Clean Energy Fuels Corp. Q1 FY2022 Earnings Call

Good afternoon and welcome to the Clear Energy Q1 Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Robert Vreeland, Chief Financial Officer. Please go ahead.

Thank you, operator. Earlier this afternoon, Clean Energy released financial results for the first quarter ending March 31, 2022. If you did not receive the release, it is available on the Investor Relations section of the company's website at www.cleanenergyfuels.com, where the call is also being webcast. There will be a replay available on the website for 30 days. Before we begin, we'd like to remind you that some of the information contained in the news release and on this conference call contains forward-looking statements that involve risks, uncertainties, and assumptions that are difficult to predict. Words of expression reflecting optimism, satisfaction with current prospects as well as words such as believe, intend, expect, plan, should, and anticipate identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Such forward-looking statements are not a guarantee of performance, and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in the Risk Factors section of Clean Energy's Form 10-Q filed today. These forward-looking statements speak only as of the date of this release. The company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this release. The company's non-GAAP EPS and adjusted EBITDA will be reviewed on this call and exclude certain expenses that the company's management does not believe are indicative of the company's core business operating results. Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for or superior to GAAP results. The directly comparable GAAP information, reasons why management uses non-GAAP information, a definition of non-GAAP EPS and adjusted EBITDA and a reconciliation between these non-GAAP and GAAP figures is provided in the company's press release, which has been furnished to the SEC on Form 8-K today. With that, I will turn the call over to our President and Chief Executive Officer, Andrew Littlefair.

Thank you, Bob. Good afternoon, everyone, and thank you for joining us. Our fuel volumes in the first quarter of this year grew from 92 million gallons to almost 96 million, or 3.7%. We had some pretty strong headwinds at the beginning of the year due to an Omicron variant spike, most notably in our transit sector. The momentum we saw in Q4 of 2021 stalled in January and amounted to about a 2.8 million gallons shortfall in transit alone. We also had some significant winter-related commodity supply curtailments at our NG Advantage subsidiary. On the positive side, however, our trucking volumes grew, led by the additional Amazon trucks that continue to roll out across the country, and we saw a ramp-up in overall fuel volumes at the end of the first quarter and into the current quarter. It seems that we have returned to more normal operation in the transit airport sectors that were impacted by the latest COVID interruption. Revenues increased by 8.2% quarter-over-quarter to $83.5 million from $77 million in Q1 of 2021. Adjusted EBITDA for the quarter was $3.3 million. Keep in mind that this quarter did not include any alternative fuel tax credit revenue, which we assume will arrive in the second half of this year. I want to take a minute to expand on an area that I normally don't address, but I feel like it's important. These results were slightly off from our internal budget. But were it not for the Omicron slowdown and the curtailment of NG Advantage, we would have been very close to our internal budget. We recognize that our internal budget is different from the analyst consensus. The biggest difference is timing, principally the AFTC and the general volume ramp increasing throughout the year. Our quarters are divergent and not smooth. However, when I look at our annual outlook for 2022 and given the first quarter results, we are still within the guidance ranges Bob has given. Bob will go over this in more detail during his remarks. The company remains in a very strong financial position with over $228 million in cash and investments with very little debt. We continue to fund new stations for Amazon as well as our RNG joint ventures with Total Energies and BP as we invest in the future of our business in clean transportation. The momentum and progress of our renewable natural gas supply business continued to pick up steam during the first quarter. The signing of agreements in 2021 for new RNG supply quickly turned into construction projects around the country in 2022. We are at the 50% completion mark on the first RNG supply project we signed through our joint venture with Total Energies, the Del Rio Dairy in Texas, which is on schedule to flow 1 million gallons a year once completed. We recently signed a partnership with another dairy in Texas, South Park in Hart County, which is expected to produce almost 3 million gallons of RNG when completed. A group of 5 dairies in South Dakota and Iowa that we signed through our joint venture with BP broke ground and are well under construction. When completed, these projects will produce 6.7 million gallons annually. As we announced earlier, we are very proud to have partnered with one of the largest dairies in the country, Millincap in Idaho, where construction has begun on the digester that should produce 5 million gallons of RNG a year. And it's not just dairy cows that are getting into the act of producing the cleanest transportation fuel on the planet. We signed an agreement with O'Brien Farms, a large swine operation in Kentucky, that has the potential of producing at least 0.5 million gallons of RNG a year. So you can see it's been a busy and productive beginning of 2022 on the RNG supply side, and we expect the pace will continue to accelerate through this year and into next year as the demand for RNG intensifies. Our customers are asking for more of it, and the lower the carbon score for the fuel, the better. There really is no easier, quicker, and cost-effective way for them to reduce their carbon emissions than by converting their fleets to low-carbon intensity RNG. The demand for RNG continued to increase during the first quarter across all segments, including new customers such as the carrier postal delivery services and national ready-mix, which are both deploying their first fleets of heavy-duty natural gas trucks in California financed through our zero-emission program. We also saw strong demand from existing large customers that are expanding their RNG fleets, highlighted by the contract extensions we signed, including LA Metro, North County Transit in San Diego, and CR&R in the city of Santa Monica. But RNG is not just a California story where there is a low carbon fuel standard program. We have nationwide RNG customers like Amazon, UPS, and Republic Services. It is equally important that we continue to focus on adding customers and expand with existing customers with regular CNG fuel, which we can convert to RNG as new supply comes online from ourselves and from third parties. In the first quarter, we signed CNG contracts with refuse companies, transit agencies, and heavy-duty trucking firms from Arizona to New York to Canada, where we added a waste management site in British Columbia to fuel 73 trucks. As you know, it is our goal to provide RNG to all of our fleet customers by 2025. One of the many attributes of RNG is that it is a fuel that can be dropped into the existing infrastructure anywhere in the country, allowing us to easily turn the CNG customers into RNG customers. Earlier this week, I participated in a panel discussion at the Milken Institute Conference about the future of energy. Last week, I was in Washington where I had meetings with members of Congress. Much of the discussions were around the turmoil in the energy markets that I've highlighted how the transition in energy is going to take longer and be more difficult and expensive than many thought. We believe this only underscores the requirement of multiple clean transportation technologies and emphasizes the advantage of RNG, which is currently available, scalable, and economic. We continue to hear about announcements about new investments going into the development of RNG, which we see as nothing but positive. These new dollars pouring in confirm that the solution of capturing fugitive methane and turning it into something good is a positive environmental solution. It also means all this new RNG will need to find a market that can maximize its value. That is where Clean Energy's distribution network advantage comes into play. We stand head and shoulders above any other fuel provider with our extensive station network and years of experience in engineering, constructing, and maintaining fueling projects. In fact, we now have 66 fueling projects working their way through our 2022 activity board, many of which will be new stations anchored by our large customer, Amazon. RNG is the solution that can reduce carbon emissions much more cost-effectively and realistically than other promised alternatives. But the reality is kicking in and is tarnishing some of those a bit. We remain very optimistic about the promise of RNG because every day, tens of thousands of Waste Management, Republic Services, Amazon, UPS, LA Metro, New York Transit, and other heavy-duty vehicles pull up to a dispenser, fill up with this amazing fuel that is doing so much to tackle the problem of climate change. And with that, I will turn the call over to Bob.

