U.S. Markets open in 6 hrs 26 mins

Golden Ocean Group Ltd (GOGL) Q1 2019 Earnings Call Transcript

Motley Fool Transcribers, The Motley Fool
Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Golden Ocean Group Ltd (NASDAQ: GOGL)
Q1 2019 Earnings Call
May 22, 2019, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Quarter One 2019 Golden Ocean Group Limited Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions) I must advise you that this conference is being recorded today on Wednesday, May 22, 2019. I would now like to hand the conference over to your speaker and CEO, Birgitte Vartdal, please go ahead.

Birgitte Ringstad Vartdal -- Chief Executive Officer

Thank you. Good morning and good afternoon, and welcome to the first quarter of 2019 earnings call for Golden Ocean Group Limited. My name is Birgitte Vartdal. I'm the CEO of Golden Ocean management, and together with me, I have Per Heiberg, the CFO of Golden Ocean management. As usual, Per will take you through the Company update and I will revert after with some market comments and strategy announcements.

Per Heiberg -- Chief Financial Officer

Thank you, Birgitte. I'll go straight to the highlights for the quarter. Golden Ocean reports a net loss of $7.5 million and a loss per share of $0.05 for the first quarter of 2019, compared to a net income of $23.6 million and earnings per share or $0.16 in the fourth quarter or 2018. Adjusted EBITDA ended at $36 million, down from $70.4 million in the previous quarter. In April and May, we refinanced all non-recourse debt assumed through 14 vessel purchases in 2017, thus reducing the interest expense, extending repayment profiles, and reducing our cash break even levels going forward.

In April 2019, we made an investment in Singapore Marine, a newly established dry bulk operator that will seek to generate returns in all market conditions by employing an asset-light business model. And the Company announced a dividend of $0.025 per share for the first quarter of 2019.

Moving on to the P&L, time charter equivalent or TCE revenue decreased by $31.2 million, compared to the previous quarter. The decrease is a reflection of the weak market experienced in the first quarter, particularly for the Capsize vessels. Lower short-term trading activity with third-party vessels compared to previous quarter also contributed to decrease. This will somewhat offset by a good performance on the smaller vessels to short-term coverage taken prior to this downturn.

The adoption of the new lease standard changed how we account for the cost of vessels chartered-in on short-term time charters, as they now need to account for the estimated operating expense on the leases under ship operating expenses, thus reducing shorter higher expenses by the same amount. In first quarter, this change caused our operating expenses to increase by $3 million, which would have otherwise been classified as shorter higher expenses under the old lease standards. The additional $600,000 increase in ship operating expenses compared to last quarter relate to somewhat higher docking costs and also some higher costs on sailing vessels in the quarter. Dry docking expenses will increase going forward in 2019, as we have 19 vessels in total that are scheduled for dry dock this year.

G&A and depreciation was stable over the quarter with no significant changes to the fleet or on staff costs. Net financial expenses are down by $1.6 million, compared to prior quarter. This is mainly due to reduced interest cost on the convertible bond that repaid in January. We booked a loss of $0.6 million related to marketable securities and derivatives in the first quarter. This is mainly related to a loss on third-party shareholdings and on US dollar interest rate swaps. Some -- and -- but this was offset by profits on FFA and bunker hedges.

Adjusted EBITDA came in at $36 million for the quarter and the achieved TCE per day was $13,131, which is well above the benchmark rates in the quarter.

Commenting a bit on the cash flow in the quarter, it's not any big surprises. We ended the quarter with $373 million in cash and generated positive cash flow from operations of $25 million. Ordinary repayment of debt amounted to $16.6 million, and this come on top of the full repayment of the convertible bond of $168.2 million, which was paid in January. The Company paid $7.2 million or $0.05 per share in dividend in the fourth quarter -- or in the first quarter for the fourth quarter last year. And following some other cash outflow related among other two investments in ballast water treatment systems and upcoming scrubber units, the cash ended the quarter with close to $200 million.

In the balance sheet, the most notable change this quarter is the impact from the new lease standard. Most significantly, Golden Ocean has nine vessels leased in on long-term charters, which are classified as operational leases. These include eight Capes chartered-in from Ship Finance and one Supramax from Cape -- from a Japanese leasing house.

