Ladies and gentlemen, thank you for standing by, and welcome to the Universal Stainless Second Quarter 2021 Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions].

I would now like to hand the conference over to your host today, June Filingeri. Please go ahead. .

Thank you, Sarah. Good morning. This is June Filingeri of Comm-Partners, and I also would like to welcome you to the Universal Stainless conference call and webcast. We are here to discuss the company's second quarter 2021 results reported this morning. .

With us from management are Denny Oates, Chairman, President and Chief Executive Officer; Chris Zimmer, Executive Vice President and Chief Commercial Officer; and John Arminas, Vice President, General Counsel and Corporate Secretary. .

Before I turn the call over to management, let me quickly review procedures. After management has made formal remarks, we will take your questions. And as Sarah said, she will instruct you on procedures at that time. .

Also please note, in this morning's call, management will make forward-looking statements under the Private Securities Litigation Reform Act of 1995. I would like to remind you of the risks related to these statements, which are more fully described in today's press release and in the company's filings with the Securities and Exchange Commission. .

With the formalities complete, I would now like to turn the call over to Denny Oates. Denny, we are ready to begin. .

Thank you, June. Good morning, everyone. Thanks for joining us today. Our second quarter results built on the trends we highlighted in the first quarter and further confirms our 2021 outlook for consecutive quarterly improvement. If anything, demand momentum accelerated at a faster clip than we projected.

Specifically, during the second quarter, we posted a new company record with gross bookings of $74 million. Cancellations were minimal. Bookings increased 68% sequentially and tripled the second quarter of 2020 level. It is noteworthy that 42% of the second quarter bookings are scheduled for delivery in the first half of 2022. .

We reported a rapidly growing backlog of $98.9 million, an increase of 71% during the quarter, more than doubling our backlog since December 31, 2020. We reported all end markets increased bookings and backlog with the growing confidence in the aerospace recovery standing out.

We turned a corner on profitability, achieving a positive gross margin of 5.6% in the second quarter, the highest level since the pre-pandemic first quarter of 2020. .

We increased sequential electric arc and vacuum induction melting activity by 15% and 8%, respectively. On a year-over-year basis, electric arc melting was up 33% and vacuum melting of premium alloys was up 71%.

We also noted that our $10 million Payroll Protection Plan loan was officially forgiven early in July and will be recorded in our third quarter -- third fiscal quarter. .

Let's take a deeper dive into the second quarter itself. Net sales in the second quarter of 2021 were $38.5 million, an increase of 4% from the first quarter. This reflected strong sequential sales growth in each of our end markets, except for aerospace, which is off 4% from the first quarter.

Shipments were 14.3 million pounds, up 3% sequentially and 28% from the cyclical low fourth quarter of 2020. Indications continue to point to demand recovery in the commercial aerospace market in the second half of 2021, accelerating into 2022 and 2023 as evidenced in our order entry and backlog. .

Our sales were more heavily weighted towards semi-finished products, including lower premium melted products, offset by strong plate sales. Premium alloy sales totaled $5.9 million or 15% of second quarter sales. That's down 7 points -- down from $7.6 million or 20% of sales in the first quarter, reflecting inventory drawdown in aerospace.

Customers report pulling requests from OEMs are growing, and our premium alloy orders in our incoming bookings and June 30 backlog are up at a more normal rate of 21% to 25% of sales. .

Second quarter plate sales totaled $9.3 million or 24% of sales, the highest sales level since the record third quarter of 2018. The sharp recovery in industrial manufacturing, combined with a continuing strong automotive market, are driving plate demand. .

improved absorption as activity levels recover, about $1.1 million of the improvement; positive misalignment between surcharges and metallic costs on products shipped, about $0.5 million; lower operating costs due to improved productivity and increased yields of about $800,000.

In addition, we remain extremely vigilant in controlling spending and maintain controllable fixed operating spending 35% below pre-pandemic levels during the quarter. .

Given our increase in bookings and backlog, we are clearly in ramp-up mode operationally. The ramp is evident on the primary end of our business. That would be melting, remelting, grinding and hot working activity, all of which have increased.

Our downstream operations will be increasing output as we move through the second half with a higher mix of finished bar products.

For context, our overall plant activity level in the second quarter, as measured by pounds processed, was 44% above the recent cyclical low in the third quarter of 2020 but remains 42% below the last cyclical high in the fourth quarter of 2019.

