MIND Technology, Inc. (NASDAQ:MIND) Q2 2025 Earnings Call Transcript

MIND Technology, Inc. (NASDAQ:MIND) Q2 2025 Earnings Call Transcript September 12, 2024

Operator: Greetings. Welcome to MIND Technology’s Fiscal 2025 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to Zach Vaughan. Thank you. You may begin.

Zach Vaughan: Thank you, operator. Good morning, and welcome to the MIND Technology’s fiscal 2025 second quarter earnings conference call. We appreciate all of you joining us today. With me are Rob Capps, President and Chief Executive Officer; and Mark Cox, Vice President and Chief Financial Officer. Before I turn the call over to Rob, I have a few items to cover. If you would like to listen to a replay of today’s call, it will be available for 90 days via webcast by going to the Investor Relations section of the Company’s website at mind-technology.com or via a recorded instant replay until September 19. Information on how to access the replay was provided in yesterday’s earnings release. Information reported on this call speaks only as of today, Thursday, September 12, 2024, and therefore, you’re advised that time sensitive information may no longer be accurate as of the time of any replay listening or transcript reading.

Before we begin, let me remind you that certain statements made by management during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause the Company’s actual or future results or performance to materially differ from any future results or performance expressed or implied by those statements. These risks and uncertainties include the risk factors disclosed by the Company from time-to-time in its filings with the SEC, including in its annual report on Form 10-K for the year ended January 31, 2024.

Furthermore, as we start this call, please also refer to the statement regarding forward-looking statements incorporated in our press release issued yesterday, and please note that the contents of our conference call this morning are covered by these statements. Now, I would like to turn the call over to Rob Capps.

Robert P. Capps: Okay. Thanks, Zach, and thanks for all of you joining us today. First of all, I want to welcome all of our new common stockholders. For the conversion of our preferred stock into common stock last week, MIND now has a substantial new group of common stockholders. For me, if not most of you, MIND is a new Company. This new capital structure and our encouraging business environment provide MIND with important opportunities. Today, I’ll discuss some highlights from the quarter, Mark will then provide a more detailed update on our financials, and I’ll return to wrap things up with some remarks about our outlook. MIND delivered positive results in the second quarter that were in-line with our expectations and further demonstrated the progress we’ve made on several fronts.

We continue to operate efficiently and actively manage cost. We generated positive cash flow from operations in the quarter, which helped further improve liquidity. Our ability to build on the momentum we’ve generated in recent periods and execute has enabled MIND to deliver another quarter of positive adjusted EBITDA and profitability. We remain well-positioned to achieve profitability and favorable results in future periods. We maintain our belief that MIND is strategically positioned for both near and long-term growth. Now, while it did not directly impact second quarter results, the approval of our preferred stock proposal and resulting conversion of all preferred stock into common stock was a very important development. On the conversion, we issued approximately 6.6 million shares of common stock, now have about 8 million shares outstanding.

All outstanding preferred stock along with associated accrued but undeclared dividends have been retired. Mark will touch on the accounting for this conversion, which we’ll see in the third quarter. We entered the third quarter with a strong backlog of approximately $26 million. I know that some of you have been concerned that there have not been more announcements of new orders recently. Although the order flow is often sporadic, it’s not uncommon to see positives in order activity throughout the year, especially during the summer. The backlog at the end of quarter was down sequentially, however, it was more than 50% higher than at the same time last year, which is quite high by historical standards. We don’t announce each and every order we receive.

Currently, there are more than $6 million in orders that have been received subsequent to July 31 or that we believe are imminent and those are not included in the reported backlog. Beyond that, we have an active pipeline of pending orders and prospects that is well in excess of our backlog received orders. We believe this robust backlog and many of the opportunities we are pursuing bode well for favorable future financial results. As is always the case, timing of certain orders is subject to durability due to any number of challenges, unforeseen circumstances or customer delivery requirements. Our GunLink source controllers, BuoyLink positioning systems and SeaLink streamer systems are all contributing to our strong backlog, and we currently have a number of pending orders across these product lines.