As of March 31, relating to these operating leases, we have recognized right to use of assets of $201.1 million and total lease obligation of $193 million, of which $22.1 million was classified as current. The liability from the operational leases will be reflected in the balance sheet going forward under liabilities and $171 million is long-term liability at the end of this quarter. The change on the lease accounting standard also resulted in a $12.6 million reduction in the other long-term assets related to these operational leases.

Worth noting is that both the amortization of the operating right of use of the assets and the interest on the corresponding lease liability are presented as shorter higher expense in our income statement as it was before and does not affect the P&L or the EBITDA in any material way going forward.

As illustrated on the previous cash -- or previous slide as well, including short and long-term restricted cash, we ended up the quarter with $199.2 million in the quarter. The book value of the Company's vessels decreased with ordinary depreciation of $22 million. The current portion of the Company's long-term debt decreased by $166 million over the quarter, mainly related to repayment of the convertible bond in January. A large portion of the current short-term debt, which is shown in the balance sheet, is refinanced so far in this quarter. The remainder of short-term debt relates to regularly quarterly repayments and one loan facility that matures late in December 2019 and we expect to refinance that facility during the second half of the year. At the end of the quarter, the Company's book equity was around 51%, and if you take the value-adjusted equity, it was around 45%.

Just to mention a bit more on the credit facilities, which illustrates a bit in more detail the changes we have achieved on them since the start of the year. We have during first quarter and so far in second quarter repaid entire outstanding amount on the convertible bond. We've refinanced all debts related to 14 vessels acquired from Quintana in 2017 and extended one facility covering 14 Capes by three years. On top of this, we have added a scrubber charge on the facility to finance up to 11 scrubbers on these 14 vessels mentioned earlier with a -- on the charges as of nominal value up to $33 million. As you can see from the graph to the right-hand side of the slides, we have extended the maturity for a large amount of the Company's bank debt by several years and reduced the near-term refinance risk significantly. We have also been able to secure more attractive terms on our new debt facilities, reducing the margin from 310 basis points to 213 basis points on average on the Quintana facilities and amortization period is prolonged from 15 years to 19 years. This reduces the running financing costs and lowered the cash break even for these vessels by approximately $1,300 per day and on average for the entire fleet by $200 per day going forward.

Looking at the OpEx in first quarter, we had $5,350 and $5,500 for the Panamaxes and Capes respectively. And on top of this, we bear the full-year cost of any dry docks during the quarter when as secured. We also had some cost in a quarter related to ballast water treatment system and some preparation costs for upcoming dry dockings.

As mentioned in the start, the full year schedule for dry docking is for 19 vessels; 16 Capes, and three Panamaxes and eight of these will also install ballast water treatment system. The latter incur approximately $8 million in incremental CapEx for the year.

In May, the company completed its first scrubber installation on the Capsize vessel, the Golden Feng and going forward, the remaining commitment for 19 firm and four optional scrubbers installation project will be carried out throughout this year and into early 2020. The scrubber installation schedule is shown on the graph to the right and committed scrubber installation will coincide with scheduled dry docks in 2019 and 2020.

Looking at the employment of the fleet, the fleet has been consistent over the quarter. We have not done any changes with the respective vessels. Since last earnings report, the Company has fixed out one Capesize vessel until first half of 2020 at a gross rate of $7,220 (ph) per day. We have converted to Capsize vessels at floating rates into fixed rate for the remainder of 2019; one at $15,720 and one at $18,800. And we have fixed out one Panamax vessel until the end of 2019 at a gross rate of $12,950 per day. This takes the current cover for Capes up to equivalent of six vessels at an average rate of $19,420 for the remainder of 2019 and the equivalent of eight Panamax vessels that expires between end of 2019 and the end of 2021 at an average rate of $18,555 per day.

In addition to this, we have, as reported earlier, five floor/ceiling Capsize contracts for 2019 and two for 2020, securing the downside at approximately $15,000 by giving away the upside about $19,500. These contracts have proven to be highly effective or profitable in 2019.

That ends my presentation and I hand over the word to Birgitte, who will take you through the market section.

Birgitte Ringstad Vartdal -- Chief Executive Officer

Thank you, Per.

