Corteva, Inc.
Q4 2020 Earnings Call Transcript

Published: 4 Feb 2021

[Operator:]

Good day everyone and welcome to the Corteva fourth quarter 2020 earnings call. Today’s call is being recorded. At this time, I would like to turn the conference over to Jeff Rudolph. Please go ahead.

[Jeff Rudolph:]

Good morning and welcome to Corteva’s fourth quarter 2020 earnings conference call. Our prepared remarks today will be led by Jim Collins, Chief Executive Officer, and Greg Friedman, Executive Vice President and Chief Financial Officer. Additionally, Tim Glenn, Executive Vice President and Chief Commercial Officer, and Rajan Garjaria, Executive Vice President of Business Platforms will join the live Q&A session.

[Jim Collins:]

Thank you Jeff, and welcome to the participants joining the call today. Starting on Slide 4, as I reflect on the year, 2020 was a year of profound societal and economic disruptions globally. Despite these challenges, I’m extremely proud of the continued resiliency of our company. Our global teams have worked aggressively to keep our employees and customers safe, our supply chains open, and our growth commitments on track. Our progress as a company in managing through the pandemic and other disruptions over the last year confirms the strength and durability of our strategy. Underpinning our progress is our strong organic sales growth for the full year, where our teams delivered gains in both seed and crop protection and across all regions. Transforming our cost structure remains a priority for Corteva to deliver on our targeted earnings growth. We’ve demonstrated our commitment to cost reductions in 2020 by managing spending and delivering on our productivity programs. These savings were mostly offset from headwinds that we had anticipated, such a higher input costs and investments to support growth in addition to unfavorable currency. Despite these hurdles, we delivered solid operating EBITDA improvement for the year.

[Greg Friedman:]

Thanks Jim. Moving to Slide 9 and a more in-depth look at our performance in the crop protection segment, organic sales for the fourth quarter grew 21% driven by an 11% improvement in volume and a 10% improvement in price. Robust demand for Enlist herbicides coupled with fall applications of optunite in North America drove organic sales up 31% over prior year. Strong demand for our new products and pricing actions to offset currency also led to organic growth of 21% in Latin America and 17% in Asia-Pacific for the quarter. Coupled with our productivity actions, this growth drove an approximate 70 basis point operating EBITDA margin benefit for the segment in the quarter, despite the net impact of asset divestitures in 2019. For the full year, organic sales increased 11% supported by continued growth in new products and in our differentiated spinosyn insecticides, both up double digits on an organic basis over prior year. This growth was partially offset by our strategic decision to phase out chlorpyrifos and ramp down of selected low margin third party products.

[Jim Collins:]

Thanks Greg. Turning to Slide 14, I would like to emphasize a few key points before we take your questions. We’ve made tremendous progress in the short time we’ve been an independent company, but we know we have more work to do. Our recent results and guidance indicate we are well positioned to accelerate value creation in 2021 and beyond, including progressing on our products through the ramp-up of our proprietary Enlist system and strengthening our advantaged multi-channel, multi-brand route to market, continuing to transform our crop protection portfolio and enhance our higher value product mix, and further streamlining costs and disciplined execution on our productivity actions. We will also maintain our balanced capital allocation program, continuing to return cash to shareholders even as we invest in long-term sustainable growth. Corteva’s board and management team are fully aligned on a strategy to deploy our competitive advantages to deliver increased value that is durable. Our plan is solid. We are executing and it is working. At the same time, we are always open to perspectives that benefit all of our shareholders. At Corteva, we believe in the fundamental importance of listening and incorporating ideas that will help advance our mission and our objectives, and we continue to do that. While I am pleased with our progress, I am not satisfied with our relatively flat earnings over the past three years. We have learned, we’ve adapted, and are now very well positioned to accelerate our growth and deliver on the tremendous opportunities we have created through our targeted investments and disciplined emphasis on cost and productivity. As I consider our path ahead, there is no doubt we have aligned our culture and gained the trust of our customers. At the same time, we have the right products and our portfolio transformation is underway, and we have the productivity programs in place to deliver our future. Through disciplined and focused execution, we are confident this plan will deliver meaningful earnings growth and margin expansion in the near term and significant sustained, long-term value for all of our shareholders, and importantly puts Corteva fully on track to achieve our midterm targets. I’ll hand the call back to you, Jeff.

