PlayAGS, Inc. (NYSE:AGS) Q2 2023 Earnings Call Transcript

PlayAGS, Inc. (NYSE:AGS) Q2 2023 Earnings Call Transcript August 5, 2023

Operator: Hello, and welcome to the PlayAGS Q2 2023 Earnings Conference Call. My name is Alex, and I’ll be coordinating the call today. [Operator Instructions] I will now hand it over to your host, Brad Boyer, SVP, Investor Relations. Please go ahead.

Brad Boyer: Thank you, operator, and good afternoon, everyone. Welcome to the PlayAGS Incorporated second quarter 2023 earnings conference call. With me today are David Lopez, CEO; and Kimo Akiona, CFO. A slide presentation reviewing our key operational and financial highlights for the second quarter ended June 30, 2023, can be found on our Investor Relations website, investors.playags.com. On today’s call, we will provide an overview of our Q2 2023 financial performance and offer perspective on our current financial outlook for the business. This conference call will include the use of forward-looking statements. Any statement that refers to expectations, projections, or other characterizations of future events, including financial projections or future market conditions, is a forward-looking statement based on assumptions today.

Actual results may differ materially from those expressed in these forward-looking statements, and we make no obligation to update our disclosures. For more information about factors that may cause our actual results to differ materially from our forward-looking statements, please refer to the earnings press release we issued today as well as risks described in our annual report on Form 10-K, particularly in the section of these documents titled Risk Factors. Our commentary today will also include non-GAAP financial measures. We believe the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends in our business. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP.

Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our earnings release issued today. Please refer to our filings with the SEC for more information. With that, I would like to turn the call over to our CEO, David Lopez.

David Lopez: Thanks, Brad, and good afternoon, everyone. Today, I will keep my remarks brief as I believe our record-setting financial performance clearly demonstrates the strength of our products, team members and strategy, which is creating significant momentum within all three segments of our business. Over the past several quarters, I have talked about our commitment to recruiting and hiring the best R&D, sales, and product management talent to join our team. The culmination of these efforts is reflected in our second quarter performance as we established 10 new records in the quarter. I will start with total revenues, which increased 17% year-over-year to nearly $90 million, improving sequentially for the 10th consecutive quarter.

Adjusted EBITDA grew 16% year-over-year to approximately $40 million. Domestic game ops revenue increased 7% year-over-year to $49.3 million, establishing a new record for the third consecutive quarter. Domestic RPD reached $33.48, surpassing $30 for the ninth consecutive quarter. Our premium EGM installs grew to over 2,700 units, increasing for the 14th consecutive quarter, EGM sales revenue surpassed $28 million, up more than 40% year-over-year and more than 7% ahead of the previous record set in Q3 2019. EGM ASPs eclipsed $20,000 for the first time ever. We sold units to nearly 150 unique customers, 60% higher than the numbers sold to in Q2 of 2019. Table revenues reached $4.4 million, up over 25% year-over-year. And last but not least, RMG revenue increased 10% year-over-year to $2.3 million.

Looking beyond records, we also delivered on delevering. During the second quarter, we executed with EBITDA moving higher and free cash flow surpassing $12 million. As a result, net leverage improved to 3.6x, down from 3.8x at the start of the year. Supported by our record-setting first half performance and our ability to generate free cash flow over the remainder of the year, we now expect to exit 2023 with net leverage in the range of 3.25x to 3.50x. This equates to a quarter turn reduction at the top end of the range. Before turning the call over to Kimo, I’ll highlight a few things in each product segment that I’m most excited about. Starting with EGMs. Our new Spectra 43 cabinet continues its hot streak, topping the July Eilers survey for the 7th consecutive month.

So far, we have placed over 1,650 Spectra units, and demand for the cabinet remains robust. While our two launch titles, Long Bao Bao and Shamrock Fortunes continue to deliver exceptional performance with each averaging over 1.75x house average. The key to Spectra’s success extends well beyond our strong games. It has been our R&D expertise, product strategy, and operational execution that is aided in performance that is hands down better than anything I’ve ever seen, all of which will position us for success over the long-term. Turning to table products. Our PAX shuffler continues to take the industry by storm, pushing Q2 sales and recurring table revenues to new records. To date, we have placed over 265 PAX units and with our footprint increasing by approximately 30% since Q1.