Our goal is to maximize operating leverage on higher volumes through tight spending controls and a continued drive to improve productivity and first-time-through metrics. .

The ramp will not be without its challenges. Like every manufacturer and distributor I know today, we are challenged by our limited labor pool and growing inflationary trends for key operating supplies and parts. However, we remain confident we will meet these challenges. .

Let's look at commodity prices for a minute. Except for cobalt, prices of all commodities used in manufacturing our products increased during the second quarter. Nickel resumed its climb after retreating at the end of the first quarter, rising 9% sequentially and 41% from the second quarter a year ago.

Molly was up 47% from the first quarter and more than double its level last year. Scrap also nearly doubled from a year ago and was up 11% from the first quarter.

This general rise in commodity prices over the past couple of quarters is increasing surcharges at a faster pace than our average melt cost, yielding a short-term benefit to gross profit, which we estimated at about $0.5 million in the second quarter.

Surcharge will continue to increase in the third quarter, but we expect the benefit to be tempered somewhat as melt costs catch up to surcharges. .

As to base pricing of our products, we have now announced 3 price increases this year. The first was a base price increase of 3% to 10% on all products effective March 1, and it will be reflected in late third quarter shipments. We followed with a base price increase on all bar products of 3% to 10% effective June 21.

The latest increase was announced earlier this week, a base price increase of 3% to 10% on all long products which becomes effective immediately. The latter 2 increases will benefit our sales as we move into 2022. .

Continuing down the income statement. Selling, general and administrative expenses of $5.2 million and 13.4% of sales were essentially unchanged from the first quarter, and we expect little change for the remainder of the year. With an effective tax rate of 28%, our net loss in the second quarter was reduced to $2.5 million or $0.28 per diluted share.

The net loss was $1 million or $0.11 per diluted share, excluding the fixed cost absorption charges. .

EBITDA for the second quarter turned positive at $1.8 million compared with a loss of $0.7 million in the first quarter and ahead of $1.4 million in the second quarter of last year. Adjusted EBITDA in the 2021 second quarter increased to $4.1 million versus $2.1 million in the first quarter and $2.9 million in the second quarter of 2020. .

Turning to our financial position. Managed working capital at June 30 totaled $116 million compared with $112.3 million at March 31 and $151 million at the end of the second quarter of 2020, which represents a $35 million reduction year-over-year.

Inventory did increase 8% from the first quarter to $120.8 million as we gear up for a stronger second half in 2022. Receivables increased 3% from the first quarter, totaled $21.3 million with improving days sales outstanding. Accounts payable increased 32% to $25.2 million driven primarily by higher melt activity. .

Capital spending in the second quarter totaled $1.8 million, while depreciation and amortization totaled $4.8 million.

Majority of the spend is for 2 strategic projects, including the addition of a state-of-the-art vacuum arc remelt furnace to support growth in premium products, an 18-ton crucible for our vacuum induction melting facility to further reduce operating costs as we scale up.

Commissioning of the VAR is underway, and installation of the crucible is scheduled for the fourth quarter this year. We still expect to spend about $11 million in capital this year. .

Regarding cash management. Total debt was $53 million in the second quarter, including a $10 million term loan under the Payroll Protection Program. That's up $1.4 million from the first quarter but $19.5 million lower than the second quarter of 2020.

I'm pleased to report that at the end of July -- excuse me, at the beginning of July, we received full forgiveness of the $10 million PPP note. We will record this benefit in the third quarter, labeled as extinguishment of debt in the amount of $10 million pretax or an estimated $1.10 per share. .

As a reminder, in the first quarter, we amended and restated our 5-year $120 million asset-based credit agreement. The new agreement includes a revolving credit facility of $105 million and increases the term loan facility to $15 million.

Additionally, in conjunction with the amendment, we repaid our $15 million seller note obligation associated with the acquisition of our North Jackson facility and are now enjoying about $120,000 in quarterly interest savings as a result.

All in all, we are in a firm financial footing to pursue our operating and growth strategies with upwards of $42 million in gross availability on our revolver. .

Let's spend a couple of minutes on the end markets. Our aerospace sales were $21.3 million or 55% of sales in the second quarter of 2021 compared with $22.2 million or 60% of sales in the first quarter of 2021 and $37.2 million or 71% of sales in the second quarter of 2020. Year-to-date aerospace sales were $43.5 million or 58% of sales.

