Star Bulk Carriers Corp. (NASDAQ:SBLK) has announced its financial outcomes for the second quarter of 2024, highlighting a net income of $106 million and an adjusted net income of $89 million, or $0.81 per share. The company also declared a dividend of $0.70 per share, demonstrating its continued commitment to shareholder returns. The successful integration with Eagle Bulk and the company's proactive approach to environmental regulations and cybersecurity measures were also discussed during the earnings call.
Key Takeaways
- Star Bulk Carriers reported a net income of $106 million and an adjusted net income of $89 million for Q2 2024.
- A dividend of $0.70 per share will be paid out on September 6, 2024.
- Total liquidity stands at $516 million, with a cash balance of $486 million at the end of the quarter.
- The company has sold 10 vessels for $180 million in 2024 and completed the acquisition of Eagle Bulk vessels.
- Star Bulk has distributed over $1.25 billion in dividends since 2021 and repurchased $420 million worth of stock.
- The company has reduced its greenhouse gas emissions and is preparing for new environmental regulations.
Company Outlook
- Star Bulk expects to increase equity by $24 million from the sale of two vessels in Q3.
- They predict a decrease in equity by $8 million due to new building down payments.
- The company remains positive about the medium-term prospects of the dry bulk industry.
Bearish Highlights
- The company's total equity, excluding vessel sales and ATM, is $74 million as of June 30, 2024.
- China's steel production has declined, potentially impacting dry bulk demand.
Bullish Highlights
- Integration with Eagle Bulk is expected to yield significant synergies.
- Limited growth in the supply of dry-bulk vessels and potential congestion could boost market rates.
- Dry-bulk trade is projected to expand in 2024 and 2025.
Misses
- The company experienced a worldwide systems incident due to a bug in July 2024, but it was quickly resolved.
Q&A highlights
- CEO Petros Pappas discussed the positive outlook for the second half of 2024 due to various market factors.
- The company has completed significant share buybacks and is considering further growth and merger opportunities.
- Ship values are expected to plateau unless the market experiences significant upside.
Star Bulk Carriers Corp. has managed to maintain a strong financial position through strategic vessel sales and share buybacks, while also focusing on environmental sustainability and compliance with upcoming regulations. Despite challenges such as a decline in China's steel production, the company's proactive measures and positive industry outlook suggest a robust performance for the remainder of the year. The company's commitment to shareholder returns is evident in its substantial dividend distributions and share repurchase programs. As Star Bulk navigates the evolving maritime landscape, it continues to prioritize growth, operational efficiency, and environmental responsibility.
Full transcript - Star Bulk Carriers Corp (SBLK) Q2 2024:
Simos Spyrou - Co-CFO:
Nicos Rescos - COO:
Charis Plakantonaki - Chief Strategy Officer:
Petros Pappas - CEO:
Hamish Norton - President:
Constantine Nanopoulos - Deputy CFO:
Omar Nokta - Jefferies:
Operator: Thank you for standing by ladies and gentlemen. And welcome to the Star Bulk Carriers Conference Call on the Second Quarter 2024 Financial Results. We have with us. Mr. Petros Pappas, Chief Executive Officer; Mr. Hamish Norton, President; Mr. Simos Spyrou and Mr. Christos Begleris, Co-Chief Financial Officers; Mr. Nicos Rescos, Chief Operating Officer; and Mrs. Charis Plakantonaki, Chief Strategy Officer of the company. At this time, all participants are in listen-only mode. There will be a presentation, followed by a question-and-answer session, [Operator Instructions]. I must advise you that this office is being recorded today. We now pass the floor to one of your speakers today, Mr. Spyrou. Please go ahead, sir.
