Helix Energy Solutions Group, Inc. (HLX) Q3 2013 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to the Helix Energy Solutions Group Review of Q3 2013 Results Conference Call. (Operator instructions.) As a reminder this conference is being recorded Tuesday, October 22, 2013. I would now like to turn the conference over to Mr. Terrence Jamerson, Director of Finance and Investor Relations. Please go ahead, sir.

Thank you. Good morning, everyone, and thanks for joining us this morning. Joining me today is Owen Kratz, our CEO; Tony Tripodo, our CFO; Cliff Chamblee, Executive Vice President and Chief Operating Officer; Alisa Johnson, our General Counsel; and Erik Staffeldt, our Finance and Treasury Director. Hopefully you all have had an opportunity to review our press release and related slide presentation released last night. If you do not have a copy of these materials both can be accessed through the Investor Relations page on our website at www.helixesg.com. The press release can be accessed under the “Press Releases” tab and the slide presentation can be accessed by clicking on today’s webcast icon. Before we begin our prepared remarks Alisa Johnson will make a statement regarding forward-looking information.

During this call we anticipate making certain projections and forward-looking statements based upon our current expectations. All statements made during this conference call or in the associated (inaudible) other than statements of historical fact are forward-looking statements and are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual future results may differ materially from our projections and forward-looking statements due to a number and variety of factors including those set forth in our Slide 2 and in our Annual Report on Form 10(k) for the year ended December 31, 2012. Also during this call certain non-GAAP financial disclosures may be made. In accordance with SEC rules the final slide of our presentation materials provide a reconciliation of certain non-GAAP measures to comparable GAAP financial measures. The reconciliation along with this presentation, the earnings press release, our Annual Report and a replay of this broadcast are available on our website. Owen?

Thanks, Alisa. Good morning, everyone. We’re going to start on Slide 5 of the presentation which is a high-level summary of Q3 results. When adjusting for the impact of the contribution from the pipe lay asset which has since been sold, Q3 revenues increased 10% from Q2. The introduction of the Skandi Constructor into the Well Intervention fleet had the most significant impact while Robotics’ revenues increased slightly as well. While reported EBITDA went down from quarter to quarter some $4 million, again, when adjusting for the contribution for the pipe lay assets in Q2 EBITDA with the way Helix is computed today actually increased sequentially some $11 million in Q3. Over to Slide 6, our reported earnings per share of $0.42 included two nonrecurring items – a gain from the sale of the Express which occurred in mid-July of $15.6 million and a loss on the early redemption of the remaining $275.0 million of senior unsecured notes of $8.6 million pre-tax. Combined on an after-tax basis these two items amounted to $0.04 per share; thus, without these two items our reported EPS of $0.42 per share would have been $0.38 per share. Our Robotics business realized 98% utilization on our long-term chartered vessel fleet, producing our best quarter of the year for this business segment. However, Q3 is normally a seasonally active quarter for this business due to our exposure to the North Sea. While the Well Intervention fleet saw fleet utilization slip to 84% in Q3 this was entirely due to the Skandi Constructor being off hire for most of the quarter while being fitted for its well intervention equipment. She went into Well Intervention mode in early September and we’re pleased so far with her operating performance. With the sale of The Express in mid-July for the most part Q3’s results essentially reflect the business Helix has transformed into. On to Slide 7, from a balance sheet perspective our cash and liquidity levels remain very strong. Cash stood at $480 million with liquidity levels remaining strong at approximately $1.1 billion. We made two major shipyard payments during Q3 - $a 58 million progress payment for the Q5000 and the $69 million down payment for the recently announced Q7000. With the redemption of the remaining 9.5% senior unsecured notes in July our net debt capital structure has now been transformed to a much lower cost profile. I’ll now turn the call over to Cliff for an in-depth discussion of our Contracting Services results.