[Jeff Rudolph:]

Thank you Jim. Now let’s move onto your questions. I would like to remind you that our cautions on forward-looking statements, non-GAAP measures and pro forma financials apply to both our prepared remarks and the following Q&A. Operator, please provide the Q&A instructions.

[Operator:]

We’ll take our first question from Joel Jackson with BMO Capital Markets.

[Joel Jackson:]

Good morning everyone. Jim and Greg, as we look at your 2021 bridge on Slide 12, could you maybe outline where you think the guidance is most conservative and where you think it’s most aggressive? Thank you.

[Jim Collins:]

Thanks Joel. Yes, as we’ve said in the opening comments, 2021 is a big step forward for us, and I really believe we’ve reached an acceleration point given the investments and the strategies that we’ve been putting in place since 2017, and believe they will drive substantial earnings for the years ahead. As a starting point for ’21, I think you’ve got to look at that fourth quarter momentum. That momentum is there and it’s real, and it gives you a strong sense for where that growth is going to come from. As we’ve guided for ’21, as you see on the chart, that 15% to 20% improvement in EBITDA, and that’s a 200 basis point improvement in EBITDA margin, I believe that guide is strong and it’s realistic. As you’ve asked, let me give you some proof points on why I have some confidence in it. Two-thirds of the improvement in the business this next year is going to come through our crop protection business, and that’s tied to the productivity improvements that we’ve put in place - a number of footprint reduction projects, as they have started to flow through cost of sales, and you can really begin to see that in our CP margins. You add to that the continued ramp-up of either the new products that we’ve talked so much about, about $300 million or so of incremental new product sales, and then you start to unleash the spinosyn capacity that we have been investing in, so overall you get about $400 million of growth there. Then all of that on crop protection is net of now the strategic decisions that we made to exit a number of key products, so while those decisions have been headwinds in the past, we’ve got those behind us now, so the numbers we’re talking to you about are net numbers. Then about a third of that improvement next year is tied to our seed business, and you’ve really got to start that discussion by just looking at Latin America, he tremendous momentum we carried in the fourth quarter, and then you add to that expectations of, I don’t know, 5 million to 8 million acres of new crop coming back into corn and soybeans in North America, probably heavily weighted to soybeans, but it’s real out there. You can see it tied to the really strong demand that’s in the marketplace, and that’s being reflected in commodity prices. Then the other confidence I have in our seed business is with respect to pricing. You look at what we delivered in 2020, 2% price improvement in corn and 2% price improvement in soybeans globally, we’ve got a track record now there and so we’re going to count on that track record. We will have a little headwind in the seed business tied to commodity prices and cost of sales, and then don’t forget about Brevant as we’re thinking about the bridge next year. We’re just scratching the surface of what Brevant as well as Enlist is going to be able to deliver for us. I think this is a strong and realistic guide for 2021, and I have a lot of confidence in this plan and my team that we can deliver that.

[Operator:]

We’ll take our next question from David Begleiter with Deutsche Bank. Please go ahead.

[David Begleiter:]

Thank you, good morning. Jim, on your 2022 target, which implies about--I think about $2.95 billion at the midpoint, can you bridge that roughly $500 million increase versus ’21 vis-à-vis cost, new products, productivity, etc.?

[Jim Collins:]

Great David, thanks for the question. You’re right - in our outline, our prepared remarks today, we really are affirming our midterm targets, and that’s that 12% to 16% EBITDA growth using 2019 as a baseline. We’re not going to provide guidance for 2022--you know, specific guidance for 2022, but we do see that continued momentum that I was just talking about that we have going into 2021. It’s a little hard to sit here today and predict the market in ’22, but we can talk about the levers that are still going to be within our control, that have given me confidence to confirm those midterm targets. You start in seed with really Enlist, and in 2021 we’re just scratching the surface on the margin lift that Enlist can deliver for us. By 2022, we’re really into the noticeable improvement in net royalty expense as we not only ramp up the top line revenue but we ramp up the proprietary portion of those sales that are in Corteva germplasm, and then we’re going to continue to see improvement in the rest of our portfolio in a few other areas. Then I mentioned--I always need to keep reminding folks about Brevant. Again, ’21, it’s going to be a good year, a good start year for us, but 2022 will allow us to continue that momentum into that retail channel with Brevant. On crop protection, the main story there is momentum. We delivered $250 million of new product incremental revenue in 2020. ’21 is going to be another strong year with about $300 million of incremental from those new products. We had 140 new product registrations that were received right here at the end of 2020 that will just start having momentum in ’21, and you’ll feel that again in ’22. Then on top of the top line revenue that we’ll get from crop protection, by ’22 we’re really starting to see the compounding effects of better margins on that new chemistry as higher volumes flow through that same asset base and take up--you know, we start to spread that fixed cost over a much broader base. You’re seeing some of that in ’21, but as those new product sales continue to ramp, it shows up in ’22, on top of that, the further improvements that you’re going to see from the asset footprint work that we’re doing, and we’ve got a good start at that this year coming up and it’ll show up next year. All of these levers, we really have within our control and, again, while it’s early, we’ve still got ’21 to get through and tough to predict what that market will look like, but we’ve got our hands firmly on these levers and that’s what’s going to propel us to those midterm targets.