Thank you, Andrew, and good afternoon to everyone. I will discuss our 2022 outlook in a moment. As Andrew mentioned, our volume came off recovery trends from the fourth quarter due to the Omicron surge and its lingering effects. Now we've taken what we saw in the first quarter relative to this volume recovery and which we feel is mostly ended. And we've taken that into consideration as we looked at our 2022 outlook, and I'll go into that a little bit later. We delivered 39.7 million gallons or a 7.3% increase in RNG volumes in the first quarter of 2022 compared to a year ago, and the demand for RNG fuel remains strong. Revenue of $83.5 million was up 8.2%, which was helped by a higher effective price per gallon on higher volume from a year ago. The increase in revenue came despite there being $4.5 million of alternative fuel tax credit revenue in 2021, and 2022 includes $3.8 million in contra revenue from the Amazon stock warrant incentives. Our effective price per gallon, which excludes the Amazon contra revenue charge, was $0.88 per gallon in the first quarter of 2022 compared to $0.76 per gallon a year ago. That's about a 13% increase. That $0.88 has come off of Q4, which was $0.84. So we're just seeing that kind of go up, in line with what's going on with commodities. This also, though, I'll say, contributing to that from our comparison to a year ago was a higher RIN pricing. Our margin per gallon for the first quarter of 2022 was $0.25. Our margin per gallon a year ago was $0.26. Our internal target for the first quarter of 2022 was $0.26. So we had anticipated a little pullback in the first quarter of 2022 from the trends that we were seeing at the end of '21, but it pulled back maybe $0.01 more than what we had planned. While the LCFS pricing was lower than anticipated in the first quarter of 2022, which impacted our LCF revenues and the margin per gallon, the higher RIN pricing offset the lower LCFS pricing. So when combined, the RIN and LCFS revenue for the quarter actually came in on plan. On SG&A, most of the increase over a year ago is from stock compensation, much of which is attributed to performance-based awards and our generally higher stock price. In addition, increases in SG&A have been based on our planned execution of our RNG strategy. Our GAAP loss per share for the first quarter was $0.11 compared to a GAAP loss per share of $0.04 in the first quarter of 2021. Remembering that 2021 included $4.5 million of alternative fuel tax credit earnings and 2022 was reduced by $3.8 million in Amazon stock warrant charges. As well, stock compensation rose year-over-year by $4.9 million. And we've incurred some start-up expenses related to our RNG supply operations that didn't exist last year. That was about $1.2 million for the first quarter of 2022. Finally, our interest expense was higher in 2022 by $2.3 million from the write-off of debt issuance costs associated with our refinancing of our NG Advantage subsidiary debt. Our adjusted non-GAAP loss per share was $0.05 in the first quarter of 2022 compared to a $0.01 loss per share last year. The comparability of our adjusted non-GAAP loss per share was also impacted by the alternative fuel tax credit being in 2021 and 2022 having some additional expenses related to our R&D strategy as well as the incremental interest impacting 2022 as well. The adjusted EBITDA was $3.3 million for 2022 versus $11.6 million in 2021, again impacted by the alternative fuel tax credit, and then 2022 having planned expenses around our RNG activities. In terms of updating 2022, we took into consideration some of the headwinds that we saw in the first quarter and did our normal sensitivity analysis on our assumptions looking forward. While we still believe that the prior guidance is possible to achieve, the events of the first quarter could possibly push out our anticipated ramp-up from a timing standpoint. As a result, we’ve updated our guidance. Our GAAP loss is estimated to range from $57 million to $65 million. Much of that change there is related to updating stock compensation that's based on performance milestones. At the adjusted EBITDA level, we've made that more of a range of $60 million to $65 million, reflecting a scenario of possibly lower volumes and the added spend we've seen around our RNG supply operations. On the RIN and LCFS front for our look at '22, we've considered the dynamics we saw in the first quarter, and even if we are considering a lower LCFS price going forward, it does not give rise to a meaningful adjustment to the guidance. Lastly, I'll emphasize; our view forward is still weighted heavily toward the third and fourth quarter. One of the big assumptions is our assumption that the alternative fuel tax credit will get passed this year. Our assumption is that we would see it in the third quarter. If that happens, we would have at least $15 million in the third quarter. That would be on top of other normal operating results, and the fourth quarter would see maybe about $5 million of that AFTC. We spoke about this in the last call, and I'll emphasize again that there's a ramp-up in volume. We feel that we were certainly within striking distance of our internal plan, but believe there was a miss on the consensus. So hopefully, we'll do better at that. With that, operator, we'll open the call to questions.

We will now begin the question-and-answer session. And our first question comes from Eric Stein.

Bob, so maybe I'll start with a high-level question with what's going on in energy markets. Oil prices, the price of diesel haven't seen this for many years and now the economic argument added to the sustainability piece, which has been the case for a number of years. Just curious if you can discuss kind of what you're seeing from fleets as a result type of urgency you're seeing. I know you're having to deal with it on the cost side as well with natural gas, but obviously, that doesn't impact things as much as the price of diesel would.

