Earnings Transcript for DWSN - Q2 Fiscal Year 2020

Operator: Good day, and welcome to the Dawson Geophysical Second Quarter 2020 Results Conference Call. As a reminder, today's conference is being recorded. Statements made by management during this call with respect to forecasts, estimates or other expectations regarding future events or which provide any information other than historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the company is unable to predict or control that may cause the company's actual future results or performance to materially differ from any future results or the performance expressed or implied by those statements. These risks and uncertainties include the risk factors disclosed by the company from time to time in its filings with the SEC, including in the company's annual report on Form 10-K filed with the SEC on March 6, 2020 and any subsequent quarterly reports on Form 10-Q filed with the SEC. Furthermore, as we start this call, please also refer to the statement regarding forward-looking statements incorporated in the company's press release issued this morning, and please note that the contents of the company's conference call this morning is covered by those statements. During this conference call, management will make references to EBITDA, which is a non-GAAP financial measure. A reconciliation of the non-GAAP measure to the applicable GAAP measure can be found in the company's current earnings release, a copy of which is located on the company's website, www.dawson3d.com. This call is scheduled for 30 minutes, and the company will not provide any guidance. I would now like to turn the call over to Stephen Jumper, Chairman, President and CEO of Dawson Geophysical Company. Please go ahead, sir.

Steve Jumper: Well, thank you, Cecilia. Good morning, and welcome to Dawson Geophysical Company's Second Quarter 2020 Earnings and Operations Conference Call. As Cecilia said, my name is Steve Jumper, Chairman, President and CEO of the company. Joining me on the call is Jim Brata, Executive Vice President and Chief Financial Officer. Before we start the call, just a few items to cover. If you would like to listen to a replay of today's call, it will be available via webcast by going to the Investor Relations section of the company's website at www.dawson3d.com. Information reported on this call speaks only of today, Thursday, July 30, 2020. And therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening. Turning to our preliminary second quarter and 6 months ended June 30, 2020 financial results. For the second quarter ended June 30, 2020, the company reported revenues of $29.5 million compared to $24.1 million for the quarter ended June 30, 2019. For the second quarter of 2020, the company reported net income of $1.5 million or $0.06 per common share compared to a net loss of $11.2 million or $0.49 loss per common share for the second quarter of 2019. The company reported positive EBITDA of $5.8 million for the quarter ended June 30, 2020 compared to negative EBITDA of $6.1 million for the quarter ended June 30, 2019. For the 6 months ended June 30, 2020, the company reported revenues of $68.5 million compared to $75.2 million for the 6 months ended June 30, 2019. For the 6 months ended June 30, 2020, the company reported net income of $2.5 million or $0.11 per common share compared to a net loss of $11.4 million or $0.49 loss per common share for the 6 months ended June 30, 2019. The company reported positive EBITDA of $11.6 million for the 6 months ended June 30, 2020 compared to negative EBITDA of $111,000 for 6 months ended June 30, 2019. Our second quarter results were favorably impacted by the continued operation of 2 large channel count crews in the United States that were partially offset by the redeployment of a small channel count crew on a previously completed project as described in our first quarter earnings release and severance costs of approximately $1.4 million associated with staff reductions that were announced in April. The company anticipates annual savings of approximately $4.3 million from such reduction. I will now turn the control of the call to Jim Brata, who will review the financial results. I will then return with some final remarks and our outlook into the third and fourth quarters of 2020. Jim?