And, I’m confident that the type of macro environment, our narrowed focus, strong customer relationships, ever increasing capabilities and value partnerships will continue to cement MIND as a partner of choice for companies looking to acquire high-quality and versatile marine technology products. Our marine technology products revenues for the second quarter of fiscal 2025 were $10 million. Our ability to grow revenue both sequentially and year-over-year demonstrates the strength in customer engagement and order flow, favorable macro tailwinds and the emphasis we put on execution and efficiency. We also continue to take steps to improve our cost structure, which has enhanced our profitability in recent quarters. Now, it’s always important to mention that while supply chain issues are much improved, they’re still with us to varying degrees and could impact results in future periods.

These challenges are simply component of new business and we will almost certainly encounter them again in the future. To combat some of these challenges, we’ve built inventory in recent months to accommodate pending and upcoming orders. Additionally, as we’ve noted, the magnitude of our backlog and expected orders does give us better visibility and therefore better ability to manage our procurement processes and improve margins. We continue to believe that the current market environment is an advantageous reminder. Our key markets remain loaded with opportunity. We’re seeing an uptick in customer inquiries and RFQs as we come out of the summer months. In addition to now operating a more streamlined and focused suite of products, it continues to develop new and innovative ways to adapt and implement our technologies to meet the evolving needs of our customers.

Recent sales and inquiries regarding our ultra-high resolution SeaLink streamer systems are a good example of this. I’m confident that our differentiated approach and best-in-class suite of products will continue to give us the competitive advantage to address the growing demand we’re seeing within the marine technology industry. Our repair activities, both for our own products as well as third-party products, continue to develop and look promising for the future. We continue to see traction for our Spectral Ai Software Suite through our collaboration agreement with General Oceans. We believe there are a number of promising prospects. Recent customer feedback for the software has been positive, and we hope to find further applications for this technology in the future.

Now, I’ll let Mark walk you through the second quarter financial results in a bit more detail.

Mark Cox: Thanks, Rob, and good morning, everyone. Consistent with the past several calls, I would like to remind everyone that with the sale of Klein, those operations have been treated as discontinued operations and prior period results have been restated to reflect that. Accordingly, the results from continuing operations that we reported yesterday and are discussing here today, including prior period comparative data, do not include amounts related to Klein. They include only our ongoing business. As Rob mentioned earlier, revenues from marine technology product sales totaled $10 million in the quarter, which was up about 32% from approximately $7.6 million in the same period a year ago. We continue to believe the underlying strength we’re seeing in all our key markets and the significant customer demand driving our robust backlog positions us well for sustained high-level revenue in the coming quarters.

Second quarter gross profit was approximately $4.8 million which was up approximately 62% when compared to the second quarter of last year. Gross profit margin, which was approximately 48% for the quarter also increased approximately 22% when compared to the same quarter a year ago. This margin improvement stemmed from increased manufacturing activity that resulted in greater overhead absorption. Margins also benefited from the price increases that were implemented in 2024 as well as greater production efficiencies throughout the business. Our general and administrative expenses were $2.8 million for the second quarter of fiscal 2025, which was flat sequentially and down slightly from $2.9 million in the second quarter of last year. We also expect additional reductions in general and administrative expenses in the third quarter as we continue to streamline overhead costs following the sale of Klein.

As we’ve mentioned on previous calls, the sale of Klein has allowed us to streamline our operations and thereby reduce some costs, most notably related to corporate expenses attributable to the support of Klein. I should note that our general and administrative costs do not include incremental third-party costs related to the preferred stock proposal and result in conversion of preferred stock into common stock. I’ll touch on the accounting for that in a moment. Our research and development expense for the second quarter was $328,000. This was down both sequentially and compared to the prior year period. These costs are largely directed toward the development of our next generation streamer system and continued development of our Spectral Ai Software Suite.

Operating income for the second quarter was approximately $1.4 million compared to an operating loss of $767,000 in the second quarter of fiscal 2024. Our second quarter adjusted EBITDA was approximately $1.8 million compared to an adjusted EBITDA loss of $120,000 in the second quarter a year ago. Net income for the second quarter was $798,000 which was an improvement of approximately $1.6 million from the net loss of $758,000 in the second quarter of fiscal 2024. As Rob mentioned, we’re pleased to have achieved another quarter of profitability and we hope to continue building on this momentum in the future period. As of July 31, 2024, we had working capital of approximately $20.3 million and $1.9 million of cash on hand. As expected during the quarter, liquidity continued to be impacted by MIND’s operational requirements related to acquiring inventory and executing on a backlog of orders.

