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Just Energy Group, Inc. (NYSE: JE ) Q4 2016 Earnings Conference Call May 19, 2016 10:00 AM ET Executives Rebecca MacDonald – Executive Chair James Lewis – President and Co-Chief Executive Officer Just Energy Pat McCullough – Chief Financial Officer Analysts Nelson Ng – RBC Capital Market Carter Driscoll – FBR Damir Gunja – TD Securities Sameer Joshi – Rodman & Renshaw Operator Good morning, ladies and gentlemen. Welcome to the Just Energy Group Inc. Conference Call to discuss the Fourth Quarter 2016 Results for the period ended March 31, 2016. At the end of today’s presentation, there will be a formal Q&A session. [Operator Instructions] I would now like to turn the meeting over to Ms. Rebecca MacDonald. Go ahead Ms. MacDonald. Rebecca MacDonald Good morning. Thank you for joining us thing morning for our fiscal 2016 fourth quarter earnings conference. I’m Rebecca MacDonald, Executive Chair, Just Energy. And are here with me this morning, Co-CEO James Lewis and CFO Pat McCullough. Unfortunately, we will not be joined by Co-CEO, Deb Merril, as she is attending funeral services for a family member. Before we begin, let me preface the call by telling you that our earnings release and potentially our answers to questions will contain forward-looking financial information. This information may eventually prove to be inaccurate, so please read the disclaimer regarding such information at the bottom of our press release. Fiscal 2016 was tremendous year or Just Energy from a financial, operational and strategic positioning perspective. Our business continues to perform very well, delivering strong top and bottom line results, while generating meaningful cash flow. In parallel, with delivering strong results we were able to take strategic measures to position the company for continued long-term success in this exciting changing industry. On behalf of the board, I want to extend our appreciation to Deb, Jay, Pat and the entire team for their focus and commitment to driving meaningful change throughout the organization. As I look back over the past three years, essentially the time strains can put this new leadership team together, this is clearly a developing track record of delivering on our promises to our shareholders, customers and all of our stakeholders. In fiscal 2016, we exceeded our own guidance and overcame a very tough comparison to the strong fourth quarter of 2015. Given our world class risk management and our hedging strategy, we were able to drive strong performance in recently completed winter quarter, despite a relatively warm weather. As you’d recall, the winter weather of last year provided a windfall across much of the industry. The recent winter was about 15% milder than normal across Just Energy customer base in North America. Delivering such a strong result is testament to our hedging philosophy and commitment to establishing a stable and predictable earning profile. We feel strongly that our demonstrated ability to consistently deliver performance driven results in our any environment is now the new norm at Just Energy, as a result of our strengthened financial position and improved profitability profile. As you’ve heard us talk about all year long, we’ve taken action to change the business foundation and reposition the company to capture more accretive, profit and cash flow by not allowing our team to chase market share at the expense of margin due to our refusal to engage in risky pricing tactics that would ultimately damage our improved profitability profile. While this strategy will result in a decline in next customer additions from time to time, we feel strongly that our margin for customer improvement initiative is working. The progress is evident in improved scale and leverage in our model that is allowing us to take 5% topline sales growth for the year and deliver 17% gross margin and 15% Base EBITDA growth, while driving a 62% increase in cash flow. Let me be very clear, we are managing this business for the long-term, if that yield shorter negative additions for the sake of long-term accretive profit and cash flow, we will do it every single quarter. Let me also be clear, that we are planning for and we are well positioned for significant growth. We see tremendous opportunities to achieve our goals through the addition of product, markets and partnerships that will deliver value to our customers and growth for our business. Today, we are operating from greatly improved financial position. And our strategy is proving our ability to consistently deliver throughout any cycle. Our financial flexibility combined with the commitment to maintain a capital like model supports our ability to pursue a growth strategy centered on geographic expansion, structuring superior product value proposition and enhancing the portfolio of energy management offering. We feel confident, our strategy will continue to deliver in fiscal 2017 and beyond. With that I will pause, and ask Pat to provide some additional color on the quarter and years financial results. Pat. Pat McCullough Thank you, Rebecca. Overall, it was an outstanding year in terms of both profitability and cash. We’re very pleased with the financial results we’re generating as a results of the actions we’ve taken to reposition the company. The business is performing exceptionally well, and we’re seeing a consistency in our ability to take strong topline performance and deliver even more impressive bottom-line results. Let me cover some of the recent highlights for the fourth