021, Samuel in Tampa Bay in 2024.

Horton Drosky: On page 19, Theres, a deeper dive on the returning capital to shareholders top left graph, we have our longer term dividend profile with the just announced 42.

Horton Drosky: Her share for this past quarter, and we will continue to.

Horton Drosky: Regularly revisit the appropriate dividend level to take into account our capital structure and our earnings profile as was done when we lifted the dividend in both May 2023 and May of 2024.

Horton Drosky: On the bottom left chart, we show our NCI b activity by quarter since it was put in place in August of 2022.

As I said, a couple of times and I've said many times in the past, we don't have a fixed hardware to approach to the program we view it as an opportunistic way to.

Horton Drosky: Or to buy back shares and we have been more aggressive at certain price points and others that being said, we did by 330000 shares in.

Horton Drosky: In the quarter for around $14 million on the bottom right chart, you see the impact of the NCI be it has been a gradual reduction of our share count over the past two years and.

Horton Drosky: Or has resulted in a greater than 10% reduction in our shares outstanding.

Horton Drosky: On the top right chart, the aggregation of dividends and in CIB over the past couple of years illustrates more balanced approach.

Horton Drosky: That has recently been more weighted to share buybacks over dividends and over the past 12 months, we have acquired $131 million of our shares and the current run rate for dividends is around $96 million. The other item to note is that with the reduction in our share count it.

Horton Drosky: It has allowed us to maintain a similar quarterly outflow.

Horton Drosky: It'll dividends, even as we increased the per share dividend in both 2023 and 2024.

Horton Drosky: On page 20 of the summary of our capital reallocation aggregated over the past five years on the left chart you see that we generate a total of about $2 billion through $1 6 billion of cash from operations on $400 million.

Horton Drosky: Through asset sales and on the right chart, we have a pretty balanced approach when we look at the three primary buckets to capital allocations.

Horton Drosky: In Blue is $724 million being returned to shareholders through a combination of both share buybacks and dividends, we've invested $770 million of both acquisitions and internal capex and in Green, we have the $528 million of debt reduction cap.

Horton Drosky: Built so again from our perspective when it comes to capital allocation, we've tried to take a fairly balanced approach to the various opportunities.

Horton Drosky: Lastly, and.

Horton Drosky: And in closing if we look beyond 2024 and into 2025, there are a few key observations one.

Horton Drosky: Steel prices are very recently moved higher as said earlier some of this relates to tariffs and some relates to demand dynamics that being said, we are well equipped to adapt regardless of market conditions.

Horton Drosky: We completed a lot of initiatives in 2024, which positions us really well for 2025, but also the multiple years ahead and these initiatives should lead to further growth in a number of ways.

Horton Drosky: Firstly as I mentioned earlier, our U S expansion.

Horton Drosky: Continuing relative to our Canadian platform I would expect that our U S business should exceed 50% of our revenue base within a few years to the types of growth are on value added and specialty products as part of our overall portfolio.

Horton Drosky: Some of this growth will be through market share gain gains and some is through the impact of acquisitions that we've seen this year as an example, with Tampa Bay and Samuels. These initiatives will provide for margin expansion and a continuing migration to more stable baseline of cash flows and I expect that we will get to 50% of our revenue.

Horton Drosky: You base, having a value added element within a few years and I expect over 10% of our revenues will be specialty products like stainless steel and aluminum in 2025 alone.

Horton Drosky: So in closing on behalf of John and other members of the management team I would just like to express our appreciation to everyone within the Russell family for their contributions in particular 2024 had a lot on the go and we saw a lot of people step up and provide significant leadership work effort commitment and teamwork as we meet.

Speaker Change: A series of inroads. So operator that concludes my introductory remarks, if you would now like to open the lineup for any questions. Please. Thank you Sir ladies and gentlemen, if you do have any questions. Please press star followed by one on your Touchtone phone.

Speaker Change: <unk> been here a prompt acknowledging that your hand has been raised should you wish to decline from the calling process. Please press star followed by two.

Speaker Change: A speaker phone please needs to lift the handset first before pressing any keys. Please go ahead and press Star one now if you do have any questions.

Speaker Change: First we will hear from James Mcgarrigle RBC capital markets. Please go ahead.

Speaker Change: Thanks, Rob and me on and congrats on a good quarter there in a pretty tough backdrop.

Speaker Change: But Marty are you kind of give us some color on tariffs in your prepared remarks, and it seems like the U S business should benefit from higher prices, but being back to the Canadian business is likely going to be a bit more nuanced.

Speaker Change: That said would you expect pricing to hold up in Canada, and the effects of tariffs given that we're a net exporter of steel to the U S.

Speaker Change: Any early indications that we're seeing any impact.

Speaker Change: The impact on volumes, maybe some project deferrals, just given some of the uncertainty caused by our recent announcements.

Speaker Change: Any color you can provide there.

Speaker Change: Yeah. So James let me just give a context to this and first off I. Appreciate your introductory comments. Thank you.