Right. Well, Eric, no, it's a good question. I would say that our customers are really watching this, right? I mean, it does impact them. It's among their largest costs. I think any of us in the alternative fuel business, while we selfishly love an elevated diesel price, I mean, like, for instance, I'm looking at a sheet that's right in front of me, and most people don't think about it this way. But diesel prices in the Eastern seaboard this last week went up $0.86 a gallon in Newark and in Boston, $0.79 out of Long Island. So we're seeing kind of a diesel shock coming through, with the price of diesel in California at $6.55 a gallon. I don't know that that's essentially a healthy environment for people making choices about their fueling. Now they're talking to their customers about surcharges and having to explain themselves; so I don't know that that's necessarily favorable. The good news from our point of view, obviously, we have a big spread — and yet on the other hand, we've seen our commodity price almost double. Now obviously, we're not buying everything at spot price, but we are seeing a rise, so that's an advantage for us. We did see natural gas prices go from around $4 to $6. So one would say, wow, that's pretty volatile in terms of your commodity. Well, the good news is, while we are careful about how we price this to our customers and sensitive to it, we're able to move that cost of the commodity through. And while we saw a slight almost $0.01 compression there, we're still able to provide savings of almost $1 to $1.25 in certain markets. Our value proposition remains strong, and that's not lost on our customers. It is an advantage for us compared to many other technologies that cannot speak to such significant savings.

Got it. That's helpful. Maybe just turning to the RNG that you gave your 5-year targets. I know we've seen it to some extent with giving customers — but just curious how you're feeling about that? And then maybe how you're feeling about some of those other objectives realizing that it's 5 years away.

Yes. That plan that we unveiled for the market in January '20 seems like a long time ago now, that's still in place. Any changes to that yet. And there are two big components on that, Eric. One was the development of our own RNG supply and the other was third party, right? It broke down with our own, let's call it, dairy projects that we own and operate with our joint venture partners and also is bringing in other third parties and a lot of that being landfill gas, right? So it's a bond, you're of landfill and animal manure projects. That is on track. We have 9 projects under construction and have committed capital of $400 million, which is very much in line with what we said in January. I think we've actually secured more now than when we had then. At that time, I think we said we had 7 projects inked and 5 under construction. So we have 9 projects underway now. We have 5 more that are in the definitive phases for another $150 million. So I would say that the projects and those joint ventures are going as planned, and there are many more in the pipeline. Last time I think we talked, I said there were 15 more in the pipeline. That number has increased. From getting to those numbers over time on our development side, I like where we stand. We currently are in a commercial agreement for another 25 million gallons that will begin flowing this year in third party. Those third-party agreements are multiyear. I think this quarter, we signed one more for another 3 million gallons. We continue to be one of the biggest suppliers of third-party fuel from our landfill partners. So that continues to go strong. I would say that besides the very noted slight weakening in low carbon fuel standard pricing, the strengthening on the RIN pricing has balanced that out. So all in all, that's holding up pretty well, that plan is intact.

Yes. I’ll add on to that, Eric. With the RNG being — the demand for being there, yes, we still have a nice bucket of customers that have yet to convert over a lot of our O&M gallons, and that was also in our plan, and that's certainly in the works as well in terms of optimizing our O&M customers because many of them will take it as soon as they can get it.

Not to mention, as we add on those Amazon trucks, right? Many of those come to California. So that's increased California volume. And that's kind of embedded in those new customers and the new Amazon volume as well. It's all RNG.

Our next question comes from Rob Brown, Lake Street Capital Markets.

Just wanted to clarify your comments on the volume kind of the current impact in Q1? I know it's normalizing. But you say there's maybe some still in tail here. How is the volume normalizing kind of into Q2? Are you seeing any impact? Or is it pretty much recovered?

Yes. I think what we were trying to say, Rob, is we want to give as much clarity and transparency as possible. We really did see — a lot of our customers haul people at airports and transits. That showed up right after Christmas in January, which impacted our business. Transit alone was about 2.8 million gallons in January, and there's an airport number that wasn't quite that large. It's just several million gallons of — now what I thought I said in our remarks, maybe I didn't stress it enough, is that we have seen — in coming to this quarter, we have seen that all kind of come back. So knock on wood, we have another flare-up here somewhere. It looks like we're back on kind of normalized volumes at those airports, what we had seen the ding that we took in January.

Okay, good. And you gave some good updates on the RNG build-out efforts. Have you got more dairies in the pipeline? And what sort of the project kickoff activity look like for the rest of the year?