Okay, thanks Owen. Good morning, everyone. In looking at the summary results for Contracting Services we see that the revenues including subsea construction were up $17 million or 8% in Q3 compared to Q2. The $4 million of revenues in subsea construction was for remaining work of (Inaudible) Express pipeline vessel before being sold in the middle of July. Both revenues and profits remained roughly the same in the production facilities while overall gross profit margins in the Contracting Services increased to their highest levels of the year primarily due to the strong utilization of the charter vessel fleet in Robotics and now having three vessels in the North Sea performing well intervention work. We move on to Slide 10 for a well ops review. In the Gulf of Mexico we achieved 100% utilization of the Q4000 for the quarter. Our spare Intervention Riser System, IRS no. 2 remained on hire to a client in standby rates throughout the quarter and we expect the system to go on hire at full operating rates sometime in December of this year. As for the latest on the 534 she began transit in mid-September and is expected to arrive in the Gulf in November, and if all goes well we hope to put it to work in late December. Over the North Sea we achieved 97% utilization in the Seawell and 100% for the Well Enhancer. The Skandi Constructor as you’ll recall was (inaudible) at the beginning of Q2 and she initially went to work as a support vessel on our wind farm project. At the end of Q2 we brought the vessel dockside to undergo upgrades and installation of the well intervention equipment for approximately two months. That’s the reason for the decrease in utilization of the overall well intervention fleet this…

Thanks, Cliff, and good morning. Please turn to Slide 14. Slide 14 provides an illustration of our debt maturity profile at September 30th. Previously disclosed, during Q3 we retired the high-yield notes with proceeds from the term loan, significantly decreasing the cost profile of our capital debt structure. Debt reductions during the quarter reflected quarterly payments of the term loan and the semi-annual payments for the MARAD debt. Moving on, Slide 15 provides an update on our gross and net debt levels historically end at September 30th. We continue to maintain a strong liquidity position with approximately $1.1 billion of liquidity. Our net debt levels increased from Q2 primarily as a result of the Q7000 shipyard payment previously disclosed. Tony?

Yes, moving on to Slide 17 which reflects our updated 2013 outlook. We adjusted our outlook assuming a late December in-service date for the H534 resulting in very little contribution from this vessel for 2013. Although the vessel is expected to arrive in the Gulf of Mexico in early November with an estimated thirty days of work needed to get the vessel ready to be placed in service we believed it was prudent to lower our expectations for EBITDA contribution for this vessel in 2013. Thus we have adjusted our forecast of total EBITDA for 2013 to approximately $290 million from the prior $300 million. Again, as we’ve stated in prior quarters, in backing out the [stub] impact of our discontinued operations, both oil & gas and pipeline and throw it into the equation, a full year’s impact for the two vessels that entered the fleet in 2013 – the Skandi Constructor and the Helix 534- expected pro forma exit rate EBITDA for 2013 is more like $350 million. We’ll actually provide our initial guidance for 2014 in February. Both Well Enhance and Skandi Constructor have short duration dry docks in 2014 and we may and are evaluating to perform a life extension project on the Seawell. If we do so she may come out of service in late December of next year to commence this project. Year-over-year for ongoing operations we’re forecasting a revenue growth of 22% in 2013. $1.8 billion of backlog at September 30th and $2.0 billion including the backlog for the Helix Producer I provides a solid foundation for our revenue base on a go forward basis. For instance, the Q4000 is spoken for through 2015 with additional commitments in progress beyond. The Seawell, Well Enhancer and Skandi Constructor have relatively high levels of backlog and…

Thanks, Tony. Well, I’m pleased to report that all is going well and we’re on track with the execution of our growth strategy. While the H534 is arriving to market slower than we had hoped for our strategy for adding capacity to the growing well intervention market is solidly in place. The slower start with the introduction of the H534 into the Gulf of Mexico intervention market was due to a prolonged refurbishment that has delayed the asset to market by almost six months. The vessel’s now en route to the Gulf of Mexico and is expected to be in service prior to year end as Cliff said. On the Robotics side the new T1200 trencher went into service onboard the Grand Canyon and we did add some new ROVs to update our fleet so we’ll expect some stronger results ahead for Robotics. As Cliff mentioned also we added the Skandi Constructor back in Q2 but just recently completed the required modifications that will allow it to go into full light well intervention mode. While a tad later than we expected this vessel is now working in intervention mode and it’s performing well. While we didn’t get the assets working as fast as we had planned our exit EBITDA rate is still forecasted to be $350 million, so by the end of the year we will be where we wanted to be. The delays related to the H534 and Skandi Constructor mean that 2013 results are not quite as good as they could have been, but in spite of this strong performance from the rest of the company has allowed us to come really close to the $300 million EBITDA that we did forecast. The two new builds, Q5000 and Q7000 are progressing on schedule in the shipyard. Q5000 is on schedule to be delivered in early 2015 with the Q7000 around midyear 2016, and both projects are forecasted to be on or under budget. In general we’re pleased with the 32% operating margins that we achieved this quarter and even see areas where we might improve. The balance sheet remains strong with planned growth capital allocations paced to keep debt low. We’re 16 months from delivery in our first in a series of new intervention assets and market demand is developing as we predicted. All is well and we should expect even better results ahead. So at this time we’ll be happy to take any questions.

