HMH Holding Inc (HMH) Q1 2026 Earnings Call Transcript

Thank you for standing by. My name is Amy, and I will be your conference operator for today. At this time, I would like to welcome everyone to the HMH Holding First Quarter 2026 Earnings Call. All participants have been placed in a listen-only mode. After the speaker's remarks, we will conduct a question-and-answer session. If you would like to join the queue to ask a question, simply press star followed by the number 1 on your telephone keypad. It is now my pleasure to turn the call over to David Bratton, Senior Vice President of Finance with HMH Holding. You may begin.

Good morning, everyone, and thank you for joining us for HMH's first quarter results. Joining me today are Eirik Versvick, our Chief Executive Officer, and Tom McGee, our Chief Financial Officer. Before we begin, we would like to remind you that this conference call may include four looking statements. These statements, which are subject to various risks, uncertainties, and assumptions, could cause our actual results to differ materially from these statements. These risks, uncertainties, and assumptions are detailed in this morning's press release, as well as our filings with the SEC, which can be found on our website at investor.hmhw.com. We undertake no obligation to revise or update any forelooking statements or information except as required by law. Management statements may include non-GAAP financial measures. These reconciliations of these measures, please refer to our earnings release and our SEC filings. For reconciliations of these measures, please refer to our earnings release and our SEC Following our prepared remarks, we will open the call for your questions. I will now turn the call over to Ayrick.

Thank you, David, and good morning, everyone. Before we discuss our performance, I want to take a moment to say thank you to every HMH employee around the world. Your hard work, your dedication, and your innovative spirit have been the driving force behind our successful IPO and the strong foundation we are building today. We could not have reached this milestone without you, and I'm truly excited about what we'll achieve together in the future. Now turning to our financial results. Our first quarter of 2026 results demonstrate resilience and quality of our business model. Orders for the quarter were $218 million, representing a book-to-bill ratio of 1.3 times in the first quarter. Total revenue for the quarter was $171 million, reflecting the expected softness relative to last year driven by the lower backlog coming into the quarter. Importantly, adjusted EBITDA margins grew year-over-year to 17.6%, driven by disciplined cost execution, favorable product mix in spare parts, and the continued focus on operational efficiency. Looking at revenue composition, spare parts revenue was a standout, increasing 11% year-over-year to $67 million, reflecting continued demand from our installed base and growing aftermarket activity. Service revenue of $72 million was as expected primarily due to the backlog of repairs as we entered with the year. Product revenue of $33 million reflected the conclusion of capital equipment, projects, and lower backlog to start the year, which we expect to reverse in the second half of the year. Before turning to market developments, I want to briefly acknowledge the heightened geopolitical tension in the Middle East. While these dynamics have the potential to create some near-term disruption, particularly across certain onshore and jack-up activities in the Middle East, we continue to view their overall impact on HMH as manageable. Our exposure today is increasingly weighting toward offshore markets, where major, long-cycle projects are progressing in regions outside the Middle East. As a result, while we remain vigilant, our overall outlook for HMH remains constructive. Turning to the overall market, over the past several weeks, the outlook for offshore drilling market has improved meaningfully. After several quarters of relatively soft contracting activity, the first quarter of 2026 marked a clear inflection point, with a notable increase in newly announced contracts, contract extensions, and levels of intent across multiple regions. In fact, this quarter represented the strongest quarter for offshore contracting activity in more than three years. Importantly, this momentum has carried into the second quarter, and market indications suggest that additional near-term awards are likely to be announced shortly. This improving contracts environment is now translating into rising backlog and improving utilization, reinforcing our view that the long-anticipated offshore market recovery is beginning to materialize. The recovery has been particularly strong within the floater segment. In the first four months of 2026 alone, approximately 110 rig years of floater awards, including options and letters of intent, have been announced, equating to roughly 75% of the total award volume seen during all of 2025. Similar to the overall market, conditions have also improved for HMH install base. A significant portion of recent awards have gone to high-spec units with HMH equipment and utilization across submersible rigs, with our install base is now moving back into the high 80% range, representing an important inflection point. We expect a similar trajectory for drill shifts as current tenders convert into firm awards. A significant portion of recent awards has come from Brazil, where we signed a development agreement with Petrobras focused on rotating control device technology, which is at the core of managed pressure drilling. We are also seeing encouraging momentum across other regions, including the North Sea, Canada, and Asia. While many of these awards were contemplated on our internal planning assumptions, their conversion into firm contracts materially enhanced our confidence in the outlook. overall these recent awards meaningfully support the floor of 2026 activity levels while near-term revenue impact of these announcements may be modest they materially improve visibility and certainty for 2027 and beyond it's also worth highlighting that several of the recent awards are long-term in nature creating a more constructive environment for customers to ever evaluate future upgrades and enhancements, such as drilling automation solutions. In addition, a number of contracts have been awarded to key units with HMH equipment that have been ready-stacked for several quarters and are now either returning to work or scheduled to do so during 2026. Taken together, these developments increase our confidence that we are entering a period of sustained year-over-year growth, both in 2026 and into 2027. Turning to jack-up and land market, first quarter activity was impacted by geopolitical developments in the Middle East. We did see some temporary disruptions and contract suspension across the part of the Middle East region. However, many of these units have since returned to work, and we are seeing resilience across several key basins and provinces. At the same time, we are observing a growing appetite to accelerate drilling activity in other regions. Collectively, these signals support a constructive near- and medium-term outlook for both check-up and land markets. Overall, we maintain a very positive outlook across both offshore and onshore drilling markets. Supported by rising oil prices and an increasing focus on energy security and energy independence, we see continued recovery in global drilling demand. We remain optimistic that future rewards will drive additional reactivations across rigs with HMH equipment. As always, we continue to monitor geopolitical developments closely and assess whether they could have broader implications. At this stage, demand indicators across global drilling and mining markets remain solid, and overall market conditions continue to be supportive. While we are watching developments in the Middle East carefully and evaluating potential impacts on supply, demand, and capital allocation, the indicators today remain very constructive. To provide more detail on our financial results and outlook, I will now turn the call over to Tom McKee.