Jim Brata: Thank you, Steve, and good morning. Revenues for the second quarter of 2020 were $29.5 million, an increase of approximately 23% compared to $24.1 million for the quarter ended June 30, 2019. As stated in our earnings release issued this morning, our second quarter results were favorably impacted by the continued operation of 2 large channel count crews in the U.S. and were partially offset by the redeployment of a small channel count crew on a previously completed project, as described in our first quarter earnings release. And severance costs of approximately $1.4 million associated with staff reductions that were announced in April. The company anticipates annual savings of approximately $4.3 million from such reductions. Cost of services in the second quarter of 2020 were $19.7 million, a decrease of 23% compared to $25.3 million in the same quarter of 2019. General and administrative expenses were $4.3 million in the second quarter of 2020, a decrease of 15.6% compared to $5 million in the second quarter of 2019. Depreciation and amortization expense in the second quarter of 2020 was $4.4 million, a decrease of 17.7% compared to $5.3 million in the same quarter of 2019. Net income for the second quarter of 2020 was $1.5 million or $0.06 per share compared to a net loss of $11.2 million or $0.49 loss per share in the second quarter of 2019. Income tax expense was negligible during the second quarter of 2020 compared to an income tax benefit of $121,000 during the second quarter of 2019. EBITDA in the second quarter of 2020 was $5.8 million compared to negative EBITDA of $6.1 million in the same period of 2019. An EBITDA reconciliation was provided in our earnings release issued this morning. Now I will highlight some results for the 6 months ended June 30, 2020. Revenues for the 6 months ended June 30, 2020 were $68.5 million, a decrease of approximately 9% compared to $75.2 million for the 6 months ended June 30, 2019. Cost of services for the first half of 2020 was $48.7 million, a decrease of approximately 26% compared to $66.2 million during the same period of 2019. General and administrative expenses were $7.9 million in the first half of 2020, a decrease of 17.3% compared to $9.6 million for the 6 months ended June 30, 2019. Depreciation and amortization expense for the 6 months ended June 30, 2020 was $9.3 million, a decrease of 18.6% compared to $11.4 million in the same period a year ago. Net income for the 6 months ended June 30, 2020 was $2.5 million or $0.11 per common share compared to a net loss of $11.4 million or $0.49 loss per common share in the 6 months ended June 30, 2019. EBITDA for the first 6 months of 2020 was $11.6 million compared to negative EBITDA of $111,000 in the same period of 2019. An EBITDA reconciliation was provided in our earnings release issued this morning. And now for some balance sheet items. Our balance sheet continues to remain strong. As of June 30, 2020, we had debt, including obligations under financing leases of approximately $1.6 million, cash and short-term investments of $36.8 million, our current ratio was 6.2

Steve Jumper: Well, thank you, Jim. While our second quarter and 6 months, the results were positive, there continue to be significant challenges to the oil and gas industry and overall energy market. On July 16, the Organization of the Petroleum Exporting Countries and its allies collectively known as OPEC+, announced that OPEC+ will ease production cuts from 9.7 million barrels per day to 8.3 million barrels per day net, potentially placing greater pressure on oil prices. In addition, a recent surge in the number of COVID-19 cases being reported both in the United States and globally may further limit economic activity and restrict worldwide travel. Combined, these factors could result in a further decrease of demand for oil and gas production, placing greater restraint on our client spending levels. Already many exploration and production companies have reduced their capital budgets by 30% to 50%, resulting in a reduction in the number of wells being drilled. The corresponding decrease in number of wells to be drilled and completed by our clients can negatively impact the demand for our services. Despite today's challenges, there are signs of improvement. Oil prices have rebounded from their April lows and are currently trading in the $40 per barrel range. A total of 1,238 permits to drill wells in the U.S. was approved during the month of June, a 15% month-over-month increase, and several independent oil and gas producers announced their intentions to increase presence in both the Permian Basin and Bakken oil shale. Based on current or rapidly changing information, the company anticipates continued operation of 1 moderate sized channel count crew through the end of 2020 in the U.S. with possible periods of oil utilization and limited activity in Canada. Given the current market environment, the company's visibility beyond the fourth quarter is limited. Request for proposals continue to be slow. However, the company has several requests for projects in late 2020 that may require a second crew in the fourth quarter and several requests for projects in 2021. As mentioned earlier, capital expenditures for the second quarter and first 6 months of 2020 were $359,000 and $2.7 million, respectively, primarily for maintenance capital items. As Jim mentioned, our balance sheet remains strong with $58.3 million of working capital as of June 30, 2020. The company has notes payable and financial -- finance leases totaling $1.6 million as of June 30, 2020. In response to the COVID-19 pandemic and its impact on our people, we continue to follow recommended CDC guidelines, including, but not limited to, social distancing, hygiene recommendations, small group limits, enhanced work from home guidelines, minimized office hours in certain regions and periodic town hall telephone conferences to update employees and their families on the company's practices and protocols. We continue to provide additional flexibility to work from home for those with preexisting health concerns, childcare issues, elderly in home residence or other general concerns. At the crew level, we have implemented policies to eliminate large group gatherings to provide additional vehicles to reduce the number of people per vehicle traveling to and from project locations, increased utilization of radio communications, secured ample and safe daily water supply, increased flexibility -- housing flexibility and relaxed field schedules to allow for individual needs. Most of our day-to-day operations consist of small, oftentimes individual isolated work groups. In conclusion, while the challenges we face today are historic, they are by no means unfamiliar, to Dawson Geophysical members of our team. Throughout our company's 60-plus year history, we've experienced several downturns and setbacks, which require us to reduce our crew count, limit our spending and maintaining the costs out in the balance sheet. That said, even in today's low price environment, there is a strong case for seismic exploration and production companies to work harder than ever to identify optimum well locations in the most cost-efficient manner. Seismic data and the solutions that offer the physical providers are uniquely suited to help E&P companies achieve their goals. I thank all of our hard-working employees, our valued clients and shareholders for their continued commitment and support during these challenging times. And with that, Cecilia you, I believe we are ready to take questions.