quarter and full year, then I’ll add more added color in specific focus areas and provide our outlook for fiscal 2017. In the fourth quarter, sales were $1,075.9 million, a decrease of 11% over the very strong quarter of fiscal 2015. The quarterly decline was a mix of lower commodity prices, lower volume due to warm weather and lower net additions from the year ago period in the consumer division, combined with lower sales prices for variable products in the commercial division. The effect of these items combined with the lower customer base more than offset the positive foreign exchange impact. For the full year, sales were up 5% to $4,105.9 million. The increase is primarily a result of the currency impact of converting US dollar denominated sales into Canadian dollars. Gross margin increased 5% to $204.3 million during the quarter, this is a continuation of the same positive foreign exchange impact and ongoing success of our margin improvement strategies that led to a full year gross margin increase of 17% to $702.3 million over last year. This quarter’s gross margin did not feel the impact of the warm weather that Rebecca mentioned due to our superior weather hedging program. Let me step back to add some color on how far we’ve come along this profitability for customer initiative. Today, we’re signing consumer customers at $207 of gross margin for our RCE, which compares to $191, just one year ago and $166 two years back. Additionally, commercial margins are being added now at $84 for RCE, up from $79 just one year ago, and $67 two years ago. So that’s a 25% improvement in both consumer and commercial over the two year period. We were able to drive these improvements in margin because our new innovative products are gaining more appeal and presenting more value for our customers. This is allowing us to price our energy management solutions competitively without sacrificing customer satisfaction. This satisfaction is evident in the attrition rate remaining flat year-over-year in what we consider a highly competitive market. The improvement in our operating results is also reflected in our cash flow performance. We ended the quarter with $127.6 million on cash and cash equivalents, up 62% from $78.8 million at the end of fiscal 2015. In addition, base funds from operations increased 37% from the same quarter last year and increased 49% year-over-year to $138.2 million. You’ve heard us talk a lot about the changes and repositioning this company has undergone, and this is another great example of delivering on promised change. Today, we’re happy to be able to say that the payout ratio on base funds is 54% for the full year, down from 94% in fiscal 2015 and down from 139% in fiscal 2014. Given the growth we’re projecting moving forward, I’m confident this achievement is sustainable. We’ve also remained committed to reducing debt. At year-end, long-term debt was $660.5 million, a decrease of 2% year-over-year. Despite the higher value of the US denominated debt due to foreign exchange, we successfully reduced debt during the year by $7 million through our normal course issuer bid program and an additional $25 million through repayment of our unsecured senior notes. As a result, book value net debt was 2.6 times the trailing 12 month Base EBITDA, significantly improved from 3.3 times just one year ago and approximately 6 times two years ago. We remain focused on further improvements to our debt position going forward. We were also successful in controlling overhead cost. Administrative expenses for the year increased by 10% to $170.3 million, however this was entirely driven by higher costs required to support customer growth in the UK, as well as the impact of the exchange rate on the US dollar denominated administrative cost. Selling and marketing expenses for the year increased 14% to $257.3 million, due to the impact of foreign exchange on the US base commission and overhead expenses. The start-up cost associated with the residential solar division, as well as the expenses becoming more directly co-related to the growing portion of the customer base for which selling cost are recorded over the life of a contract. In fact, the majority of the year-over-year increase was driven by prepaid commercial commissions. I’d also like to point out that during the recent quarter, we made four strategic sales in energy management solutions hires, whom we’re very excited to have on-board. These new members of the team provide us increased confidence in our ability to execute our growth strategy around solar and broader energy management solutions that will drive future customer growth within existing and new channels. To wrap up the year, the sum of all these activities and results led to strong bottom line results that exceeded even our aggressive expectations. Base EBITDA increased by 10% to $74.7 million this quarter, excluding the additional prepaid commission expense item. It’s important to remember that our reported Base EBITDA in the fourth quarter of this year included $7.4 million of prepaid commission expense, reflecting the change in classification of prepaid commissions to a current asset effective April 1, 2016. Base EBITDA was $67.3 million in the quarter, a 1% decrease from last year when we fully reflect this change in the current period. For the full year, Base EBITDA increased by 25% to $225.5 million in comparison to the fiscal 2015 excluding the additional prepaid commission expense. In fiscal 2016, we incurred $17.9 million of prepaid commission expense. When you include the