While some folks may take a successful launch for granted, I cannot overstate what an accomplishment it has been to successfully design, develop, manufacture, sell, and service, a competitive shuffler product in an industry long dominated by one company. That said, I would like to congratulate the engineers, software programmers, testers, assemblers, and the service and sales team for their contributions to the success of this product. Looking ahead at our trial activity and the growing operator interest, I’m confident PAX will continue to serve as growth catalysts for many quarters to come. Finally, I will move to our Interactive segment, where returns on our highly focused talent investments pushed Q2 RMG revenues to a new record. As the old saying goes, records are made to be broken, and I do not expect our Q2 record to hold up for very long.

As just last week, we launched our first new game, leveraging our revamped RMG gaming development team. In addition to benefiting from the first collaboration between our land-based and interactive teams, the game was the first developed on our completely redesigned online platform and serves as our first title in the popular three-reel slot segment. Looking forward, I believe we have a strong and passionate team in place to consistently deliver a steady supply of great content. In closing, I would like to thank our teams around the globe for staying focused on their specific goals and delivering on the high-level objectives the company has put before them. It truly is our products and our people that have me excited about the remainder of the year and well beyond.

With that, I’ll turn it over to Kimo.

Kimo Akiona: Thank you, David, and good afternoon to everyone on the call. As in prior quarters, I will review a couple of highlights from our reported results and provide a perspective on how we see each of our business segments trending as we look ahead to the current quarter. I will also share some thoughts on our free cash flow outlook for the year and close by addressing a few items related to our balance sheet. Turning first to our domestic EGM gaming operations business, second quarter revenue increased 7% year-over-year to a record of nearly $50 million, well ahead of the 2% to 3% increase in market level gross gaming revenues or GGR. The growth algorithm driving our relative outperformance in Q2 remained consistent with the past several quarters.

Modest installed base growth led by further expansion of our premium unit footprint and Spectra deployment and sustained strength in our reported domestic RPD supported by growing Spectra and premium mix, further capital efficient optimization and a relative stable GGR environment. Looking ahead to Q3, we believe the momentum behind our premium products, coupled with the relative stability of our core unit footprint and scheduled new casino openings and expansions should allow us to grow our domestic installed base for a sixth consecutive quarter. As it relates to RPD, trends observed Q3 to date continue to convey stability in market level GGR. The broader market resiliency, coupled with our ability to further leverage multiple company-specific catalysts, including our high-performing Spectra cabinet, increasingly deep and diverse core content portfolio, and consistent premium gain market penetration momentum should allow us to deliver Q3 domestic RPD that is in line with to slightly ahead of the $31.13 achieved in Q3 of 2022.

I would remind everyone, Q2 has historically served as the seasonal high point for our domestic game ops business, and we expect normal seasonal trends to prevail this year. Shifting to EGM equipment sales, we sold over 1,250 units globally in the second quarter, up 35% year-over-year and 7% ahead of Q2 2019. The momentum building behind the continued strong performance of our Spectra cabinet, a more than 65% increase in the number of customers sold to, the ability to leverage a deeper and more diverse product portfolio and relative stability in market level demand trends all contributed to our outsized unit sales growth in the quarter. As we look ahead to Q3, accelerating demand for Spectra, a continued strategic focus on broadening our customer account penetration and consistent market level demand trends should allow us to deliver global EGM unit sales volume that modestly exceeds Q2 levels.

Moving on to EGM pricing. As David mentioned earlier, second quarter global average selling price or ASP surpassed $20,000 for the first time ever, driven by a greater mix of premium priced Spectra cabinet sales and continued implementation of our price integrity initiatives. Looking to Q3, although we expect domestic unit pricing to be relatively consistent with the prior quarter, a modest projected increase in our international market sales is likely to produce a global ASP that is slightly below the level achieved in the second quarter. Turning to our international EGM business. Recurring revenue increased nearly 20% year-over-year and improved sequentially for the 12th consecutive quarter. The continued strong performance of several established AGS franchise game themes throughout Mexico, further installed base optimization, stable macroeconomic trends, and favorable FX movements contributed to our improved recurring revenue performance in the quarter.