Simos Spyrou: Thank you, operator. I am Simos Spyrou, Co-Chief Financial Officer of Star Bulk Carriers, and I would like to welcome you to our conference call regarding our financial results for the second quarter of 2024. Before we begin, I kindly ask you to take a moment to read the safe harbor statement on slide number 2 of our presentation. In today's presentation, we will go through our second quarter results, cash evolution during the quarter, actions taken to create value for our shareholders, an update on our Eagle Bulk Integration, vessel operations, fleet update, the latest on the ESG front, and our views on industry fundamentals before we open up for questions. Let us now turn to Slide number 3 of the presentation for a summary of our second quarter 2024 highlights. For the second quarter 2024, the company reported the following. Net income amounted to $106 million with adjusted net income of $89 million or $0.81 per share adjusted earnings. Adjusted EBITDA was at $153 million for the quarter. For the second quarter, as per our existing dividend policy, we declared a dividend per share of $0.70 payable on September 6, 2024. Since 2021, dividend distributions are over $1.25 billion or $12.20 per share and share buybacks of over $420 million. Our total liquidity today stands strong at $516 million. Meanwhile, our total debt stands at $1.38 billion. On the top right of the page, you will see our daily figures per vessel for the quarter. Our time charter equivalent rate was 19,268 per vessel per day. Our combined daily OpEx and net cash G&A expenses per vessel per day amounted to $6,690. Therefore, our TCE, less OpEx, and less cash G&A is around $12,578 per day per vessel. The Eagle Bulk transaction was completed on April 9 and the Eagle Bulk vessels contributed 83 days each during the second quarter. Cash received from the Eagle Bulk merger amounted to $104.3 million. Eagle Bulk's convertible notes, which matured on August 1, 2024, converted to 5,971,290 shares of Star Bulk common stock. 1,341,584 shares of Star Bulk have been loaned out as part of a share lending agreement with Jefferies Capital Services in connection with the Eagle Bulk convertible notes and have been returned to Star Bulk and cancelled. The fully diluted share count as of today stands at 118,825,307 shares. Currently, we have 159 vessels on a fully delivered basis, including the five new building Kamsarmax vessels we have announced. During 2024, we have sold 10 vessels for a total gross proceeds of $180 million. Two of these vessels, namely Star Pyxis and Star Audrey, are expected to be delivered during the third quarter to their new owners. As of June 30, 2024, the equity left aside from vessel sales and the ATM after the share buybacks and $18 million of new building installments stands at $74 million. During the third quarter, the above equity will increase by $24 million from the sale of the two sold vessels and will be reduced by $8 million of new building down payments. Slide number 4, graphically illustrates the changes in the company's cash balance during the second quarter. We started the quarter with $373 million in cash, out of which $104 million were received from the Eagle Bulk transaction. We generated positive cash flow from operating activities of $143 million. After including debt proceeds and repayments, CapEx payments for ESD and ballast water treatment installations, and the first quarter dividend payment, we arrived at a cash balance of $486 million at the end of the second quarter. Slide number 5, provides an overview of the company's capital allocation policy over the last three years and the various levels we have used to create shareholder value. On the top left, we show our net debt evolution. Since 2021, we have reduced leverage in the company by approximately 34%. Our average net debt per vessel has decreased from 11 million to 6 million per vessel. Star Bulk has been creating value for its shareholders through consecutive fleet buyouts by issuing shares at or above NAV. Over the same period, we have declared consecutive quarterly dividends of over $1.25 billion. We have taken advantage of historically elevated S&P values to sell some of our older and less efficient vessels, using equity proceeds to buy back our shares at attractive valuations. Since 2022, we have bought back $423 million worth of Star Bulk stock. Combining all of the above, we see that we have focused on returning capital to our shareholders while at the same time deleveraging the balance sheet and buying back shares when there are opportunities to do so accretively. In total, since 2021, we have taken actions of $2.3 billion to create value for our shareholders. I will now pass the floor to our COO, Nicos Rescos, for an update on Eagle Bulk transaction integration and our operational performance.