prepaid commission expense item, reported Base EBITDA was $207.6 million, an increase of 15% over the prior year. While we did benefit nearly $21 million from foreign currency impact on the translation of our US operations, it was still a very impressive year as we posted performance based improvements of $24.5 million for the year. Now let me turn to the outlook for 2017. The improvements we’ve made to the business are here to stay. To reflect the progress in repositioning the business and to build off of our strong 2016, we believe we will achieve fiscal 2017 Base EBITDA in the range of $223 million to $233 million, reflecting continued double-digit percentage year-over-year growth. Fiscal 2017 guidance includes deductions to Base EBITDA of approximately $40 million for prepaid commercial commissions, which were previously have been included in amortization within selling and marketing expenses. This represents a $22 million year-over-year increase in this expense versus 2016, and represents a go forward run rate for this incremental deduction in future years. As you saw this year, we expect to offset this headwind with continued strong gross margin performance and foreign exchange benefit. If you consider the 20% EBITDA growth that we recorded this year, prepaid commission adjusted and on top of that another 25% for next year, this is a very compelling fees. In addition, Just Energy’s solar program continues to show promise, based on the success of the pilot launch in Southern California, operations will continue to grow with further expansion in California and in Northeast United States. In fiscal 2017, our solar and renewables business is expected to contribute $10 million towards the double digit percentage Base EBITDA targets. With that, I’ll turn it over to Rebecca for some concluding remarks. Rebecca MacDonald Thanks Pat. We enter fiscal 2017 well positioned to participate in the significant growth opportunity that exists in our changing industry. The energy management solution industry is in the midst of significant transformation as customers demand value added product that address the changing manner in which energy will be consumed. We embrace this change and feel we are uniquely capable of transforming our vision and insights into action, by delivering effective strategies and compelling product that capitalize on change and deliver real value. Our growth plan is centered on continued geographic expansion, structuring superior product value proposition and enhancing the portfolio of energy management offerings. Geographically, our expansion plan are focused in Europe, where we are actively evaluating new markets. Our UK business is striving and we are successfully adding consumer and commercial customers in a profitable manner. We believe this early success validates our ability to compete outside of North America and we plan to take this experience and expand into two new European nations this year. A large part of our ongoing success is also being driven by our ability to provide innovative product that take advantage of technological advantage and offer a superior value proposition to our customers. New products like our unlimited plan, our bundled product offering, our JustGreen offering, smart stat, thermostat and JustSolar to name just a few exciting opportunities. During the year, we also started [indiscernible] energy efficient LED lightbulbs without commodity product, and we added air filters to our suite of options. Each of those initiative –innovative product gaining more appeal and delivering more values to customer, which in turn is allowing us to price our solutions at premium, while retaining customers for long duration. In summary, this has been an incredible year for our company, and one we feel places us [indiscernible] on the best path of becoming the premium world-class provider of energy management solution. Our business is healthy and growing even stronger. We are committed to delivering another year of double-digits earnings growth, maintain our stable dividend, pursuing prudent geographic expansion and further strengthening the company’s financial and strategic position in the coming year. We would like to thank the employees of Just Energy, for making these results possible. As leadership team, we are very fortunate to have a group of employees who deliver results and believe in the future of Just Energy. Thank you for all you do for the business we operate, the customers we service, and the communities which we live in. With that I would like to open it up for questions. Question-and-Answer Session Operator Thank you. [Operator Instructions] We have a question from Nelson Ng from RBC Capital Market. Nelson Ng Great, thanks. Congratulations on a good quarter. Rebecca MacDonald Thank you very much. Pat McCullough Thank you, Nelson. Nelson Ng My first question relates to the customer margins, in terms of additions and the attrition, so I’m not sure if my math is right, but are the margins for the consumer customers lost higher than the margins for the consumer customers added in Q4? Pat McCullough The margin for… Nelson Ng For the customers lost, for Q4 specifically and not for the year, was it higher than the margins for the customers added? James Lewis No, the margin for the customer for Q4 and full year had [indiscernible]. Now, if we continue to look at those customers the mass markets are – has been added, as Rebecca talked about the bundles there, so that would be the case. Nelson Ng Okay. Pat McCullough So Nelson, we can help you with this offline. I