Oceaneering International, Inc. (NYSE:OII) Q4 2024 Earnings Call Transcript

Oceaneering International, Inc. (NYSE:OII) Q4 2024 Earnings Call Transcript February 20, 2025

Desiree: Welcome to Oceaneering’s fourth quarter and full year 2024 earnings conference call. My name is Desiree, and I will be your conference operator. All lines have been placed on mute to prevent any background noise. There will be a question and answer period after the speaker’s remarks. With that, I will now turn the call over to Hilary Frisbie, Oceaneering Senior Director of Investor Relations. Please go ahead.

Hilary Frisbie: Good morning, and welcome to Oceaneering’s fourth quarter and full year 2024 earnings conference call. Today’s call is being webcast and a replay will be available on Oceaneering’s website. With me on the call today are Roderick Larson, President and Chief Executive Officer, who will be providing our prepared comments, and Alan Curtis, Senior Vice President and Chief Financial Officer. Before we begin, I would like to remind participants that statements we make during this call regarding our future financial performance, business strategy, plans for future operations, and industry conditions are forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Our comments today include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our fourth quarter press release. We welcome your questions after the prepared statements. I will now turn the call over to Roderick Larson.

Roderick Larson: Hey, good morning, and thanks for joining the call today. First off, thank you to our investors, our customers, and vendors, partners, and most importantly, the Oceaneers around the globe for continuing to believe in and contribute to the Oceaneering story. During 2024, we recorded notable order intake of $2.9 billion, demonstrating our customers’ confidence in our ability to deliver safe and reliable services and products. We repurchased approximately $20 million in shares, demonstrated continued value for our customers as evidenced by our year-end remotely operated vehicle or ROV uptime rate of 99%. Further, we progressed pricing in our ROV business, improving 13% over the course of the year. We realized a 361 basis point improvement in Subsea Robotics or SSR EBITDA margin year over year, exiting 2024 at 36%.

We attained our highest quarterly revenue since the fourth quarter of 2015 and surpassed $100 million in adjusted EBITDA for the first time since the second quarter of 2016. We won a contract from the Defense Innovation Unit to build a Freedom Vehicle or Hybrid ROV, Autonomous Underwater Vehicle, AUV, and to establish an onshore remote operations center for the US Navy, highlighting the cross-industry applications for our technology. We made targeted adjustments to our portfolio, including the fourth quarter acquisition of Global Design Innovation Limited or GDi, a UK-based provider of digital and software solutions, and exits from other businesses. And I would be remiss if I failed to mention our steadfast commitment to safety, which in 2024 led to a 56% reduction in high potential incidents and a total recordable incident rate or TRIR of 0.29 for the year, nearly matching our record low TRIR achieved in 2022.

Q&A Session

Now, I will focus my comments on our performance for the fourth quarter and full year of 2024, our market outlook for 2025, our consolidated 2025 outlook, including our expectation to generate positive free cash flow in the range of $110 million to $130 million and EBITDA in the range of $380 million to $430 million, and our segment outlook for the full year and first quarter of 2025. Now starting with our fourth quarter 2024 results. For the fourth quarter of 2024, we reported net income of $56.1 million or $0.55 per share, a 26% year-over-year increase. Consolidated revenue of $713 million was 9% higher than in the same period of the prior year, with revenue increases in each of our operating segments. Fourth quarter 2024 consolidated operating income of $77.9 million was 64% higher year over year, due to significant improvements in our SSR and offshore projects group or OPG segments.

Our consolidated adjusted earnings before interest, taxes, depreciation, and amortization or adjusted EBITDA of $102 million represented a 35% increase year over year and was slightly above both the midpoint of our implied guidance range provided at the beginning of the fourth quarter and consensus estimates. Although we experienced typical fourth quarter seasonality in SSR, it is worth noting that their results declined only slightly while OPG’s fourth quarter revenue, operating income, and EBITDA improved and represented its best quarter in 2024. We generated $128 million of cash from operating activities in the fourth quarter and invested, including $18 million in growth and $16 million in maintenance. Additionally, as previously mentioned, we acquired GDI.

