American States Water Company (NYSE:AWR) Q4 2022 Earnings Call Transcript

American States Water Company (NYSE:AWR) Q4 2022 Earnings Call Transcript March 2, 2023

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the American States Water Company Conference Call discussing the company’s Fourth Quarter and Full Year 2022 Results. The call is being recorded. If you would like to listen to a replay of this call, it will begin this afternoon at 5:00 p.m. Eastern Time and run through Thursday, March 9, 2023, on the company’s website, www.aswater.com. The slides that the company will be referring to are also available on the website. All participants are currently in a listen-only mode. After today’s presentation, there will be an opportunity for questions. Please also note that today’s conference call will be limited to one hour. Presenting today from American States Water Company are Bob Sprowls, President and Chief Executive Officer; and Eva Tang, Senior Vice President of Finance and Chief Financial Officer.

As a reminder, certain matters discussed during this conference call may be forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Please review a description of the company’s risks and uncertainties in our most recent Form 10-K and Form 10-Q on file with the Securities and Exchange Commission. In addition, this conference call will include a discussion of certain measures that are not prepared in accordance with generally accepted accounting principles or GAAP in the United States and constitute non-GAAP financial measures under SEC rules. These non-GAAP financial measures are derived from consolidated financial information and are not presented in our financial statements that are prepared in accordance with GAAP.

For more details, please refer to the press release. At this time, I’d like to turn the conference call over to Bob Sprowls, President and Chief Executive Officer of American States Water Company.

Bob Sprowls: Thank you, Jamie, and welcome everyone and thank you for joining us today. I’ll begin with some brief comments on the year. Eva will then discuss some financial details, and then I’ll wrap it up with some further thoughts on the quarter and the year, updates on regulatory activities, ASUS, dividends, and then we’ll take your questions. During a year of high inflation, rising interest rates, volatile markets and supply chain challenges, we stayed focused on providing safe and reliable water, wastewater and electric services to over 1 million people in 9 states. To accomplish this, we spent 2022 successfully executing on our strategic plans, continuing our financial discipline, building and fortifying our infrastructure, providing excellent customer service, ensuring employee safety and well-being and managing the water and wastewater for our country’s military personnel and family.

In 2022, we invested a record high $167.4 million in infrastructure at our regulated utilities and received $34.4 million in new capital upgrade awards at ASUS, nearly double the amount from 2021. These significant investments will allow us to serve our customers for generations to come. As we turn to the financial results, the largest impact on our earnings per share for the year was the delayed decision from the California Public Utilities Commission, or CPUC, on Golden State Water’s general rate case. New rates are to be effective January 1, 2022. And if approved, as settled would have resulted in an increase of $0.38 per share for the year. However, we continue to wait for a decision and because of that, we’re not able to include the effect of any new rates on 2022 financial performance.

As soon as the decision is received, new rates will go into effect and still be retroactive to January 1, 2022, which also means that the resulting increase in earnings per share is expected to be recognized in 2023’s financial results. Secondly, we experienced losses incurred on our investments to fund one of the company’s retirement plans, which negatively impacted earnings per share by $0.10 for the year as compared to gains of $0.08 per share in 2021. Excluding the effects of these two items from both years, adjusted consolidated diluted earnings for 2022 were $2.59 per share as compared to adjusted diluted earnings of $2.47 per share for 2021, an increase of $0.12 per share. On the regulatory front, there are several critical filings pending, which I will discuss later.

And we remain proud of our dividend history and growth. In 2022, we increased the annual dividend by 8.9%, our 68th consecutive year of annual dividend increase. Eva will discuss the earnings and liquidity, and I’ll turn the call over to Eva.

Eva Tang: Thank you, Bob, and hello, everyone. Let me start with our fourth quarter financial results. Consolidated earnings as reported were $0.50 per share as compared to $0.55 per share last year in 2021, a decrease of $0.05 per share. This included gains of $1.3 million, or $0.03 per share, on the investments held to fund a retirement plan as compared to gains of $2 million, or $0.04 per share, in 2021. This item resulted in an unfavorable variance of $0.01 per share. In addition, due to the delay in receiving a final decision on the pending water general rate case while the revenues for 2022 were based on 2021 adopted rate. As the new rates being approved and implemented on January 1, 2022 consistent with the settlement agreement reached between Golden State Water and the Public Advocates Office at the CPUC, we would have recorded additional revenues and water supply costs that would have resulted in higher earnings of $0.09 per share for the fourth quarter of 2022.