Thank you, Eric. I will begin with the total company results and then discuss our outlook for the year. Revenue for the quarter was $171 million, down 14% year-over-year, reflecting lower product and service volumes, partially offset by higher spares volumes. This was primarily driven by reduced product and services backlog entering the period. Adjusted EBITDA in the quarter was $30 million, relatively flat year-over-year, with higher spares activity, offsetting lower service and product volume. Quarter-on-quarter, EBITDA declined 44%, driven by lower volumes and a non-repeat of Q4 benefits from inventory optimization and contract services, partially offset by spares. The adjusted EBITDA margin was 17.6 in the quarter. Despite lower volumes, we continue to demonstrate underlying margin resilience, supported by disciplined cost execution, favorable product mix, and continued focus on operational efficiency. Orders for the quarter were $218 million, up 10% year-over-year, driven by products and projects slightly offset by field services and contract services, and up 25% quarter-on-quarter, driven by equipment and repairs as customers prepared for increased activity in the second half of 2026. Orders exceeded revenue in the quarter, resulting in a book-to-bill of 1.3 times. Importantly, quarter-over-quarter order and backlog growth reflects improving customer visibility and positions as well for increased activity levels in the second half of the year. Turning to cash flow, free cash flow, defined as cash flow from operating activities, less purchase of property, equipment, and development costs, was positive at $4.6 million in the quarter. The result reflects expected seasonality as we typically see a lighter first half of the year while preparing for a second half uptick. CapEx and development costs during the quarter were $2.7 million, remaining consistent with historical quarters, primarily supporting aftermarket capabilities and service reliability. We continue to operate an asset-like business model and manage capital intensity carefully while preserving flexibility to support growth this activity levels recover. We ended the quarter with 101 million cash and cash equivalents on hand. Subsequent to quarter end, we completed our IPO, which materially strengthened our balance sheet and enhanced our liquidity and financial flexibility. Net proceeds after underwriting discounts, commission costs, and shareholder loan repayments were approximately 21 million. Before we move on, I'd like to clarify that the results discussed in today's conference call reflect the historic financial results of HMH Holding BV, which is the predecessor entity to HMH Holding Inc. HMH Holding Inc. was formed as a holding company in connection with the IPO and related transactions and as of March 31, 2026, had not conducted any operating activities. The financial results do not represent the results of HMH Holding Inc. as if the IPO and related transactions had occurred during the periods discussed. Now, I'll walk you through the product line results in more detail. In aftermarket services, revenue was $72 million in the quarter, down 14% year-over-year, and down 30% quarter-on-quarter, impacted by softer 2025 order intake and non-repeat of contractual service volume. Margins in the segment remain supported by service mix, execution, focus, and selective cost actions implemented over the past several quarters. After-market services order intake was $99 million in the quarter, down 3% year-over-year, driven by lower field service and digital technology orders, and up 33% quarter-on-quarter, driven by customers preparing for an uptick in 2026 activity, primarily in upgrades and contract services. Spares revenue was $67 million in the quarter, up 11% year-over-year, driven by land and top-side spares, slightly offset by pressure control spares, and up 23% quarter-over-quarter, as customers prepare for second-half activity. Spare's order intake was $63 million, up 4% year-over-year and up 12% quarter-over-quarter, driven by customer preparations, as previously mentioned. In projects, products, and other, revenue in the quarter was $33 million, down 40% year-over-year and down 30% quarter-over-quarter, driven by lower starting backlogs due to customer CapEx referrals in 2025. Moving to our capital structure. We ended the quarter with $101 million in cash and cash equivalents and total liquidity, including the revolving credit facility, of approximately $175 million. We have no long-term debt maturity until June 2028. On April 2, 2026, we completed our initial public offering of 10.52 million shares of Class A common stock, representing approximately 24% of the company, at a public offering price of $20 per share. During the second quarter, we used a portion of the IPO proceeds to repay outstanding shareholder loans. After underwriting discounts, commissions, and these repayments, net proceeds totaled approximately $21 million. On April 30, 2026, the underwriters exercised their option to purchase an additional 685,844 shares of Class A common stock, which closed on May 5, 2026. Net proceeds of approximately $12.9 million were paid entirely to the company's principal shareholders. Overall, the IPO has significantly strengthened our capital structure and positioned us well to support long-term growth and deliver value to our shareholders. Looking ahead, we are already seeing a strong order rate so far in the second quarter, and we expect another quarter of book-to-bill above one times. Looking at the full year 26, we expect second-half revenue to be meaningfully stronger than the first half, driven by strong services and spares bookings during the first half of the year that will translate into revenue as customers prepare for higher activity levels. Based on our current backlog, order activity, and margin visibility, we expect full-year adjusted EBITDA to be in the range of $157 million to $177 million, with performance weighted towards the back half as activity levels ramp. Investments in CapEx expected to be 2% of revenue for 2026. Overall, we are excited for the next chapter for HMH. We are proud to be the first oil and gas company to go public in 2026, and the first offshore oil field company to go public since 2014. While near-term activity levels remain mixed, we expect demand to improve as the year progresses, supported by a strengthening order book, continued offshore activity, and customer focus on equipment reliability and lifecycle support. HMH continues to advance strategic initiatives focused on margin durability, operational efficiency, and disciplined growth as a public company. With that, I will turn the call back over to IREC for closing remarks before Q&A.