know we put this full year fiscals in our MD&A, but we can pull apart the fourth quarter for you. Nelson Ng Okay, that’s great. And then, just in terms of the fiscal 2017 guidance, like once you back out solar and you kind of back out the – or adjust for the commercial commission prepayments, it implies like a growth rate of above 15% EBITDA for the base energy retail business. I guess, like what’s your expectations in terms of the customer level going forward for the year, compared to I guess the growth in margins? James Lewis Nelson, when you – if you look at it, I think – we’re looking at this from an overall cost perspective, we’re getting more value add, the customers were singing up, or cost selling, up selling investing customers with the filters, with the deck, with the LED lights, so we expect more value under the existing customers. As we bring on new customers, our expectation is that from next year, we’re mostly in the range of 300,000 customers to add. As you go – brings the guidance, typically, and now we didn’t have the other original value in gross margins a little bit. Nelson Ng So you expect modest customer growth than most of the EBITDA growth will come from higher margins per customer? James Lewis Yes. But we are expecting, as Rebecca said to add more customers this year. Rebecca MacDonald I think in the last couple of years, Nelson, what you’ve seen is a, cleaning up our customer base that grew over time with number of unprofitable customers and this theme of change is focused on financial metrics, way more than on actual absolute number of customers. And one thing that we have proven to ourselves is that the margin for customer with the bundled product that is growing, and we don’t expect any change there. Now, would we like to add more customers? Absolutely. But, we have created enormous amounts of discipline around the margin that we will accept for each customer. And if we are not able to get it, we are happy to walk away from it. So what Jay is saying, look at the bundle and look at additions. And, we want to add as many profitable customers as we possibly can. But the key is profitable. Nelson Ng I see. But I guess in terms of your revenue guidance, you’re assuming like a modest customer growth, plus stronger margins per customer to drive growth, right? Pat McCullough Yeah, this is Pat, Nelson. If you go back to our growth strategy, we’re expecting both customer top line and bottom line growth through three main initiatives, geographic expansion, product enhancements to both bundling, but also bringing superior product structures like flat bill products to markets, when volatility returns, we think those are going to exciting products, and then the enhancement of more things sold through the customer at higher value. Nelson Ng I see, okay. And then just kind of moving on to the balance sheet, so you have a $128 million of cash at the end of the quarter, like I presume you’ll allocate some of that to reduce debt, as you’ve done in the last quarter. Can you talk about your – I guess your uses of cash in the next year in terms of what you intend to do with that and also, are there any updates in terms of I guess refinancing or addressing the 2017 maturity? Pat McCullough That was more than one question. Sure, let me start at the top. So, we’re very proud of this quarter based on the cash generated. Not only did we report, as we mentioned a $128 million of cash, we actually paid down $25 million of principal on the high yields senior note. And yes, that remains the priority. As we generate cash and [indiscernible] the dry powder on our balance sheet, we support the restructuring efforts of the business, which we’re very pleased, are right on track and we’re very confident that we’re going to be able to restructure the long-term converts and debt on our balance sheet in a shareholder efficient manner. Nelson Ng And do you have any, I guess updated timing on the solution? Pat McCullough We’re consistent with what we’ve said in the past, we see this getting done this year, this calendar year. We won’t be spilling into the fiscal 2017 calendar year, or the calendar year 2017. Nelson Ng Okay. Thanks Pat. I will get back in the queue. Pat McCullough Thanks, Nelson. Operator Our next question comes from Carter Driscoll from FBR. Carter Driscoll Good morning. So, can you talk maybe just about the competitive situation and maybe in conjunction with some of the changing regulatory in particular, obviously your state had a bit of a hick-up in terms of its curves to the energy retailing market most recently. How do you kind of deal with that from a high level? And then I’ve a couple of follow-up. James Lewis Yes, Carter. We believe the [indiscernible] that’s what they were looking at, whatever the drivers is. And if you look at, historically, when we have those competition, it will drive long-term value. So what we’re doing is we’re working with industry groups, and all the other markets to make sure they have the right market structure in place, that can deliver those types of value. What you’ve seen in place, where you have open access to the bill and you have policy going, you can offer customer innovative products, such as bundle that depends on what you do when you have markets when we only have aligned among the customer bill. Rebecca MacDonald I’m so sorry, I’d like to add to this, management of Just Energy is confident that we would be able to maneuver to any regulatory changes that might show through the year. Being in this for 25 years, I have seen so many different