Also had we received the decision in the fourth quarter, we would have recorded a full year impact of $0.38 per share in Q4. Excluding the gains on investments from both periods and including the impacts caused by the delay in the water general rate case in the results, adjusted consolidated earnings for the quarter were $0.56 per share as compared to adjusted earnings of $0.51 per share for the fourth quarter of 2021, an increase of $0.05 per share or nearly 10% despite a $0.03 per share reduction in earnings for Q4 of 2022 as a result of recording a lower debt cost in the pending cost of capital proceeding for the Water segment. For our water utility subsidiary, Golden State Water Company reported earnings for the quarter were $0.28 per share as compared to $0.36 per share in 2021, a $0.08 increase €“ decrease both I just discussed affected earnings at the water segment.

So factoring in the same effect from the two items such as the earnings for the fourth quarter of 2022 at Water segment were $0.34 per share, which was an increase of $0.02 per share as compared to adjusted earnings of $0.32 per share for the same period in 2021. Also included in the Water segment results for the quarter was $1.4 million reduction in revenues, or $0.03 per share, to reflect our best estimate at this time of revenues subject to refund Golden State Water’s pending cost of capital application, which includes the impact of a lower cost of debt requested in this application. There were also increases in operating expenses and interest expense, partially offset by an increase in other income. Our electric segment’s earnings were $0.08 per share for the fourth quarter as compared to $0.07 per share for the same period in 2021.

The increase in electric revenues and a lower effective income tax rate were partially offset by higher interest expense. Earnings from our contracted services segment increased $0.04 per share for the quarter, which Bob will discuss later during the call. Turning on the next slide. Consolidated revenue for the fourth quarter of 2022 increased by $8.8 million as compared to the same period in 2021. The increase was mostly due to an increase in revenues from our contracted services, the decrease in Water revenue was due to the cost of debt adjustments expected from the cost of capital proceedings and a decrease of approximately $1 million in amounts included in CPUC approved pension and conservation balancing accounts, both of which are offset by lower expenses and have no net earnings impact.

Again, while the revenue for the fourth quarter of 2022 were based on 2021 adopted rate, the increase in electric revenues was mainly due to the CPUC approved rate increases for 2022. Turning to Slide 9. Looking at total operating expenses, other than supply costs, consolidated expenses increased approximately $10.6 million as compared to the fourth quarter of 2021. This was primarily due to an increase in construction costs at our contracted services segment resulting from higher construction activities and higher other operations, administrative and general and depreciation expenses partially offset by a decrease in maintenance costs. Interest expense, net of interest income increased by $2.2 million due to higher average interest rates during the quarter and increases in overall borrowing levels.

Other income net of other expenses increased by $400,000 due primarily to an increase in non-service cost components for Golden State Water’s benefit plan resulting from lower actuarial losses recognized for the fourth quarter of 2022, partially offset by a decrease in gains on adjustments held for retirement plan. Slide 10 shows the EPS bridge comparing the fourth quarter of 2022 with 2021 fourth quarter. This slide reflects our full year earnings per share by segment as reported and as adjusted, fully diluted earnings for 2022 were $2.11 as compared to $2.55 for 2021, a decrease of $0.44 per share, an unfavorable variance of $0.18 per share was due to losses of $5.2 million on retirement plan investment this year as compared to gains of $4.3 million for 2021.

In addition, had the new rates in the GRC settlement being approved by the CPUC and implemented on January 1, 2022 our earnings would have increased by $0.38 per share. Excluding the gains and losses on the retirement plan investments from both periods and including the results of the new water rate settlement agreement for 2022, adjusted consolidated earnings for 2022 were $2.59 per share, which were $0.12 per share higher than adjusted earnings of $2.47 per share for 2021, despite of a $0.13 per share reduction in 2022’s earnings as a result of a lower debt cost in the pending cost of capital proceeding. For more detail on the annual results, please refer to yesterday’s press release and Form 10-K. Turning to liquidity on Slide 12. Net cash provided by operating activities was $117.8 million as compared to $115.6 million for 2021.