We ended the quarter with free cash flow of $94.5 million. As of December 31, 2024, our cash balance was $498 million. Now let’s look at our business operations by segment for the fourth quarter of 2024, as compared to the fourth quarter of 2023. SSR operating income of $63.5 million was 26% higher compared to the fourth quarter of 2023 on a 6% increase in revenue. EBITDA margin also improved year over year to 36% from 32%, reflecting continued pricing progression in ROV and tooling and improved execution in our ROV and survey groups. Average ROV revenue per day utilized was $10,706, a 12% year-over-year increase, while fleet utilization of 66% and days utilized of 15,211 ROV fleet used during the quarter of 64. The revenue split between our ROV business and our combined tooling and survey business as a percentage of our total SSR revenue was 77% and 23%, which was relatively flat during the same period in 2023.

As of December 31, 2024, we had 59% of the contract floating rate market with ROV contracts on 84 of the 140 contracts. We ended the quarter and the year just as we began with a fleet count of 250 ROV systems. Turning to manufactured products, our fourth quarter revenue of $143 million increased 8% year over year. Operating income of $4.2 million and operating income margin of 3% declined primarily due to reserve taken on an umbilical project. Year-end 2024 backlog was $604 million, a decrease of $17 million compared to December 31, 2023. The book-to-bill ratio of 0.7 for the full year of 2024, compared to 1.31 in the full year of 2023, was lower than expected due to the timing of awards for Max Mover Counterbalance forklifts. OPG achieved their highest levels of revenue, operating income, and operating income margin in 2024 during the fourth quarter.

As compared to the fourth quarter of 2023, operating income improved significantly to $39.3 million, operating income margin improved to 21% from 9%, and revenue increased 14% to $184 million. These improvements resulted from increased installation and intervention activity levels in West Africa and the Gulf of Mexico. For Integrity Management and Digital Solutions or IMDS, fourth quarter operating income decreased by $1.2 million and operating income margin declined from 5% to 3% despite a $9.1 million increase in revenue, primarily due to costs associated with acquisitions and divestitures. As previously announced, we completed the acquisition of GDI, which will report future financial results through IMDS. Our aerospace and defense technologies or ADTECH fourth quarter 2024 operating income declined $1.1 million and operating income margin declined to 10% on a $3.9 million increase in revenue as compared to the same period last year.

Operating income declined primarily due to changes in project mix, with increased volume in our Marine Services division, which is lower margin Manpower business offsetting lower volume in our Oceaneering Technologies or Otech division and the implementation of a discrete new ERP system for Adtech that supports our growth strategy to become a prime contractor for the US government. Fourth quarter 2024 unallocated expenses of $41.1 million were in line with the guidance for the quarter. Now I’ll turn my focus to our full year 2024 results compared to 2023. For 2024, consolidated revenue increased 10% to $2.7 billion from $2.4 billion in 2023, with each of our operating segments achieving revenue growth. Consolidated 2024 operating income of $246 million improved by $64.9 million or 36%, and adjusted EBITDA of $347 million improved by $58.2 million or 20% compared to 2023.

EBITDA gains in our SSR, manufactured products, and OPG segments more than offset declines in our IMS and AdTech segments. As compared to 2023, cash flow from operations declined $6.7 million to $203 million due to increased net working capital, related to the timing of revenues and increased cash taxes. We invested $107 million in organic capital expenditures, an increase from $101 million in 2023. As previously discussed, we also spent approximately $27 million in inorganic capital expenditures, which included the acquisition of GDi. For the full year of 2024, free cash flow was $96.1 million compared to $109 million in 2023. At year-end, we had healthy liquidity with $498 million in cash and cash equivalents and an undrawn $250 million credit revolver.

Now turning to our 2025 market outlook. We believe that Oceaneering is well positioned to take advantage of market dynamics in 2025 and beyond. Research services continue to report that breakeven costs and carbon intensity in the offshore operations are lower compared to most other forms of hydrocarbon development. Near-term and long-term oil and gas prices continue to be supportive of a healthy market for the services and products that we provide. We also continue to see growth opportunities within our AdTech sector. Analyst and Research Services projections for key energy-related metrics that we track indicate that 2025 activity will be flat or slightly positive. We expect that the 2025 forecasted average Brent crude oil price of approximately $75 per barrel will be supportive of stable levels of offshore operating and capital spending throughout the year.