Operator: [Operator Instructions] And we'll go first to John Potratz of Research Investments, Inc.

John Potratz: Congratulations on a very excellent quarter in controlling costs. It's just -- it's really mind blowing. Congratulations to the both of you Brata and Jumper. I was very happy to see what you've been able to do in terms of the operating results. And you talked about the fact that you contact a lot of their clients on a continuing basis. Are you -- I'm looking at -- are you having -- seeing a lot of sort of the feeling sense that they're going to be doing something in the third and fourth quarters? It takes -- the difference in talking about it and how they're talking about it and actually making a contract. So you -- how you -- it sounds like there's a positive shift in terms of your clients' mode of what they're talking about in the business?

Steve Jumper: Jay, we're having a little bit of a difficult time hearing you, but I will attempt to answer the question as I think I understood it. Appreciate your comments early on, by the way. I believe your question revolves around our conversation with our clients and what we believe their activity levels to be at the end of the year, and whether or not these conversations are leading to contracts. And there's a lot packed into that question. There's quite a bit of speculation packed into it, but I'll try to answer the question the best we can. We are continuing to have contact with our client base in today's world. And we're not unique in our company or our industry, I think this is a typical of -- things going on all around the country and the economy. Communication is a little bit difficult externally and internally with some of our clients with a lot of work at home policies, with furloughs being used for personnel, with cutbacks, there's a -- it's a moving target sometimes as to how and when you can communicate with folks. And so I think our folks are doing a fantastic job of staying on top of things. I think if there are seismic projects as a general rule out there that -- or to -- being talked about certainly in Lower 48 in Canada, I believe, we're getting the chance to look at and have conversation on those projects. There's always a few out there with peer group or peer competitors that have long-standing relationships with certain companies that we may not see, and we certainly have some of those ourselves. But I think we get a solid look at anything that might be happening. Here again, we're just a little bit past midway through the year. There's been a tremendous amount of budget cut back on the E&P side. What we don't know, and I think what leads into some of this discussion as to whether or not conversation of projects turns into reality, we don't know what's going to happen on the back half of the year with our E&P clients' budgets. We don't know if there's going to be a budget exhaustion scenario at the end of the year or if there will be a budget surplus. And I think the E&P companies are being very cautious on their spending levels and keeping some of those things close to the vest, so to speak. But we are seeing some proposals. As we mentioned in the press release, requests are certainly slow. They're not robust by any stretch of the imagination. But there is some conversation. We have limited visibility beyond Q4. And as we said in the release, we anticipate 1 crew working through the end of the year. There is a scenario where there could be periods of low utilization for that 1 crew. There could be some timing issues that might require a second crew. And so it's really -- it's very difficult to speculate on a go-forward basis what the actual demand levels will look like. With regard to the multi-client groups, there are certainly some projects being talked about on the multi-client side. And as we've mentioned, the multi-client base has been a big part of our operation here, particularly in the last couple of years. They have historically, but as a percentage, they've been a much higher percentage of our work, certainly in the last couple of years. They have a little bit of a compounded issue and that they are working within their own capital budget constraints with regards to how much risk they're willing to take on a project in conjunction with having to rely on budget levels within their underwriting client base, which would go to E&Ps. And so it appears as though the multi-client group is watching their dollars closely, just like the E&P, which is kind of a compounded issue for us. I will close this answer here, and I'm sure everybody's well aware, I answer questions in a lengthy manner, try to be as accurate and transparent as I can. But the -- we've seen this recently, some proposals and conversations that are more direct with E&P. Some projects that have been pushed back until next year that were scheduled for 2020. Earlier this year, we've got some new outlines that we're taking a look at direct for E&Ps. And so we're beginning to see a very slight, not meaningful, I would say, but slight increase in direct requests from E&Ps. And so I hope that answered your question, Jay. If it didn't answer that one, it answered some question, I think.