In 2022, our regulated utilities received $10 million in COVID-19 relief funds from the state of California to provide assistance to customer for delinquent water and electric customer bills incurred during the COVID-19 pandemic. The increase in operating cash flow was also due to differences in timing of vendor payments between the two periods and the timing of billing of and cash receipts for construction work at military bases. The increase in operating cash flow was also due to differences in timing of vendor payments between the two periods and the timing of billing of and cash receipts for construction work at military bases. These increases were partially offset by a decrease in customer cash collections resulting from decreased water consumption due to drought condition and rationing.

These under collections were being captured in the 2022 Water Revenue Adjustment Mechanism or the WRAM. Furthermore, delay in the water general rate case decision has negatively affected cash flows from operating activities as year-to-date billed revenue has been based on 2021 adopted customer rates, while operating expenses have continued to increase. Our regulated utilities invested $167.4 million in company-funded capital projects in 2022. We expect capital expenditure of $140 million to $150 million for 2023. AWR’s credit facility with a borrowing capacity of $280 million expires in May this year, the outstanding borrowings has been classified as a current liability in the company’s consolidated balance sheet as of December 31, 2022. We plan to either renew and extend this facility or enter into a new credit facility prior to expiration date.

We believe the company’s sound capital structure and A+ credit rating for American States and Golden State Water combined with financial discipline and history and relationships with the lenders will enable us to assess the debt market with reasonable terms as we are put in place a new facility before May 2023. In January of 2023 Golden State Water issued unsecured private placement totaling $130 million. The proceeds were ultimately used to partially pay down AWR’s credit facility and further support Golden State Water’s capital program. At this time, we do not expect AWR to issue additional equity for at least the next 18 to 24 months to fund its current businesses. We will continue to access the need for equity issuance if and when AWR decides to issue equity, we plan to raise capital over time.

We would consider doing an added market offerings that enable AWR to control the timing and size of the sale of its common shares over several years. With that, I’ll turn the call back to Bob.

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Bob Sprowls: Thank you, Eva. I’ll discuss a few key regulatory matters. As mentioned in previous earnings calls, we reached nearly a full settlement agreement with the Public Advocates Office of the CPUC on Golden State Water’s 2022 through 2024 general rate case and filed a settlement agreement with the CPUC in November 2021. If approved, this settlement agreement resolves all the issues related to the calculation of the 2022 annual revenue requirement. It authorizes Golden State Water to invest approximately $404.8 million in capital infrastructure over the three-year cycle, plus $9.4 million of capital projects that have been completed and filed as advice letter project, the revenue for which was in effect February 15 of last year.

It increases Golden State Water’s adopted operating revenues for 2022 by approximately $30.3 million, which includes an increase for higher adopted supply costs of $9.6 million as compared to the 2021 adopted revenues, excluding the advice letter project revenue. And it allows for potential, additional increases in adopted revenues for 2023 and 2024, subject to an earnings test and changes to the forecasted inflationary index value. Obviously, we’re disappointed that we have not received a proposed decision for 2022 water rates, which as previously mentioned, could have added $0.38 per share to our 2022 financial results. We are now in the process of preparing our next water general rate case to be filed in July of this year, for rates for the years 2025 through 2027.

One key issue in the next application is related to the Water Revenue Adjustment Mechanism or WRAM. On September 30 of last year, the Governor of California signed Senate Bill 1469 effective January 1, 2023, it allows Class A Water utilities to request the use of the full WRAM in their next general rate case. So with the passage of this bill, Golden State Water will be able to request the continued use of the WRAM in the general rate case we plan to file this July. Although the CPUC can still rule against the individual utilities and their request to use the full RAM, this is a significant step forward as decoupling for water utilities is now in the Public Utilities Code. In addition, Golden State Water, other Water utilities in the California Water Association, have appealed the August 2020 CPUC decoupling decision to the California Supreme Court, and the court has agreed to hear the case.

As a result of the passage of Senate Bill 1469, the CPUC filed a motion to dismiss the IOWUs and CWA’s petition with the Court in October 2022, but was denied by the Supreme Court. Next, I’ll discuss the cost of capital proceeding. Golden State Water filed a cost of capital application with the CPUC in May 2021, requesting a capital structure of 57% equity and 43% debt, return on equity of 10.5% and embedded cost of debt up 5.1%, and a return on rate base of 8.18%. We have recorded a reduction to water revenues, which decreased fourth quarter 2022 earnings by $0.03 per share and the earnings for the full year of 2022 by $0.13 per share to reflect the estimated revenue impact of a lower cost of debt of 5.1% as requested in our cost of capital application as compared to 6.6% included in 2021 rate currently being built to water customers.

