Step Energy Services Ltd

TSX:STEP

Earnings Call Transcript

[Operator]

Good morning, ladies and gentlemen, and welcome to the STEP Energy Services Fourth Quarter and Year-End 2024 Conference Call and Webcast. [Operator Instructions] Also note that this call is being recorded on Wednesday, March 12, 2025. I would now like to turn the conference over to Mr. Steve Glanville, President and CEO. Please go ahead, sir.

[Stephen Glanville, executive]

Thank you, and good morning. Welcome to our Q4 and year-end 2024 conference call. We're glad you could join us to hear about the fourth quarter, the 2024 full year results, our outlook for 2025 and the latest developments at STEP Energy Services.

First, I'd like to invite Klaas Deemter, our CFO, to provide an overview of our financial results for Q4 and the full year, and then I'll provide some comments on operating conditions in 2024 and what we're seeing for 2025. Then we'll open up to calls -- or the call for questions after that. Klaas, why don't you take it over?

[Klaas Deemter, executive]

Thanks, Steve, and good morning, everyone. My comments today will include forward-looking statements regarding STEP's future results and prospects. Please note that these statements are subject to a number of known and unknown risks and uncertainties that could cause our results to differ materially from our expectations. For more information on the forward-looking statements and these risk factors, please refer to our year-end 2024 SEDAR+ filings as well as our 2024 AIF.

Finally, please note that all numbers are in Canadian dollars unless noted otherwise, and I will round where possible.

During Q4, STEP had consolidated revenue of $147 million, down sequentially from $256 million in Q3. Adjusted EBITDA for the quarter came in at $4 million or a 3% margin compared to a $44 million or 17% margin in Q3. Q4 is typically a bit slower sequentially given that most clients complete their programs by mid- to late October, but the depressed commodity prices -- sorry, November, but the depressed commodity prices during 2024 led to a number of clients curtailing their capital spend early, which exacerbated the slowdown this year.

For the 2024 year, STEP had consolidated revenue of $955 million, up from the prior year revenue of $946 million. Adjusted EBITDA for the year came in at $169 million or an 18% margin, up from the $164 million or 17% margin in the prior year. For Q4 of this year, STEP had a net loss of $45 million or $0.23 per share, compared to a net loss of $5.5 million or $0.08 per share in the prior quarter.

Included in this loss was $2.5 million of stock-based comp and $2.2 million in expense associated with the terminated transaction with ARC Financial. We also incurred a noncash impairment of $23.9 million as a result of our decision to wind down the U.S. fracturing service line. This was in addition to the impairment that we took in Q3. That impairment was taken on legacy diesel equipment and a property about to be sold, while the Q4 impairment was taken on the Tier 2 dual fuel equipment along with some ancillary equipment.

The decision to wind down our U.S. operations was made after we were advised in late February by our client that despite executing at a high level in Q1, they were awarding the work scope beyond Q1 to a larger competitor. This has happened repeatedly to STEP since the wave of consolidation washed over the U.S. E&P space. As clients become larger, they want their service companies to match their scale, which is making it increasingly difficult for smaller scale operators like STEP to find a niche.

For the 2024 year, STEP had net income of $2 million or $0.02 per diluted share, compared to net income of $50 million or $0.67 per diluted share in 2023. Again, included in net income for 2024 was $6.3 million for share-based compensation, a noncash impairment expense of $36.7 million and $2.2 million of transaction costs. Without these last 2 unusual items, our net income would have been $41 million or about $0.56 per share.

I will now turn to the geographical regions to provide key highlights on the quarter. Q4 revenue for the Canadian segment was $110 million compared to $211 million in Q3 and was comprised of $79 million in fracturing revenues and $31 million in coiled tubing revenues. Adjusted EBITDA for the Canadian region of $11 million or 10% was down from $49 million or 23% generated in Q3.

Despite the slower fourth quarter, 2024 was a record year for the Canadian geographic region. Full year revenue was $723 million, up significantly from the $580 million generated in 2023. Adjusted EBITDA on the year was $169 million, also up significantly from the $134 million or 23% generated in the prior year. We are extremely proud of the team that accomplished this.