Thank you. (Operator instructions.) Our first question comes from the line of Jim Rollyson from Raymond James. Please proceed. Jim Rollyson – Raymond James: Good morning, guys. Owen, you talked about the Robotics side of things with the REM Installer coming in last quarter, a couple more ROVs you mentioned and generally you sounded pretty positive. Yet your revenue guidance for that business came down a little bit just for the rest of the year. I’m trying to square those two items and trying to figure out maybe what drove that and how we should think about the Robotics business going into the latter part of this year and really next year.

Okay, thanks Jim. Let me let Cliff address that since he’s a lot closer to it.

Okay. Well, on the Robotics side, as you remember on the long-term charter vessels we had we were running at about 98% utilization so obviously that’s a good thing – that’s been pretty consistent. Lately we had a little bit of a slow start in the winter with those. But one of the objectives that we haven’t achieved and that doesn’t look like we will this year, and that we have historically, is we have not been able to pick up any spot boats that we didn’t have already on long-term charter just because the market wasn’t there to pick those spot boats up and make some extra money in addition to our long-term charter vessels. We do expect that to get back to the normal levels next year like we’ve had in the last three or four years in the past, so that’s our biggest shortfall I believe there. Jim Rollyson – Raymond James: Okay, so it’s not lack of opportunities; it’s just lack of available vessels. That makes sense.

No, it’s a little of both. It is a little bit of market also that there has been a little bit of lack of opportunity as well there also. So it’s not just lack of vessels; it’s been more so I’d say lack of opportunity there this year. Jim Rollyson – Raymond James: Okay, that’s helpful. And Tony, you talked a little bit about, you certainly gave us detail on CAPEX for the rest of this year – maybe give us some idea, just kind of thinking about how to schedule the payments on the Q5000 and the Q7000 as you go through the rest of the construction cycle just so we kind of maybe time that right.

Okay, Jim, just from a Q5000 only, the major milestone payments for 2013 are now behind us this year. I would expect us to add two more milestone payments next year totaling about $120 million, and then the final payment upon delivery in 2015. As far as the Q7000 contract goes, that shipyard contract is different than the Q5000. We essentially negotiated 20/80 terms which is 20% down, 80% on delivery, so the rest of the shipyard payment won’t occur until the vessel is delivered in 2016. That being said we have ongoing expenditures internally for engineering that will go on constantly as well as some equipment we buy for the vessel that will happen from time to time, but the majority of the costs for both vessels is the shipyard-related costs and it’s as I outlined previously. Jim Rollyson – Raymond James: That’s what I thought you said, that’s helpful. And lastly maybe just Owen, when you announced the Q5000 you kind of waited until you got some work for that before you looked into seriously considering the Q7000 and you had obviously picked up a contract. I’m curious how marketing is going at this point or discussions at least for the Q7000 and maybe how you think about the timing and what needs to happen if you were going to build a third new build.

That is one component of it, Jim, is having work booked up for this current vessel under construction. I’d say that the market demand for the Q7000 is strong or stronger than what we had expected. Timing-wise I’m going to go out on a limb here and say, well, let me go into the second part of that. Another reason why you build these vessels sequentially is so that you can allocate your resources properly and gain some economy of scale and efficiencies. So we wouldn’t want to start the next one too soon – we’d want to get down the road with the Q7000 before starting the next one. I’ll just leave it to say that I’m pretty confident that before we get to that inflection point we will have sufficient contracted dates for the Q7000 to proceed with the next vessel, maximizing the efficiency of our current resources. Jim Rollyson – Raymond James: Okay, thanks guys, I appreciate it.