In addition, in the cost of capital application, Golden State Water has requested authorization from the CPUC to continue the water cost of capital mechanism. For the period from October 1, 2021, and through September 30, 2022, the Moody’s AA utility bond rate increased by more than 100 basis points from the benchmark. As you know, if there is a positive or negative change of more than 100 basis points, the return on equity is adjusted by one half of the difference. We expect this to be addressed by the CPUC in the pending proposed decision. Our electric utility subsidiary filed its general rate case on August 30 of last year. In addition to new rates, there are a number of items that are requested such as additional capital expenditures as part of the four-year rate cycle and a new capital structure.

In addition, we have requested the recovery of more than $20 million in capital already spent related to the Wildfire Mitigation Plan. In the fourth quarter, the CPUC approved a decision for a general rate case memorandum account that will make new rates once approved in a CPUC final decision effective January 1, 2023. Turning our attention to Slide 16, we present the growth in Golden State Water’s average rate base as authorized by the CPUC for 2018 through 2021. The weighted average water rate base has grown from $752.2 million in 2018 to $980.4 million in 2021. Based on the general rate case settlement agreement, the 2022 rate base amount is $1,152.3 million, which, if approved, would result in a compound annual growth rate of 11.3% since 2018.

The rate base amounts shown for 2021 and 2022 do not include any rate recovery for advice letter project. Let’s move on to ASUS, which contributed earnings of $0.17 per share for the fourth quarter as compared to $0.13 per share for the same period last year, an increase of $0.04 per share. The increase was largely due to an increase in construction activity during the quarter and an increase in management fee revenue resulting from resolution of various economic price adjustments, partially offset by higher overall operating expenses as compared to the same period of 2021. Earnings for the full year 2022 were $0.46 per share as compared to $0.48 per share for 2021 as the Contracted Services segment experienced challenges in its construction activity resulting from longer material supply chain lead times, weather conditions and other delays during the first nine months of the year.

We expect the supply chain issues will improve this year and project that ASUS will contribute $0.45 to $0.49 per share for 2023. As I mentioned earlier, ASUS received new capital upgrade project award of $34.4 million in 2022 for work that will be performed in the next few years. Completion of filings for economic price adjustments, requests for equitable adjustment, asset transfers and contract modifications awarded for new projects provide ASUS with additional revenues in dollar margin. We remain confident that we can effectively compete for new military-based contract awards in the future. Based on our proven track record of managing water and waste water-related services for military basis since 2004. I’d like to now turn our attention to dividends, which remain a compelling part of our investment story.

Our quarterly dividend rate has grown at a compound annual growth rate of 9.3% over the last five years. These increases are consistent with our policy to achieve a compound annual growth rate in the dividend of more than 7% over the long term. Our strong dividend history is something that the company is proud of and is a continuing asset to our shareholders. This strong track record has allowed us to achieve a compound annual growth rate of 9.2% in our calendar year dividend payments to shareholders over the last 10 years for 2012 through 2022. I’d like to conclude our prepared remarks by thanking you for your interest in American States Water, and I’ll now turn the call over to the operator for questions.

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Q&A Session

Operator: Ladies and gentlemen at this time we will being the question-and-answer session. And our first question today comes from Angie Storozynski from Seaport. Please go ahead with your questions.

Angie Storozynski: Thank you. So maybe first, you have the $0.13 of a drag reflected in your earnings and it’s unique for you guys compared to the other two California utilities, right, because you are reflecting the lower cost of debt from the pending cost of capital proceeding even though there hasn’t been a decision rendered or we’re not sure if it’s going to be retroactive. So in other words if the decision does not require a retroactive adjustment to the cost of debt, that $0.13 is going to return in 2023, meaning it’s going to be an earning €“ it will be additive to 2023 earnings. Is that correct?

Bob Sprowls: That is correct.

Angie Storozynski: Okay.

Bob Sprowls: How are you doing Angie?