Yes. We have 5 more that are signed, so I told you just now that we have 9 underway. We have 5 more that are in the final stages of the definitive agreements. Those will all get kicked off this year. We have a pipeline that's 18 or a few more than that. I don't know; as I sit here, I might before I come back if you listen in a few minutes, I'll know how many of those will get started this year. There will be more, Rob, and I'll see if I can't get the exact number. We're busy on that front. We checked in with one of our partners this morning. With the lowering a little bit, let's face it, some developers that have less capital or may be more concerned about the offtakes and are a little more cautious about the moving down curve on the LCFS gives some of our partners in the development side pause. However, we've checked in with BP and their development team that we're hand in glove with, and we haven't lost any dairies that we're focused on. We're generally constructive. As we look out, there are many people watching this business now, and they get very focused on what CARB is going to do. We believe that the ARB knows that the low carbon fuel standard is a bright spot, and it has been working. We believe that over time, their plan will increase those targets.

Okay, great. That was very good. I appreciate it. I'll turn it over.

Our next question comes from Manav Gupta, Credit Suisse.

A quick question here, and I'm sorry I have to understand this a little better. I think in the last quarter when the update was we were thinking more of $10 million in EBITDA. It's coming a little lighter than expectations. Can you help us bridge the gap as to between what was kind of expected on your side and on our side, $10 versus 3.2? What were the major blocks of cost or revenue that created this delta of about $5.5 million or $6 million?

Manav, I think it goes back to adjusted EBITDA without AFTC. We talked about that being kind of $44 million for the year, and that number starts to get you close to $10 million, $11 million a quarter. I could understand how it’s tricky when our internal plan ends up having a significant ramp. It wasn't, let me be clear, not an operational issue; it was a math exercise that didn’t bridge the gap. Partially, I think Q1 is in the bag. Our target was closer to 6%, and if we had come in at 9% — maybe we wouldn’t be having the conversation. The Omicron action stalled things a bit. That’s a lot of what we were seeing.

So it's why we wanted to highlight this, that all of the analysts looking at this understand that it’s easy to divide by 4, maybe add a little at the back end of the year. That wasn’t what we expected. So we wanted to clarify that we could be a bit light on the annual guidance, but there's still a range here of $60 million to $65 million.

And a light quarter for us, volume played some into that; volume played a role in our own kind of lighter quarter than we would have liked. We had volume come off or not recover as we anticipated, and though there was some extra spend and some outliers that we might consider one-off costs. Overall, we're not seeing that recurring going forward, so that’s kind of where we landed.

Perfect. Your job is not easy sometimes. Our job is not easy. I fully appreciate it. My follow-up question here is, I think I’m trying to understand, at the start of the call it seems you were a little more bearish on LCFS prices where you were saying between the higher D3 and the lower LCFS balancing out. So from your perspective, where do you see the LCFS prices going? Do you think this is transitory, or do you think this is more permanent?

It's a very good question. We're watching it closely. I don’t think we should debate whether RNG is going to be kicked out of low carbon fuel standard. We don't believe that will happen. We do believe that the targets will increase; that doesn't happen overnight. It takes effect over the next few months. I can agree with your thoughts that the price could dip down. I wouldn't say it's permanent; you might see it dip or go lower than where it is today, but I do believe it can bounce back. We’ve structured our deals to withstand this type of variability, and we feel good about moving forward.

I understand and appreciate that perspective. It sounds like you believe the market is setting itself up for a rebound in pricing in the near future.

Exactly. Over the long run, we've seen that is likely to increase alongside the awareness of sustainability and low-carbon fuels.

Our next question comes from Pavel Molchanov, Raymond James.

You touched on the commodity cost dimension of the business. In terms of the construction effort on the RNG facilities, can you talk about steel, labor, all of the other inputs and the extent to which you're seeing some cost inflation and how you're managing that?

Yes, Pavel, good question. We have seen some inflation in our inputs, maybe around a 20% uptick in steel fabrications, cement, concrete. However, we think that has stabilized at this point. We haven't been seeing that kind of increase in the current bidding from our contractors. So, good news there is it seems to level off. But we also have to consider the supply chain constraints we faced, which include some components being pushed out for 60 to 90 days. However, we believe that will be sorted out in time as we have started to work with our suppliers to mitigate those delays.