The Deepwater Final Investment Decision or FID forecast indicates a year-over-year increase in 2025, providing added support for our forecast. Tree awards and project sanctions are indicators of the two to five-year horizon for activities such as installations, equipment orders, and offshore spending. Tree awards are forecasted to increase in 2025 with 285 subsea trees expected to be awarded in 2025, as compared to 216 awards in 2024. Tree installations are forecasted to increase year over year with approximately 350 installations forecasted for 2025, as compared to 330 installations in 2024. Drilling rig demand is expected to be flat in 2025. While we view these market indicators as supportive, changes in the geopolitical landscape, including changes in regulations and trade policies, may impact the markets we serve and our customers’ planned activities.

Like our peers, we are closely monitoring the announced changes, which we currently do not expect to have a material impact on our energy services products. We are also monitoring the impact of budgetary reviews in the US on our government-related markets. At this time, we expect that the specific defense-related markets that we serve will remain relatively stable with continued growth for the foreseeable future. Now for our 2025 consolidated outlook for Oceaneering. Based on our year-end 2024 backlog, expected backlog conversion, anticipated 2025 order intake, and current market fundamentals, we are projecting our 2025 consolidated revenue to grow by mid to high single digits, with increased revenue in each of our operating segments. Our expectations for growth in revenue are driven by our expectations for continued pricing progression and favorable year-over-year project mix.

We also expect higher operating income and operating income margins in each of our operating segments. While we remain confident in our backlog and sales pipeline, we felt it was prudent to acknowledge the aforementioned geopolitical risks and their potential impact on the markets we participate in. As reported yesterday, we have adjusted our EBITDA guidance range for the year. We anticipate generating $380 million to $430 million in EBITDA, with the year-over-year improvement being led by our SSR, AdTech, and Manufactured Product segments. At the midpoint of this range, our 2025 EBITDA would represent a 17% increase over our 2024 adjusted EBITDA. We anticipate generating positive free cash flow of $110 million. As has been the case over the past several years, we anticipate some working capital changes associated with vendor payments, customer cash receipts, and the payment of performance-based incentive compensation.

For 2025, we forecast our organic capital expenditures to total between $130 million and $140 million. This includes approximately $52 million to $56 million of maintenance capital expenditures and $78 million to $84 million of growth capital expenditures. This total is inclusive of $15 million to $20 million associated with the implementation of a new ERP system. It is worth noting that the increase in capital expenditures is tied to growth opportunities related to new contracts. We forecast our 2025 interest expense net of interest income to be in the range of $26 million to $30 million. We expect our 2025 cash tax payments to be in the range of $110 million to $120 million. This includes taxes incurred in countries that impose tax based on in-country revenue and bear no relationship to the profitability of such operations.

Directionally in 2025, for our operations by segment, for SSR, the expectation for improved results is based on sustained and continued pricing improvement in ROV, a stable overall demand for ROV days, and improved results from our survey business. Results for tooling-based services are expected to generally follow ROV days utilized. Revenue growth is expected to be in the high single-digit range and EBITDA margins are expected to average in the mid-thirty percent range for the full year. For ROVs, we project that our 2024 service mix of 65% drill support and 35% vessel services will remain generally the same in 2025. We expect to continue to navigate concerns about white space drilling schedules by maintaining and placing our ROV systems on higher class assets.

Our overall ROV fleet utilization during the year is forecast to range between the high sixty percent and low seventy percent with high seasonal activity during the second and third quarters. We expect to sustain our ROV market share in the fifty-five to sixty percent range. We continue to see opportunities to improve ROV revenue per day utilized. In 2024, we saw an increase of 13% year over year, from $9,315 in 2023 to $10,481 in 2024, with a 2024 exit rate of $10,786. For manufactured products, we expect operating margins to improve and operating results to improve significantly on increased revenue, primarily based on conversion of our existing backlog and energy products growth in our Greylock connectors business and improvements in our non-energy product lines.

OPG operating results are forecasted to improve on a flat to slight increase in revenue. These projections are based on expectations for improved vessel utilization in the Gulf of Mexico and West Africa and increased activity levels in Brazil and Asia Pacific. Overall, for 2025, OPG operating income margins are expected to average in the mid-teens range for the year, primarily due to an increase in higher margin intervention work, including light well intervention and a meaningful reduction in dry dock costs. IMDS operating results are forecasted to improve significantly on increased revenue, with growth opportunities in digital and engineering services. Operating income margin is expected to improve to be in the high single-digit to low double-digit range for the year.