However, we did generate approximately $1 million of cash flow from operations in the second quarter. The balance sheet remains strong and as of today MIND remains debt free. Additionally, after the preferred stock conversion earlier this month, MIND now maintains a clean capital structure and has good flexibility from which to enhance stockholder value. As Rob mentioned, the conversion of the preferred stock is not reflected in our second quarter results. In the third quarter financials, we will reflect this transaction. We expect to record the issuance of approximately 6.6 million new shares of common stock at the then current market value of the common stock, less associated transaction costs such as legal fees and solicitation costs. The carrying value of the preferred stock will be eliminated.

The excess of the carrying value of the preferred stock over the recorded value of the new common stock, which we currently estimate to be approximately $15 million will be credited directly to retained earnings. This treatment was described in the proxy statement provided to preferred stockholders associated with the approval of the proposal. I’ll now pass it back over to Rob for some concluding comments.

Robert P. Capps: Okay. Thanks, Mark. MIND continues to benefit from the positive momentum we’ve generated in recent periods and our sustained higher level revenue reflects that. We’re seeing strong customer interest and demand across our Seamap product lines and our focused approach and streamlined operations continue to positively impact our results. We maintain a lean operating structure and continue to manage cost to improve margins and enhance our bottom line. We fully expect to achieve positive adjusted EBITDA and profitability throughout fiscal 2025. We remain encouraged by the notable tailwinds and significant opportunities for our Seamap unit, and our other initiatives in this market. We’ve developed valuable partnerships and customer relationships that have enabled us to build a strong backlog that continue to drive new orders.

Our marine technology products continue to penetrate a variety of industries and markets. I believe this is a direct correlation to the work that our team has done to develop and continually adapt our technology to meet the evolving needs of our customers. We believe our pipeline of receipt and pending orders and other prospects are reflective of the significant demand and market adoption of our product lines. While we’re pleased with the results from the second quarter, we believe MIND is poised to capitalize on additional opportunities and deliver improved results in the coming quarters. As usual, I’d like to remind everyone that fluctuations in our revenue from quarter-to-quarter are bound to occur at some point in the future as they have at times in the past.

And, this revenue variation could result from any number of different challenges in unforeseen circumstances or simple customer delivery requirements. We continue to maintain our belief that the general trend will be one of sustainably higher level revenue throughout the remainder of fiscal 2025 and beyond. The conversion of preferred stock to common stock is another important element that in my opinion provides a great deal of flexibility in pursuing these opportunities. Looking forward and barring any unexpected challenges around the same circumstances, we expect our results for the second half of fiscal 2025 to be somewhat improved compared to the first half of the year. Our current visibility, healthy customer engagement, strong backlog and favorable macro tailwinds continue to give us confidence.

We will see higher revenue and continued positive adjusted EBITDA in the coming quarters, which we anticipate culminating in another profitable year for MIND. We have a differentiated and market leading suite of products, a favorable market environment and now a very clean debt free capital structure. We look forward to capitalize on these positive factors to increase stockholder value as we move forward. With that, operator, we can now open the call for questions.

Q&A Session

Operator: Thank you. [Operator Instructions] Our first question is from Tyson Bauer with KC Capital. Please proceed.

Tyson Bauer: Congratulations, gentlemen.

Robert P. Capps: Hey, thanks, Tyson.

Tyson Bauer: A lot less stressful for all involved now that cap structure. Obviously, backlog will be somewhat of a focus, but I think your comments on the outlook kind of soften that. We go from 38 to [31.26] (ph) add another six, so you’re about 32. So, you’re maintaining your backlog. You mentioned sustained revenue as we go forth in the next couple of quarters with an improvement in second half results. Do you look at that as kind of now we’ve hit that benchmark level where other than maybe some unique timing issues, we should be at that $10 million plus going forward?

Robert P. Capps: Okay. I’m always hesitant, excuse me, to be specific about that. But I think normally you’re correct. Just understanding that when a particular order falls, from one week to the next could have an impact on given quarter. So, if we’re waking up one day and have a $8 million quarter, I would not be panicking. This is no, don’t be shocked if there’s a $12 million quarter.

Tyson Bauer: Right. I think one of the more impressive financial metrics that you posted in the quarter was your gross margin 47.6%. I think I had you at about 45.5%. That’s 200 basis points ahead of schedule, which I’ll take that over the little lighter on the revenue any day. Is that mainly from that operating leverage or is that just that pricing that’s coming through or kind of a combination?

Robert P. Capps: It’s a combination. Yes, certainly the operating leverage helps a lot and they were able to buy more rationally. Product mix has an impact, so there are all sorts of things that go into that calculus. But, we are very pleased about that. That’s something we’ve really been trying to focus on and hope we can continue that going forward.

Tyson Bauer: So, you see that being sustainable also or widening as we continue?

Robert P. Capps: I would say more sustainable. And again, if we solve a quarter just a couple of hundred points that wouldn’t be a positive concern at all. Again, just given what products are in the quarter, what discount structures happen, that sort of thing can impact quarter-to-quarter. But I think, again, we’ve done a good job of improving margins at the gross level.

Tyson Bauer: I think another impressive financial metric here is cash flow from operations being up $1 million in the quarter. Given you had a $3 million increase in your inventory, it’s been a while that we’ve had a positive numbers on that line item. Are we expected then to work down a little bit of that inventory or is that going to be kind of sustained? And, what is your net working capital outlook in the second half?

Robert P. Capps: Yes. I would hope and expect that we’d be able to work that down a bit. And therefore, we’re starting to see the cash flow turn a bit, collecting receivables from things we shipped. Again, we pre-bought inventory in some cases, trying to work some of that down, and maybe we don’t have to do be quite as aggressive in the future with that. Having said that, you get a big order next week that we need to, buy today to deliver in six months, that can have an impact. But in general, I would expect us to work that down a bit.

Tyson Bauer: You go ahead and get those big orders.

Robert P. Capps: Exactly.

Tyson Bauer: Diluted share count, now that we should be reporting positive EPS as far as GAAP purposes with the conversion, which is roughly 8 million shares, would have gave you a quarter around $0.10, I wouldn’t think you have very much options or anything else in the money. So, is that $8 million a fairly good diluted number to work with?

Robert P. Capps: Yes, it is. Yes, there’s nothing in the money at this point.

Tyson Bauer: Okay.

Robert P. Capps: So, that should be a good number.

Tyson Bauer: And, I was trying to quickly go on the back of my notes. What are you looking at your book value post conversion? I know you talked about $15 million retained earnings and the preferred getting rid of. And that now, what does your book value look like per share?

Robert P. Capps: Oh, gosh. Tyson, I don’t have the number in front of me, so I’d hate to just do something off the cuff. 10-Q will be out this evening. I think everybody can do their own math off of that. And get pretty close. I just I don’t have in front of me, so I don’t want to misstate on that.

Tyson Bauer: I know I’m talking about a lot of things outside of your actual business products and services. One of the key things, you’re getting a market value of $29 million and you just got rid of a liquidation value preference of $48 million.

Robert P. Capps: Right.

Tyson Bauer: Which included getting rid of all those accumulated dividends, which go away and will not continue to accumulate, in addition to what the preferred value was in the marketplace before you did the conversion. Are you a little surprised that we haven’t seen an adjustment to your market valuation just based on those numbers alone?

Robert P. Capps: Frankly, not really in that you kind of think about the natural arbitrage that’s been in place. There’s not been demand to buy the common recently. People will be buying the preferred instead. Obviously, there’s some people who bought the preferred who intended to unload immediately. So, I think we’re seeing some of that selling pressure right now. So, I would expect that to work itself off in the coming days and maybe weeks. And, as we continue to work tomorrow, I think it will stockpile should take care of itself. So, I’m not concerned about that.

Tyson Bauer: Okay. Yes, as we work through those non votes on the preferred and no votes, they’re converted shares. I would assume given what you’re giving us an outlook and what you posted on a pro forma basis, we should see some positive traction all other things being equal.

Robert P. Capps: I would expect, I would hope so.

Tyson Bauer: All right. I’m sure somebody else will have some business questions for you, but thanks a lot and great job guys.

Robert P. Capps: Okay. Thanks, Tyson.

Operator: [Operator Instructions]. Our next question is from Ross Taylor with ARS Investment Partners. Please proceed.

Ross Taylor: Thank you. And I’ll echo Tyson’s congratulations and also thank you for your perseverance. It was not an easy thing to get done. I had some people telling me it wouldn’t get done and it got done. So, I think this is setting the stage for a lot of value creation going forward. And I’m confident as a preferred holder, I’ll be better off the year from now than I was would have been under the old structure.

Robert P. Capps: Thanks, Ross.

Ross Taylor: Couple of questions. What were inventory levels at quarter end?

Robert P. Capps: About $20 million.

Ross Taylor: Second is, you talked about pulling down the G&A as you’re rightsizing the business. What kind of run rate G&A should we expect to see going forward either annually or on a quarter basis?

Robert P. Capps: So, we’re at $2.8 million this quarter. I would like to see that down a little bit, 100,000 or so, not drastically, but then we’re just at a point where we’re starting to tweak things a bit, just headcounts in some places. So, it’s kind of like that level, analyze the $2.8 million and take maybe a $0.5 million off of that maybe makes some sense, but those are rough numbers obviously.

Ross Taylor: Okay. And that’s a number that you should — that $2.80 0,000 annualized down works out to something around $10 million annually and you’re confident that if as you grow your revenues that number should be able to hold towards that $10 million range?

Robert P. Capps: Yes, I think so. Yes, for a while at least. Obviously, it does get to a point where we have to expand a bit for the time being.

Ross Taylor: Yes, within reason. Yes, obviously. What are your public company costs? Obviously, it’s pretty expensive to be a small public company. It’s not uncommon to cost over $1 million. What kind of costs do you guys incur just —

Robert P. Capps: Yes, that’s a great question. So, I think it’s well in excess of the $1 million like your audit costs are more, you got public reporting cost, you’ve got shareholder cost. So, I think well in excess of $1 million and probably approaching $2 million is not hard to get to.

Ross Taylor: So, it could be something as high as like $0.15, $0.16 a share in earnings impact.

Robert P. Capps: Yes, it’s real money for sure.

Ross Taylor: Yes, under the 8 million shares. Okay. That’s actually pretty meaningful. In the past, you had to subtract the preferred dividends like the number and Tyson touched on this. It always drives me crazy because I think Tyson reports his numbers on adjusted and the street picked it up as GAAP. And so they reported as an earnings miss when in fact I actually think you were probably in line with Tyson’s number. He can come back on and confirm that if I’m right or wrong. If I’m wrong, he can call me up and laugh at me. But when we’re looking at that, that’s what about almost $0.12 a quarter, roughly $0.47, $0.48 a year. Going forward, when you get this, are you going to restate past earnings or is this all going to come out in that make whole adjustment?

Robert P. Capps: Yes. So don’t hold me to this. It’s and we’re still researching as to the proper way to do it because there’s not clear guidance on some of this. I suspect EPS will be restated. And there will be I think, a really strange looking adjustment in EPS in the first quarter. This $15 million charge to return earnings, or approximate $15 million actually will get reflected in EPS in that quarter, which was kind of meaningless. But we think that’s what GAAP says to do.

Ross Taylor: Yes. And all I would say is break out whatever that number is, so that even Bloomberg can pick it up and be right with it. You’ve talked about — in the comments you made, you talked about the fact that you saw the second half being slightly better than the first half. Can you tell us what number you’re working on for the first half? When I’m looking at reported GAAP numbers, I have you earning about $0.58. When I adjust for the preferred dividends, I add that back, I get $0.24 added to that. So, I’m talking about something that’s in the $0.81 range. What do you see as the second half? I mean, what should I be benchmarking slightly better against? Is it $0.57? Is it a different number? When I’m going to compare apples-to-apples, what should I be using as my first apple?

Robert P. Capps: So Ross, to be quite frank, what I was alluding to a revenue level. And so, roughly $20 million revenue, I mean, just below that in the first half. So, that’s what I was comparing to and then do the math off of that as to what the EPS looks like. So, I wasn’t trying to do it from an EPS standpoint or from a net earnings standpoint.

Ross Taylor: Is there anything in the first half of the year that was uniquely one time that we should be backing out to get that base level before we add back the preferred dividend?

Mark Cox: I don’t think anything. Nothing really unusual. Again, there’s some seasonality in some of our costs, G&A costs, but we’ve talked about that in the past. So, nothing out of the ordinary.