If you look at the historic utilization, the utilization drops by around 4% in the first quarter this year, compared to fourth quarter last year. This was a combination of fleet supply that increased due to new deliveries in the quarter. Port congestion is up as coal cargoes were discharged in China. In January, last year, imports were kept toward the end of the last year. Transportation demand dropped as well. Although the total volume transported were stable quarter-over-quarter, the trading distances were shorter.

Moving on to demand. As I mentioned, volumes, measured at the time it has been imported, were actually stable quarter-over-quarter. Despite a drop in iron ore trade, other commodities improved to compensate. Coal was relative to the fourth quarter compensating for the drop down as volumes were cleared into China. Agri products were flat quarter-over-quarter and other bulks continued the positive trend. And for instance, as mentioned in earlier calls, bulk freight is a commodity with a positive trend and also added longer sailing distances as well.

But the key component at the moment has been the iron ore trade. Going into 2019, there was a strong conviction in the markets additional tonnes of iron ore was to come from Brazil and Vale had guided on the production increase of between 25 million and 30 million tonnes from the year before. Due to the tragic accident in Brazil at the end of January, this situation changed completely. In addition to the disruption due to the accident, heavy rain also caused a drop in production and exports in the northern system.

In February, Vale was still exporting volumes from the port stockpiles, while volumes dropped back in March and into April. Currently, we see low volumes for spot fixtures out of Brazil. However, the volumes have picked up lately. First half of May has almost exported the same volume as the full month of April. And the queue of vessels that has been waiting outside Brazil is dropping and is down from around 70 vessels last week to 50 vessels this week.

Australian miners also had disruption with cyclones and other issues in the first quarter, and have now pushed for higher volumes to get back up in the second quarter. The second quarter is the final quarter of the financial year in Australia, and with the current iron ore price, the Australian miners try to push out as much volume as they can. And we see a steady flow of cargos coming from the Australian market.

While volumes are expected to come back and exceed the year's initial guidance over time as confirmed by Vale earlier, this can take time. And as we have seen through various releases, Vale's operation is under great deal of scrutiny in Brazil. For a few weeks, the Brucutu mine had licenses to produce iron ore from a lower level court, but on a higher level court stopped the production again. This mining complex can contribute up to 30 million tonnes and if that comes back on stream, this will improve the sentiment quickly.

After the accident in Brazil, iron ore prices started to rise sharply on the fear of lack of available iron ore, and we believe this is part of the reason for increased destocking imports and through the value chain in China. The purchase cost of the iron ore in stock is lower than the price that you have to pay today. More iron ore volumes coming back into the market should push iron ore prices down, and this can change the iron ore from consumption from destocking and back to imports.

Despite the higher iron prices that have been observed, steel margins has more or less kept up and has been stable most of 2019. The steel margins have kept up as the steel production in China once again held an impressive growth base. Stockpiles of steel continue also to be at modest levels, which is an indication that the steel that is being produced is being consumed. While the Chinese growth was quite impressive, the growth in the rest of the world were flat for the quarter, however with a slight improving trend toward the end of the quarter.

Moving on to coal. As mentioned earlier, coal imports to China picked up again after the import restrictions in the fourth quarter of last year. And if you look back to the third quarter of 2018, the volumes were almost back up in the first quarter this year. India continued its positive trend in the quarter, while Japan, South, Korea and Europe were down compared to the previous quarter. In this quarter, we've also added a new group of countries with the redline, Other Asia and it's worth noting the trend there. This includes, among others, Vietnam, Thailand and Indonesia and had a strong positive growth over the period. In the future, we expect this group of countries to continue on the growth path, given the construction of new coal-fired power plants that we see in these countries.

Looking at inventories, inventories have increased in India, but it's still at relatively low levels compared to consumption, and Chinese inventories are at more normal levels.

Electricity production continues to grow in China and showed 6% growth year-over-year in the first quarter of 2019. In the quarter, thermal coal made up of 75% of the energy for electricity production, and this is consistent with past quarters. Looking at April numbers, it indicates an increase in hydropower production as is normal for this time of the year and we expect the second quarter numbers will see a small seasonal shift toward hydropower.