Our next question comes from the line of Joel Gibney from Capital One. Please proceed. Joel Gibney – Capital One : Thanks, good morning. Owen, I just wanted to get your bigger picture perspective on well intervention. It certainly seems a little bit more perception versus reality in the market a little bit. It sounds like everything’s proceeding well in terms of market demand. I’m just curious to get your perception a little bit on mid-water and legacy deepwater offshore driller rate declines in the market. There seems to be a bit of a perception that this puts a bit of a cap on well intervention rates and/or creates the notion that some rigs might step down into the market. Just curious to get your thoughts if you’re seeing that, if you’re not; whether or not you deem that material to sort of your market opportunities as it stands today.

In the long term, Joe, I would say that it’s immaterial. I think there is a shift in the market to non-rig solutions for well intervention and I think there’s a growing awareness by the operators that they need this solution. Near term, could it put some downward pressure on pricing? Probably, but keep in mind that historically we’ve priced at a discount to rigs already so there’s room there. Also I think it’s just highlighting the efficiency argument greater than it has been. There has been an efficiency gain by using our assets versus a rig that has to be taken into consideration. And then finally consider the fact that 80% of all of the intervention in the world currently is done by rigs. What’s happening is they shift some rigs to non-rig vessels. That may slow a little bit with more rigs doing it, but a few more rigs doing intervention when 80% of all the intervention’s done by rigs already is not material in my mind. Joel Gibney – Capital One : Okay, helpful. I appreciate it.

Let me add one thing, Joe. The H534 I think demonstrated that converting one of these old drill ships to intervention is not an easy task. Joel Gibney – Capital One : Sure. Specifically my next question, I was just curious – I know the incremental costs on that asset look up a little bit here again sequentially. Is that just a function of some of the incremental yard time in getting it ready, with the longer stay or some other bells and whistles here as you’ve peeled it back? I’m just curious on the cost creep on that particular asset.

I think we had three things that occurred on the H534. One is we expanded the scope of the refurbishment that we originally had planned because we do want an asset that performs well in the market. Second, I think the condition of the vessel – you know, when you get into these old vessels you can get into a refurbishment and put Band-Aid fixes on things and get working; or you can look at root cause and try and really dig down, and that takes time and money. And we opted to take the second route. And then third we did have some vendor issues where some of the vendors that we gave engines and things out to, their work was subpar and had to be reworked. So that was the cause of the delay. Joel Gibney – Capital One : Okay, helpful. The last one for me, Tony, just some modeling-related questions: G&A, just curious, I know this is a minor needle mover but I thought we might have seen a little bit more step down as you kind of pare back a little bit on sort of shore-based costs and some of the things associated with the construction side of things. As Express is out of the mix now could we see G&A step a little bit lower here? And also just a little bit of help on tax – where do we go with that on a reasonable run rate going forward? I know it can dance but Q3 was a little aberrant. Just trying to get a decent run rate going forward.

Sure. SG&A from a pure spending standpoint was actually pretty flat for Q2. We did book additional bad debt reserves in Q3 of some $2 million so that’s why you saw the tick up. I would expect in Q4 it to come down. In terms of tax we had some discreet items that benefited our tax rate in Q3 – 13% plus I would say is unusually low. We expect the total rate for the year to be 20%. And I think from our thinking and from everybody on the outside’s thinking we think low- to mid-20%s is the right type of rate going forward although this year we’ll be around 20%. Joel Gibney – Capital One : Okay, helpful. I appreciate it, I’ll turn it back.

Our next question comes from the line of Jeff Campbell with Tuohy Brothers Investment Research. Please proceed. Jeff Campbell – Tuohy Brothers Investment Research: Yes, good morning. I just wanted to ask you a quick question with regards to Seawell. Assuming that you do choose the life extension you mentioned that there might be a bit of a headwind if it goes into its work late in the year. I was just wondering do you have any flexibility to work around that with the Skandi Constructor during a Q4 2013 dry dock?

Well, the reason we picked that timing is historically in the North Sea that’s the slow time in the year in the work efficiency and we struggle for keeping the utilization there. So that’s why we chose that. The other vessels are, and we are booked up beyond that and we have work for the Seawell beyond that as well, so we’re trying to pick the period when the clients would like for us to be out of service. And obviously the North Sea is in the middle of winter so our goal is to get it in in December of next year and work December, January, and probably into February as well. Jeff Campbell – Tuohy Brothers Investment Research: Okay, well that was helpful. I just wanted to ask kind of a little bit broader question. When we spoke with Owen back in August he told us that plugging abandonment is the dominant business in well intervention but that production enhancement is increasing in demand. And I was just wondering are you still seeing that trend for production enhancement increasing in the most recent quarter and looking ahead?