AdTech operating results and revenue are expected to be significantly higher. We anticipate growth in all three of our government-focused businesses led by Otech, as we commence work on expected new program awards and recovery in our space systems business. Operating income margins are expected to average in the low teens for the year. For 2025, we anticipate unallocated expenses to average $45 million per quarter. Now I’ll discuss our outlook for the first quarter of 2025 as compared to the first quarter of 2024. On a consolidated basis, we expect our first quarter 2025 revenue to increase and EBITDA to significantly increase, with EBITDA in the range of $80 million to $90 million. As compared to the first quarter of 2024, our expectations for the first quarter of 2025 by segment are SSR, we project revenue to increase and operating results to increase significantly.

For OPG, we expect revenue and operating results to improve significantly due to ongoing work from the fourth quarter of 2024, and due to the reduction of drydock costs and the related loss of vessel days that impacted the first quarter of 2024. For manufactured products, IMDS, and AdTech, we expect that revenue and operating results will be similar. We forecast all unallocated expenses to be in the range of $45 million. In closing, I’d like to again thank our team of Oceaneers. It is their ingenuity, teamwork, and commitment to our shared values that drives our success. As we look forward to the future, we remain focused on delivering innovative solutions to our customers, fulfilling our commitments to our shareholders, and supporting and empowering our team.

We appreciate everyone’s continued interest in Oceaneering and we’ll now be happy to take any questions you may have.

Desiree: Thank you. We will now begin a question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. Our first question comes from the line of Eddie Kim with Barclays. Your line is open.

Eddie Kim: Hi. Good morning.

Roderick Larson: Morning. So the upward progression of your ROVs average revenue per day has been impressive. At almost $10,800 in the quarter. Has that increase in pricing over the past several years, has that been driven more by the drilling support side or the vessel-based work? Or the combination of both? And just given the expectation of a lot of white space this year on deepwater rigs, do you expect maybe a flattish kind of trajectory from 4Q levels through the end of the year? Or do you expect that we’ll actually surpass about, you know, $11,000 a day as we move through the year?

Roderick Larson: Thanks, Eddie. I would say, first of all, the pricing is coming from both. We’re seeing improvements in both the vessel and the drill support. And then I guess we see the days or the activity being flattish, but because you know, it’s the realization of price even from the exit rate we have. There’s been ongoing negotiations. Obviously, it’s not the same. I would say that the bites come, you know, in smaller bites or the improvements come in smaller bites. But it’s still we’re still seeing some upward progressions. So we expect to get even more through 2025 despite the flat days. And again, just kind of reassurance of that. Not unlike we had flattish days and flattish activity in 2024. We still see the opportunity to demonstrate value, 99% uptime, and get, you know, get that improvement in price over time.

Eddie Kim: Got it. Understood. And my follow-up is just on your orders within the manufactured products segment, it looks like your book-to-bill for full year 2024 was about 1.1 times, which was a slight decrease from 2023. It’s about 1.3 times book-to-bill. Apologies if I missed it, but for this year, is there any kind of guidance from an orders or a book-to-bill perspective on what we should expect?

Roderick Larson: We haven’t given that guidance at this time. I think right now, we haven’t provided the guidance, but I think, you know, in the call notes, Ron did describe our expectation that our sales pipeline remains healthy. And I think that’s, you know, an indicator of our belief, and then future orders this year will be.

Eddie Kim: Got it. Great. That’s all very helpful. I’ll turn it back. Thanks.

Desiree: And our next question comes from the line of Kurt Hallead with Benchmark Company. Your line is open.

Kurt Hallead: Hey. Good morning, everybody.

Roderick Larson: Morning, Kurt.

Kurt Hallead: Hey. Appreciate the color as always. I guess in the context of recent conference calls, we’ve heard from effectively almost all the offshore drillers that there’s gonna be a reacceleration of contract activity occurring here, you know, through the first part of 2025. And, obviously, boding well for incremental activity in 2026 and 2027. So I guess a kind of two-part question around your ROV utilization assumptions. You know, for the year. Can you give us a reminder or refresher on, you know, how potential downtime or white space on rigs and how you’ve gotta factor that in for 2025? I think it’s all in the days.