Turning to the U.S. region. Q4 revenues of $37 million were comprised of about $3 million for fracturing and $34 million for coiled tubing. The quarterly revenue was down from the $45 million generated in Q3 of 2024. The adjusted EBITDA loss of $3 million compares with a $1.4 million loss in Q3. The negative 8% adjusted EBITDA margin in Q4 was down from a 3% negative margin in the prior quarter. U.S. revenue for the full year came in at $232 million compared to the $366 million earned in 2023.

Adjusted EBITDA for the year was $18 million or 8% compared to $46 million or 13% in the prior year. In addition to adjusted EBITDA, one of our other key non-IFRS measures is free cash flow, which is calculated by taking the cash flow from operations, less changes in noncash working capital, sustaining capital and lease payments. In the fourth quarter, we had free cash flow of negative $17 million compared to $28 million positive cash flow in Q3. For the full year, we had free cash flow of $86 million, up from $83 million in 2023.

Looking just at capital expenditures, we spent $19 million in the fourth quarter, split $8 million for sustaining and $11 million for optimization capital. For the full year, we spent $94 million, close to our full year depreciation of $83 million on our property and equipment. This was down from $105 million spent in 2023. This year, we -- in 2024, we allocated $36 million for sustaining capital and $57 million for optimization capital, along with $1 million on intangible assets related to our acquisition of the proprietary technology behind our STEP-conneCT coiled tubing offering.

Our full year capital expenditures were offset by proceeds of disposal of $9 million compared to proceeds of $3 million in 2023. We also have an active NCIB program through the first half of the year, buying nearly 1.9 million shares at an average price of $4.17. We see tremendous value in buying our shares given our book value per share of just over $5 at our low multiple, and we'll continue to remain active on our NCIB in 2025.

Finally, STEP ended the quarter with net debt of $53 million, down from $88 million at the end of 2023 and down from $142 million at the end of 2022. Since 2018, we paid down over $250 million of debt, an accomplishment that we're extremely proud of. I'll now turn it back to Steve for his comments on operations and outlook.

[Stephen Glanville, executive]

Thank you, Klaas. I am pleased to share some of the operational highlights from 2024, and I'll provide an outlook into 2025. But firstly, I'll begin by addressing the take private transaction proposed by our major shareholder, which is ARC Financial. The transaction was mutually terminated when it became clear that the transaction would not meet the required approval thresholds from minority shareholders.

While we were disappointed by the outcome, I'm extremely proud of how we navigated through this period of uncertainty. We continue to execute at a high level throughout the process, and our company operations and client relationships remain strong.

Moving on to our operating performance. The complexities of our clients' drilling and completion programs has grown significantly in recent years, with operators drilling more wells, using more sand and extending lateral lengths to maximize production. In formations such as the Montney and Duvernay, sand intensities have reached unprecedented levels, with some operators on track to pump close to over 1 million tonnes of proppant per year in their completion programs.

In 2024, STEP's North American pressure pumping business pumped a record 2.3 million tonnes of proppant, which is an 8% increase from 2023. But just in Canada alone, we saw an increase of over 64% year-over-year of proppant pumped. While we track various key performance metrics, one that really highlights the increasing intensity of these wells is proppant placed per well.

In Canada, we saw a nearly 7% increase in the lateral length of wells drilled by operators, but more notably, proppant pumped per meter rose by over 30%. This upward trend in proppant intensity signals increasingly complex operational demands, which is precisely the kind of challenge that STEP's professionals are upgraded asset base and new technology are built to handle.

Since 2022, STEP has invested $162 million of optimization capital, enabling us to develop a state-of-the-art fleet. 88% of our fracturing capacity is now dual fuel capable, which is a key differentiator in reducing costs, diesel consumption and associated emissions. Increasing natural gas usage is a key tool to reduce emissions and cost for operators, and we are leading the way to 100% gas-powered fracturing operations.

STEP is the only Canadian company selected to participate in a trial of the industry's first fracturing pump that has 100% natural gas-powered reciprocating engine. This engine produces around 3,600 horsepower versus 2,500 horsepower from a Tier 4 engine. This will reduce the on-site footprint of a frac fleet.

We are also deploying our first suite of electric backside equipment. This would include a blender hydration unit, [ Chem ad ] units. And we plan to also trial 100% natural gas-powered tractor part of our logistics fleet later in 2025. STEP operates one of the largest internal hauling fleets in Canada with specialized equipment, including which reduces the reliance on third-party hauling. Approximately 75% of our sand pumped is imported by rail from the U.S., requiring extensive last mile logistics.