We expect recovery in commercial aerospace demand to gain traction as we move through -- move into fall this year. Inventories have been leaned out to supply chain. Airlines are recovering to pre-COVID levels and ordering new airplanes. Airplane makers are increasing build rates and beginning to place orders with suppliers. .

Let me expand on a few items. The uptake of COVID vaccinations has unleashed pent-up leisure travel, and domestic airline passenger traffic is taking off. You'll have to excuse the pun.

Over the 4th of July weekend, for example, TSA screened more than 10 million people, including 2.2 million passengers on Friday, July 2, which was high -- was the highest level since the start of the pandemic.

Delta Air Lines reports that their domestic leisure travel has fully recovered to 2019 levels, and they also see encouraging signs of improvement in business and international travel. .

The resurgence in air travel, low interest rates and rising fuel costs are prompting airlines to place orders for new airplanes. The largest in the second quarter was from United Airlines, 270 single-aisle Boeing and Airbus planes. Ryanair and Alaska Airlines have also ordered additional 737 MAX jets.

In total, Boeing reported 505 gross orders, while Airbus at 108 gross orders. .

The recovery in new orders from airlines have prompted the manufacturers to consider increasing aircraft build rates.

In its updated production plans, Airbus confirmed an average production rate of 45 aircraft per month in the fourth quarter of 2021 for the A320 and told suppliers to prepare for a rate of 64 by the second quarter of 2023 and as many as 70 by the first quarter of 2024.

They are also increasing the build rate for the A220 from 5 aircraft per month to 6 in early 2022 and a similar increase to the A350 by the autumn period of 2022. .

We'll see what Boeing has to say about build rates next week when they report. Unfortunately, all the news from Boeing has not been positive. UAE airline flight Dubai cut its order for the 737 MAX by 65 planes based upon its latest strategic planning.

And Boeing has reported that the 787 production rate will temporarily be lowered from 5 to 4 going forward. Lastly, software issues on the 777X continue. .

Meanwhile, the aftermarket continues to improve, and defense markets remain strong. Our service center customers continue to expect a strong metal pull in the supply chain for building new planes in the fourth quarter of 2021.

Conversations about supply chain destocking have all but disappeared in aerospace as focus shifts to the timing and strength of the recovery. .

The heavy equipment market remained our second largest market in the second quarter of 2021 with sales of $9.3 million or 24% of sales, representing an increase of 15% over the 2021 first quarter and 67% higher than the second quarter of 2020.

Metal fabrication markets drive plate sales and a pickup in industrial manufacturing as well as automotive demand and new model development despite the chip shortage drove our second quarter growth.

Last week, the Federal Reserve reported that the second quarter total industrial production rose at an annual rate of 5.5% with mining and materials, especially strong. We expect plate sales to continue to be a major growth driver for us in the second half of the year as order entry for our plate products remains strong. .

The oil and gas end market remained our third largest end market in the second quarter with sales of $3.9 million or 10% of sales, an increase of 28% from the first quarter sales and up 9% from the 2020 second quarter. The oil and gas market continued to rebound in the second quarter with U.S.

crude prices rising more than 50% this year and the rotary rig count in North America more than doubling from last year. A Houston-based analyst put it this way. As oil prices continue to surge upwards, rig counts are being dragged along with them.

After a couple of years of producers cutting expenditures as they focused on shoring up capital and investor returns, some have started increasing production.

Halliburton characterized 2021 as a transition year on their call yesterday and called out continuing increases in production and spending in the second half as the start of a multiyear up-cycle in the oil and gas industry. .

Looking at our backlog and order book and considering the products we've introduced for this market, we expect to see continued moderate growth through the balance of 2021. .

The general industrial market was our fourth largest market in the second quarter with sales of $2.3 million or 6% of sales, representing a sales increase of 9% from the first quarter of 2021 but 27% lower than the second quarter a year ago.

Our general industrial category includes sales to the semiconductor as well as to the medical and general manufacturing markets. The sequential increase in our general industrial sales is mainly due to a resumption of purchasing by our semiconductor customers due to their inventory adjustment in the first quarter. .