Moving on to agri products. The US/China trade war had a significant effect on the last six months, which is normally the high season for US grain exports. Despite some buying of soybeans from the US to smoothen the trade talks earlier this year, volumes from the US are significantly down year-over-year. This is shown clearly on the lower chart on the slide, where the seasonal spike in US soybean and soybean meal exports is absent. Total exported volumes, however, are not a lot lower than last year. Brazil has compensated most of the shortfall in US exports. We are now entering strong season for East Coast of South America and although the season is extended, we feel that there is a pickup at this time of the year.

However, aside from the tariffs, there is a growing concern about an epidemic of swine flu that has spread across China and is reducing the demand for feedstock. This has --may impacted trade and estimates are around 15 million tonnes for this year. Lately, however, gross margins have started to improve again in China, which may indicate that the worst is over and the China has started to turn positive again.

Moving to the supply side. First quarter of the year is normally where the highest fleet growth of the year is due to a lot of deliveries scheduled in this period. This was true also in 2019 for Panamax and smaller sizes. But for the Capesizes, net fleet growth was actually down from the previous quarter. Delivery was not much higher than in the fourth quarter of last year and we have observed higher scrapping, which I will discuss further later on.

Looking ahead, the order book represents around 11% of the fleet, down from 11.5% in the last quarterly presentation. And in the last month, there's not been many new orders reported. These data represents an estimated fleet growth for 2019 of 6%, which we believe is in the high end. We expect some 2019 deliveries will slip into 2020 and also a part of the order book have old orders that were placed before 2015 around 13 million deadweight ton. Some of these vessels may never be delivered and some have been placed at yards that have since gone bankrupt. We expect therefore the final delivery numbers to be slightly lower.

If you look at net fleet growth, in addition to demolition which I will come to after, the effect of the IMO 2020 disruption, including of higher to scrubber installations, cleaning of tanks, and timely availability of new types of fuel will impact the efficiency of the feet. Also offsetting the fleet growth is that scrapping activity has picked up this year. It's been driven by various factors. Of course, weaker spot market is always helping when the decision has to be taken. The relationship between scrap prices and second-hand values have narrowed and the upcoming investments required for ballast water treatment regulation in addition to the requirement of IMO 2020 and the fuel economics of older assets.

Scrapping in the Capesize segment so far this year exceeded all the vessels scrapped last year and has resulted in a negative fleet growth year-to-date for the Capes if you look at the number of vessels delivered versus the number of vessels scrapped. if the market should remain weak, there is greater likelihood that vessels above 15 years of age will be scrapped as they approach the next special survey and further investments are required in ballast water treatment system.

Prices in the S&P markets have been trended slightly down but there have been remarkably few transactions have taken place. In particular, in the Cape market, there has not been any transactions for modern assets reported over the last five months and only a few older Capesize vessels have been sold in the last week. In the smaller segment, there have been more activity but mainly on older tonnage, with less investments required.

In the resale market, there is a clear preference for modern ECO tonnage. Clarkson began to publish these data last March and since then, five-year-old vessels, both ECO and non-ECO have declined in value, but the decline has been much more pronounced for the non-ECO vessels.

Following the implementation of IMO 2020 sulphur regulation, one should expect that less fuel efficient vessels (inaudible) retrofitted with scrubbers will fall further out of fashion.

To summarize, this year started with a number of unexpected events that caused a rapid decline in (inaudible) rates. While in January, prior to the disaster in Brazil, rates were stable at around $15,000 per day on Capes. The market was (inaudible) back by this accident but also other factors impacting exports from Australia. But despite the relative limited spot exports from Brazil after Australian exports have picked up, we have seen a decent improvement in rates during April and into May and rates are now back at around $12,000 for a standard Cape.

Headlines from Vale have quickly changed to short-term sentiment, both positively and negatively and iron ore from Brazil should eventually normalize as Vale continues to improve its operation to recover its production (ph). And factors that are currently working against us can soon turn to be in our favor as weaker market rates affect the behaviors in the market. First of all, the weaker market has caused the pickup in scrapping and there has been limited new ordering since the start of the year. New building prices are still at reasonably high levels as there are activities in other shipping segments and this should keep supply growth moderate as the spread between new building prices and second-hand values are increasing.

Current destocking of iron ore can suddenly turn to a restocking. There are plenty of risks in this market, but (inaudible) potential and most of the risks seem to be priced into the markets currently.

Setting aside the market volatility, we believe that our continued focus on low cash break even levels and a strong balance sheet provide us with a very strong footing. Our recent refinancing of the credit facilities for the 14 vessels is an example of the steps we have proactively taken to manage our cash flow and our good relationship to OpEx.

A fair point to note, the recent financing has reduced our cash break even for $200 for the entire fleet, and we have extended maturity of debt facilities. The balance sheet is strong and we have a significant liquidity position. As a reflection of this, the Board has declared a dividend of $0.025 per share, despite a small loss in the quarter.

The competitive advantage of our fleet is already reflected in the way asset prices fall (inaudible) and should together with the scrubber installations significantly impact our earnings potential as we approach 2020 at an environment where higher fuel prices are very likely. Despite the short-term volatility and uncertainty created by the political climate, we have a constructive market outlook and believe the current setbacks are temporary in nature and will eventually give way to a better market environment.

This ends the presentation for today. We are open to answer any questions you may have.

Questions and Answers:

Operator

(Operator Instructions) Thank you. We will now take our first question. The first question comes from the line of Greg Lewis from BTIG. Please go ahead and ask your question.

Greg Lewis -- BTIG -- Analyst

Yes. Thank you and good afternoon.

Birgitte Ringstad Vartdal -- Chief Executive Officer

Good afternoon, Greg.

Greg Lewis -- BTIG -- Analyst

I guess my first question is -- I mean just because it's top going on everybody's mind and you've touched on it in your prepared remarks, but as we think about the impact of the loss of iron ore volumes out of Brazil and what we've seen in the market, do you think at this point realizing it's still a fluid situation, do you think we've managed through the worst of the loss of the impacts from the Vale disaster? I mean, you mentioned that rates have stabilized a little bit here. Do you think we've kind over now trying to -- we've kind of hit an inflection point that things are getting a little better there?

Birgitte Ringstad Vartdal -- Chief Executive Officer

Yes, I think, I mean, it may, of course, it's very volatile in terms of when the Vale's mines will come back on stream. We hope Brucutu will be the first one, but those are part of the lack of volumes from Brazil was not related to the accident but more Vale-related issues and that we expect to have normalized now and we believe with what we've seen with vessels leaving Brazil loaded, vessels that were sort of piling up and waiting for cargo at least gives indication of a positive trend.

Greg Lewis -- BTIG -- Analyst

Okay. And then you mentioned the completion of the first scrubber installation. Obviously, there's a still a lot more to go. Has the conversations with potential charterers increased? Are you seeing an increased demand from charterers for vessels that have scrubbers and is there any kind of premium that maybe that you're seeing in the market that you could point to for vessels that have scrubbers versus vessels that do not?

Birgitte Ringstad Vartdal -- Chief Executive Officer

There is -- mainly the discussions that we have seen is where there is profits placed on actual earnings, where maybe the owner sits with at least 50%, maybe up to 75% of the profits, while the charterer sits with the rest of them. And you can go for such a scheme, it's actually important that the charterer has some upside, because if it's not there, they do not have any incentives to do earn the money.

And the other element is more that, they call it, the fixed rate premium, where the charterer take all the upside or downside of the actual savings. There are also those discussions, but I would say that they are more linked to the cost of the installation than the savings relative to the fuel curve at the moment.

Greg Lewis -- BTIG -- Analyst

Okay. And then just one more from me. You mentioned that you made this -- you made this investment in this dry bulk. I guess it's nearly asset-light model. Could you talk a little bit about the thought process in making this investment in the bulker space outside of Golden Ocean?

Birgitte Ringstad Vartdal -- Chief Executive Officer

Yes, I think first of all, this Company has the opportunity to take both the short and long position and try it around the markets in a different way than what is easy for a shipowner that has a default long position. That can also provide market information on a general level, because they would be able to see all the type of deals and the shipowner would maybe see. (inaudible) has a good track record and finally we find it to be a potentially profitable commercial (ph) investment. So it's a combination. It's obviously not a very large amount we have invested compared to our balance sheet, but it's sufficient to get involved and to get information and discussions (inaudible) market that we think will benefit also the on-fleet.

Greg Lewis -- BTIG -- Analyst

Perfect. Thank you very much for the time everybody.

Birgitte Ringstad Vartdal -- Chief Executive Officer

Thank you as well.

Operator

Thank you. The next question comes from the line of Marius Furuly from Carnegie. Please go ahead and ask your question.

Marius Furuly -- Carnegie -- Analyst

Good afternoon, Birgitte and Per, two questions from me. First of all, how many extra days over the scheduled dry dockings did you use for retrofitting the Golden Feng with a scrubber?

Birgitte Ringstad Vartdal -- Chief Executive Officer

What we have guided previously is that we expect in total around 25 days to 30 days. And then you have 15 days for an ordinary dry dock. For this vessel, we also did a ballast water and it's the first installation. So, I think we added between 30 days and 35 days.

Marius Furuly -- Carnegie -- Analyst

Okay. That's clear. Secondly, you stopped repurchasing shares during the first quarter, but now you announced a dividend. Would you really consider now that you really have proved that you have a constructive view on the market to maybe restarting those repurchases?

Birgitte Ringstad Vartdal -- Chief Executive Officer

The mandate is still there.

Marius Furuly -- Carnegie -- Analyst

All right.

Per Heiberg -- Chief Financial Officer

It's an ongoing discussion and we will -- if we decide, we will report as you know.

Marius Furuly -- Carnegie -- Analyst

Yes. All right. Thanks for that.

Operator

Thank you. Your next question comes from the line of Lukas Daul from ABG. Please go ahead and ask your question.

Lukas Daul -- ABG -- Analyst

Thank you. Good afternoon. I'm sticking to that question on distributing of capital. You reported a net loss, you decided to pay $0.025 in dividend. Second quarter is probably going to be below than -- below the first as you indicate. What is your thoughts on the dividend level? Have you sort of set a floor or how are you thinking about that?

Birgitte Ringstad Vartdal -- Chief Executive Officer

We think based on the cash position we have and balance sheet we have, we can manage with the level we have at the moment. We hope that the markets will improve and we are able to increase that dividend and we should be able to maintain it for a while. Obviously, we have to adjust to the market situation, but we as see it today, it's a comfortable level.

Lukas Daul -- ABG -- Analyst

All right. Thank you.

Birgitte Ringstad Vartdal -- Chief Executive Officer

Thank you as well.

Operator

Thank you. There are currently no further questions. (Operator Instructions) A further question has been entered. This is from the line of Jay Mehr (ph) from Golden Ocean. Please go ahead and ask your question.

Jay Mehr -- Golden Ocean -- Analyst

Yes, hi. I was just wondering I read an article about John Fredrickson, he's going to have 10 Newcastles -- Newcastlemax I'm sorry, Newcastlemax that are going to be taken care of by Golden Ocean and I was just wondering that there's going to be two delivered at the end of this year. Can you give us some more information on that if it's a true story?

Birgitte Ringstad Vartdal -- Chief Executive Officer

I cannot comment on -- hello, I cannot comment on Mr. Fredrickson's private investments but in general, we manage the commercial -- commercially, we manage the fleet of the dry dock vessels.

Jay Mehr -- Golden Ocean -- Analyst

Okay. And one more question. The investment is made with (inaudible) new company in Singapore. I've read an article on that that this young man is not going to be buying any ships for a couple of years. I don't know if that's true or not. Can you comment on that?

Birgitte Ringstad Vartdal -- Chief Executive Officer

I don't have a comment to that. I'm sorry.

Operator

Thank you. There are no further questions.

Birgitte Ringstad Vartdal -- Chief Executive Officer

Thank you for listening in today. I wish you a nice rest of the day.

Operator

Thank you, ladies and gentlemen. That does conclude our conference for today. Thank you for participating. You may all now disconnect.

Duration: 39 minutes

Call participants:

Birgitte Ringstad Vartdal -- Chief Executive Officer

Per Heiberg -- Chief Financial Officer

Greg Lewis -- BTIG -- Analyst

Marius Furuly -- Carnegie -- Analyst

Lukas Daul -- ABG -- Analyst

Jay Mehr -- Golden Ocean -- Analyst

More GOGL analysis

All earnings call transcripts

AlphaStreet Logo

More From The Motley Fool

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

Motley Fool Transcribers has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.