In 2024, our clients experienced 0 NPT, which is nonproductive time related to our sand logistics department, which is a real testament to the efficiencies and expertise of our integrated logistics team. We are also the technology leaders in coiled tubing operations with the largest deep capacity coiled tubing fleet in North America. We take great pride in our professionals and the exceptional level of execution achieved in 2024 across both Canada and the U.S.

Last year, we collaborated with a major U.S.-based operator to further expand our ultra-deep coiled tubing capabilities. The result of this is called Coil+, which is an extended reach solution that has redefined well completions. Coil+ enables faster, more efficient completions in horizontal wells that continue to increase in lateral length, some of which are exceeding over 5 miles of lateral length. In Q3, STEP set a new depth record reaching 30,210 feet or 9,208 meters using this technology. This really highlights our ability to push boundaries and deliver industry-leading results.

In 2024, we also acquired the proprietary technology and intellectual property behind the STEP-conneCT downhole tool, making STEP the exclusive provider of this technology across North America. This tool allows operators to make real-time decisions during their milling operations, saving clients time and money. Full ownership of this technology will allow us to continue to expand our market share and deliver innovative solutions to our clients.

And now on to our outlook. As we look ahead to 2025, we are cautiously optimistic about the growth potential in the North America energy market. Key drivers such as higher commodity prices, rising natural gas demand and the completions of major infrastructure projects create a strong foundation for growth. However, we are also aware of the dynamic political landscapes in Canada and the United States -- in the United States, which presents potential risks and uncertainties for our industry. In Canada, we anticipate increased activity levels year-over-year, supported by the completion of major projects such as the TMX and LNG Canada.

We are fortunate that the Montney and Duvernay plays in Alberta and British Columbia will be the primary growth engines for the growing gas and natural gas liquids demand. The Montney play, which produces roughly half of the Canada's gas production is really still in the early stages of production. The Duvernay is a growing domestic source of natural gas liquids that will help supplement imported condensate and support Alberta's drive to increase oil sands production.

Our company's fracturing and coiled tubing equipment is specifically designed for the high-pressure continuous duty work needed in these basins, which positions us well to capitalize on the anticipated growth. First quarter activity in Canada is expected to be robust with high utilization across our fracturing and coiled tubing fleets. Alignment with key clients has driven strong activity in January and February with sand volumes already tracking ahead of Q1 2024. Our industry-leading logistics fleets has handled a significant portion of this volume, delivering additional value to our business.

Coiled tubing, pumping and nitrogen services are similarly busy with activity in line with Q1 2024 levels. We continue to work closely with our clients to enhance their completion programs and maximize well performance. Recently, a key client in the Montney adopted a new completion technique that uses a single entry point for each fracturing stage. This shift has driven strong demand for our coiled tubing services, keeping 2 units consistently active. And just in Q1, our teams set a record, completing 299 stages in one single well using this method. We also pumped over 14,000 tonnes of proppant during the simul-frac ops.

Pricing for services has improved sequentially from the fourth quarter of 2024, but remains lower than the first quarter of 2024. The weakening of the Canadian dollar against the U.S. dollar has led to further margin compression, particularly on proppant, which is purchased out of the U.S. We have good visibility into Q2, which should track similar to the same period in 2024.

The second half of the year is difficult to project with certainty, but we have a good base of work already scheduled and are actively working to help our clients level load their completion programs throughout the later part of the year, particularly in the fourth quarter.

The expected first delivery of cargo from the LNG Canada facility in early Q3 could spur additional activity in the second half of the year. And in the United States, following some delays early in Q1 due to cold weather, our coiled tubing activity levels are expected to stay fairly steady throughout the first half of the year with some cautious optimism for an uptick in the back half as several large LNG projects are completed. Natural gas prices have bounced back from the low 2024 levels, helped by a cold weather that has drawn down inventories, offering a bit more stability as we head into 2025.

The reset of E&P budgets in January provided a moderate lift to oilfield service levels. Probably through Q1, we reactivated an additional coiled tubing unit that was idled in Q4 2024, which will bring the total unit count in the U.S. to 12. We expect to reactivate another unit during the first half of 2025 if we -- if demand for our services continues to grow.