Yeah, definitely production enhancement is more of what we’re doing, and there’s talk on the horizon about more decommissioning work as well but that’s still out in the future out there. Jeff Campbell – Tuohy Brothers Investment Research: Okay, thanks a lot. That’s it for me.

Our next question comes from the line of Michael Marino from Stephens Inc. Please proceed. Michael Marino – Stephens Inc.: Thanks. Tony, you called out a couple dry docks and then the Seawell’s life extension potential is I guess headwinds for 2014 versus the ’13 exit rate. Is maybe the embedded day rate increases within Well Intervention and growth in the Robotics, is that enough to kind of offset those discrete items?

You know, Michael, that’s a good question. We believe that a $350 million exit rate is a good proxy right now looking forward despite those dry docks and a possible life extension. So I will say this – we’re in the middle of our budgeting process for 2014; we haven’t finalized it yet. But based on our analysis of what 2014 should look like I think that exit rate is a good proxy now. Michael Marino – Stephens Inc.: Okay, thanks for that color. And then two more, I guess more housekeeping things: the planned sale of Ingleside, what kind of proceeds are we expecting there or is it too early to say?

I think the major terms are we’ve already received a $5 million deposit and I think we’re going to see progress payments over four years of about $10 million, $8 million apiece. So it’s going to be spread out over four years. January is the next payment. We close in January so that’s when we’ll receive the next payment. Michael Marino – Stephens Inc.: Okay. And then one final one just to make sure I have this in my model right, but the dry dock of the HP1 in Q4 of this year and you’re still expecting 45 to 60 days, is that correct?

It’s in dry dock right now. It’s about halfway through so we’ll be on budget for that is our prognosis at this time. Michael Marino – Stephens Inc.: But 45 to 60 days is still the thought?

It’s less than that. It’s going to be between 30 and 45. Michael Marino – Stephens Inc.: Okay, thank you.

(Operator instructions.) Our next question comes from the line of Martin Malloy with Johnson Rice. Please proceed. Martin Malloy – Johnson Rice: Good morning. Could you maybe talk about what you’re seeing in terms of pricing for well intervention services as you look forward maybe on a year-over-year basis from ’13 to ’14, with you already having good contract coverage for almost all of ’14?

I think in general – I’ll speak first and then let Cliff add something to it. But I’d just like to point out that we have moved the intervention rates up pretty aggressively over the past two years so we are seeing stronger rates. We’ve already talked about could there be some downward pressure from older rigs and the answer is probably yes, so trying to predict how much further rates could go up is difficult. There is greater demand than there is supply right now so that’s working in our favor, and there is a big difference between long-term commitment and short-term spot market rates. So the answer’s not easy but I think we have been successful in pushing them up. I think there is probably some incremental additional increase coming but I’d be cautious about predicting too great an increase. Martin Malloy – Johnson Rice: Okay.

Our biggest (inaudible) is going to come when we get the new vessels, the Q5000 and the Q7000 as far as the incremental increase. And I think the fact that now the clients have realized the efficiencies using our vessels in well intervention versus trying to use the older rigs is helping us sustain those higher rates as well. Martin Malloy – Johnson Rice: Okay. And then just to go back to the Robotics segment, and from the Q2 presentation to the Q3 presentation it’s about a 10% decline in terms of your revenue expectations for that this year. And I know you mentioned you were unable to pick up some spot charter vessels but is there anything else that’s going on on the Robotics side that gives you concern? Are there projects on the renewable side that are not materializing or anything like that?

As I mentioned Q1 we had a slow start in the North Sea so that had a couple vessels sitting at the docks which hurt us right out of the gates. And as you mentioned we haven’t had spot vessels. But it has been a little bit of a slow year on the renewable side but not anything substantial, and project-wise that is picking up for next year and beyond.

I’ll add to that. I think maybe expectations for this year, if you go back to last year talking about this year there was a lot of talk in the industry about how strong the subsea market was going to be in the coming year and out into the future. And I think our experience is that it didn’t materialize quite as strongly as what everybody was thinking especially here in the Gulf. Martin Malloy – Johnson Rice: Thank you.