Roderick Larson: I mean, when we talk about the activity, I think in the rig activity, it’s in our plan as flattish, and that’s it’s hard to take the average of what everybody is telling you. I think when Alan and I talk about it, it feels like we’re maybe closer to the Transocean story than maybe some of the others. And that’s just the blend of the assets we’re on. I talked about these higher quality assets, but I think there’s lots of things going on under the water. One of the things that’s helped us is we’ve, you know, quietly grown our market share in Brazil. And so we’re pushing up higher there. We didn’t we never used to talk that much about Brazil because some of the Petrobras contracts were pretty onerous. And now that we see more of the drilling contractors contracting ROVs directly, and they really value uptime, we’ve been able to get better pricing and again more market share in Brazil.

So that’s one of those things that happens that’s sort of in the mix that kind of gives us some protection against the white space that everybody’s talking about.

Kurt Hallead: Okay. Great. Appreciate that. Now maybe switching gears and just keeping the topic of the, you know, mobile robotics, forklifts, you know, that business segment. I know you guys have shifted your manufacturing to more of an outsource kind of model. Can you give us an update on how that’s progressing and give us an update on, you know, what kind of discussions you’ve been having with respect to incremental orders for that business?

Roderick Larson: I think the best thing I can say is the outsource manufacturing we feel good about, feel good about the quality coming from there. We’re watching the pipeline. Customers are still very, very bullish. They like the product. They’ve got their own kind of shuffling of the deck about we’re not just sending these into one factory or two. We’re servicing multiple factories so that as their schedule changes, where they wanna put things, where they have time to kind of intervene into the production line, that scheduling has been one of the things that we gotta keep our eye on. As well as developing, you know, the next big customer and kind of taking some of these people who have, I would say, taken trial levels of vehicles and turned them into larger volume buyers.

Kurt Hallead: Got it. Okay. And then just one more, you know, on the manufacturing products. So it’s decent. Book-to-bill on that front. What are some of the can you give us a feel for the margin improvement going forward? How much of that is better price backlog? How much of that is more efficient operations, just a little bit more flushing that out if you can.

Roderick Larson: Yes. All of the above. And, you know, I was as I’d jump in on this a little bit because I think we have been trying to signal that there is some, you know, improved margins sitting in backlog that we were waiting for, you know, delivery of small fleet materials to come in. Which we’ve been texting receipt of, and that’s kind of giving us the confidence in the outlook for 2025 and, you know, the increase in revenues and increase in profit. So, you know, the large amount of it is sitting there and it is the efficiency we gain by having continuous throughput in these factories. I mean, these are large volume factories and, you know, they eat every day as we call it. So getting the utilization in, we absorb more of the overhead cost QDC costs as we call it, so that improves margin. Having daily throughput is a nice way to look at it in driving margin progression for us this year.

Roderick Larson: Yeah. And I would just comment on book-to-bill even though we haven’t given guidance. I think just we just tell everybody to watch what we’re watching. We’re looking for those tree orders. We’re looking for tree installations, and those things kind of are the best indicator of what’s out there. If we see year-over-year improvements in both of those, that bodes well for what’s gonna be led in the umbilical side. Yeah. And I’ll highlight something Ron had in the call notes here as well. We call that Greylock product. It’s not one we speak about a whole lot, but it’s a nice niche business for us that delivers high temperature, high pressure connectors, and, you know, it’s one that gets into many different markets. So I think the team there has been doing a nice job the last couple of years expanding into new markets. Yeah. That and we continue to see opportunity in that.

Kurt Hallead: Sure. Excellent. Appreciate that color as always. Thank you.

Desiree: Again, if you would like to ask a question, press star then the number one on your telephone keypad. And we have another question from Josh Jayne with Daniel Energy Partners. Your line is open.

Josh Jayne: Thanks. Good morning. First question just on offshore products or sorry, offshore projects group always moves around a bit. The Q4 performance is quite strong and Q1 outlook highlights significantly higher activity year over year. Maybe you could go into more detail about not only for Q4, you talked about West Africa, Gulf of Mexico, but also where you see some of the strength coming in 2025 and beyond?