[Operator:]

We’ll take our next question from Vincent Andrews with Morgan Stanley.

[Vincent Andrews:]

Thank you and good morning everyone. Jim, if I could ask on seed production costs, I believe they were up in 2020 somewhere in the $75 million to $100 million range, and most of that was on production issues, I think in soy. Then this year, you’re talking about another $100 million, so on a two-year stack, if my math’s right, you’re up $175 million to $200 million. I guess my question is if we have sort of normal production in the U.S. and Europe this year and if the futures curve for corn and soy is correct and commodity prices are lower into next year, does that mean there’s going to be $170 million to $200 million seed production cost tailwind in ’22, or would some of that be eaten up by other costs, maybe extend launch costs or anything else? How should we be thinking about that bridge? Thank you.

[Jim Collins:]

Thanks Vincent for the question, and you’re right - for 2021, we are expecting approximately $100 million in seed input cost headwinds. Those are predominantly due to the higher commodity prices for soybeans that impact our grower compensation program, the way we compensate growers for producing seed. We also had lower seed field yields in Europe - it was a tough seed production year. Just as background, we go out and we contract with independent growers to produce our commercial seed, and they have the opportunity to lock in a commodity price rate during a window, and especially with soybeans as we saw that run-up late in the season, they locked in at higher rates. We go into every year with our best foot forward, so as we put seed in the ground in ’21 for ’22 production, clearly we will lap those higher commodity prices, and if we see some tail off there, we’ll benefit from that. We’ll expect to always have good solid yield production in our fields. We work with a lot of irrigated fields, so we try to take the weather out of that as much as possible. We’ve seen good trends, and I think we’ve got a lot in play that should help us support us as we come out of ’21 and into ’22.

[Operator:]

We’ll take our next question from PJ Juvekar with Citi.

[PJ Juvekar:]

Yes, hi. Good morning. A couple of related questions, Jim, on seeds. Are you seeing that farmers are willing to buy higher priced seeds given that they have strong disposable income this year? Just related to that, on your fixed minimum royalty payments that you have through 2023, which I think that’s more of a cash flow item, can you talk about the income statement impact as you ramp up volumes of Enlist E3 and ramp down volumes of Round UP yield? Thank you.

[Jim Collins:]

Good morning PJ. I’ll talk to the pricing question and maybe have Greg walk you through the impacts of the way that balance sheet and the royalties flow. As we think about the market this season, 2021, it’s always a competitive marketplace, and it will be just as competitive as we saw in 2020 even with the commodity pricing backdrop, so we’re going to continue to go out there and get paid for the value that we deliver to growers, especially when it comes to the yield advantaged technology that we’re putting out there, and most notably we really do see that in corn. We’ve established a really strong track record that I mentioned earlier of extracting that value for our technology, and all you’ve got to do is go back and look at our 2020 performance where we delivered 2% pricing in corn and soybeans, and that’s globally. This is always a market-specific phenomenon, but when you step back and look at our performance last year, we did that everywhere. As we sit here today, we’re very pleased with the pace of the orders that are coming in, in both our Pioneer brand in North America as well as the Brevant brand through those channels, and so I’m confident on that value question that we’ll carry that momentum into 2021. Greg, you want to talk a little bit about royalties?