All right. You talked about the Omicron wave and the impact in Q1 that's totally clear. At this point, we're two years since the first lockdowns in this country. Is it fair to say that aviation airport shuttles is the only portion of your sales mix that is still below pre-COVID volume levels?

I think that is safe to say. I would say we're back to pre-COVID levels. If we're not, maybe we're still at about a 3% increase or something. It's negligible. So it looks good so long as we don't see another macro issue arise.

It's very close.

Pavel, you didn't ask about the alternative fuel tax credit, and you kind of disappointed me. Can I go ahead and answer that question?

Sure.

The reason we included it in our '22 budget is because it was embedded in the build back better plan. We see bipartisan support for it. Right now, both the House and Senate majority leadership haven't fully given up on the bill. Until they do, they haven't unleashed alternatives yet. A group led by Senators Manchin and others are looking at modifications to the bill. There is also expectation that energy components may get the most support and we believe it will happen maybe in the third or fourth quarter.

For sure. Appreciate it.

I have no reason to believe it won't pass. I haven’t heard any doubts about the support from members. Overall, I'm feeling optimistic about it.

Our next question comes from Matt Blair.

Andrew, I was intrigued by your mention of the swine project you are investing in. Could you contrast swine versus dairy RNG opportunities maybe in terms of size, capital costs, CI scores, and overall returns in each space?

Okay. Now you're going to test me here. I'm pretty good on the dairy. The swine opportunity is fascinating, right? The farm we're working on produces around 280,000 pigs. The CI score is lower; it has to do with the process they collect and how they handle the waste. So there’s a lot more variation to swine than dairy. That said, there are some big swine operations in the country, and we’re exploring many of them.

Great. Your R&D volumes really came off versus Q4 levels, and I noticed it was even more than the drop in your non-R&D volumes. Can you explain that?

The dynamic we referred to was around the Omicron impact, particularly in the transit world. We had some big transit customers that take RNG, but their volumes were down significantly.

Yes, that was certainly the case. It's the kind of situation where there are needs to be pathways across the country.

Our next question comes from Craig Shere, Tuohy Brothers.

I just wanted to ask something about both the downside protection and upside opportunity for LCFS. I heard that renewable diesel is not the same as RNG, and it has to physically be delivered into a tank. If LCFS gets low enough, some renewable diesel may not justify the cost of transport, creating a floor. Is that true?

True. You’re correct, Craig. It must go into the tank molecule; it’s liquid.

What are you hearing around the country at other major states and locales that could adopt new LCFS systems? Has anything changed since your last call?

There are about 8 or 10 states looking into LCFS. New Mexico was close to passing it. In New York, the governor has other priorities, which affected its passage. We're seeing interest in our projects in Canada, particularly British Columbia. It seems there’s a developing appetite for similar initiatives across various states.

Our next question comes from Jason Gabelman, Cowen.

I wanted to clarify a few numbers that you mentioned on the call. You mentioned there were 66 fueling projects on the board; is that the same as what was indicated last call? And what would be the capital involved in that? And on the upstream side, how much volume is coming from the 16 projects in construction by the end of 2022? Does that align with what was forecasted at the R&D Day?

The 66 fueling projects do include those 19 from previous calls; they are part of it. However, not all are standalone stations; many are expansions. Our development is on track; we have committed capital and haven't changed substantially. The total volume from those projects is approximately 25 million gallons, in line with what we forecasted.

Correct; those projects will include our transit properties, and we are working across various sectors.

Our next question comes from Todd with Evercore.

I was curious about the expansion of LCFS in Canada. I'm wondering how you view that market and any opportunities for Clean Energy there.

Canada is definitely on our radar. We’ve had a lot of activity in Calgary with our RNG initiatives. Western Canada is also seeing a push with similar regulations as in California, and there’s a good political climate for such discussions, so we’re well-positioned to engage.

Clean Energy has a strong foothold in Canada, and we see potential in expanding our operations there.

This concludes our question-and-answer session. I would like to turn the conference back over to Andrew Littlefair for any closing remarks.

Thank you, operator, and thank you for those good questions. We appreciate your joining us today, and we look forward to updating you next quarter. Thanks.

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.