John Potratz: And I think what really came out to me was like I do research on equities fixed income, is that -- it's so hard -- much harder to get something done and communicate with people. What was a simple phone call before, it can be a very complex one because someone's working from home or traveling or something of that nature. But it sounds like even within that, there is a sense that they're looking at doing additional projects at this point, but no firm commitment, but that's part of just the communication lag that you have.

Steve Jumper: Correct. And there's nothing better than face-to-face communication, and that's what we're -- not just us, but I think worldwide, that's what -- an issue that we're all having to deal with. We have said this before, we're a company that's built on personal relationships and interaction. And so we're having to work around that, we're still maintaining good, solid communication with our client base. But hopefully, we can get this thing straightened out here in the next couple of months.

John Potratz: It sounds like you're working very diligently and anticipating no issues. One other thing I'd say there is a number of talks [indiscernible] about a couple of years ago, and you mentioned in today's news, is it strong case for seismic and E&P companies are working harder than ever to identify optimal drilling locations in the most cost-effective manner possible. That basically says in a way, I need to get -- the data you provide is a lot more detailed and better and people are willing to pay more for -- pay for that again because they want to not drill a well or to drill a well more optimally than they used to in the past. So there's underlying demand for more of your data, is that sort of a sense of what people are asking for in your data?

Steve Jumper: Jay, I'm going to attack that from a couple of angles. The same that we have always tried to provide from our company standpoint is value to our client base. And value has to be recognized on the other side. And I think we certainly went through a period, the industry went through a period -- the seismic industry went through a period when unconventionals first, particularly oil side came into play. That, quite frankly, there were folks that didn't feel like it added -- that there was value in the data. And I don't think that was widespread, but there were certainly some of that. And that oil prices would overcome mistakes, so to speak. We have always said that, that when you get into a commodity price constrained environment, and certainly, $40 is way too constrained. But I don't know what that number needs to be. But to loosen up some first string, so to speak. But as prices stabilize at some level and people begin to understand their cost structure, I'm of the opinion and believe, and I think I have -- we're starting to see this, that companies need to evaluate drilling locations, whether they're being conventional or unconventional and place that wellbore as strategically and as optimally as they possibly can. And the data, the information, we're providing the industry today certainly lends itself more to that, particularly in the unconventional than it did several years ago. And so we are confident and believe that the majority, if not higher, of the E&P companies are utilizing seismic information as part of their drilling and production and completion plan. We have talked in the past that we are -- that we've been working in concentrated areas of the Permian and Delaware. That's certainly opening up a little bit. We're -- we've kind of extended where we work outside the core areas, so to speak, that you would have thought about a year or 2 ago. But we have -- we do have large areas of core acreage covered where there's current seismic data information. So when you listen to some of these companies that have pulled back into their -- into a core area, so to speak, there's a tremendous number of drilled, uncompleted out there that need to be finished. There's some drilling locations that these guys can go to. And so yes, seismic data is a big part of what they do. Yes, it's being utilized currently. We think it will be in the future. But at the same time, with the drastic slowdown in drilling and completions, there probably -- possibly could be a lag time between our pickup and rig count and frac fleet count going up. So answer to your question is yes. We think it's a value-add to the process. And so we think there will be demand. Certainly, the demand is slow, as we've said right now, but we've probably got to work through some drillable locations and some drill uncompleted completions to begin going forward.

John Potratz: But it also sounds like you realize that this is a problem with maintaining your crews, and it looks like you've done a lot of cost-cutting to keep the control on cost -- on Dawson while you wait for all of this to develop. It's not just sort of waiting there. You've done indefinite activities like some severances and cut backs in salaries. So it -- my compliments you to maybe cut back in making the Dawson a good survival mode.