[Greg Friedman:]

Yes PJ, on royalties, we are in 2020 a relatively flat on our royalty spend, and we’ll continue into 2021 pretty much on the same basis. As we go into 2022 and start ramping up more of our proprietary products in germplasm, we’ll start to see that royalty expense come down, and that will continue beyond 2022 through the rollout of Enlist through the end of the decade. We do, as you know, have some minimum payments that we make every year. Those will end in 2023.

[Operator:]

We’ll take our next question from Arun Viswanathan with RBC Capital Markets.

[Arun Viswanathan:]

Great, thanks for taking my question. Congratulations on the progress in ’20. I just wanted to ask about the margin progression and evolution that you’re seeing you’ve achieved and you see over the next couple years. It looks like you’re guiding to about a 17% EBITDA margin at the midpoint in ’21, and you’ve outlined some new restructuring initiatives for footprint optimization and such. Do you see maybe this as a first step and maybe some other projects down the road - maybe you can expand on the opportunities that you see, and if so, where do you think margins ultimately can get to, and what would it be dependent on? Would it be dependent on maybe further market growth or some inorganic growth, or maybe some different asset structuring or potentially even some different business lines, like formulation or anything like that? There’s a lot in there, but maybe you can address some of that. Thanks.

[Jim Collins:]

Great Arun, and thanks for your comment as well. Due to the merger, we did inherit a number of U.S. manufacturing locations that have been more expensive than what I had personally experienced in the past around a more outsourced or a more localized approach to the business. We didn’t wait to take any actions to start optimizing the supply chain. Since merge, since the close of the merger, we’ve shut down nine manufacturing assets, and we are starting to see the benefits of those lower cost supply chains, so I do believe that 2021 is really an inflection point for us. We really haven’t seen much of the benefits of those actions yet, and that’s kind of related to the amount of time that it takes to clear the regulatory hurdles. Every time you make a change in your supply chain, you have to go back and resubmit dossiers to regulatory authorities in every country around the world. You saw some restructuring, the 8-K that we filed that had restructuring in it - that’s just part of those programs that we’ve talked about, and we’ll just continue to roll forward. In our guides, in our confirmation of our midterm targets, we’ve included those strategic decisions in those guides. It’s one of the tools that we have, one of the ways that we get there and have confidence that they’re achievable, and then we’re always looking for opportunities and new ideas. We take every one of our active ingredients that we produce and we ask ourselves the question, can we be the lowest cost producer of that product? When that answer is no, the teams begin looking for alternate sources. When that answer is yes but we need project work to get there, we begin to put those initiatives in place to drive that. The best example I could point to is if you look at 2021’s EBITDA improvement, two-thirds of that improvement is going to be coming from those initiatives in our crop protection business, so I’ve got a lot of confidence, a lot of great visibility of those initiatives that are in flight, and exactly where we are in each one of those manufacturing units and those cost of sales points to be able to point to that.

[Operator:]

We’ll take our next question from Jeff Zekauskas with JP Morgan.

[Jeff Zekauskas:]

Thanks very much. I have a question about your conservative operating cash flow guidance in that your ’21-’22 total is $3 billion to $3.5 billion, so let’s call it, I don’t know, $1.7 billion a year. This year, your operating cash flow is $2 billion. If you subtract out your working capital benefits, maybe it’s $1.7 billion, so you’re sort of saying that your operating cash flow is not really going to change very much from that base. You know, there’ll be a little bit more working capital, but your EBITDA you think will go from $2 billion to $3 billion over--you know, to 2022. I don’t understand why you would be generating so much EBITDA and so little operating cash flow. Then secondly, your pension liability really went down in the fourth quarter, I think sequentially from something like $5.8 billion to $5.1 billion, but interest rates really fell year-over-year and I would have thought that there would have been an adjustment in the opposite direction. Can you explain what happened to pension, and can you explain why there’s so little growth in operating cash flow?

[Jim Collins:]

Great Jeff, thanks for the question. Let me just start by saying I’m really proud of how the team performed in 2020 from a cash flow perspective - you’ve seen the numbers that we’ve talked about, and also the plan that we’ve put in place for 2021. That includes returning about--for 2021 when we complete the share buyback and the dividends, we’re going to return $1.1 billion to shareholders. Let me turn it to Greg to talk a little bit about the future look on cash flows and that balance as you talked with EBITDA, and for the discussion of what happened to the pension. Greg?