Thank you, Tom. To conclude my prepared remarks, I want to emphasize that while Q1 revenue reflects expected softness given our starting backlog to the year, our underlying business fundamentals are strong. Adjusted EBITDA margins grew year over year. Cost discipline is delivering results, and our commercial pipeline is robust. The offshore drilling market is in a supportive position. Floater contracting activity is improving. Long-term contracts are being awarded to rigs carrying our equipment, and our customers are increasingly investing in upgrades and new technology. We are well-positioned to capitalize on these trends with our differentiated technology portfolio as HMH. Before we move to Q&A, I'd like to take a moment to recognize and thank several groups whose contributions were critical to our success and our completion of our IPO. First, to our advisory team, our legal counsel, banking partners, consultants, and everyone else who worked tirelessly behind the scenes. Their expertise, preparation, and guidance throughout the investor process and pricing were invaluable, and we sincerely appreciate the role you played in delivering such a strong outcome. I also want to thank Acosta and Baker Hughes for their consistent support over the years. We value these relationships greatly and are excited about continuing our partnership as we enter the next chapter of HMH growth. To our customers, thank you for continued trust and support from our formation in 2021 through today as a unified company operating as HMH. Your partnership across our business units has been essential to our progress. Most importantly, to our HMH employees, thank you for your commitment, collaboration, and belief in what we're building together. Over the past four and a half years, we have achieved a great deal, and while we're proud of that progress, we know there is still significant opportunity ahead as we continue to strengthen HMH's position as a leading drilling solution provider. Finally, to our new shareholders who helped make our IPO possible, thank you for your confidence in our strategy and leadership team. We remain fully committed to earning your trust each day and look forward to continued engagement with you and the analyst community in the years ahead. With that, I'll turn a call back to the operator for questions.