Steve Jumper: Well, thank you, Jay. With regards to that, I think our group is -- and every department has done a fantastic job on cost control, but it's been difficult. It's been a very difficult environment for everybody and for our company. But we, as in the past, are trying to be proactive and stay ahead of it. And we're trying to not be reactive but be proactive in how we're approaching the business.

Operator: [Operator Instructions] And we'll go next Michael Melby of Gate City Capital Management.

Michael Melby: Congrats on the very good results. Could you expand on your openness or willingness or ability for industry consolidation during this difficult period for the seismic market?

Steve Jumper: Good question. I don't see anything at this point that would be meaningful or beneficial for us. Certainly, we -- as we always have, look -- continue to look across the space and see what's out there and -- but I don't see anything at this point, Mike, that is imminent or that would be real meaningful for us.

Michael Melby: Got it. And certainly, the cash balance is a huge asset of the company and we're going through some really tough times here. Can you talk about your thoughts and maybe the Board's as well on allocating that cash and the potential to, I guess, repurchase stock or even pay a dividend when it looks like you're -- and the whole company at a 0 price after taking out the cash you've got?

Steve Jumper: Certainly, Mike, we -- the board has discussions on a regular basis about the balance sheet and the cash position and the overall capital structure. And I really can't comment much other than to say that our Board is comprised of a wide range of experiences and backgrounds. And some within the industry and some shareholder -- some significant shareholder ownership. And then we've got some very smart financial folks on our Board as well. And so our Board takes a hard look routinely on an ongoing basis with regards to the business and the company's capital structure and cash position. And we've always been a very conservative company. Going back to your earlier question about consolidation. We've made the one transaction with TGC, which we think has been very beneficial to both companies back in -- completed in 2015. And we have paid a dividend in the past. And we certainly will take a look at that. And all those considerations and concerns are looked at the Board level, and we're just trying to make the -- and we'll continue to make decisions based on the best interest of both the shareholders and the company as well. So appreciate your comments very much. And I know we've had this discussion in the past, but I hope I've answered your question.

Michael Melby: Yes. And just me asking the question is a testament to a good stewardship of cash. Yes, stocks are, in general -- opening or starting a share repurchase program wouldn't commit you to anything, but could provide some optionality or flexibility to have that ready in case there are shares available at attractive prices going forward. So I just wanted to throw that as well.

Steve Jumper: Understood.

Operator: And our next question comes from [Bill Kim], private investor.

Unidentified Analyst: I'm trying to get a better understanding of your economics of the business that you're investing in your company. And I've noticed that CapEx, in general, has been running shy on your depreciation expense. And if you could kind of explain how that works, the relationship between the two. What's the maintenance CapEx? And why are you able to -- how are you able to sustain ongoing EBITDA with the continued time you're spending on depreciation?

Steve Jumper: Okay. Bill, I apologize here. Again, we're having a little bit of phone issues, I think. But I think your question is in regards to our CapEx being well below our depreciation level. And I think your question was how are we doing that? Do I understand the question correctly? Sir, I'm sorry.

Unidentified Analyst: Yes. So I'm trying to understand kind of, I guess, to put it simply, what is maintenance CapEx versus growth CapEx? And why you -- if you're at a maintenance CapEx level now, how is that is sustainable versus your much larger depreciation expense?