The fracturing market has recovered sequentially, but conditions remain challenging and activity remains below 2024 levels. The significant consolidation in the E&P space that occurred in 2024 resulted in a reduction in the number of drilling rigs and fracturing crews, intensifying price competition for the remaining service providers.

One of our 2 dual fuel fracturing crews was utilized for much of the first quarter of 2025. But despite performing well, in late February, this work was awarded to a larger competitor for the balance of the year. As our clients continue to grow and scale through consolidation, smaller service providers have found it increasingly difficult to compete. This past year has been a challenge for our fracturing service business.

And after careful consideration, we have decided to suspend our U.S.-based fracturing operations and we'll begin an orderly wind down process once the remaining Q1 work scope is complete. I want to emphasize that this is a wind down, which only includes our U.S. fracturing service business and not our coiled tubing business.

To close, I want to thank our professionals for their hard work and dedication in what was a time -- at times very challenging year. I'd especially like to acknowledge our U.S. fracturing crews whose unwavering commitment to delivering safe and exceptional service in a volatile market is a true reflection of their character and professionalism. Looking ahead, we remain optimistic about the strong opportunities in 2025. However, we are also mindful of the potential risks, particularly from the evolving political landscape.

The upcoming elections in Canada, along with the recent turbulence in U.S.-Canada relations, could have significant implications for our industry. We will continue to monitor these developments closely and take proactive measures to navigate any challenges that may arise.

Thank you. And operator, Klaas and I look forward to answering any questions you may have.

[Operator]

[Operator Instructions] First, we will hear from Keith MacKey at RBC.

[Keith MacKey, analyst]

Understand the decision to wind understand the decision to wind down the U.S. business. Can you just talk to us a little bit about what you plan to do with the equipment that remains that hasn't been written down? And what -- how this decision might change your capital allocation for 2025?

[Stephen Glanville, executive]

Yes, Keith, obviously, this is kind of tough news for us to swallow. We've been working on that U.S. frac business for quite some time, particularly after COVID, we saw some surgence that we were pretty happy with. So we invested in some dual fuel assets to obviously keep up with the current technologies. It just became really apparent to us that we were always on the losing end of acquisitions. So working for small to mid-cap companies that were being bought up by a large company. So tough decision that we had.

And as far as your question in regards to the asset base, we've -- we'll look at perhaps selling some of that assets through auction. There are some assets that we spent quite a bit of capital on, as mentioned, that we'll either look at -- repatriating it back to Canada, but not to stand up an additional equipment to be more just to offset some of the older assets that may be at the end of their life usage, and then we'll go from there. But as of today, our plan is just to kind of marshal that equipment and get ready for what we hope is the worst of the time in the U.S.

[Keith MacKey, analyst]

Yes. Fair enough. And maybe just to follow up. So a lot of moving pieces with respect to the outlook. Near-term Canada frac looks good, but maybe pricing is down and coiled tubing looks like it's relatively steady for the most part. Can you just give us a little bit more direction on how you think these factors all map out to your year-over-year adjusted EBITDA growth or decline from 2024 to 2025?

[Stephen Glanville, executive]

Yes. We have, as I mentioned, great visibility. Our Q1 is going to be solid compared to kind of Q1 of '24 from a utilization perspective. You'll see a bit of margin degradation, but it really comes back to the kind of the work scope that we had. We took on a lot more of supplying our own proppant in Canada with some clients. So that usually comes with a bit less of a margin versus just supplying horsepower.

Q2 looks good. I think what you'll see in Q2 is a bit more Duvernay activity. We've seen that from a rig count increase in Q1. So I think the Duvernay is going to be pretty exciting. Of course, that requires lots of intensity.

I think the real question, Keith, is kind of the back half of the year. As we saw last year, gas prices dropped kind of below the $1 AECO mark. And I think the clients that we have, they'll continue to drill, but what we saw last year is that they basically had DUCs building. And so there's a bit of an inventory that we believe is going into this year. And if we can see gas prices holding in around that $3.50, $4, I think it's going to be a pretty robust back half of the year.

[Keith MacKey, analyst]

Understood.