Thank you. The floor is now open for questions. To enter the queue, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question again, simply press star and the number one. if you are called upon to ask your question and are listening via loud speaker on your device please pick up your handset and ensure that your phone is not on mute when asking your question we do request for today's session that you please limit to one question and one follow-up again press star and one to enter the queue we'll pause for just a moment to compile the Q&A roster your The first question comes from the line of Arun Jayaram with J.P. Morgan. Your line is now open.

Yeah, good morning, team. Tom and Iric, I wanted to just see if you could provide just a little bit of a flavor around the inbound orders. You mentioned 1.3 times booked a bill in 1Q and continue to see favorable order trends in April. But just give us a flavor of what type of inbound kind of you're seeing, you know, thus far on the year-to-date basis.

Well, I think it's a combination of everything. I mean, we talked about, you know, the individual categories. Where light is obviously on the product and project side. Not surprisingly, that's sort of a trailing impact of last year. But you're starting to see, you know, spares, digital upgrades, and repair kind of in advance of people going back to work.

Fair enough, fair enough. And just maybe some thoughts on the full-year outlook, Tom. You mentioned, and this is how we're modeling it, that the second half of the year will be stronger in terms of revenue and EBITDA trends. But can you help us frame what – you have a range of – call it 157 to 177 for EBITDA. How do you think about what elements put you towards the low end versus the high end? But give us a little bit of thoughts on maybe how 2Q could play out, but just a little bit more color on the full-year guidance would be helpful.

I think, yeah, I think we're trying not to get too much quarterly guidance because things can shift between quarter to quarter, although Q2 will, I think, based on you look at the order rate, it will be higher. I think you can look at that and can include that safely. But if you think about what you could dial up or down on the full year, It would really at this point on the downside have to be just things that are going to happen and they get pushed out for some reason. I think there's probably a little bit more potential optimism there, given that you could have some reactivations, you could have, you know, some some some larger equipment orders. And I think those would really be what we'd look what we'd be looking for on the upside. Hopefully that gives you enough information. I can't get into too much more specifics other than, you know, we felt pretty comfortable with what we put out. And certainly there's a path, you know, there's a path higher with some things, you know, continuing to accelerate in the industry.

Yeah, we heard the optimism on orders and how trends are going. So appreciate that, Tom and Ari.

Thank you. The next question comes from the line of Stephen Gingaro with Steiffel. Your line is now open.

Thanks. Good morning, everybody. Two things for me. The first, can you talk a little bit about just if you're seeing anything on the pricing side? I mean, you talked about the order flow was good, I think, particularly on the spare side. Have you seen any pricing?

And maybe just to kind of give us some color on how the pricing dynamics generally work as the market tightens. uh hey steven i would say that we we haven't there's nothing much to say about that we we don't see any specifics when it comes to pricing at the moment so yeah and i think as we talked about i think i'd reframe it a little bit and say that is the market titans you know day rates should increase um really the benefit that provides us and what we see in the industry they have more money to spend. And so we look at it with they start to spend, broaden their spending, upgrade equipment and upgrade capability. I think that is the more important dynamic with the market tightening.

Okay. Thank you. And then, and then the other question that has come up a few times with clients too has been, well, we talk about the interplay between the spare part order flow and then, and then the aftermarket business itself. Is, Is there any link there at all as far as how we should think about that? Or are they kind of separate entities and sort of the drivers and how they sort of play out from a timing perspective?

They work together very closely. I mean, I think – and sometimes they are explicitly linked. Sometimes they are not. And so it just depends on how it – because you could actually be doing a repair and providing parts. But I think directionally those things over the course of a year are going to move in the same direction.

Okay, so the spare order flow, that pretends positive growth for the aftermarket piece over the next several quarters.

Yeah, I would look at it over a longer term, yes, because what you're seeing is, I mean, if you think about what would happen, you could get orders for parts before a rig's actually working. You may do some repair on that, right? But I think what it's doing is it's kind of getting that rig into operation.

Great. Thanks for the details.