Speaker Change: The tariff question, it's a real moving target and as we kind of look back over the last two weeks one week as look very different in the next week in terms of what is being announced and what is being contemplated nothing has actually happened yet. So the best data point that we can point to know is what happened back in 2018 and.

Speaker Change: I think it's fair to say that there is a lot of noise in the period, leading up to to tariffs with lots of stuff happening in terms of supply chain is moving around and activity I think it's premature.

Speaker Change: For people to be talking about <unk>.

Speaker Change: Projects that are canceled projects that are being accelerated projects that are being moved because this is really evolving in real time, but if we look back to 2018, probably the single biggest takeaway is it did lift steel prices and to a certain degree aluminum prices as well in the near term how that shakes out is a function of all the other <unk>.

Speaker Change: Iterations that will happen and trade issues and back in 2018. It wasn't a single data point it evolved over 2018 from announcements to retaliatory tariffs to them coming off to coming on different rules for different countries. So just the qualifier and all of this it is a bit of a moving target that being said John.

Speaker Change: What are you seeing in terms of the near term.

Speaker Change: James Thank you for the question.

Speaker Change: There's a couple of things to look at on this the markets, we're moving and when I talked with most of the steel price markets on place, we're moving up prior to tariff announcements hot roll coils moving scrap.

Speaker Change: Localized domestic north American market and on the World market are all moving up demand is very solid. So those things were very good. So we're seeing increases in addition tariffs on top of that QC.

Speaker Change: Do you see further increases.

Speaker Change: We assume there'll be retaliatory tariffs.

Speaker Change: Canada and Mexico.

Speaker Change: That will further increase the pricing on both sides of the border steel pricing historically has always set off of the U S base.

Speaker Change: Currency adjusted we think that will continue in the near term.

Speaker Change: I think the bigger challenge that we have to look at it from a Canadian perspective.

Speaker Change: Canada reacts to the rest of the world.

Speaker Change: This candidate become a dumping ground for things that would have traditionally what's the U S. Because the 25% tariff or are they going to put tariffs on the rest of the world I think they will have to but.

Speaker Change: Initially we see this as just a pass through for US on both sides of the border keeping in mind. Our average order size is very small 3500 $4000 of our customer base predominantly stays in country on each side.

Speaker Change: Okay. Thanks for that.

Speaker Change: That color there and then looking at the commentary on the outlook you flagged some near term opportunity in the U S.

Speaker Change: That seems a lot more positive compared to your outlook commentary last quarter. So.

Speaker Change: Given the recent ramp we've seen a pricing.

Speaker Change: Kevin The acquisition is now.

Speaker Change: We closed some opportunity potentially left and Samuel.

Speaker Change: Can you give us some color on how we should be thinking about.

Speaker Change: Our sequential earnings strength into Q1, and after that I can turn the line over thank you.

Speaker Change: So let me deal with the very end of what you ask James and then John can put some color on it I expect Q1 to be better than Q4.

Speaker Change: It is a bit of a moving target right now in terms of the tariff impact and what that does to steel prices all of that so I kind of park that aside but generally our Q1s are better than Q4s in particular, and that's from a volume perspective, and also we did see stabilization of pricing and having a little bit of inching up so there should be some positive migration in Q1.

Speaker Change: Versus Q4, but it's probably not a step function change, it's continuing migration and so if you look at Q3 for us in Q4, I would suspect right now that Q1 is probably looking somewhere in between Q3 and Q4.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Again from the outlooks, we've been pleasantly surprised in Canada, and the U S. As demand has come out early on in the quarter better than we anticipated.

Speaker Change: So we see that continuing going forward again as capacity utilization at mills has continued to edge up lead times range, which again.

Speaker Change: Further.

Speaker Change: Price stability or potential for price increases that are out there there's been some large pipe jobs.

Speaker Change: Went into the hot roll coil mills that have actually extended those mills well into third quarter for any spot tons. So that's firming up pricing as well.

Speaker Change: Rig counts if you look at Canada, specifically, they're up 7% as of this morning compared to this time last year. So we're seeing very positive opportunities on our energy bills store businesses, we're continuing to gain share in our U S and its growth U S market is down and energy again.

Speaker Change: Oil is above $70 a barrel right now natural gas is over $3 50.

Speaker Change: Those are two very strong numbers for continuation.

Speaker Change: Market.

Speaker Change: As Marty mentioned in his comments, we feel very good demand as we are so we think it's going forward and then we'll have to see if there is a no.

Speaker Change: <unk> in the year.

Speaker Change: These changes are the tariff announcements here to see what this really means in the coming days.

James Mcgarrigle: Thanks James.

James Mcgarrigle: Thank you.

James Mcgarrigle: Thank you.

Speaker Change: At this time Mr. <unk>, we have no other questions registered Sir Please proceed.

Speaker Change: Great. Thank you operator, thank you everyone for joining our call and if you have any additional questions. Please feel free to reach out otherwise we look forward to staying in touch during the balance of the quarter have a good day everyone.

Speaker Change: Thank you, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines.

Okay.