Our next question comes from the line of Trey Stolz from Iberia Capital Partners. Please proceed. Trey Stolz – Iberia Capital Partners: Good morning, guys. A lot of my questions have been answered already. I guess looking at Canyon with the additional chartered vessel there, can you quantify or help us kind of understand what the contribution was quarter-over-quarter in terms of revenue, how we might think about that. Was there a shakedown period for a vessel like this and will we expect higher contribution on a relative basis going forward?

If you’re talking about the new vessel I think, the REM Installer, that’s your question? Trey Stolz – Iberia Capital Partners: Yes.

Yeah, there was not a shakedown period. It came out of the yard and went pretty much straight to work. And actually it’s on kind of a field maintenance contract. We’re supplying a flotilla or what we call a walk to work contract, so there’s people staying on the vessel and working on the platform. So it’s not a real high dollar earner contract for us and it’s on there until I think the end of this month actually. So it’s not on a trenching campaign or a construction campaign – it’s a little bit more of a lesser return than a normal construction-type project. Trey Stolz – Iberia Capital Partners: So will you expect incremental operating income after this month from that vessel?

Yes, we expect to put it back into the construction side of work but also be aware that wintertime is fast approaching here in the North Sea so you could be seeing in Q4, the back end of Q4 we could be seeing some utilization projects as well. Trey Stolz – Iberia Capital Partners: Gotcha, okay. And then the Seawell, what are the factors playing into your decision there on the Seawell and the project, the life enhancement project?

I’ll take that, Cliff. We have three light and efficient vessels working in the North Sea right now – demand is strong, we need three. The Seawell is now getting fairly old but she has a fantastic track record. She was purpose built for intervention and she works exceedingly well. So the decision tree was what do we do? Do we replace her or do we refurbish her? And at the end of the day, through a lot of considerations I think a life extension is what makes the most market as well as commercial sense for us to do.

Some of that is driven by the fact that of the three vessels we have there, two of them have manned diving onboard and the Seawell is one of them. And to get a new vessel with manned diving on it is somewhat expensive and problematic as well. And this one as Owen mentioned has a fantastic reputation, a great hull, so right now we’re looking at the extension versus a new build. Trey Stolz – Iberia Capital Partners: And can you quantify that at all what time out that might require for the Seawell? What time in the shipyard; how long out will it be missing?

We’re estimating right now about 90 days. We’re not sure – as we said, we’re not 100% sure we’re going to go ahead with it but at the moment, if we had to say what we’re going to do we’d put it in in December, the end of December, January and February. Trey Stolz – Iberia Capital Partners: Gotcha. Alright, that’s it for me. Thanks.

Our next question comes from the line of Michael Noll from Key Group Holdings. Please proceed. Brian Finkelstein – Key Group Holdings : This is Brian Finkelstein for Michael. I just had a quick question on the well construction – did it contribute any margins to the quarter?

You mean on subsea construction? Brian Finkelstein – Key Group Holdings: Yeah, sorry, I meant subsea construction.

Very, very little.

It had $4 million of revenue but I don’t think it was anything [material, no].

Yeah, so negligible. Brian Finkelstein – Key Group Holdings: Okay, and then just on the Skandi – did you guys capitalize any costs when it was in the shipyard?

No, not on the vessel itself. The only capitalized costs are we built an intervention system that went onboard; that’s why it was at the dock, we had to install it onboard.

It actually was a drag on Q3 while it was in the shipyard because we had extra people and we still had to pay the vessel charter. So it was actually a drag on the quarter until it went to work on September 1st. Brian Finkelstein – Key Group Holdings: Okay, perfect. And then just last on the Robotics, I know there’s been a handful of questions – I know there’s some good progression and I understand that some of the vessels were spot that you weren’t able to get a hold of. How should we think about that segment going forward?

Well, as Tony said earlier we’re in the budgeting process right now and we’re in the first stages of that. So I don’t know how that’s going to come out exactly but I would expect that next year would be a better year than what we’re having this year from a profit standpoint – probably somewhere between where we are this year and where we were last year. Brian Finkelstein – Key Group Holdings: Okay, perfect. Thanks.

Mr. Jamerson, there are no further questions at this time. Please continue with your presentation or closing remarks.

Okay, thanks for joining us today. We very much appreciate your interest and participation and look forward to having you participate on our Q4 2013 Conference Call.