Thanks. Thank you. So your next question comes from the line of Scott Gruber with Citigroup. Your line is now open.

Morning.

Yes. Good morning, Eric and Tom, and congrats on hosting your first conference call.

Thank you.

So I wanted to ask, you know, as you kind of get deeper into this deep water restart and you had, you know, really solid orders in the first quarter, maybe just some color on how this restart differs from restarts in the past. Are you seeing, say, more digital upgrade demand, more NPD? Are you seeing more kind of real capacity upgrades around hook load? Just some color around kind of what you're seeing this restart versus past restarts and what that means for HMH.

Scott, I think if you look at the orders that have been stacked that got contracts now, you know, the last quarter or the last four or five months, you will see that it's a spread of rigs, everything from middle deep water to ultra deep water and also rigs that are highly automated and rigs that are not highly automated. I think it very much depends on where these rigs are going. So I wouldn't say that there are any specific different this cycle or this uptick from what we've seen before, of course, you will see some more MPD. You will see some more digital upgrades. But all in all, it's very much about seeing the same as before.

Got it. And then, you know, there's hope for a kind of broad-based drilling recovery post this Middle East crisis. Maybe just some color on what you're seeing on the onshore markets around the world. I know it's smaller business for you, but are you seeing a genuine pickup there as well?

And maybe just some broad strokes on thoughts around capturing share as the onshore market starts to recover as well around the world. i i think yeah i think i think you've heard most investors um at this point i'm sorry most companies at investor conferences that there's a little bit of a wait and see i mean i do think you're starting to see let's call it green shoots i mean you've heard several of our peers talk about um you know some cautious optimism around north america you know picking up rigs and starting to invest a little bit more um middle east you know again there are things happening there today I mean, regardless, despite the situation. So we continue to be very positive. And I think versus what we've been saying for a few months ago to today, there's a meaningful path to North America improving. And as we've talked about, given the type of equipment that they're starting to look at to drill the wells they're drilling today, I think it's very favorable for us. And, you know, combined with the fact we're putting real R&D dollars in into product capability to enhance that. So we continue to view it as a big opportunity as the market moves to us, and we are definitely increasingly more optimistic than we were a couple of months ago, and we were not pessimistic then.

Yeah, and I think, as we said before, you know, the market is looking for more power, more torque, and it kind of comes towards us when it comes to our portfolio. And I also would like to mention that I think the dynamics in the Middle East now is really interesting by having the Emirates leaving the OPEC and that also at the same time Emirates or ADNOX say that they're going to ramp up their production significantly. And I assume that that will entail more drilling. And that's interesting, of course, for us.

I got it. Appreciate it. Thank you.

Thank you. Your next question. excuse me, comes from the line of Derek Podhazer with Piper Sandler. Your line is now open.

Hey, good morning, guys. Maybe I just wanted to ask about your – good. I want to ask about margins here. Obviously, pretty resilient EBITDA margins despite maybe a little bit less of an expected top-line revenue number. You know, totally appreciate service revenue came in a little bit lighter than expected, but just given seasonal trends. But maybe could you help us understand some of the drivers that were able to create elevated margins, maybe versus our expectations going into the quarter?

Yeah, I think it's probably due to mix. I mean, it's always going to be, you know, fluctuate a little bit quarter to quarter if you look at our results. And it's kind of based on whether, you know, what the mix is of the actual parts that you're selling. um i that said i mean i think you know we we are confident in being able to maintain and improve overall margins from where they are from where they are and i think that what you've seen here was really the cost structure work that happened last year finally flowing through um into the pnl and i think you should see really good leverage leverage off that that answers your question no it does that's helpful and then maybe just just touching on free cash flow um you know capital light, 2% capex to sales.

Like, this is obviously a very exciting part of the investment thesis. Came in a little light. I know you guys mentioned there's a bit of a seasonal trend here, but maybe just help us understand the free cash flow trajectory as we worked through the year, particularly around the working capital improvement, the efficiency there. Just some colors. Yes.