Angie Storozynski: Very good. Again, I mean, what a mess. Just so unfortunate that we haven’t had a decision in your rate case or cost of capital proceeding. And looking at your electric rate case, it also seems like it’s likely to split. So it will be in a sense a recurring headache, right? You know what the true earnings power of your business is now?

Bob Sprowls: Yes. It’s €“ yes, the electric rate case given its very small size, it’s likely that the commission, particularly on the electric side of the house, which is who processes that particular case. It’s quite possible that that will get delayed given the size and what everything else that they’ve got going there.

Angie Storozynski: Okay. So €“ okay. Now the €“ just trying to understand the 8.9% dividend increase and the messaging that it spends about the longer-term earnings growth potential of the company. Obviously, I see the rate base growth. If you were to extrapolate from what you have settled for in your general rate case for Golden State, what would be the rate base growth going forward? So if I were to take 2022 through 2024 based on the settlement, what would be the rate base CAGR there?

Bob Sprowls: Yes. So we’ve got a pretty good step-up between 2021 and 2022, which is on a particular slide here.

Eva Tang: Page 16

Bob Sprowls: Yes. Yes. And then I don’t know what that percent change is, but that’s a big jump there. And then I would say it’s not as significant for 2023 and 2024. That’s…

Eva Tang: That’s fair. And Angie, we have $404.5 million CapEx authorized over the three years. So it’s on average here is one-third of that amount. So you will use the 2022 adopted rate base of that amount minus depreciation, of course. So the second, third year probably much less than the increase in the first test year as the regulator . So we are preparing for the next rate case, which will be effective 2025. So that will be €“ we anticipate a much higher increase in rate base from last year.

Angie Storozynski: Okay. For 2025 onwards, okay. And then lastly, via the $0.04 parent drag, it’s a pretty meaningful increase from previous years. Is it, and then I see the drivers, right, interest expense and taxes? I mean when I look forward for the next year or two, is that €“ and given the rising interest rates, do I see the parent drag creep up further. So I’m growing at like $0.01 to $0.02 a year from the current level, meaning on a negative side, obviously?

Bob Sprowls: No, it’s really a function of interest rates. And if they’re flat €“ if they’re flat relative to 2022, you won’t see it grow because it’s really €“ it’s really the jump in interest rates that created that drag, not necessarily the borrowing levels. Now I want to go back to your other question if I could.

Angie Storozynski: Yes.

Bob Sprowls: Subject to check, I just did the math on the 2022 versus 2021, rate base growth, and that’s a 17.5% growth from 2021 to 2022.

Angie Storozynski: Yes. I understand. Yes. Okay, very good. But just one last one. So Eva, are you saying there’s been a change in the wording about the equity needs. So is that also a function of rising interest rates? Hence, you were signaling that there could be some need for equity beyond the next 24 months?

Eva Tang: No, not so much the rising interest rate. And we’re still waiting for the Water GRC. So it depends on the timing of when we receive the recovery of it. And also, our CapEx continues to go up and we prepare for our next GRC we anticipate the capital expenditure continue to increase. So just to support the overall capital spending for the utility and fair value, also spend a lot of money on their capital expenditures as well. So that’s really to support the capital expenditure need for the company. So we’ll continue to assess that. We’re hoping we can last for 24 months, but that the market now for sure if we’re ready to do that.

Angie Storozynski: Okay. Thank you.

Bob Sprowls: Thanks Angie.

Operator: Our next question comes from Jonathan Reeder from Wells Fargo. Please go ahead with your question.

Jonathan Reeder: Hey Bob and Eva. Just wanted to continue that last discussion on equity. Just trying to get a sense of the amount that you can need after that 18- to 24-month period that you mentioned. Can you talk about like the targets that AWR has for FFO-to-debt, debt-to-EBITDA and just the consolidated equity ratio?

Eva Tang: We definitely want to maintain the equity ratio €“ the cap ratio aligned with the CPUC authorized rate, right, Jonathan. So if you have to maintain that and the equity coming from parent need to support that. And for the parent, we would like to maintain our credit rating with the rating agencies. So we’ll continue to look at their benchmark to make sure we are meeting their requirements to hopefully maintain our credit rating at the parent level as well.

Jonathan Reeder: Okay. Do you know what those like metrics are on an FFO-to-debt basis for your A+ and everything?