Ross Taylor: Okay, cool. So, that’s a really nice setup for the second half of this year. Also your press release, the last line in it was interesting to me. You made a comment is a little sentence is, this is an important step for MIND. It simplifies our capital structure. It’s actually the last two sentences. I went to public school, forgive me. And in my opinion, sets the stage for creating meaningful stockholder value. Will you go into some more color on how you see that value being realized? Is this setting up a situation where obviously we’re going to have much better earnings, a clean balance sheet that creates one level of value? But does this also create a situation where strategically you think that it will be easier for people to look at MIND and value it appropriately and come up with a number that will be found acceptable to all shareholders in the past.

The problem we had is the first roughly $50 million was going to the preferred holders, which left very little for the common holders, but now we’re all in the same boat. So, I’d love to get more insight into what your thinking is behind those two sentences.

Robert P. Capps: Sure. There’s a couple of aspects to that, Ross. Certainly, there’s just the math of it or the corporate finance aspects of it that you alluded to. And that I think, this is my opinion, I think that people did really understand how to value or how to — what calculus to use in determining what’s the impact of the deferred on the common. So, I think taking that uncertainty away clarifies things. I also think it gives us some great work, little more flexibility in growing the company. As tech, we’re a small very small company. We need to be bigger. And there’s different ways to get bigger. And I think, having this uncertainty out of the way and this confusion, perhaps, out of the way makes it easier for us to do other things via raise other capital to grow or maybe, you know, look for other partners to do things with. So, just gives us a lot more flexibility to do lots of different things.

Ross Taylor: Well, thank you. And I would agree, I mean, if you just look at if you put a 10 multiple on the preferred dividend, you have a stock that should be closer to 5 not 4 or 3.5. So that alone creates and then we talked about the public company costs. I mean, there’s a huge amount of value here. This company is clearly worth a lot more than $3.5 or $4 a share. And I want to leave you with, I want to thank you. I know as I said, you worked very hard on getting this done. There was you and I didn’t always support or agree with how you were handling this, but in the end I think you created something that should unlock a tremendous amount of value. And you and your board, your leadership team are to be commended for quite honestly sticking to something that most people would have walked away from.

Robert P. Capps: Okay. Thanks, Ross. I appreciate that.

Operator: Our next question is from Sam Schwartz with Kaliber Management. Please proceed.

Sam Schwartz: Hi, good morning. Excellent report. So good to read and congratulations on the turnaround and looking forward. I have one particular question you don’t seem to focus on and that is, MIND Technologies involvement in artificial intelligence and your Spectral software. I wonder if you could give us a little color on what’s going on there?

Robert P. Capps: Sure. That’s something we developed in connection with our client operation initially. Of course, we’ve sold that, but we retained that IP in the transaction, but then had sublicense that back to Klein and General Oceans, the buyer, as it relates to certain applications, specifically side scan sonar. So right now, we are promoting that in connection with our agreement, our collaboration agreement with General Oceans. It’s early days. The revenue from it has been de minimis. I mean, just a few tens of thousands of dollars so far. But I think it’s something that’s pretty interesting and that companies who have looked at it, and it’s in the hands of a couple of significant customers around the world right now.

The feedback is very positive that there are some unique things about this Software Suite. There’s lots of APR automatic target recognition software out there, lots of AI models out there. But there’s some things about this as it relates to data handling and ability to develop new models, which we think is unique. So, we think there’s an interesting opportunity there, but it is very early days, and we’re still exploring the best way to exploit that. It’s not going to be a $50 million a year business, but it doesn’t need to be. If it can be, something much smaller than that, I think it could add some pretty meaningful value to it. So, it’s one of those things that, we can’t bet the bank on it right now, but I think it’s some interesting upside for us that we’re trying to pursue.

Sam Schwartz: Great. Thank you very much.

Operator: We have reached the end of our question-and-answer session. I would like to turn the conference back over to management for closing remarks.

Robert P. Capps: Okay. Thanks very much. I’d like to thank everybody for joining us this morning and taking time to learn about kind of where we stand today and where we’re going forward. We look forward to visiting you at the end of our third quarter a few weeks. Thanks very much.

Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time and thank you for your participation.