Yes. I think there are a couple things going on there. One is, you know, if you look at the balance sheet and think about it, you've got AR, it kind of increased during the quarter, inventory held flat. That AR increase was just due to some later billings. It's not an AR problem. So you kind of should see that reverse. We also had some capitalized IPO expense, which create a little bit of noise in the quarter. So I think if you look at it over the course of the year, which is how we prefer to look at that cash conversion, and I think last year is a great example of that, we believe we're still kind of on target for the numbers that we've talked about in the past. And I think last year will reflect that. It's always front end loaded. This is very typical of this business. So I think you had those two specific things that I called out that actually drove a little bit of an increase and you had a low revenue. And so your balance sheet's there and you're at a low point in the revenue due to where we are in the white space. And so I think that combined to create that, I think we are very much on track for hitting the targets that we have, and you're just going to have to look at it over the course of a year rather than quarter to quarter. And I'll call out one more thing while we have it, just a reminder that you had a little bit of a, when you close an IPO the day after a quarter ends, you had the kind of a historic preparation of the HMHBV versus the Inc. I want to just make sure to reiterate something in terms of the models that are out there when you look at the tax rates people are assuming they're accurate going forward just want to get that in before before someone asks that question okay no that's very helpful um thanks again and congrats on the debut thank you thanks thank you before we continue with our next question i just want to remind you if you'd

like to ask a question please press star followed by the number one to enter the queue your next question comes from the line of heath beckman with pep your line is now open hey thanks for taking my question this morning yeah good morning i wanted to just get your thoughts um you know just just came out of the public company but maybe longer term how are you thinking about uh potential bolt on mna and maybe can you talk about what would make sense for you and kind of what wouldn't uh under the parameters of that sure i think um we have a very active mna pipeline right now um and it's mostly you know smaller smaller opportunities they're always looking at some larger opportunities when we've talked in the past you know and kind of laid out

our strategy what we've said is stick to the core and so what you're going to see is a range of possibilities is really what we do today which is land and offshore drilling equipment parts and services and mining and digital and so anything we do is just going to be building out the portfolio that we have and building out the capability and the services and that we provide our customers so So I think we've got, you know, we're sticking close to what we know, and we're going to execute on that over the next time.

That's really helpful. And then my second question, I just wanted to ask a little bit about the mining business and just maybe some ways that you think you could potentially expand that over time beyond slurry pumps, you know.

Yeah, well, this is part of what Tom, excuse me, talked about our M&A strategy. expanding in the mining field is also a part of our M&A strategy so we are looking at possibilities there both when it comes to acquisitions but also with partnership with larger companies within that sector and and we we look very positive on the on the mining sector going forward with copper prices arising and and and we also see that there are more and more new projects coming on online going forward.

Awesome. Really appreciate it. I'll turn it back. Thanks, guys.

Thank you. Stephen Gingaro has entered the queue again. I'm going to go ahead and ask him to unmute. Your line is now open.

Okay. Thanks, Shalma. I just wanted to ask one more, if you don't mind. When we think about the visibility you have, and you talked a lot, I think, on the roadshow about, you know, rigs that are contracted that underpin the 2026 guide and the second half ramp. Can you just comment on that a little bit? And then maybe as we think about it, and I know we're not guiding to 27 at this point, but just at a high level, how does the visibility evolve for you as you look out two, three, four quarters? and maybe kind of give us, I don't know if this is where to give us a confidence interval, but just kind of how you manage the business and how you can kind of see the growth and how far out you can see that growth.

Yeah, I think I'll try to see if I can get there. I think when you think about what we're looking at in 26, the rigs that we're counting on are largely, and I won't say 100%, there's never 100%, but they're largely spoken for, right? I mean, you see a very high visibility through the end of this year, into the first half of next year, in terms of rigs that we know will be working. And I think that's where the contract announcements come in. And a lot of those don't start until 27, by the way. So I can't, I don't know how to answer it other than to say that we have a pretty, pretty high visibility into what the number of rigs working with our equipment will be over the next 18 months at this point. There are upsides to that, and there are things that we think are going to happen that haven't happened yet. So it's not – I can't say it's 100%, but I'd say it's pretty high confidence.

Yeah, I think also you could add that if you look at the contract activity of the first quarter of 26, you know, more than – actually more than 75% of the total contracts awarded in 25 was done first quarter in 26. So that means that the visibility is absolutely much higher now than it was a year ago.

Great. No, that's good color, gentlemen.

Thank you. thank you thank you there are no further questions at this time Mr. Burzfit I'd like to return the call back over to you for closing remarks yes thank you for your support and participation on today's call and we're looking forward to updating you on our second quarter results thank you much that concludes today's conference call you may now