The current demand for chips is urgent, and buying has been heavy. In its latest report, Semiconductor Industry Association noted that global demand for semiconductors remained high in May with sales increases both year-to-date and month-to-month in all major regional markets.

While this segment can be a bit lumpy for us, we are back on track to see more normal sales levels for the balance of the year. .

Power generation market sales in the second quarter increased 17% to $1.4 million or 4% of sales compared with $1.2 million or 3% of sales in the first quarter but were 34% below the second quarter of 2020. Maintenance demand continued to account for most of our power gen sales in the second quarter as it has in recent years.

While maintenance activities were interrupted by the pandemic in 2020, demand began to recover in the first quarter and recovery continued in the second quarter. Springtime is normally a strong season for maintenance, and the unusually high conditions this year have also increased demand. .

Universal, along with our customers, have been waiting for the eventual pickup in the new turbine market in the U.S. for some time.

The business case for gas turbines was recently reiterated by a market analysis from Grand View Research, which noted that the size of the global gas turbine market is about $20 billion, is expected to grow at a compound annual rate of 7% from 2021 through 2028.

Among the factors cited propelling the market were government policies favoring the use of clean fuels for electricity generation, the role of natural gas-based power plants in reducing greenhouse gas emissions, the decline in gas prices and the discovery of shale gas reserves.

That said, we expect maintenance demand to continue to be the main source of our power gen revenues with recovery to continue for the balance of the year. .

So let me summarize. In the second quarter -- the second quarter was another quarter of improvement for Universal, and 2021 is playing out generally as we expected. Sales are increasing gradually while incoming bookings accelerated to record levels during the quarter.

Market demand is going in the right direction, and we saw sequential sales growth in each of our end markets, except aerospace. Recovery in demand in aerospace is expected in the second half of the year, especially in the fourth quarter. .

Our initial expectation for 2021 was for consecutive quarterly improvement with momentum building in the second half. With record bookings in the second quarter and a backlog increase of 71% to just shy of $100 million, we are well on track. .

We turned the corner in profitability with a positive gross profit of $2.2 million and a gross margin of 5.6% in the second quarter. We continue to achieve productivity improvements, reduce operating cost per pound and control spending. We expect further improvement as volumes increase and a firming price environment unfolds.

We are moving forward with our growth initiatives, including the addition of the new state-of-the-art VAR as well as the 18-ton crucible to support our growth in premium alloys and reduce costs. .

labor shortages throughout the supply chain and increasing inflationary trends on parts of supplies and consumables. As we move through this year amid signs of recovery, I want to continue to recognize the central roles of our dedicated team, our support of customers and shareholders and our Board.

Without them, our continued progress would not be possible. .

That concludes my formal remarks. Sarah, we're ready to take some questions. .

[Operator Instructions] Our first question comes from the line of Michael Leshock with KeyBanc Capital Markets. .

I just first wanted to touch on the inflationary pressures and labor constraints that you mentioned. Maybe if you could provide an update there in the current hiring environment and where you see your current head count versus where you want to be on the recovery. .

Well, it's been a struggle, and it's a struggle, I want to emphasize, not just for Universal. I think it's a struggle throughout the supply chain. So we are spending as much time expediting as we are placing purchase orders these days.

And normally, the lack of delivery of parts and supplies and the slow delivery of raw materials is normally attributed to a lack of labor at our suppliers or a lack of containers or shortage of containers or high-priced containers on an international product that we're moving.

So this is a problem that the entire industry, entire supply chain is confronted with. .

As far as Universal goes, as we start to ramp up the facilities, we are hiring. It is very challenging right now. Yes, in my personal opinion, the supplemental unemployment compensation that we have in the country today, which will end on September 4, is the main cause of the problems we're seeing along with other manufacturers.

So we are doing things to try and address that. We have accelerated some wage increases in our contracts, which were originally slated for the end of September. We accelerated into June to try and attract more employees. But fundamentally, I don't view this as a wage rate issue.

It's simply the fact that it's a nice part time of the year at summer and people are electing to stay on unemployment through the summer and come back to work in September. .

As far as the numbers go, if we could get an additional 50 employees for activity now, and we will be growing that number of employees probably north of 100 by the first quarter of next year, that's a rough idea of the number of folks that we would be looking for in our plants -- in our 4 operating plants. .