[Stephen Glanville, executive]

I'll just add one other thing, Keith. I know there is some equipment brought up by some competitors from the U.S. And all of that obviously puts pressure on margins. I think clients today are looking for sort of fully integrated business model that can supply their proppant logistics, pump-down services, coiled tubing services. So I think that's the big differentiator that we have. And of course, our large market share, not only in coiled tubing, but being the second largest in Canada from an overall market share perspective on the frac business provides us with some optimism that we can increase back half utilization and increase market share in Canada.

[Operator]

Next question will be from Josef Schachter at Schachter Energy Research.

[Josef Schachter, analyst]

Thank you very much, and glad to be talking to you Steve.

[Stephen Glanville, executive]

Yes, you bet you also.

[Josef Schachter, analyst]

Can you walk me through a little more of the CGU of writing down? You've got GG4 equipment. Is it worthwhile, especially given the long replacement times of a lot of this most modern equipment to bring some up as backstopping for the equipment you do have? And is there potentially in '26 demand increase for one more frac fleet, that it might be worthwhile to move it up during '25 so that you are in a position to take into account any Northeast BC pickup in activity?

[Stephen Glanville, executive]

Yes. I would say that we have, call it, kind of 26 of the Tier 4 pumps down in the U.S. that are -- it wouldn't require a lot of capital to make it kind of cold weather operating for Canada. That is something the team is working on right now just to get an understanding of it. And we will -- obviously, for -- if we're not going to get a good price for it in the U.S. from an auction perspective, our plan would be to bring it to Canada. As I mentioned earlier, the plan isn't to right away put an additional fleet into Canada, but does provide that flexibility to be able to add horsepower when needed.

I think the -- just to add on a bit of the complexities of the business today. I kind of talked a little bit about it, but I'll just share, we were on a pad for, call it, 32 days in Q1. And we pumped over 365 stages in 30 days. And when you start thinking about all that and pumping at, call it, 16 cubes a minute, you need a lot of additional capital, a lot of additional equipment to be able to support that operations. And so having some additional horsepower, I think, would ease some strain off of our Canadian team on how well they've been executing.

[Josef Schachter, analyst]

Is it going to be -- given the higher pressure, the more stages, the more proppant, is there going to have to be a price increase to cover the cost of the incremental rough work on the equipment, especially in the Duvernay?

[Stephen Glanville, executive]

Yes. I would say that there's some older fleets that are out there that are not continuous duty. So they haven't upgraded to the pumps that we have. But yes, I mean, it's a -- I'm not going to say it's a great business. It still is a great business, but it is tough. It is really tough because you have delays in your schedule, and we've -- this industry has, I would say, overbuilt. And there's -- right today, you need to pump 20, 25 days a month to bank a profit.

And our clients are enjoying this. And they're enjoying -- obviously, the pricing has went down year-over-year. And I think from an efficiency standpoint, the OFS sector doesn't get enough credit for the amount of work that we put into making our clients efficient and they're generating some great cash flow.

So I think it's time for us to do a bit of a reset on to replace these assets. I've mentioned on the calls before, it's about $80 million per frac crew. So you start thinking about that long term, Josef, it's going to be -- there's going to be needing some price increases going forward.

[Josef Schachter, analyst]

Okay. Last one for me. If you are able to sell some of your U.S. equipment, bring up to others here and have it for yourself here. Debt is now $57 million, down from $86 million, good move there. What is the target debt level? And then at what point would you then say, okay, if we're at $30 million or whatever the number is, you'd be more interested in NCIB or dividend? How do you look at shareholder returns after you get to whatever comfort zone you have on the debt level?

[Klaas Deemter, executive]

Yes. Josef, it's Klaas here. That's a great question. Thank you for that. So we're going to continue to push down that debt number. We do have an NCIB that is active right now, and we expect that to remain active through the rest of the year here. I think you could see debt closing in on $40 million, maybe plus or minus that a little bit. As we think about potential proceeds from that -- the sale of any U.S. equipment, one of the things that we're really interested in is continuing to solidify our market-leading presence on our coiled tubing side.

We do know that there are some companies that are running out of cash. And we've been able to introduce new technology to the various basins that we operate in. We know others just don't have the capacity to do that. They do have some equipment that is attractive to us. So there's opportunity for us to consolidate a little bit.

It's -- a lot of those companies are private down there. We're one of the few publics that operate. But consolidating some of those smaller private companies will allow you to stabilize the market a little bit and continue to deliver that industry-leading service that we have. I'm going to invite Steve here to talk a minute about those laterals, but we're seeing a huge explosion in growth in those things that Steve will touch on here.