Steve Jumper: So I'll try to answer the question. We have been in a maintenance capital level probably for the last 18 months or so, so to speak. I think the last non-maintenance capital expenditure we made would probably have been in late '18. We purchased some legacy equipment off the used market that was complementary and supplementary to our equipment base. And so we, through this process in the last 18 months have reduced CapEx spending to strictly maintenance capital items, which would be things like rolling stock, batteries, for example, for recording equipment, and things that basically, they just suffer some wear and tear during routine usage. Having said that, our equipment base is in really good shape. If you look at the recording equipment that we have in terms of current capacity and technology, we are in really strong position. We've got -- there are some recording equipment out there that's -- that is being developed, which is basically repackaging of the same technology. And so from an asset standpoint, both on the recording side and on the sourcing side, we feel really good about our equipment base. And we think that we don't see anything on the horizon any time that's coming up that would require us to have a large replacement type CapEx spend or upgrade type CapEx spend. If you look back at the 2 legacy companies, Dawson and TGC prior to the merger of 2015, from a time period of about 2011 to probably 2000 -- late '13, '14, something like that. Both companies -- combined companies had spent close to $200 million in energy sources and the conversion from cable to cableless recording equipment. And so while our recording equipment is in the 6-, 7-, 8-year range in terms of age, it's what we would call an unbundled system. In other words, there's a listening device, there's a recording device and a battery, there's all 3 that work together to create a channel. And we've been able to -- the recording devices stay really steady. They're state-of-the-art reporting devices. There's not a new technology out there that will provide a better data sample for -- so to speak. But we've been able to maintain, through maintenance cap, maintain both the battery power and the sensor side. And we've been able to do the same thing on the vibrator side, the energy source side. So we are spending well below the CapEx of the depreciation level that is not uncommon in our industry. If you look back at our company, and I think the combined companies -- legacy companies over time, we've gone through periods of CapEx spend on new equipment. And then we've had a pretty long run with equipment bases. So we're very comfortable with our equipment base as it stands and believe that maintenance capital requirements as well we'll have to meet in the near future.

Unidentified Analyst: I appreciate that. And so is it fair to say that the recording equipment in the industry in general has longer life than perhaps the company will be depreciating for? And if that's the case, what kind of test [indiscernible].

Steve Jumper: What kind of what? I'm sorry?

Unidentified Analyst: What kind of technology are you seeing kind of coming on the horizon in this industry that would perhaps decrease the value of the existing equipment?

Steve Jumper: Well, that's a very good question. If you look back -- this is a little bit of a small history lesson here. There have been things that have been progressing forward, particularly with regards to recording systems. Energy sources over the years have gotten better with better hydraulics and better electronics and bigger. But we've kind of probably reached the top side of what the size of the energy sources that could be used in the United States. There are some bigger ones that can be used in the Middle East. But when you think about movement and trucking and those kind of things, we're probably on the top side from a sourcing standpoint. So we're comfortable there. On the recording side, we've made changes from -- over the years from analog to digital to telemetry-based systems, distributed systems to channel count growth to cableless. All moving towards an increase of channel count. And so there are several different recording systems out there. We happen to pick a platform in 2011 that we stayed with. That is cableless, has expandability on channel count, scalability, so to speak, the channel count can move up or down. You can move channels from one crew to the other. And so historically, we have seen things change through some level of downturn where there's been a different technology come forward. We're not seeing that in this downturn. This downturn -- there is some work being done out there with regards to recording systems, but they're basically just repackaging of technology. They vary a little bit in size. They vary a little bit in how data is collected and managed. But in terms of the actual data quality, there's not really been a big change. Now there is some conversation potentially about a digital sensor and those types of things that are used from time to time that we really don't see anything right now that we are concerned about that makes our equipment base obsolete, so to speak. We -- sometimes when you look at the life of an asset, it depends on how it’s been utilized, how it’s been maintained. We spend a lot of time on maintenance and equipment rotation, in and out of certain projects. And so our equipment is in good shape. It may very well be, just given the times, that probably going to get a little more out of this equipment than was originally on the schedule, but we're very comfortable where we are from a depreciation load as well as the asset base.

Operator: There are no further questions in queue, I'd like to turn the call back over to Mr. Stephen Jumper for any additional or closing remarks.

Steve Jumper: Well, thank you, Cecilia. I want to thank everybody for taking time to listen in to our second quarter 6 months 2020 call. We always appreciate the questions and the interest and the support. Just to sum up, this is a very difficult time in our space as well as overall energy markets. There are, obviously, we're facing some headwinds that we probably haven't seen in the past with regards to demand breakdown related to slowdown in economic activity as well as a supply issue, but it is a tough time all across the energy space. The company will continue to respond proactively and continue to look at ways to cut costs and improve efficiencies and productivities going forward. And we'll continue to protect and maintain the balance sheet as we have over our 60-plus year history. Once again, I want to thank all of our shareholders. I want to thank our client base, in particular, I want to thank our employee base for their diligent effort and continued hard work in a very difficult time. Thank you very much, and we'll talk to you again in about 90 days. Thank you.

Operator: And this does conclude today's call. Thank you for your participation, and you may now disconnect.