[Greg Friedman:]

Yes, specifically on cash flow, we had a very strong cash generation year, as you commented, this year. A lot of that was driven by real specific actions that we took to manage our working capital and also manage our capital spending, particularly during the pandemic. What also happened towards the end of the year is we saw some very good cash generation by our customers through the government programs that they received some benefit from, and in addition to that the rise in commodity prices towards the end of the year also generated some incremental income for our customers, and we got the benefit of that with some cash generation at the end of the year. As we go into 2021 and beyond, we are looking at increasing our capital spending. We were at $475 million in 2020 and you’ll see in our guide that we’ve included capex at about 550 in 2021, so we put some of our capex on hold and we plan to reinvest in our growth projects in 2021 and beyond. In addition to that, we do expect to return to a more normal cash-credit mix with our customers, so there will be some changes in working capital as we move through 2021 and assuming a more normalized cash-credit mix.

[Jim Collins:]

Great, and do you want to talk about pensions?

[Greg Friedman:]

Yes, so on pensions specifically, we saw a net decrease in the obligation, and that was driven by two things

[Jim Collins:]

The other thing, Jeff, just to highlight is our unfunded balance declined, and that was mostly due to changes in the OPEB obligation as a result of some changes that we made in benefits.

[Operator:]

We’ll take our next question from Jonas Oxgaard with Bernstein. Please go ahead.

[Jonas Oxgaard:]

Thank you and good morning. You mentioned earlier that you were seeing some share gains in South America crop protection. I was wondering if you could expand on share gains in corn, soybean, and crop protection in other regions. Then as a follow-up, how do you see that evolving this year?

[Jim Collins:]

Great Jonas, thanks. We are confident that we gained corn market share for sure in Europe and in Brazil, both in the Safrinha season as well as summer, and we’ve got just a fantastic line-up and our teams really executed very, very well. It’s a little too early to call on share gains in North America. We really have to get that last round of USDA data that give us plantings and what happened right down to a county level, so we’ll have that final call on North America in mid-March. But look - I’m confident that we held share at least for sure in corn in North America while delivering above market pricing gains, so our story in North America was really all about value. In soybeans from a global perspective, we saw some slight declines in volumes, but for us it’s the U.S. that really matters, and our U.S. seed volumes in soybeans were up, so I’m pretty confident in soy as well. We held, if not we were up slightly, and one more time, in soybeans that 2% pricing on a look back basis shows that we not only have we held if not gained slightly and drove much higher value. Those are the big markets, but maybe Tim, do you want to share either a broader perspective of how we’re doing on market share in other markets around the world, other crops?

[Tim Glenn:]

Yes Jim, maybe I’d add a couple comments on the crop protection side, especially looking back at 2020. I think we can confidently say we gained share in crop protection, I think on a global basis. We obviously are still in the early days and we don’t have all the competitive metrics in place, but it certainly seems like on a global basis that we would have outperformed the market on CP as well as I think we can confidently say in EMEA as well as Asia-Pacific, we’ve been ahead of the market really throughout the year and had strong finishes there. In North America, we’ve sort of been hanging with the market for most of the year in crop protection, and then we had a strong finish to the year as well, so we’ll see where that , but a little optimistic that we will end up above the market for North America, we’ll have strong finish, and in Latin America fair to say that we started off the year behind the market in the first half. We felt like we were catching as we went through the third quarter, and a really strong finish in the fourth quarter as we anticipated. Again, I thin much like North America, we have some reason to believe that once everything is tallied up that we’re going to be certainly with the market, and maybe just ahead of it on the crop protection side. So in conjunction with the seed share position that Jim talked about, I think we can feel really proud of how we performed versus the market on the crop protection side, again with strong pricing to support it.

[Jim Collins:]

Great Tim. Thanks for mentioning the crop protection. You mentioned Latin America right there at the end - Jonas, our insecticide business in the fourth quarter in Latin America was up 36%, and our fungicide business in Latin America was up 28%, so as Tim said, really strong close for the year by that team. On a full year basis, we were also up similar numbers, so we’re encouraged by our CP market share as well. Thanks Jonas.

[Operator:]

Our next question comes from Kevin McCarthy with Vertical Research Partners.