regulatory changes over time, pendulum goes left to the right and back, and our approach by large is conversation with the local environment about moderation, everything has to be balanced. Governments do want to protect the customers, but responsible players want to protect the customers as well. And we see the best protection customer guest is a strong consumer protection act and a very good value proposition to that customer. If you don’t try to drive value then in our opinion you are not going to survive in the business. Pat McCullough And Carter, this is Pat. One of the other enticing things about our strategy is as we move to more off grid or let’s say grid unconnected products, we’ve come a lot less attendant on regulation versus deregulation trends, where some of our competitors are pretty concentrated selling commodity only in deregulated markets. We’re really moving away from that to a broader or more diverse portfolio of products. And if you think about some of the new companies that are selling solar energy storage, they are not constrained by deregulation versus regulated space. Carter Driscoll And to that point Pat, can you talk maybe about your tax rate for some of the new bundled product, maybe quantify a little bit, so we get a sense of how that translate from just commodity offerings? Pat McCullough Sorry, I didn’t understand the beginning of your question Carter. Carter Driscoll I was just saying, can you talk about the attach rates for some of the bundled services, relative to your existing RCE base and how that’s trended over the past few quarters, so we get a sense, or try to quantify going forward as we try to apply some level run rate to, you’re kind of decoupling from the largely dependents on the commodity markets. Pat McCullough Yeah, that’s right. And as we were talking about earlier, and as Jay alluded to. Number of customers versus RCEs, which are commodity equivalent and the products per customer are going to be major drivers of improvement for us in the future. And as we create more of these bundled attach solutions, we’re really piloting first and then scaling into solutions that provide better conversion upfront and then less attrition and longer lifecycles with customers. So if you can get a – obviously stickier, more profitable customer you’re really going to be working both the front end and the back end of those income and cash cycles. And we see evidence of that as we bring differentiated value propositions to our customers. And we’re excited because we’re really starting to get to the point where we can take some of these high levels like LEDs, smart thermostats and solar from tens of thousands of customers to more. Carter Driscoll But quantifying it, is that possible at this point, can you just talk about your tax rate, as from some period, or over a longer period of time, is it 5%, is it 10%? James Lewis I think earlier on, Carter, I think we see in the market where we’re able to deal with and attrition rate, we see attrition, say about 5 percentage points and some like is 10%. What you’ll see in those markets, where you have a control of the bill and you choose the right customer, we’re getting a much this year value composition in those markets. As we look and figure out the ways to deliver this and constrain markets where we don’t have that sort of bill, the stickiness isn’t that strong because the utility determined to win the dropped customers in those markets. So [indiscernible] strong, but in other markets it’s extremely strong. Pat McCullough And Carter, the direct answer to your question is no, we’re not presenting a tax rate at this point in time, but obviously as we move to a broader portfolio RCEs don’t really represent, the strategy what the business will be doing. So you will see us begin to report in a different way in the future where we’re really talking about number of customers and products per customer, so that we can directly to the answer to your question. Carter Driscoll Alright. And then, just maybe a couple of quick ones. On the national side, you talked about kind of the margin expectations as you penetrate and the time to reach maybe kind of, what you’ve earned domestically, and then is there any incremental spend for those two target markets, you’re looking to expand internationally, is that already baked into your EBITDA guidance for the year? Pat McCullough Yes, it is. We’re really looking to address two markets as Deb mentioned on the last call. We’ve put some investor materials out on our investor website, which showed the P&L and the cash over the last four years for our UK organic business development. We’re assuming a similar business case as we enter markets in Continental Europe. Now the difference in Continental Europe and the UK is, UK and Germany are the largest markets by far. So other markets that Deb spoke about, Netherlands, Austria, Ireland are smaller markets. But we do expect to see similar sized customers as the UK, those customers end up being much smaller than North American users of energy, but they end up being much more profitable on a common energy unit basis, meaning gross margin for RCE for example on commodity. So we’re believing, as we’ve said in the past that single-digit millions of dollars to penetrate two new markets, we don’t want to take more than that on in the year, but we expect to have breakeven just after about a year’s time and get a cash on cash return in less than two years, that’s what we experienced in the UK, that’s what we think we can do in the other Continental European