Roderick Larson: Hey. Thanks, Josh. And yeah. You know, we’ve been trying to do the best to talk about this story because I’m gonna go back to we hinted at this when we talked about capex deployment. We spent a lot of time looking for these growth things. Right? These pieces that are in our wheelhouse, that are specialty, but also things that we think grow faster than maybe the rest of the oil field. If the oil field tempers a little bit, these are things that are gonna continue to grow because there’s uptake on them. Light volume intervention is one of the greatest ones. And we’re making investment there. That light well intervention work. You know, I joke that the best, you know, the cheapest barrels are the ones that are already behind pipe.

So if you’ve got wells that you can rework, you do the intervention, whether it’s a mechanical or a hydraulic intervention, I mean, those are that’s just really good work. And that’s some of the best margin work for us. You know, we’re doing it at a lower cost point for the customers because we’re using a vestibule opportunity instead of having to have a specialty intervention vessel or a drill rig. So we see the customers getting more and more excited about that again. We see that we can invest in equipment and expand our footprint. That along with some of the rework of infrastructure like we saw in Gulf Mexico and West Africa this year. Those are the things that, you know, we really think that have been so supportive of the OPG business rather than just call out IMR work.

Those are longer contracts. Sometimes that equipment gets put on hire for, you know, months at a time. And so those things those things are a great stabilizing piece for the OPG business.

Josh Jayne: Okay. Thanks. And just I wanted to ask one on the ROV business. More of a focus on the vessel class rather than drill support. Could you speak to your the visibility you have in the vessel class ROV market supply demand today and where I guess, how tight the market is today and the multiyear opportunity set there? Because I would assume, as one of the other questions asked, that a decent amount of the day rate progression has come from this as well as drill support. So maybe you could just speak to those opportunities as well.

Roderick Larson: I’m not when you say when you are you talking, like, on the vessel side installation vessels versus yeah. I mean, we see a fair amount. I mean, a lot of the really big vessels, pipeline stuff, you know, they’re a lot of those are done by customers who like to do their own ROVs. So those things aren’t so much as, you know, you get down into the, you know, what they call a drill support vessel, you know, a multipurpose service vessel or an ROV support vessel. Those are the things we see. And utilization’s been good. I mean, when we look for one of those, on the OPG side, when we’re a vessel of opportunity to go attack a project, we find that the windows are not that easy to find. So I think the utilization of that class where we’re mostly deployed has been pretty strong.

Josh Jayne: And then maybe one last one if I may on M&A. You’ve made it clear in the past with free cash flow and incremental capital, you’d like to invest in potentially disruptive technologies. As the multiples have compressed in the public space, I’m curious if you’ve seen more M&A opportunities sort of come through over the last six to nine months or if the number of opportunities has sort of remained consistent with where we’ve been over the last year.

Roderick Larson: No. I think there I think there’s more stuff. I mean, I think we see more stuff. So that’s exciting. You know, we’re waiting for our perfect pitch probably is the way to put that. GDI was great. I mean, GDI is such an exciting thing for us because it and I’m sure I’ve said this before, but what I love about it is it’s really smart for infrastructure. We get a lot of bang for the buck because what they help you do is by taking a laser scan and a video, you can take that whole picture and determine corrosion and quantify corrosion. Cool part is that, you know, we’re working really hard to get that deployed in the water, and we feel very confident that, you know, that’s the next thing we get to do. Well, for us, that’s a double bonus.

Right? We’ve got GDI doing all that interpretation work, but we’re taking the video and we’re doing the laser scanning with ROVs. So anything that creates more dive time for ROVs pays us points. And so we’re pretty excited about things like that. When we’re watching the M&A space, we’re really looking for the things that, you know, we are truly the best owner of.

Josh Jayne: I’ll turn it back.

Roderick Larson: Thanks, Josh.

Desiree: That concludes the question and answer session. I would like to turn the call back over to Mr. Roderick Larson for closing remarks.

Roderick Larson: Thanks, Desiree. Since there are no more questions, I’ll just wrap up by thanking everyone again for joining the call. This concludes our fourth quarter and full year 2024 conference call. Have a great day.

Desiree: Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.