[Kevin McCarthy:]

Yes, good morning. Just a follow-up on capital allocation, it sounds like you’re going to be mostly done with your share repurchase commitment by the middle of the year, so how would you describe the potential for future repurchases versus the M&A opportunities that you described, Jim, in fruits and vegetables, digital and biologicals? Then related to that for Greg, can you comment on other cash calls or expectations for 2021 in terms of pension, OPEB, PFAS, and any other extraordinary items? Thank you.

[Jim Collins:]

Thanks Kevin. As we mentioned in our message earlier, we’re going to continue to evaluate opportunities to return capital to shareholders and we view that as a priority in our overall scheme for capital allocation. We mentioned that we are committed to executing the current share repurchase program and now plan to complete, as you said, most of that program by mid-’21. That is a further acceleration from where we were and where we communicated back in 3Q. Then on a look forward basis, you look at that combined with our dividend, we’ll be a little over $1.1 billion returned to shareholders. At that time, as that program closes out, we’ll take a view of all of our obligations and sit down with our board and talk about what’s next after that, but I’m confident that returning capital to shareholders is a priority for me and it’s a priority for this board, and we’ll certainly keep you informed as our thoughts around that evolve. Greg?

[Greg Friedman:]

Yes, on cash calls, you mentioned pension and OPEB. Specifically with respect to the pension, we continue to be confident that we don’t have a required contribution to the pension plan in the next couple years; in fact, as I mentioned earlier, our returns this year exceeded the cost of the plan, so our funded rate improved. You’ll see the details of all of that in the 10-K when we issue that in the next several days, so apologize for not having the details readily available for you for that. Regarding OPEB, no additional cash calls other than what we normally see on an annual basis, and as Jim mentioned, with the changes that we made to the plan, that reduced the liability significantly.

[Jim Collins:]

Thanks Greg. Thanks Kevin.

[Operator:]

Our last question will come from Steve Byrne with Bank of America.

[Steve Byrne:]

Thank you. Good morning. Jim, you mentioned seven-year high on crop commodity prices, and if you look at that another way, the growers that are locking in harvest month futures prices today versus what they were doing a year ago, they’re looking at $100 an acre higher revenue today than they were a year ago. My question for you on that is how do you think that most affects the decisions those farmers make? Is it seed genetics, is it shift to branded crop chemicals, is it application rates? How do you think it most affects your verticals? Then the second question there would be your 2021 guide of a 3% sales growth is the same as it was in 2020. Is it reasonable to see that as not really a middle of the road but a not to miss guide?

[Jim Collins:]

Great, thanks Steve. Clearly improving commodity price markets helps the psychology of everybody involved, and farmers always think about their decisions as investments in their future to drive productivity and yield, so higher commodity prices means they will continue to push for yield and be able to take advantage of that yield. What I like about what we’re seeing right now is we feel like the demand side of this equation that’s driving those commodity prices is pretty durable for the one to two-year term as we look out. China’s demand curve seems to be strong as they’re rebuilding their pork industry, and we know we’ve got demand for exports in other markets and strong demand for animal feed that we’re seeing come back in North America, and with the carry-over stocks where we’re seeing them. I, like you, believe that we have support for those commodity prices here for the next two or three years, and that’s driving our acreage assumptions as well. I would expect 182 million corn and soybean acres when you combine them. It’s a little hard to call the split there, but probably the best news we’re hearing right now is we don’t seem to be--it’s going to favor soybeans, we know that. Any increases will go into soybean acreage, but it’s not coming out of corn, so it’s really setting up for both a strong corn and bean. When you look at our revenue guide for next year, as you mentioned, just remember that in that guide, that is a net top line revenue number and it’s net of about $300 million of revenue that we phased out of from 2020, going into ’21, the first of those strategic decisions around chlorpyrifos, and then in several other low margin products, very, very generic, and just probably not the right kind of products for our portfolio going forward. We’re certainly in a mix enrichment and refreshment of that portfolio and basically have the majority of those big strategic decisions now behind us. Back to my comment earlier, I think this guide is a strong and a realistic guide with all of those elements really baked into it, and we still have a full season ahead. We’re sitting here early in ’21 with a lot to go, but we’re confident we’ve set this at the right spot. Thanks Steve.

[Jeff Rudolph:]

Great, well thank you for joining the call today, and we appreciate your interest in Corteva.

[Operator:]

That does conclude today’s presentation. Thank you for your participation. You may now disconnect.