Bob Sprowls: Yes. So it’s a bit of a debate between us and Standard & Poor’s, I’ll tell you that because they are €“ we’re kind of looking at the, what 20 to 25 FFO-to-debt for American States and Golden State. And one of the issues here is whether because we have the revolver at the parent, we have to look at this 20 to 25. If we had the revolver at Golden State, perhaps the FFO-to-debt would be lower the benchmark.

Eva Tang: Yes, I believe that benchmark for will appeal while it will be slower.

Bob Sprowls: Yes. As we have other things under the American States umbrella and just too states, our FFO-to-debt perhaps is a bit higher benchmarks than what you might see for a pure water facility.

Jonathan Reeder: Okay. Any thoughts on like putting a revolver or having a different revolver at the utility level than to address that or not really?

Bob Sprowls: Yes. I mean we’re thinking through that as we speak. With that S&P we’ve got the A+ rating for both parent and Golden State and with a negative outlook. And so we’re working hard to maintain our ratings there. Whenever you have a negative outlook, as you know, Jonathan, you got to work hard to try to keep your rating and so we are.

Jonathan Reeder: Okay. Okay. Makes sense. GRC, I mean any idea what the heck happened with ALJ. I know they had put out the time extension saying that the proposed decision was going to come in January. So I mean I understand things can kind of slip, but to say that, with a couple of weeks ago and now are over a month after January. Any €“ what’s going on there?

Bob Sprowls: Well, the sense we have is just to say we’ve got more work to do than people could do it. But we’re €“ we’ve been pushing and pushing and pushing at it doesn’t seem to be getting the ball across the goal line here. So I know Jonathan and Angie both are really frustrated by this, you can imagine how frustrated we are with all-party settlement sitting in front of them. But it doesn’t do any good. I don’t know what issues they have there. It just seems like maybe they don’t have enough people to do the work.

Jonathan Reeder: Yes. It just seems kind of odd. I mean, I forget when January came out, but are they the same?

Bob Sprowls: Very early in January. In January 12, I think, that the CPUC approved the ALJ’s request for a deferral.

Jonathan Reeder: Yes.

Bob Sprowls: And then there was commentary about trying to get PD out in January. And then January came and went, and then now February has come and gone and we kind of met with everybody we think we can meet with this issue and just hard to put your finger on. I don’t know if it’s this particular ALJ has got too many things on his plate. That seems to be what the issue is. And so we’ll continue to try to push as much as we can. But I think at this point, as long as we get a reasonable decision from the commission we’ll be fine with it. And it does create this lumpiness. It makes it difficult for analysts on track, but we do understand they’ve got staffing issues that we’re trying to deal with too.

Jonathan Reeder: Yes. I mean do you think it’s appreciated at the top of the house with the commission, like I mean I think President Reynolds, when she was brought in one of our task was to try to get timely decisions out there. Do you think she has an understanding of the extent of the delays at the water side? Or it’s just €“ is water really taken a backseat at the commission to all of the energy policy stuff?

Bob Sprowls: Well, I think she’s aware that there’s been delays on the water rate base. How that fits into her do list. It is €“ I always defend the commission on this particular standpoint. California is a huge state. We’ve got five commissioners that have to basically deal with line up California with what you see on the East Coast. And how many commissions are they doing with the issues that one commission in California standpoint. You may have, what, seven or eight state commissions. So I do have a great appreciation for the difficulties and the challenges that the commission has to deal with. I’m not happy that our case is being delayed. I don’t completely understand it, but I believe that group, the CPUC works hard and they try to get things done on time, et cetera, just perhaps it’s more things to do than time to do it.

Jonathan Reeder: Yes. Well, you’re patient person Bob. Hopefully, your patient is rewarded here and we can get some proposed decisions on the two big ones out here shortly. So good luck. Appreciate you taking my call and the update today.

Bob Sprowls: Thank you, Jonathan.

Eva Tang: Thank you.

Operator: And ladies and gentleman at this time I am showing no additional questions. I’d like to turn the conference call back over to Bob Sprowls for any closing remarks.

Bob Sprowls: Thank you, Jamie. I just wanted to thank you all again for your participation today, and we look forward to speaking with you next quarter, which will be couple of months here, I guess. And thank you for your interest in the company. Have a good rest of your week. Thank you.

Operator: And ladies and gentlemen, with that, we’ll conclude today’s conference call and presentation. We thank you for joining today’s conference. You may now disconnect your lines.