Nicos Rescos: Thank you, Simos. Slide 6 illustrates a summary of Eagle Bulk transaction integration. Integration with Eagle Bulk is underway and upon completion, it will allow us to leverage our strong global presence of the combined entity with offices in Singapore, the U.S., Greece, Denmark, and Cyprus. The respective Singapore offices' operations have merged into one entity and continue as a commercial and technical management hub, aligning ship management practices covering the Asia-Pacific. The Stanford office continues operations both on commercial and technical management covering the Atlantic and the U.S. Together with the Athens corporate headquarters in Europe, we maintain presence in Copenhagen for chartering operations covering the Atlantic and the continent. We are nearing completion of the integration of our commercial teams for the Supramax and Ultramax vessels, managing the second largest Ultramax/Supramax fleet globally, combining our trading capabilities, aiming to improve our TCE performance. We are further rebalancing our sector employment strategy to include voyage business and optimizing our fleet distribution between the Atlantic and the Pacific basins. We have introduced our planned maintenance, procurement, and cost control processes across the Singapore and Stanford offices and towards realizing operational and cost reduction synergies. Significant synergies are expected, from the centralization of the procurement of all stores, spare parts, bunkers, and lubricants for the combined fleet. Crewing is gradually taken in-house, with the expected cost reduction of $600 per vessel per day to be realized by Q2 2025. Dry docks of 12 ex-Eagle Bulk vessels are planned following the merger, and benefiting from Star Bulk competitive pricing agreements with service providers and shipyards globally. Marine Safety Quality and Technical Maintenance standards process, policies, and systems are being applied across the combined fleet, aligning with the Star Bulk flagship safety score and port state control performance. Please turn to Slide 7, where we provide an operational update. Operating expenses was at 5,319 barrels for Q2 2024. That's net cash G&A expenses at $1,371 per vessel per day for the same period. In addition, we'll continue to rate at the top amongst our listed peers in terms of Rightship safety score. Slide eight provides a fleet update and some guidance around our future dry bulk and the relevant total off-high days. On the top right of the page, we provide our expected dry-dock expense schedule, which for the remaining 2024 is estimated at $34.8 million for the dry-docking of 38 vessels. In total, we expect to have approximately 966 off-high days for the same period. On the bottom of the page, we have our CapEx schedule illustrating our new building CapEx and vessel energy efficiency upgrade expenses with 100% of our fleet by now being ballast water treatment fitted. Based on our latest construction schedule, our new building vessels are expected to be delivered in Q4 2025, Q2, and Q3 2026. In line with EEXI and CII regulations, we continue investing in upgrading our fleet with the latest operational technologies available aimed in improving our fuel consumption and reducing our environmental footprint, further enhancing the commercial attractiveness of the Star Bulk fleet. Regarding our energy-saving devices program, we have completed 36 installations with 11 more vessels planned for retrofit by the end of the year. The above numbers are based on current estimates around dry-dock, retrofit planning, vessel employment, and yard capacity. Please turn to Slide 9, for an update on our fleet sales. On the vessel sales front, we'll continue disposing of vessels opportunistically at historically attractive levels, having agreed during Q2 to sell two vessels for a total gross profit of 30 million, reducing our average fleet age and improving overall fleet efficiency. Following the rollover of Eagle Bulk existing chartering contracts, we now have a total of 10 chartering vessels. We have five firm shipbuilding contracts with Qingdao Shipyard, with a construction of 82,000 Kamsarmax shipbuilding vessels, and with the first vessel delivering during Q4 next year. Considering the aforementioned changes in our fleet mix, we operate one of the largest dry-bulk fleet amongst U.S. and European listed peers, with 159 vessels on a fully delivered basis and an average age of 11.3 years. I will now pass the floor to our Chief Strategy Officer, Charis Plakantonaki, for an ESG update.
Charis Plakantonaki: Thank you, Nicos. Please turn to Slide 10, where we highlight our continued leadership on the ESG front. During the second quarter of 2024, we completed the measurement of the company's 2023 Greenhouse Gas Emissions. Scope 1, Greenhouse Gas Emissions were reduced by approximately 4%, while the respective CII of our fleet reduced by approximately 5.7% compared to 2022. Scope 3 Emissions, measured for consecutive years, were approximately 9.5% lower than the previous year. This performance will be published in our new ESG report during the third quarter of 2024. Moving forward, we're working on setting science-based targets for the company to help clearly define the path to further reduce our fleet's carbon footprint in line with the Paris Agreement goals. On the regulatory front, we are preparing for compliance with the fueling to Maritime Regulation, coming into force on 1st January, 2025, and the Mediterranean Sea Emission Control Area for sulfur oxide and particulate matter, taking effect from 1st May, 2025. A gap analysis related to the EU's Corporate Sustainability Reporting Directive is underway to identify and address differences between the directive and the company's ESG reporting processes. In July, 2024, startup systems, both in the office and on the vessels, were affected by the CrowdStrike (NASDAQ:CRWD) worldwide incident caused by a bug during an anti-virus shuffling. Immediate action by the company restored the systems in the office a few hours later and on the vessels 100 days later. On the society front, the employment of female cadets on our vessels continues, along with the deployment of Starlink on board and the implementation of the CyberOwl technology, which monitors vessel systems' performance and security. Star Bulk was awarded Sustainable Development in the Maritime Industry Credit Award, recognizing the company's continuous efforts to lead by example in sustainable development in the shipping industry. I will now pass the floor to our CEO, Petros Pappas, for a market update and to close the meeting.