markets. Carter Driscoll It’s very helpful. Then just lastly, I’ll sneak one in, on the Resi Solar side, what do you see in terms of pricing, obviously there has been some comments about slowdown in market, I think it’s more unrealistic expectations entering the year, but any kind of feedback you can give, what you’ve learned, whether you can hold EBITDA margins that you thought you would get from those markets and kind of the uptake, I know you reiterated the same contribution you did last quarter, but any incremental color would be helpful? Pat McCullough Yeah, I think we all know with SolarCity and SunEdison that the solar industry is taking some loss. It is impacting the cost of capital of our counterparties, and it’s impacting the cost of capital of financing solar across the industry. So yes, is the answer to your question that there is going to be pressure on our origination income and other parts of the value chain like installation and panels, which we do not participate in. But we really do believe we can hold higher origination income to the industry, but we’re obviously going to feel the same pressure that the industry feels. Rebecca MacDonald And just to add, we have already looked at solar and part of our bundle, because of diversified offerings we have to our customer base, we don’t want to hang our hat on any – not totally on solar and not totally on commodity, and that’s what does give us a real competitive edge. I would definitely, I don’t think this management team would want to be in 100% solar business today, and that’s not the space we would enjoy very much. Carter Driscoll Okay. I appreciate all your responses. I’ll go back in the queue. Thank you. Rebecca MacDonald You’re welcome. Operator We have a question from Damir Gunja from TD Securities. Damir Gunja Thanks good morning. Rebecca MacDonald Good morning. Damir Gunja Maybe can you just confirm the exact level of FX that you’re assuming in your forward guidance? Pat McCullough Yeah, Damir, we’re assuming 1.25 US deal saving. Damir Gunja Okay, that’s great. Thanks. And, I guess just a second one since everything was asked, I just want to confirm you quoted 300,000 customer adds for the coming year, that’s on a net basis? Pat McCullough Yes, Damir. And I think, the way we’re thinking about this, is it comes from geographic expansion, continued improvement in the UK, but also those non-RCE type customers. And I think solar being our energy storage pilot that we talked about in our outlook as well. Damir Gunja Okay. Got it. Okay, thank you. Operator We have a question from Sameer Joshi from Rodman & Renshaw. Sameer Joshi Hey, Pat, good morning. Pat McCullough Good morning. Sameer Joshi Just a quick question on – follow-up on Carter, line of questioning about the solar, is the outlook phase $10 million contribution to Base EBITDA from the solar business, should we expect the top line to be sort of in the same proportion as the $223 million to $223 million would reflect on the top line? Pat McCullough Relative to solar sales? Sameer Joshi Yeah. Pat McCullough Yeah, so I will refresh everyone’s memory on accounting for solar sales given we’re in origination business model. We’ll be experiencing the normal size installation that the industry sees, so I think 5, 6 kilowatts, we’ll be reporting revenue on the basis of the origination income that were paid. There is no cost of goods sold on our transactions, so gross margin will be equal to revenue. And then we’ll be recognizing our direct sales cost, our marketing efforts, our overheads between the gross margin and EBITDA lines. So that’s where you’ll see the fallout. We’ve talked publicly that we know third-parties are paying as much as $1 per watt, excuse me in Southern California, lower amounts closer to $0.50 in the Northeast, but we know that third-parties can hold as much as $1,500 US per transaction. We’re hoping to hold something in that range, but as I mentioned with Carter, there is quite a bit of pressure on those margins and with the heavy margins on the origination side of the business, we don’t think those will be sustainable for the long-term, but in the short-term we hope to experience those type of industry norms. Sameer Joshi Okay. That is helpful. And just two part question. Where there any installations in the – this quarter, in the last quarter, and going forward, are you giving any outlook in terms of solar installations, should we expect total installed base to be in the 5,000 to 7,000 range, and that 5 to 6 kilowatt per residence? Pat McCullough Yeah, if you use the industry norms, that’s the math that you would get to based on our guidance for fiscal 2017. And to answer your question that were limited installations done in fiscal 2016, they’ll become material to us in the coming year, so we’ll start to segment and show the details as to what we’re signing, what we’re recognizing as revenue gross margin needed up. Sameer Joshi Great. Thanks a lot, and good luck. Pat McCullough Thank you. Rebecca MacDonald Thank you. Well, if there are no more questions, I would like to thank you very much for joining us on this call. As management team, we really really appreciate your support, and if there are any other additional questions, all of us are available, you can call us directly. And look forward to talking to you in August when we report our first quarter. Pat McCullough Thank you. Rebecca MacDonald Thanks. James Lewis Thanks. Operator Thank you. Ladies and gentlemen, this concludes today’s conference. 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