As far as the inflation, I mentioned the labor and the impact on getting the product here, getting supplies and parts on time. And I should emphasize, it's an issue. It's not crippling us or anything like that, but it is something that I feel, in the interest of being transparent, we need to call out because it is a problem.

We are seeing mid-single to high single-digit cost inflation on many consumables, things like refractory brick, saw blades, lubricants, things like that. .

Got it.

And then on the longer-dated orders in your aerospace backlog, is that more structural or engine products? And do you see any discernible difference between engine and structural supply chain currently?.

Let me ask Chris Zimmer to answer that one. .

Yes. Mike, a lot of the orders that are coming on to the books for shipment in 2022 tend to be structural. That supply chain flows primarily through service centers. The engine side of the business is typically forger business. They buy at lead time and generally don't go out as far as they rely upon a flow down from the engine manufacturers.

And those engine guys are very quickly imposing upon their supply chains, get ready for the ramp. So we have seen an uptick in activity for engine demands. But I would characterize the majority of our order entry in the second quarter supporting structural applications, landing gear, things of that sort. .

Okay. That's helpful. And then just last for me.

Have you specified your wide-body versus narrow-body exposure in the past? And how do you see the recent 787 issues impacting Universal in the supply chain?.

We've never specified a percentage of our sales going to the wide-body versus single-aisle planes simply because we really don't have good data on that. As Chris just described, we sell mostly through the service centers. About 65%, 70% of our sales go through service centers. Forgers would be the next biggest group.

So we don't have the visibility through to the ultimate platform that those parts are going on. .

As far as the 787 goes, I mean, certainly, we'd love to see them making 5 787s a month instead of 4, but it's really a marginal impact on us. I can't really give you a number, but you can see by our bookings. I think, obviously, majority of our volume is going to single-aisle-type airplanes. .

Our next question comes from the line of Alan Weber with Robotti Advisors. .

Can you talk about the backlog? What percent of that is aerospace?.

Roughly about 2/3. 65% right now at June 30 would be aerospace. So what you've seen more recently in the last couple of quarters in terms of sales is a decline in the percentage of aerospace as a percentage of our mix, which reflects, obviously, the downturn in aerospace coupled with some faster growth in our non-aerospace business. .

As we look at the backlog, we would expect that to come back in line with some more normal numbers. And by normal, I mean things we've seen recently, which would be -- aerospace is roughly 2/3 of our sales year in and year out.

And as we continue to grow the premium melted products, they will pick up an increasing percentage of our sales, which we would expect to be roughly 20% today and a growing percent as we get into the next 2, 3 years. .

Okay.

And then my other question was, can you talk about -- as you talk about the backlog growing like that, how do you think about gross margins and operating margins kind of incrementally?.

Well, you're seeing sequential increase in gross profit margin. So operationally, as we look at higher volumes in our backlog, obviously, that did take higher production volumes in our plants. So we want to maximize operating leverage. We want to do everything we can to hold our fixed cost relatively flat.

So at the margin, as sales pick up, more and more of that will come to the bottom line. .

In addition, with higher volumes, just some of the variable cost performance, putting more material through our facilities, we will pick up additional variable cost per pound improvements. So both of those items will drive higher gross profit margins.

And as we look near term, I think we still have another quarter or 2 of challenges certainly in the third quarter. I expect sales to be up. Gross margins to be improved, maybe in the high single-digit range.

But as we noted, we did have a nice bump in bookings but almost 50% of that is scheduled for production in the second half with sales in the first half of the year. So it gives us an opportunity to level load our facilities and run even more efficiently. .

I guess the other impact I should mention on gross profit, obviously, is the selling price increases that I mentioned. But just be aware, we're also seeing increased commodity costs, and we're also seeing some inflationary trends on our consumables as well. So 100% of the price increases won't come to the bottom line. .

So as you look down the road, we would expect higher gross profit margins because it's a more favorable pricing environment; our mix will be improving, more finished bar, more premium melted products as we get into 2022; and as we ramp up the facilities, our absorption position will improve; and our variable cost, our productivity and yield specifically will continue to improve.

.

Okay.

And then in your adjusted EBITDA, what is fixed cost absorption direct charge?.

That, we basically hold our fixed costs at 45% of our operating costs and third-party operating costs where we might ship something outside the company. So anything over 45% we expensed directly. So when I'm talking about unabsorbed costs or special fixed cost charges, it's a simple fact that we are not operating at very high levels of activity.