Petros Pappas: Thank you, Charis. Please turn to Slide 11 for a brief update of supply. During the first half of 2024, a total of 18.8 million dead weight was delivered and 2.1 million dead weight was sent to demolition for a net fleet growth of 16.7 million dead weight or 1.7% year to date and 3% over the last 12 months. Uncertainty on future green propulsion, high shipbuilding costs and limited supply of shipyard capacity until late 2026, due to increased competition from other vessel types have helped keep new orders under relative control. The order book has slightly increased during the last two years, but still stands at the comparatively low level of 9.8% over the fleet. Furthermore, vessels above 20 and 15 years of age stand at 9% and 21.9% of the fleet respectively, while scrap prices have stabilized at elevated levels and should induce demolition of overage and energy inefficient tonnage during seasonal downturns over the next years. The average steaming speed of the dry-bulk fleet has stabilized at lower levels between 11.1 and 11.2 knots during the last six months due to inflated bunker costs and environmental regulations, including EEXI and CII, that increasingly incentivize slow steaming and retrofits and should moderate supply over the next several years. During the first half of 2024, global port concession has fully normalized on all sizes, following a strong reduction over the last two years that gradually inflated available supply by approximately 6%. Recent trends of global Supramax congestion, as well as dry-bulk tonnage at Chinese ports, indicate that there is a high probability for congestion to increase year-over-year during the second half of 2024, with a positive effect on the supply and demand balance. Moreover, rising tensions in the Red Sea since late 2023 continue to cause strong inefficiencies for trade, despite the partial recovery of dry-bulk crossings in the Panama Canal that are expected to fully recover by the end of the year. As a result of the above trends, nominal fleet growth is unlikely to exceed 3% per annum over the next couple of years, even under the assumption that demolition activity remains at current low levels. Let us now turn to Slide 12 for a brief update of demand. According to Clarkson's, total dry-bulk trade during 2024 and 2025 is projected to expand by 2.6% and 0.7% in tons and by 4.4% and 0.5% in ton miles, respectively. During the first half of 2024, total dry-bulk volumes increased by 5.8% year over year, on the back of record iron ore, coal, and minor bulk exports, while ton miles increased at a faster pace, supported by canal and geopolitical inefficiencies and strong exports from Latin America, West Africa, and the U.S. The IMF is projecting global GDP growth of 3.2% for 2024 and 3.3% for 2025, at the same pace as in 2023, and upgraded its forecast for China to 5% and 4.5%, respectively. Chinese GDP increased by 4.7% in Q2, missing initial expectations due to the struggling property market and a slowdown of household spending. Nevertheless, recent comments from government officials highlighted that the country has the ability and confidence to achieve its full year growth target of around 5%, supported by strength in infrastructure, manufacturing, and exports, while demand for dry-bulk commodities remains strong as import volumes increased by 7.5% year-over-year during the first half of 2024. Dry-bulk demand from the rest of the world is experiencing a recovery over the last three quarters that is expected to continue amid lower commodity prices and expectations of easing monetary policies. During the first half, imports were up by 4.3% year-over-year, with the increase coming mainly from India, the Middle East, and Southeast Asia. Meanwhile, Western economies are also moving higher following two years of contraction and geopolitically related disruptions. Iron ore trade is expected to expand by 3.1% in tons and by 5.6% in ton miles during 2024. China's steel production declined by 2.2% year-over-year during the first half, while domestic production and imports of iron ore increased by 15.3 and 6.1% respectively, increasing port stockpiles by approximately 30 million tons versus last year. Weak domestic consumption has forced China's steel makers to export excess output and has prompted some economies to raise tariffs as a response. On the other hand, steel production from the rest of the world has been on a strong upward trend since September and increased by 4.4% during the first half, driven by strong demand in India and a gradual recovery of Atlantic production. It is worth highlighting that the medium-term outlook of Atlantic iron ore exports is promising, as Vale is expected to achieve the upper end of their 2024 production guidance that was set at 310 to 320 million tons. Moreover, Vale is expected to ramp up production to 340 to 360 million tons by 2026, while the Simandou iron ore project in Guinea will deliver the first quantities by the end of 2025. Coal trade is expected to marginally expand by 0.6% in tons, but contracts by 0.5% in ton miles during 2024. Global focus