International RPD topped $8 for the second consecutive quarter and surpassed the $8.22 achieved in Q2 of 2019 by more than 8%. As we look ahead to Q3, we believe our stable installed base and resilient market level revenue trends should allow us to deliver our 13th consecutive quarter of sequential international game ops revenue growth. Looking beyond AGMs, our table products business delivered another record quarter with equipment sales and recurring revenue both reaching new highs, a 30% sequential increase in our PAX S shuffler footprint to over 265 units, over 2 million of high-margin progressive revenue and growing contribution from our AGS Arsenal site license offering, all contributed to our record performance in the quarter. Supported by the consistent momentum we continue to observe across the sales and recurring revenue channels, we should be able to further improve upon our record-setting Q2 performance in the third quarter.

Shifting to Interactive, as David indicated, our RMG business set a new revenue record in the second quarter, while our Interactive segment continued to generate positive adjusted EBITDA. Beginning in Q3, we expect to realize a more pronounced lift in our RMG revenues as the payoff from recent investments into our technical and commercial teams, an upside from recent new customer activations become better reflected in our quarterly results. Turning to margins. Second quarter adjusted EBITDA margin was slightly above 44%, ahead of the expectations articulated on our Q1 call, a continued organizational focus on operational efficiency, better-than-expected performance across our higher-margin recurring revenue businesses and stronger-than-anticipated product sales gross margins drove the relative upside in our Q2 margin performance.

Although we continue to expect our full year adjusted EBITDA margin to land in the 44% to 45% range, we believe recurring revenue seasonality and our anticipated EGM unit sales mix could produce a Q3 margin that looks relatively similar to the 44.1% delivered in the second quarter. Second quarter capital expenditures totaled approximately $16 million, bringing our year-to-date capital spend to just under $30 million. While we continue to project full year capital expenditures inclusive of anticipated capitalized R&D to land in the range of $65 million to $70 million, our company-wide commitment to capital deployment discipline has us trending towards the lower end of the targeted full year range. Cash interest in the quarter was approximately $13 million, increasing our year-to-date cash interest expense to roughly $26 million.

Looking to the back half of the year, we believe the recent move higher in market level rates could modestly increase our quarterly cash interest payments relative to the $13 million incurred in the second quarter. Second quarter free cash flow, defined as net operating cash flow plus proceeds from payments on customer notes receivable less CapEx, surpassed $12 million, increasing year-to-date free cash flow to approximately $4 million. Looking out over the remainder of 2023, we believe the combination of our continued operating momentum, capital deployment discipline and a heightened organizational focus on working capital efficiency should allow us to consistently generate positive quarterly free cash flow with full year 2023 free cash flow on pace to exceed the approximately $15 million of normalized free cash flow delivered in 2022.

Finally, although David stole a little bit of my thunder here, I want to reinforce, we now expect to exit the year with net leverage in the range of 3.25x to 3.5x. Consistent with our prior range and commentary, the assumptions underpinning the midpoint of our revised targeted leverage range continue to contemplate a modest pullback in prevailing market level conditions over the remainder of 2023 as compared to those encountered in 2022 and the 2023 year-to-date period. That said, should broader market trends remain relatively consistent with those we are currently experiencing, we would expect to exit 2023 with net leverage in the bottom half of the range. Finally, our approach to deleveraging remains unchanged as we continue to target a combination of adjusted EBITDA growth and consistent free cash flow generation.

Operator, this concludes our prepared remarks. We would now like to open up the line for questions.

Q&A Session

Operator: Thank you. [Operator Instructions] Our first question for today comes from Ed Engel of ROTH MKM. Your line is now open. Please go ahead.

Ed Engel: Hi. Thanks for taking my question. Congrats on a nice quarter. Just wondering how you’re thinking about leverage here, and I guess, for next year. Nice to see progress kind of coming at the low end of your target range, hopefully in the year. As you look into 2024, is there any opportunity to maybe get some interest rate savings there? And I guess, do you kind of have a target leverage ratio in mind you’d like to achieve before you then start to consider something like a refinancing?

Kimo Akiona: Good question. I mean, it’s obviously top of mind for us, right? But we put out our target for this year. But as we look forward, I think definitely top of mind has been what will be the right leverage target, what’s the right market condition right to start looking at refinancing our debt and getting something that maybe needs where the business is at, at that time. As far as like an exact number, I couldn’t give you like an exact leverage target where it will make sense because I think there’s a lot of things to consider, right, including our credit rating and other things like that. But what I would say is, as we look into next year, like I think we’ve always said that one of our, call it, medium-term targets and a big thing for us would be to get below 3x leverage.

So I think again, that’s what we’re driving. And I think it kind of permeates through the organization right and a lot of different decisions that we make. So next year, I think one of our targets would be to get down to that 3x leverage target.

Ed Engel: Great. That’s helpful. And then again, really good kind of momentum across the business in terms of just market share gains. How do you think about your R&D levels here? Do you think they kind of continue to grow with revenue? Or might you need to kind of ramp that up a notch to kind of maintain some of your momentum?

David Lopez: So we think we’re in a good spot right now. Obviously, we can be opportunistic from time to time if we see talent on the market. As we said in the prepared remarks, this is a big focus for us. We always want to be better. We always want to be top tier as far as talent goes. But I think that right now, we’re comfortable with where we are as far as studios and bandwidth and our ability to put out quality content, not just game content, but also the hardware we put out. And I think that’s sort of reflected in the performance, but it’s what we talked about with Spectra 43. It’s not just one thing. And I know the question specifically about R&D. But how we’re focused is just infrastructure around product, distribution, service and obviously, game and cabinet creation.

And that’s where we made our investment. And I think that we’re reaping the benefits right now. And at the appropriate time, obviously, we can scale up a little bit more. But we’re very thoughtful about how we’re going to do that going forward. We know we’re in a very good place right now with the number of studios we have and not just the number, but the quality of the employees that we have on the team.

Ed Engel: Great. Thanks and again congrats.

Operator: Thank you. Our next question comes from Chad Beynon of Macquarie. Your line is now open. Please go ahead.

Chad Beynon: Good afternoon. Thanks for taking my question and nice quarter, guys. I wanted to start with your premium installed base. This appears to be kind of the big segment that everyone’s focused on. And it seems like as long as the games are performing and operators are making money from these games, they’re going to continue to add the products. So given where some of your competitors current markets are – or their current percentages are. What’s kind of a near-term goal for you guys? Because if you’re performing well, there’s certainly going to be demand here. Can this continue to move up through 2023 and 2024? Thanks.

David Lopez: Yes. Hi. Thanks, Chad. Yes, we could continue to move up, and we really don’t – I think we’ve got some internal aspirational goals. We look at our competition as far as what their premium base is as a percentage of their entire installed base. We know we have some bandwidth still when we look at those numbers, both from a unit standpoint and sort of revenue – premium revenue as a percentage of all game ops revenue. But that’s all, I’d say, aspirational yes, there’s upside here for sure. And sort of we know we’ve got quite a ways to go, but we don’t really give that percentage the way of the year looking for it there. Love to, but we’re not there as far as public statements, we’ll say.

Chad Beynon: Okay. But safe to assume that it can still move higher?

David Lopez: Yes. No. I mean we’re confident that we’ve got the right sort of line up. And if you look at our pipeline of games that are coming and sort of show up at G2E, you’ll see some real fresh new premium content. But yes, performance is still strong for us, and we anticipate content to keep flowing for us there.

Chad Beynon: Thanks, David. And then Kimo, within your guidance, you talked about flat to slightly higher EGM unit sales for the third quarter. That kind of goes against what normal seasonality may be for some others. So clearly, it shows that you’re taking market share and given your broader customer penetration that’s certainly shining through. Is it fair to assume that the fourth quarter could still be seasonally the highest quarter, just given how strong the operators are doing and given new product that comes in the fourth quarter? Thanks.

Kimo Akiona: Yes. I mean I think one of the themes we’ve talked about, I think, last quarter and this quarter is like normal seasonality across different parts of our business still holds strong, right? So I think your assumption about Q4 possibly being the high watermark for sales is a good assumption. And I think our commentary about our beliefs on Q3 is, yes, it’s definitely driven by spectrum, right? I think if you – if you look where Spectra is in its life cycle, I mean, it’s a fairly newly launched product. And with that momentum, gain performance, these are just the initial games that are on Spectra. And we have a whole road map of games to back up this hardware. We feel really good about where we are and where the product is headed right now.

Chad Beynon: Thanks, Kimo. I appreciate it guys.

Kimo Akiona: Yes, thanks, Chad.

Operator: Thank you. Our next question comes from Barry Jonas of Truist. Your line is now open. Please go ahead.

Barry Jonas: Hi, guys. Just wanted to follow-up on Ed’s question. A really nice quarter with free cash flow generation and the deleverage improvement. Just curious at what point do share repurchases get interesting given where valuation is at?

Kimo Akiona: It’s always a fun question, right? I mean, again, we’ll come back to leverage targets and where we feel good about where the company can get to. And when you talk about something like refinancing our debt and the type of savings we could realize from that event. But I think for me, personally, and I think for the company, we get more excited about that. So I think our focus is really going to be on, again, just deleveraging. I mean, your question about this magic number of words the equity gets to where it makes sense. I mean I’m not ready to get that number either, but I’ll say we’re just 100% focused on, I think, deleveraging and deleveraging and accumulating cash on the balance sheet right now. Again, that 35, I think will be potentially a good event for the company, and that will yield some great cash savings at some point. So I think, again, that’s 100% of our focus.

Barry Jonas: Great. And then just for a follow-up. We’re not modeling anything in Texas, but I think investors are very excited about the potential there. Just curious if there are any updates you can share there?

David Lopez: Yes. So thanks, Barry. Naskila primarily is probably your question. There’s a couple of others as well. But at the moment, we’re sort of standing fast, as I’ve said, waiting for any sort of news on that front, nothing to report on at this time. I think the good news is since things have obviously settled in at the Supreme Court decision. We’re starting to see some marketing activity at Naskila. And we are leasing machines down there participating. So we can see the results of that and the numbers as that market seems to be maintaining and improving in strength. So it’s good news on that front. But as far as any expansionary measures, we’re waiting patiently.

Barry Jonas: Great. Thanks and a nice quarter.

David Lopez: Thanks, Barry.

Operator: Thank you. Our next question comes from Jeff Stantial from Stifel. Your line is now open. Please go ahead.

Jeff Stantial: Hi, good afternoon everyone. Thanks for taking our questions. Maybe starting out here on the EGM business. Gross margins, really nice performance in the quarter by my math, up over 500 bps versus Q1 and well ahead of 2019 levels. Kimo, could you just expand a bit more on the drivers here? And is there any reason to think why this wouldn’t be a sustainable level moving forward?

Kimo Akiona: Yes. I mean, I think if you look at one of the themes, again, we’ve been talking about Spectra, right? And I think the power of the way Spectra was built in design and the type of margins we were expecting even before we launched it, I think it’s holding true. And you can see is definitely a testament to when we have a strong quarter of Spectra sales as far as a mix, right? Like we want to emphasize mix, too, because we definitely don’t want to deemphasize curve, like Orion Curve is still an active great product in our portfolio but does carry a different margin. So when we have a quarter that is a strong spectra order, that’s where I think you’ll see that sales margin come on even stronger. But this quarter, I think gross margin on slot product sales was near 55%, right?

I think if you look at where it goes going forward, it probably will always have a five handle in the front of it. So it will be within the 50% to 55% range. And again, we’ll highlight it will be dependent on mix. And I think as we move forward as well, I think one thing we’ve been focused on as well as capturing a little more international sales, right? So if there’s a quarter where we get a little more international sales, generally, those carry slightly lower gross margins. So that could affect gross margin as well.

David Lopez: I’d only add a little bit to that, Barry, in that as far as margins go, looking in the future, we look at these cabinet Spectrum 43 as our current release, we sort of referred to it as a working name as next-gen cabinets. And the thing that we’ve done is – excuse me, Jeff has done, sorry, Barry is gone now. Thanks. So Jeff, the one thing to keep in mind here is that as we talked about that R&D and in particular, our hardware teams, we’ve made sure that our development of these cabinets have a lot of shared parts. And it seems like every iteration we come out with when we were at Orion and now we’re in the spectra, we get better at this every sort of next generation of cabinet that comes out. And as the next versions of Spectra or NextGen come out, I think you’ll continue to see those efficiencies there.

Jeff Stantial: That’s helpful and encouraging. Thanks. Thanks for that color. Moving over to the Interactive business. You called out in the release and during the prepared remarks, some investments into growth impacting margins during the quarter. Kimo, could you just provide some color on sort of how you see these investments phasing out? And when do you expect to see maybe some more typical operating leverage for that type of business start to come back?

Kimo Akiona: Yes, to your question – sorry, just to be clear, your question specific to interactive and the investments we’ve been making there?

Jeff Stantial: Correct. Yes, some of the investments you made in the interactive side of things.

Kimo Akiona: Yes. I mean we started sort of, I’ll say, our incremental investment journey last year, right, related to Interactive, we sort of built – basically built another games studio built up our commercial team and did some, we’ll call it, restructuring there. As we move through this year, we’re excited about H2, right? Because if you look at where we are now, we’re just starting to release, we’ll save some new content from our new studio and there’s some original content coming out as well. So I think as we move forward, looking to next year, I think is when you’ll start to see, call it, some operating leverage from that business. But again, equally important to emphasize, right, but we – I think we’re – we’ve been in the business long enough to know that you need to keep incrementally investing at a certain rate to ensure the long-term success of that business. But we would expect some operating leverage starting maybe next year for Interactive.

David Lopez: And Jeff, this is David again. But I think this is an area where we’re very excited going forward. It’s – we always talk about volume and sort of velocity of putting games out there. But I think what’s equally as important is that our game selection from brick-and-mortar, the way that we interact with our teams that are porting that content over user interface and all of that. And then as I’ve said in the past, Kimo commented like original content for online like unique original content for online gaming. So we anticipate some really good things that are going to happen here over the next 12 months. And obviously, some operating leverage will come out of that. But we’re super excited about this one.

Jeff Stantial: Great. Thanks again. Nice quarter.

David Lopez: Thanks.

Kimo Akiona: Thanks, Jeff.

Operator: Thank you. Our next question comes from David Katz of Jefferies. Your line is now open. Please go ahead.

David Katz: Hi. Thank you for getting me in. Look, I wanted to just get a little more color on the pipeline. Obviously, we don’t want to steal any thunder that may be coming from G2E. But just give us a sense of the scale and scope and what magnitude of what you’re following up obviously on the strong momentum that you already have?

David Lopez: Yes. Thanks, David. So yes, we don’t like to spoil alert the situation at G2E. And what I’d like to say is always, hey, just everyone show up at G3, so we have to show there. I would say that we’ve got a lot of interesting things that we’ll show at G2E and in the coming, I’ll call it, 6 to 9 months. And this is, again, a reflection of the investment that we’ve made. We got the question earlier about, hey, are we comfortable where we sit in R&D right now. And I’d say we’re really pleased with where we’re at and not just productivity from a games point of view, but I think that you’re talking mainly about cabinets. And so we think we’re sitting in a good place. There will be some really nice things coming down the road here, but I don’t want to upset R&D and product management by spoiling their big reveals.

David Katz: Okay. Okay. Can we talk then perhaps about sort of share talk about sort of…

David Lopez: Sorry, I know we both want to do that, but…

David Katz: Okay. No, I realize I just sounded disappointed, and I didn’t mean to tip that. But look, I’d like to just get a little more sense of your kind of medium-term aspirations in terms of scale and market share, et cetera, and where you think you can take this? What’s your vision?

David Lopez: A little bit like we said earlier. We know there’s a lot of upside, David. I think that both on the premium side, which was a specific question we had earlier, like, hey, do we have a specific target there on just ship share being another figure? I think there’s a whole bunch of KPIs. And I also think, and as we look at – it’s always good to look at some of our competition. And as we do, in the future, open up some new swim lanes for ourselves in the product categories underneath EGM specifically, I think that, that’s going to help us pick up additional ship share. Not so long ago, we were really only in really selling Portrait only. Now we’re selling Portrait on the Spectrum 43, and we’re selling curve on the Orion side.

We’ll continue to sort of like probe into new, as we like to say, the swim lanes and the EGM space. And I think as you see that unfold over the next, we’ll say, a year or so, you’ll see sort of where the potential is for market share gains and just improvements overall. I really think it’s going to be exciting times over the course of the second half of this year and moving into a good chunk of 2024. There’s some good upside here for us.

David Katz: Okay. I’ll take that. And our rating speaks for itself. Thank you.

David Lopez: Thank you.

Operator: Thank you. We currently have no further questions for today. So that concludes today’s conference call. Thank you all for joining. You may now disconnect your lines.