[Stephen Glanville, executive]

Yes. I talked a little bit about it, Josef, in the call, but we're seeing -- I'll just give you an example. One operator drilled, call it, less than 70 wells that were 3-mile laterals in '24 that they plan to drill over 200 wells this year. So it's -- and having our technology, which we talked about the Coil+, this allows them to have no doubt in their mind that they can reach TD when we start milling out these wells.

So I think that's going to be really interesting to pay attention to and having some additional assets that Klaas talked about the pumping assets. We're going to transfer some into the coiled tubing business to be able to support that. And I think there's going to be a very niche market that hopefully will demand a premium price.

[Operator]

[Operator Instructions] Next, we will hear from Waqar Syed at ATB Capital.

[Waqar Syed, analyst]

How much horsepower do you have in the U.S. market?

[Stephen Glanville, executive]

I would call it just over, call it, 125,000, I think, Waqar, I don't have the exact number, but call it, 2 fleets that we have. We had 3 fleets down there. Most -- the third fleet was kind of diesel assets. We've -- as I mentioned before, have been supporting our growing coiled tubing business with some additional horsepower. So I think we're about 125,000 horsepower.

[Klaas Deemter, executive]

That's right. 4,850 pumps.

[Stephen Glanville, executive]

Yes.

[Klaas Deemter, executive]

So in that number.

[Stephen Glanville, executive]

Yes, there you go.

[Waqar Syed, analyst]

Good. And then just on the Canadian side, how much horsepower you have in Canada?

[Stephen Glanville, executive]

We're north of 300,000, Waqar.

[Waqar Syed, analyst]

Okay. Sounds good. All right. Good. And then on tariffs, like do you expect tariffs to have an impact on your frac sand costs? Or you think that's going to be excluded as one of your competitor mentioned. If you could give us an update on that? And then on chemicals and others. Similarly, you're thinking about upgrades, things like that, on your optimization capital. Does that -- the cost of that go up? Similarly, both OpEx and CapEx, could you maybe talk about how the tariffs could impact?

[Stephen Glanville, executive]

I'll talk about tariffs. Maybe Klaas, you can talk a little bit about the OpEx, CapEx. But we've -- the pressure pumping group in Canada has set up a committee through Enserva to look at these tariffs. And we've obviously been sending letters to the Feds as well as the provincial government.

The challenge on the tariffs as of today is more on proppant being imported from Wisconsin. So we've looked at kind of that as there is obviously going to be a pass-through cost to our client if the tariffs do go on. I don't think it's going to be as large as what we had first thought because it's really just on the proppant itself and not on the cartage. So we're hoping to get an exemption. There's been some letters sent to, as I mentioned, to the Feds and to provincial leaders, and they've been really supportive of not slowing down the oil and gas industry.

So this would be obviously, a crutch if it were to come in. We're talking 40,000 to 50,000 jobs that the service sector basically contributes to. And so I'm pretty sure our government is very concerned about any type of cost increases going into the business.

[Klaas Deemter, executive]

Yes. So just speaking of cost increases, Waqar. So the deterioration in the FX rates on the side of the border effectively turns into a tax on everything. We did talk about it in our MD&A that we are seeing some margin compression on sand. It's a big input cost for us. And so there's that. A lot of our parts are sourced out of the U.S. So we do see some inflationary pressure just coming from the exchange rates.

Steve talked about pricing. This is something that's a very active discussion right now. Our clients obviously benefit from a weakening Canadian dollar, whereas it hurts us. So there is some talk with clients around rebalancing the impact of FX through pricing increases. We think that's a fair request just to cover the cost. So in terms of our overall budget, we haven't made any big changes.

As a result of that, we're still -- I mean, these tariffs, they do change quite frequently. So we're keeping an eye on it, and we'll react accordingly as best as we can. That's about all we can do right now.

[Operator]

And at this time, Mr. Glanville, we have no other questions registered. Please proceed, sir.

[Stephen Glanville, executive]

I'd just like to thank everybody for joining our year-end Q4 conference call. Just a reminder, it was a great year for STEP and I look forward to hosting a conference call for Q1. Thank you very much.

[Operator]

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 ask that you please disconnect your lines.