on energy security during the last years has inflated coal trade, but most of the growth has come from short-haul Indonesian exports. Chinese imports increased further during the first half and stand at record levels, supported by a 1.9% year-on-year decline in domestic coal production and a 2.2% year-on-year increase in thermal electricity generation. Nevertheless, during the last two months, a reversal of this trend is taking place, following the seasonal strength of hydropower, a directive from provinces to increase production and a stabilization of prices. During the last quarters, India is emerging as a leading buyer of coal as domestic consumption has outpaced production growth and along with inland infrastructure constraints has led to a strong increase in import requirements. Grains trade is expected to expand by 4.4% in tons and by 10% in ton miles during 2024. Exports from Latin America increased by approximately 12% during the first half as Argentinian volumes experienced a strong recovery. Moreover, Ukraine grains exports to the highest level since the start of the war, but at the same time, Russian wheat exports have been affected by frost, droughts and heat waves at key production areas. Total grain trade was flat year-over-year during the first half of 2024, but export volumes growth is expected to increase during the second half of 2024. Lower grain prices, improved outlook for the forthcoming U.S. crop and increased focus on food security are expected to support grain trade in the medium term. Minor bulk trade is expected to expand by 3% in tons and by 4.1% in ton miles during 2024. Minor bulk trade has the highest correlation to global GDP growth and the recent trend in the container market provides a positive indicator for short-term prospects for smaller sizes. The positive price arbitrage continues to incentivize Chinese steel exports and backhaul trades, while bauxite exports out of West Africa continue to expand at a high pace that generates strong ton miles for the cape size sector. As a final comment, despite the global geopolitical uncertainties, we're constructive about the medium-term prospects of our industry, given the favorable order book, an aging fleet and upcoming rigorous environmental regulations. Star Bulk has built a diverse, scrubber-fitted fleet that is well-positioned to operate efficiently and take advantage of attractive opportunities to create value for its shareholders. Without taking any more of your time, we will now pass the floor over to the operator to answer any questions you may have.
Operator: [Operator Instructions] One moment while we pull for the first question. The first question comes from Omar Nokta with Jeffries. Please proceed.
Omar Nokta: Thank you. Hi, guys. Good afternoon. Thanks for the update. And I have a couple of questions for me I wanted to ask, perhaps some of you just market-related. And Petros, you just gave an overview of the different markets. I just wanted to touch a bit more on that. Clearly, as we're looking in the market today, dry bulk rates, they've been holding up quite well. And you realize figures thus far into the third quarter show continued steady earnings, I would say. Obviously, there's volatility, but it looks like things aren't too crazy different. But this is happening somewhat of a softer steel environment, at least in terms of steel prices when we look at where they are globally. And so just wanted to ask, given that the steel backdrop and how it looks a bit softer, are you seeing this having any effect on the dry bulk market at the moment? And then also, are you a bit surprised, perhaps, that capes are earning north of 20 in this type of environment?
Petros Pappas: Hi, Omar. Thanks for the question. Well, we're actually positive for the second half of 2024 for a number of reasons. First of all, we see that the Red Sea and the Ukrainian war are not finishing any time soon. So this will continue to create inefficiencies. And this has an effect in the market. Then the environmental regulations are starting to bite. And you see that the fleet is basically slow-steaming at around 11.1 knots. So this is going to get worse going forward. Then we see Vale increasing their exports, their iron ore exports. And we see Guinea increasing or keeping at a high level their bauxite exports. We think we will see much stronger grain trade. We believe that China will not let up and will try to keep the 5% growth going forward. We also see new building deliveries slowing down. So, and judging from the past, the second half of every year is much stronger than the first half. There's much more exports. So overall, we think that the decent market will remain for the next six months at least. And it's not just related to whether there's going to be more production of steel or less production of steel in China, where we think that it will remain strong going forward, especially because of the manufacturing reasons and because they will continue to export for as long as they can. So from all respects, we expect to be seeing a decent market for the second half of the year.