It's improving. But as I mentioned in my comments, we're still running about 42% below where we were as recently as 1.5 years ago. So just from an accounting perspective, according to GAAP, we expense that rather than putting all that cost in inventory and expensing it in the future. .

[Operator Instructions] Our next question comes from the line of Bob Sales with LMK Capital. .

Congratulations on the improvement. Just you've answered most -- a lot of my questions. I just had a couple. On the premium alloy business, it looks like it was 15% of revenue in Q2, and then you described that checking to 20% over time and maybe higher than that.

The question I had in premium alloy is when you win that business, is it more application-specific that takes a longer period to gel? Or is that sold into the same type of service center business once you win approval from the manufacturer, just like the rest of your alloy products?.

Let me ask Chris Zimmer to weigh in on that one. .

Well, it's a mixture of the 2. The premium products do go to more critical applications. So the approval process is more lengthy. A lot of times, that's on a direct basis. So the qualification process is typically tied to a long-term agreement in the shift of supply chain to us from an incumbent. So it tends to be a little bit of a longer cycle.

But once we're into it, there's much more steadiness to the business and reliability. .

There is a healthy portion of it, however, that does flow through distribution. This would be what I'd call some workhorse structural alloys that go to critical aerospace and defense, largely defense applications. So it's a combination of the 2.

But when we look at the applications for these products like gearboxes, bearings, shafts within the engines, they tend to be a little bit more intensive from a qualification standpoint.

And therefore, those primes like to control the supply chain a little bit better, and that yields more direct sales rather than through distribution for what I would call some of the product that only calls out an industry AMS specification. So hopefully, that helps you. .

Yes. That's good. That's good.

And what would you say the delta is in the gross margin between your premium alloy products and your standard alloy products?.

Premium alloy we would expect to be in the high teens, low 20s on premium alloy products. We do have some AOD-produced products that are higher margin than that, quite frankly. But the typical AOD product would be somewhere between 5% to 7% lower in today's environment. .

Okay. Got it. And then the plate business, I'm just pleasantly surprised how strong that business continues to be.

Do you think it's a function of strictly new models entering the industry? Or do you think it's a continuation of limited sources for the plate product and you are garnering a bigger share of the demand?.

Well, like many of our other products, tool steel is sold 100% into service centers. So we don't have precise visibility into where every pound that we sell is ultimately going to go once it hits the service center. So we're going to sell a finished plate, service center is going to take it.

They're going to cut it up and they're going to sell that to machine shops. So what -- we know that the largest uses for tool steel would be things like new jigs and fixtures if you're redoing a line for a new model, that kind of thing or any way you're doing that kind of heavy metal fabrication work. .

Typically, automotive is the biggest driver. And within automotive, the biggest driver would be the new model where they're rejiggering facilities and stuff like that, putting in new facilities to make cars as opposed to the absolute number of cars being made.

But there's also a sizable amount that goes into general manufacturing, paper plants, cutlery, things along those lines. .

That's the best I can give you. When we talk to our customers, that's typically the way they answer the question. And there's always that healthy skepticism between our good customers and service centers and middles about where the ultimate product goes. .

Got it.

And Denny, what about an update as to your thinking with the Board on the CFO position and your plans to accommodate what you need from a finance perspective?.

Well, I think you should understand that we have a very talented group of financial folks inside the company. We're not going to rush to fill that position.

We have brought in folks in the past and popped them into the CFO role, and we end up, frankly, and this is my opinion, we end up training folks and they end up in the private equity world, taking smaller companies public. .

So we want to -- we believe in promoting from within. We've got a good cast of characters inside the company. We want to give them an opportunity to develop and perhaps have a shot at that chair. So that's kind of where we're at right now.

We're working to develop some of our people, our in-house talent that have been with us for a while and deserve a shot at that job. .

There are no further questions. I will now turn the call back to Mr. Oates for closing remarks. .

Once again, thank you for joining us this morning. With recovering markets and the relentless efforts of our team, I feel we were able to achieve important progress in the second quarter. I look forward to updating you on our efforts and to take full advantage of our market opportunities as we move forward. Be well. Stay safe.

Have a good day, and we'll talk in October. .

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect..