Caterpillar Inc.
Q1 2020 Earnings Call Transcript

Published: 28 Apr 2020

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the Q1 2020 Caterpillar Inc. Earnings Conference Call. At this time, all participants are in a listen only mode. I would now like to hand the conference over to your speaker today, Jennifer Driscoll. Please go ahead, ma'am.

[Jennifer Driscoll:]

Thanks Jacqueline. Good morning, everyone. Welcome to Caterpillar's first quarter earnings call. Joining the call today are Jim Umpleby, Chairman of the Board and CEO; Andrew Bonfield, CFO; Kyle Epley, Vice President of our Global Finance Services Division; and Rob Rengel, Senior IR Manager.

[Jim Umpleby:]

Thank you, Jennifer. Good morning and welcome to Caterpillar’s first quarter earnings call. During this difficult time, our thoughts are with those affected by COVID-19. We extend our deepest sympathies to those who have lost a loved one during the pandemic. We thank those individuals in healthcare as well as the first responders helping fight the pandemic on the frontline. I also want to thank Caterpillar’s global workforce. This month, we are celebrating 95 years of operation at Caterpillar. For nearly a century, we have faced and overcome many challenges. As in the past, our employees are rising to the occasion. I appreciate their commitment to support our customers while keeping our facilities and co-workers safe. As the COVID-19 pandemic spread around the world, many governments classified Caterpillar’s operations as essential activity for support of critical infrastructure. Working with our dealers, Caterpillar is delivering products and services that enable our customers to provide critical infrastructure that is essential to support society during the COVID-19 pandemic. Customers use our products to provide prime and standby power for hospitals, grocery stores, and data centers; to transport food and critical supplies in trucks, ships, and locomotives; to maintain clean water and sewer systems and to mine commodities and extractive fuels essential to satisfy global energy demand. While we are serving these important needs, Caterpillar remains dedicated to the safety, health, and well-being of our employees.

[Andrew Bonfield:]

Thank you, Jim and good morning everyone. I'll begin on Slide 7 with our first quarter results then I’ll discuss some of the actions we’re taking in response to the COVID-19 pandemic before turning to our cash and liquidity position. In total, sales and revenue for the first quarter declined by 21% to $10.6 billion. Operating profit decreased by 36% to $1.4 billion. Profit per share for the quarter decreased by 39% to $1.98. The decline was driven by lower volume as the cost reductions taken to mitigate the pandemic were offset by the impacts of the higher tax rate and negative currency movements. This year's quarter included a $0.38 per share re-measurement gain that resulted from the settlement of an international pension obligation. Last year's quarter included the $0.31 benefit from a discreet tax item. As you see on Slide 8, the results this quarter were up primarily driven by volume. Currency and price had a small impact, but volume decreased sales by $2.6 billion. The volume decline reflected weaknesses in end-user demand coupled with changes in dealer inventories. Geographically sales declines were led by North America and Asia Pacific. Machine sales to users, including construction industries and resource industries decreased by 17% for the quarter, while energy and transportation sales to users decreased by 12%. You may recall that we expected a decline of 4% to 9% for the year with a stronger second half. Nevertheless, first quarter sales to users where below our expectations. Demand in Asia Pacific was weaker than we expected, including a direct impact from COVID-19 on sales to users in China. In January, we indicated that we expected a small seasonal build of dealer inventory in the first quarter.

[Jennifer Driscoll:]

Jacqueline?

[Operator:]

Your first question comes from Rob Wertheimer from Melius Research. Your line is open.

[Rob Wertheimer:]

Thank you and good morning everybody. I think some of us have already started the sort of trend towards low end or below some of your 2019 margin targets just given the uncertainty with the buyers. I’d be curious to hear what, among the various uncertainties, may have kick you off that trend, whether it's aftermarket falling further you thought or mining doing something. And then I just – I wanted to see if you could talk about the trade-offs you are choosing to make. Some companies have done salary cuts, temporary or otherwise. You're choosing to continue to focus on investment and growth, and I’d like to hear the positive trade-offs you expect to see from that and whether you might return to cutting more if you need to? Thanks.

[Jim Umpleby:]

Yes, good morning Rob. Thanks for your question. The first part of your question about margin targets really comes down to the chaotic nature of this downturn. It was not a normal cyclical downturn. So, really there wasn't so much a downturn in one area of our business versus another, it’s just the way it happened. So government shut down suppliers with little or no notice, which had an impact on our operational efficiency. Now we’re continuing to serve our customers and work our way through it by redirecting things, but it really has created havoc with our manufacturing operations that we’ve overcome, but it’s not again a normal cyclical downturn. And as we’ve looked at the various levers we could pull, we are striking a balance that we think is appropriate between short-term performance and investment for the long-term. We have taken a number of actions to reduce discretionary costs, and one of the things I will remind you of is, I mentioned in my remarks as we really have managed the business differently during the last 3, 3.5 years, we kept our period costs flat and our salaried management headcount flat between the end of 2016 and the end of 2019 even though our sales went up 40%. And we talked a lot in our Investor Day presentations about the fact that we’re driving to produce higher absolute margins and higher absolute cash flow at all points in the cycle compared to that historical performance between 2010 and 2016, and we still intend to do that. Just – but, again given the chaotic nature of this downturn what’s happening with suppliers, we're saying that it will be challenging for us to achieve those new targets that we established in May 2019, but we do expect absolute margins and cash flow to be higher, and I believe our strategy will serve us well during these times. Cash is obviously king in this environment, and the fact that we will not incur large amounts of severance costs, with large restructuring, I think will serve us well. So, the fact that we maintain cost and headcount between end of 2016 and 2019 I think again positions us very well.

[Rob Wertheimer:]

Thank you. And for clarity, has that supply chain disruption seem to have reached temporary maximum or is it still rising or ongoing?

[Jim Umpleby:]

Yes, we’re working our way through it. I mean, obviously the situation – it’s geographic – the situation in China has obviously improved as the pandemic has lessened in that country, and so all of our facilities are operating in China again and our suppliers are doing much better in China as well, but it’s a rolling kind of situation, so depending on how the pandemic unfolds across the world, but again we are finding ways to continue to serve our customers, continue to ship products and parts, our dealers are supporting their customers, but it is making it more challenging and it’s having impact on our operational efficiency as you would expect.

[Rob Wertheimer:]

Thank you.

[Operator:]

Your next question comes from Mig Dobre from Robert Baird. Your line is open.

[Mircea Dobre:]

Yes, thank you. Good morning everyone. Just to maybe follow-up on Rob’s question there, as you look at the second quarter, you provided some color and detail there, but maybe you can out it – the second quarter in – within the context of the full year, is it fair to assume that this is maybe the most challenging quarter from a production standpoint or do you sort of foresee these effects lingering beyond the second quarter given, you know, the changes in backlog and what you're seeing in terms of demand? Thanks.

[Jim Umpleby:]

From a financial performance perspective, we certainly expect the second quarter to be weaker than the first quarter, and as we said we believe that the impact – the financial impact on Caterpillar will linger as long as the pandemic continues until those effects wear off. In terms of trying to quantify or give you description of Q2, Q3, Q4 in terms of our operations, it really is a fluid situation, so it’s very difficult for me to make that judgment. But again, we’re finding ways to work our way through it.

[Operator:]

Your next question comes from Jamie Cook from Credit Suisse. Your line is open.

[Jamie Cook:]

Hi, good morning. I guess my question centers around dealer inventory. You cited that the declines will be at the higher end of the range that you provided last quarter, but I guess why not more significant and is the goal still to be able to produce in line with retail as you exit 2020? So that goal I guess, you know, could we see bigger declines in that or maybe you could just comment on what you saw in April to support what we’re saying about the dealer inventory declines? Thank you.

[Andrew Bonfield:]

Yes, thanks Jamie. It’s Andrew, and good morning. So, yes, obviously what we’re pointing to is we had the range at the – in January of $1 billion to $1.5 billion. Based on what we see from a demand perspective, obviously we expect that to be at the higher end of that range. Always remember, when dealers are looking out, they’re making their plans based on what they’re seeing going forward. So, it depends what happens in 2021 and what their viewpoint is of 2021, which is far too early as Jim just said, for us to have any view even beyond the end of this quarter that will determine their final number. So, yes, it may be more flexible, and obviously, depending on what the outlook is, that may determine whether they would like to go lower, but we’re just pointing out we would expect, at the minimum, it would be at the higher end of that range.

[Jamie Cook:]

And sorry, can you comment on trends you saw in April, if you're able to?

[Andrew Bonfield:]

I mean it’s really too early to say. I mean obviously, you know, we are still in April, we don't have April result yet. You know with remote working, it’s hard to get data, but obviously, you know, we are expecting that April will be a challenging month and just purely given the lockdown impact and the impacts are – particularly things like oil and gas. Remember, we are in a situation where for reciprocating engines, oil and gas prices have been negative in the month.

[Jamie Cook:]

Okay, thank you. I hope everyone stays healthy.

[Jim Umpleby:]

Same to you Jamie, thank you.

[Jennifer Driscoll:]

You too.

[Operator:]

Your next question comes from Ann Duignan from JP Morgan. Your line is open.

[Ann Duignan:]

Thank you and good morning.

[Andrew Bonfield:]

Good morning.

[Ann Duignan:]

Maybe on the oil and gas, can you talk about your expectations for permanently impaired – impairments in that business and talk about the impact of oil and gas across your various businesses, we’ll say, oil sands and resource and construction equipment and the construction segment, you know, if you could just give us what your contemplating in terms of the longer term outlook in those businesses and how weaker oil and gas may impact you more permanently?

[Jim Umpleby:]

Yes. I’ll start with the – maybe the short-term impact and I’ll talk about some of the longer term. On the short-term, obviously, that we’ll have an – the oil and gas decline, particularly in WTI, will have an impact on our reciprocating engine businesses for North America and things like oil servicing, drilling, gas compression. And so, we – you know we went into the year expecting that our 2020 recip oil and gas sales would be lower. And now obviously, we're expecting they would be even lower than that. So our solar turbines business, mid-stream is holding up well. You should stop and think about the last downturn we had I oil and gas, the solar turbines compression business continued to hang in there, and of course the large part of solar’s sales are services related and the turbines continue to run even during low oil prices. So that provides a cushion there. I don’t anticipate a permanent impairment in our business, you know the old, I believe if it is my fifth, I think oil cycle in my 40-year career. And when things are really good people think it will never get worse again, and when things are really bad, they think it will never get better again. I do believe that the market will recover at some point. It might take a while, but I don’t perceive there will be any kind of permanent impairment on our business.

[Ann Duignan:]

Not even in non-oil and gas like oil sands?

[Jim Umpleby:]

Yes, there certainly could be an impact in terms of a short-term impact on our business, but again, I don’t see anything major that is significant that will be a permanent impairment on our business. And yes about construction as well, so we do sell a certain amount of construction equipment in North America that is related to oil and gas, so obviously that business will be slow as well.

[Ann Duignan:]

Okay, thank you. I appreciate that.

[Jim Umpleby:]

Thanks Ann.

[Jennifer Driscoll:]

You’re welcome Ann.

[Operator:]

Your next question comes from David Raso from Evercore. Your line is open.

[David Raso:]

Hi, good morning. Related to your comments, chaotic nature, the decremental margins, the first quarter at 29% were a little better than I would have thought. I assume the second quarter with a shutdown to be more challenging, but can you up us a little bit how to think about the decrementals versus you saw in the first quarter and related to that Cat nature question related to the margins, what are local and national governments telling you about the reopening. How are you planning for those reopening, things that we should be thoughtful about on your ability to ramp up a bit as things open?

[Jim Umpleby:]

Maybe, I’ll your second part of your question first, so the closures we’ve had are temporary and they are due to a combination of supply chain constraints, weak customer demand and government mandates. So, many of the facilities that have – that were closed have reopened, we’re probably going to close some that aren’t reopen now again. We look at the customer demand and we look at supply chain constraints. Even in the non-pandemic situation, we sometimes have facility closures just to align production with customer demand. So, this is not new for us. We understand how to bring facilities up, so we really don't see a big issue there. And so, we’ve been able to work with local governments and implemented the guidelines that they have provided to us and also best practices by authorities around the world in term social distancing. We’ve done things like staggered shifts. We’ve extended lunch hours. We – and we’re taking temperatures. We’re doing a whole variety of things that are – that have been recommended as best practices. So, we’re continuing to implement those as they come out. And as I mentioned earlier, we’re really focused on achieving higher margins at each point in the cycle, compared to what we did between 2010 and 2016. And so, rather than think about it from an incremental and decremental perspective, what we laid out at our two Investor Days in 2017 and 2019, was our ability to achieve higher absolute margins and absolute cash flows at each point in the cycle. And as I mentioned earlier, I believe that will serve us well in a period where cash is king.

[Andrew Bonfield:]

And David, good morning, this is Andrew. Just to add to that, obviously, the volume decline in the first quarter was somewhere around about 20%. Obviously, operating leverage is still the biggest factor in what your incrementals and decrementals would be if you think about it in that terms because leverage is the single biggest factor. Also just remind you that obviously in the first quarter last year, the actual amount of short-term incentive compensation was slightly higher than the average for the remainder of the year. So that will be slightly negative on margins going forward because obviously you won’t have as much offset against that as we go through the remaining quarters of the year, so it will vary a little bit.

[David Raso:]

So, to clarify what you're saying, a little bit related to last May’s Analyst Meeting, whatever we think the revenues will be this year versus history, similar revenues, you would expect the margins to be higher be it, you know, 2016 when equipment sales were $36 billion or 2017 when they were $42 billion, $43 billion, what you’re saying is, you expect your margins to be higher at the same revenues this year versus then, is that fair?

[Jim Umpleby:]

That is correct. That's what I said.

[David Raso:]

Alright, thank you very much. I appreciate it.

[Andrew Bonfield:]

Thank you, David.

[Operator:]

Your next question comes from Adam Uhlman from Cleveland Research. Your line is open.

[Adam Uhlman:]

Hi, good morning, everyone. Hope you’re all staying healthy. I had a question about the service sales, could you explain your thoughts on what you’re seeing there, how the revenues are holding up and with the growth efforts that you have in place, do you think you could keep the sales declines there in something like a mid-single range? Or does it get dragged down a bunch like the new equipment sales? Thanks.

[Andrew Bonfield:]

Hi, Adam. It’s Andrew. Actually, you know the services sales in the first quarter were down marginally, part of that was due to inventory movement’s year-on-year. Last year, we saw a small build in services and parts revenues in channels, and obviously, a slight decrease down. Obviously, we anticipate that services revenues will hold up better than original equipment revenues as we go through the cycle. Obviously, you know, if you look at the history that has always been the way. This stage is too early to predict what percentage they will change by, but, obviously – and it’s going to depend on customer-by-customer, where they are open, are they able to use – what machine utilization rates are and so forth. So, we need to see how all that pans out and get a few more data points before we start making predictions in that regard.

[Adam Uhlman:]

Great, thanks.

[Operator:]

And your next question comes from Steven Fisher from UBS. Your line is open.

[Steven Fisher:]

Thanks, good morning. Just wanted to ask you about pricing, is it seemed to be a little be more resilient than I would have expected really across the board, but particularly in E&T. So, maybe can you just give us a sense of where that strength came from in E&T and how sustainable you think it is and then maybe just some other comments about competitive dynamics in the other various segments?

[Andrew Bonfield:]

Yes, Steven. It’s Andrew. So, obviously overall, if you look at pricing, it was negative in the quarter. Most of that was mostly in construction industries and that was really geo mix rather than actually pricing per say although we did see some competitive pricing pressure in China. Just again to remind you, geo mix does come to which does distort the pricing mix, so obviously if you do see favorable sales in different regions that does have an impact on the mix. So, we have don't go down to that level of granularity by discussing by segment, but generally it has been – it has held up. We did put pricing increases through on 1st of January, but the geo mix was what we were expecting competitive position and Asia-Pacific hasn't changed.

[Steven Fisher:]

Thanks, but in E&T it was actually up, so I was just curious, I mean…

[Jim Umpleby:]

Yes. Well that’s relating to the price increase – that is the price increase across that was put through in the 1st of January.

[Andrew Bonfield:]

And also in the E&T things are going to get lumpy as well. So, .

[Steven Fisher:]

Okay. Thanks very much.

[Operator:]

Your next question comes from Ross Gilardi from Bank of America. Your line is open.

[Ross Gilardi:]

Hi, good morning guys.

[Jim Umpleby:]

Hi, Russ.

[Andrew Bonfield:]

Good morning, Russ.

[Ross Gilardi:]

I had a question on capital allocation, in the presentation you stated you are going to return all of your cash, but yet you are suspending the buyback program for now, does that mean that free cash flow is unlikely to exceed the 2.3 billion that gets paid out in the dividend this year? And then the follow-up question to that is, are you still committed to raising the dividend via a high single-digit percentage for the next four years given this unforeseeable situation that you couldn't have predicted when you made that commitment? Thanks.

[Jim Umpleby:]

Yes, so I think, I’ll answer the dividend question first and I will put you back to Andrew. So, obviously the dividend is a priority for us. You saw that we raised our dividend already this year even in this situation. We are not making a prediction as to what we’ll do with the dividend for the rest of the year. Obviously, it’s a priority and we feel comfortable in our ability to support the dividend, but in terms of future increases we’ll keep you posted. It’s obviously a board decision and we’ll make a recommendation to the board later in the year and we’ll keep you posted.

[Andrew Bonfield:]

Yes, Russ and as far as free cash flow, so if you look in the first quarter, we actually paid out $1.6 billion if you take the buyback into account plus the dividend, if you then extrapolated by across the remaining three quarters of dividend that implies free cash flow of over – around about $3.5 billion for the full year or 3.5 billion of distribution to shareholders for the remainder of the year. Question at the moment is, while we are uncertain as to what free cash flow will be, we’ve decided to put a pause on the buybacks because obviously we’re not yet certain whether we are in that position whether we are distributing substantially all or maybe even slightly more than our free cash flow to the – sort of that’s the uncertainty which causes us to put a suspension. As things become clearer, we’ll make decisions. We are in strong financial position. As I say, we had $7.1 billion of cash on the balance sheet at the end of the first quarter and if you remember last year we actually distributed slightly more than our free cash flow for the year.

[Ross Gilardi:]

Thanks very much.

[Operator:]

Your next question comes from Jerry Revich from Goldman Sachs. Your line is open.

[Jerry Revich:]

Yes, hi good morning everyone.

[Jim Umpleby:]

Good morning, Jerry.

[Jerry Revich:]

Andrew I’m wondering if you could expand on your prepared comments on the restructuring program, presumably the range of restructuring spending is wider than we were contemplating a quarter ago, can you just expand what the range of investment could be this year and what kind of payback periods are we targeting and for the discontinued product lines, what are the plans to repost those product lines to provide continuity for your dealers? Thanks.

[Andrew Bonfield:]

So, first of all, our expectation at the beginning of the year was that we would have somewhere in the region of $100 million to $200 million of normal restructuring expense and we put up a placeholder in place for the $200 million of restructuring for the challenged products. At this stage, we don't see that it’s going beyond that at this stage, but that’s obviously we’ll update you and keep you posted as time goes on. Obviously, again, the timing of these issues – timing of these actions is a significant factor on the charge for the year. So, for example as we said in my remarks, we started the contemplation process in Germany, that may take a while and that will determine how much we charge in the financial year relating to those challenged products. Similarly, the impairment was taken along the lines of actually the asset, we do view the asset as being impaired in value and sort so the action we took that action in Q1. So, we’ll keep you posted. Obviously, and make sure if we do believe it’s outside that range we will update at this stage, we’re still within the original range we talked about in January.

[Jim Umpleby:]

And maybe just to add additional comment about cost and we continually ask our managers to focus on cost to find ways to be more efficient and obviously during this environment we vamp that up, so whether or not that falls into a restructuring bucket regardless we are really focusing on finding ways to be more efficient and reduce costs.

[Jerry Revich:]

And the dealer product line part of the question?

[Jennifer Driscoll:]

What are the plans to replace the product lines he said? Of any exited businesses?

[Andrew Bonfield:]

The point is, actually we haven't made decisions to exit any of those businesses at this stage. So that’s why as far as dealers are concerned, obviously it’s not an issue for them at this stage.

[Jerry Revich:]

Okay, thank you.

[Jim Umpleby:]

And there are ways to restructure without exiting. So, just leave it there.

[Operator:]

And your next question comes Courtney Yakavonis from Morgan Stanley. Your line is open.

[Courtney Yakavonis:]

Hi, thanks. Just wanted to Bob, Jim with some of your comments on the positive or the medium, long-term positive outlook for mining, but you seem some uncertainty in the near-term and more restrictive CapEx from some of the miners so can you just comment on that? And then I think you did see dealer inventories decline in resources this quarter, so if you can just help us understand how big of an impact that is and how big the overhang in resources, the pressure on the heavy construction and quarry in aggregates side? Thanks.

[Andrew Bonfield:]

Sorry, Courtney it’s Andrew and good morning. On the dealer inventory side, actually the dealer inventory reductions quarter-on-quarter where the most significant impact on RI sales, it was a small majority of it. We don't disclose a specific number, but it was over half of the decline in revenues for the quarter.

[Jim Umpleby:]

And maybe just a comment on mining, it wouldn't be surprising if the pandemic would have an impact on our mining business short-term. However, based on the state of the industry, the replacement cycle, we still feel positive about mining in the medium and long-term?

[Courtney Yakavonis:]

Okay thanks. And then just, can you give us any more color on just the geographic discrepancies you are seeing between North America and Europe, I think some of your peers have talked about European a little bit weaker because of some of the more or worst restrictions over there, but seemed like Europe has actually being holding up fairly all for you based on your retail sales data. So, if you can just share on what you’re seeing there in April or not in April, just in general?

[Andrew Bonfield:]

Yes, I think Courtney there are a couple of factors. One, which is obviously is dependent how strong the comparative period was, and if you remember last year Europe was not particularly strong in the first quarter of last year. So, I think that is why year-on-year some of that data looks a little bit better in Europe. On the retail side, obviously, we’re starting to see in the U.S. where we obviously had a very strong, particularly non-residential construction cycle that has started to diminish. We hadn't seen the strength in non-residential construction in Europe, which is another factor.

[Jim Umpleby:]

This is Jim, just wanted to make a statement, I have been informed that I mistakenly used the word raised when I talked about the dividend earlier this year, we did not raise a dividend, we maintain the dividend. So, my apologies for that mistake.

[Jennifer Driscoll:]

And we now have time for one more question before we go to Jim's wrap-up.

[Operator:]

Your final question is from Joe O'Dea from Vertical Research. Your line is open.

[Joe O'Dea:]

Hi, good morning. Can you just comment on financial services with past dues up about 100 bips sequentially and allowances up 20 bips and your comfort level overall with where that allowance figure stands, and I think most importantly your thoughts on the direction of provisions over the next quarter or two whether it’s more likely that those provisions are moving up before they start to move down?

[Andrew Bonfield:]

Hi Joe, it’s Andrew and obviously I've meant to cover this a little bit in my remarks, but the – if you look at the 4.13% of past dues at the end of the quarter, significant drivers of that were the legacy Cat Power Financial portfolio, and then also some hot spots around Middle East and Latin America, both of which were issues which we were dealing with historically and have been factors were actually the reserve has been quite significant in the past. So, those are ongoing issues, which we’re dealing with. As I mentioned in my remarks, actually our customers came in to the crisis in a very healthy position. So past dues in North America at the end of last year were 1.3%. At the end of the time of the financial crisis they were 4.3% so that gives you an indication of the health of that customer base and in China they were 1.3% versus 8.3% in the financial crisis. So again, that is a very different scenario. We did modestly increase the reserves in the quarter, obviously the difference is obviously, we now have the CECL process that we are required to reserve against. The reason why our loan reserves will be lower than you would see in many other financial institutions is because the security we have over the loan, which is the loan is secured on the machine itself and that reduces your risk from a write-off perspective. So that is again, gives us comfort, yes we do expect, we would inevitably will see some write-offs as we go through the remainder of the year. We do think that will be a lot lower than it would have been historically.

[Joe O'Dea:]

Thank you.

[Jennifer Driscoll:]

And I'll turn it back to Jim for closing remarks.

[Jim Umpleby:]

Well thank everyone for your questions. I just have a wrap-up here. Caterpillar has been an operation for 95 years, and we faced it, overcome many challenges. We have a very strong financial position which we described to you this morning. We’re continuing to pursue our strategy focused on services, expanded offerings and operational excellence. Once again I’d like to thank my Caterpillar colleagues around the world for staying focused on their safety and for working with our dealers to deliver products and services that enable our customers to fight the good fight against COVID-19. Our goal is to emerge from the pandemic even stronger than before, better position for long-term profitable growth. Thank you again and with that, I’ll turn it back to Jennifer for some closing reminders.

[Jennifer Driscoll:]

Thanks Jim and Andrew and everyone who joined us today. If you missed any portion of the call, you can catch it by replay online later this morning. We will post a transcript on the investor relations website within one business day. If you have any questions, please reach out to Rob or me. You can reach Rob at [e-mail]. I'm at [e-mail]. The investor relations general phone number is 309-675-4549. And now let me ask Jacqueline to conclude our call.

[Operator:]

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