Omar Nokta: Got it. Okay, that's all for Petros. Thank you. And maybe just kind of a follow-up and thinking more about the mid-size segment this time. I think one of the themes, say, late last year and coming into this year, had been the expectation that capes would outperform the Ultra and Kamsarmax segments. And that, I think, was the case earlier. But it feels like, or it looks like, the mid-size segments have done quite well here, somewhat under the radar, perhaps. What's driving that sort of stronger performance on the mid-size, would you say?
Petros Pappas: Well, all sizes are interconnected, actually. So it's not like one size will go up and the rest will lag. So I would say that if we see very strong capes, charters will try to cover by splitting cargo, for example, or the other way around, from Supramaxes to the mid-size. So actually, whenever the two edges, the capesize and the Supramax are doing better, you will see cargoes flowing into the middle sector, the Panamax, Kamsarmax. In any case, I mean, I think all types of businesses with strong capes have remained, on average, I think above $25,000, which is pretty strong. Supras have done well because the containership sector is doing pretty well. And I have to admit that I'm pretty surprised that our Kamsarmax have been fixed for the next quarter, a bit above $18,000 on average. Probably because coal trade in the first half of the year was relatively strong, maybe because there's cargoes from the other two types of vessels. But we also expect they will be doing pretty well going forward because we foresee higher trade on the grain side.
Omar Nokta: Understood. Well, Petros, thank you for the caller. That's it for me. I'll turn it over.
Operator: Thank you. Our next question comes from [indiscernible] with Clarkson Securities. Please proceed.
Unidentified Analyst: Hey guys, just want to touch upon capital allocation. You have quite a significant portion of cash now. How are you looking at share buybacks going forward?
Hamish Norton: Well, Hamish Norton here. We spent $380 million in the fall buying back 20 million shares of stock. Oaktree was the seller, but frankly, from the shareholder's point of view, it doesn't matter who the seller was, but what the price was. And it was substantially below that asset value and below today's market value. So it was a big benefit to the shareholders. And we pretty much feel like we're exhausted by the effort of buying back those shares. At that time, let us recover our breath and figure out, you know, what to do. We're paying out a big dividend and we do have a bunch of cash after that. We, as you might recall, have a policy of keeping 2.1 million of cash per vessel on the balance sheet, permanently. And, we've got some cash in excess of that, but it's not a huge amount. So I don't think we're under pressure to figure out what to do with that cash for the moment. Not until it builds up to something more substantial.
Unidentified Analyst: That's a great color. And maybe just to follow up on that, how are you looking at growth? And if you were sort of forced to choose a segment to grow in, which one would it be?
Hamish Norton: Well, we really like being diversified. And we've just bought, a bunch of Supramax and Ultramaxes. So, ideally, if we find a merger partner, we would like to find a merger partner, you know, who's got capes and larger ships generally. So, you can't always get what you want, but hopefully we get what we need.
Unidentified Analyst: Okay, that's perfect. Thank you.
Operator: Our next question comes from Ben Nolan with Stifel, please proceed.
Unidentified Analyst: Hi, this is actually [indiscernible] on for Ben. But wanted to ask, since secondhand asset values have been sort of plateauing recently, what direction do you see this moving forward?
Petros Pappas: The ship values, Constantine, do you want to talk about ship values?
Constantine Nanopoulos: Well, ship values have increased substantially during the first half of this year. We are seeing a stabilization over the last one, two months. We believe that the ship values should, as you mentioned, plateau and probably remain at these levels, but a lot will depend on how the market performs towards the end of the year, when we expect the freight market to be stronger. Yes, and I guess the shipyards are still quite full. Yes, shipyard capacity for 2026 is actually almost all gone, and we, especially for the larger sizes, and we are now, are starting to see 2027 slowly being filled. So this is definitely something that will be a supporting prices of modern vessels, since we haven't seen such conditions for a few decades, actually. Yes, but overall, we believe that prices have actually reached a pretty high price, and they will plateau from here, unless, of course, there is a huge upside in the market at some point. Otherwise, if the market remains where it is, we think this is, we're very close to the highs of the high values for the vessels.
Unidentified Analyst: All right, appreciate the caller. Thank you. Turn it over.
Operator: [Operator Instructions] There are no questions in queue. I would like to turn the call back to management for closing comment.
Petros Pappas: No further comments, operator. Thank you very much, and have a great summer, everybody.
Operator: Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.
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