DTE Energy Company
Q3 2019 Earnings Call Transcript

Published: 28 Oct 2019

[Barbara Tuckfield:]

Jerry Norcia - President and Chief Executive Officer Peter Oleksiak - Chief Financial Officer

[Operator:]

Good day and welcome to the DTE Energy Q3 2019 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Barbara Tuckfield. Please go ahead, madam.

[Barbara Tuckfield:]

Thank you and good morning, everyone. Before we get started, I would like to remind everyone to read the Safe Harbor statement on Page 2 of the presentation, including the reference to forward-looking statements. Our presentation also includes references to operating earnings, which is a non-GAAP financial measure. Please refer to the reconciliation of GAAP earnings to operating earnings provided in the appendix of today’s presentation.

[Jerry Norcia:]

Thanks, Barb, and good morning, everyone, and thanks for joining us today. This morning, I’m going to give you a recap of our performance for the third quarter of 2019, a business unit update, and provide the overview for the 2020 early outlook and early thoughts on our long-term growth. At EEI, we’ll provide a deeper review of our long-term growth plans and strategies. Then finally, I’ll turn it over to Peter who will provide a financial review of the quarter, updates to cash, capital, and equity, and the details on our 2019 guidance and 2020 early outlook. Then I’ll wrap things up before we take your questions. So let’s start on Slide 4. We continue to make great progress on a number of key fronts. Our third quarter financial results are solidly on track with our plan. Given the strength we have experienced in the first three quarters of the year, I’m announcing an increase to our 2019 operating EPS guidance. We are increasing our 2019 guidance midpoint $0.03 to $6.23. This represents EPS growth from original guidance in 2018 to 2019 of 8%, which was quite impressive at this point. This increase is due to the strong performance at all of our business segments and the fact that we will have continued to build contingency that will carry us through the fourth quarter. Peter will provide more details on that front in a few minutes. Today, we are also providing the 2020 early outlook for operating EPS guidance with a range of $6.47 to $6.75. I’m pleased to say that this is a 7.5% increase over our 2019 original guidance and includes the impact of the recent midstream acquisition we announced earlier this month. Longer-term through 2024, we are using the higher 2020 early outlook as a new base for our 5% to 7% operating EPS growth rate. I’m also pleased to announce a 7% dividend increase that was just approved by our Board. The new annualized dividend per share is $4.05, up from $3.78. This continues DTE Energy’s consistent dividend history, having issued a cash dividend for more than 100 years. This increase reflects the company’s strong performance and ability to consistently achieve our goals. The Board’s approval of the increase signals confidence in the company’s performance and long-term strategic plan. Turning over to the business update, all of our businesses have accomplishments to note this quarter. DTE Electric recently announced our goal to achieve net zero carbon emissions by 2050. This bold new goal sets the framework to go beyond our existing commitment to reduce carbon emissions 50% by 2030 and 80% by 2040.

[Peter Oleksiak:]

Thanks, Jerry, and good morning, everyone. Before I get into the financials, I always like to give an update on the Detroit Tigers. Yeah, Tigers did come into last – in the last place this year. But the good news with that last place finish is they get a first draft pick next year. And I’m hoping they find another Justin Verlander. So overall, I’m looking to the future and feeling pretty good about it. And like my Tigers, the financials are as consistently strong here for DTE. Now let me turn your attention to the financial results, and I will start to review on Slide 6. Total earnings for the third quarter were $351 million. This translates into $1.91 per share for the quarter. And you can find a detailed breakdown of EPS by segment including our reconciliation to GAAP reported earnings in the appendix.

[Jerry Norcia:]

Thanks, Peter. I’ll wrap up on Slide 12 and then open up the line for questions. 2019 is shaping up to be a strong year as evidenced by our guidance increase, so we expect and continue our pattern of exceeding original guidance for over a decade. You can tell from our 2020 early outlook that we are planning for another strong year next year. The 2020 operating EPS midpoint of $6.61 provides 7.5% growth from our 2019 original guidance. The side’s growth rate is driven by a strong performance at all of our business units, with healthy growth at our 2 utilities, continued business development at P&I and the near-term EPS accretion from our recent GSP midstream acquisition. For 2020, GSP’s growth is more than double what we had anticipated. Going forward, we will continue to target a 5% to 7% EPS growth with 2020 outlook as the base of that growth. Our 7% dividend increase for 2020 demonstrates our confidence in the company’s performance and long-term strategic plan. Our utilities continue to focus on necessary infrastructure investments, specifically for investments to improve reliability and the customer experience. Our non-utilities continue to position us for long-term growth. Finally, I feel great about our ability to continue to deliver the premium total shareholder returns we have delivered over the past decade. And with that, I’d like to thank everyone for joining us this morning. And, Sergey, you can open up the line for questions.

[Operator:]

Thank you, sir. Our first question comes from the line of Praful Mehta of Citi. Please go ahead.

[Praful Mehta:]

Thanks so much. Hi, guys.

[Jerry Norcia:]

Good morning.

[Peter Oleksiak:]

Good morning.

[Praful Mehta:]

Good morning. So maybe just first, starting with the equity that you pointed out on Slide 11, the $1.5 billion to $2 billion in 2020 to 2022, I’m assuming in 2022 you’re including approximately what $825 million of mandatory converts?

[Peter Oleksiak:]

They do include the mandatory converts. It will be approximately $1 billion related to the acquisition, but the $1.5 billion to $2 billion does include those converts.

[Praful Mehta:]

Okay. Got you. That’s helpful. And the 2020 guidance that you provide, all that includes is an additional $300 million of equity in 2020. So, I just wanted to understand the share count that you’re using for that 2020 guide.

[Jerry Norcia:]

Yes, we have $300 million that we will be issuing next year in 2020. And here in 2019, we will be issuing the $500 million that we previously disclosed.

[Praful Mehta:]

Got you. And just finally, I just want to stay on the credit theme, I guess. You mentioned that a couple of the agencies clearly expressed some concern. Do you see any scenario where there is additional need to issue equity in a particular business? I guess, how the business kind of moves forward from here? Do you expect any need to issue additional equity to kind of satisfy the rating agency concerns?

[Jerry Norcia:]

No, I do not. The S&P rating, in particular, our strong BBB and excellent business risk profile, we were really targeting that. So we are very happy with that outcome. It gives us – actually, we have a lot of cushion even within that current rating and profile. Moody’s did fall in line with S&P. A part of the issue with Moody’s is they do not recognize the converts as equity. So that was one of the reasons behind the action they took, but with their new rating, we have a lot of cushion as well. So, we’re feeling really good where we’re at with the rating agencies at this point.

[Praful Mehta:]

All right, great. Thanks so much guys.

[Operator:]

Our next question comes from Julien Dumoulin-Smith of Bank of America Merrill Lynch. Please go ahead.

[Julien Dumoulin-Smith:]

Hey, good morning team.

[Jerry Norcia:]

Hey, Julien.

[Peter Oleksiak:]

Good morning.

[Julien Dumoulin-Smith:]

Howdy. Perhaps, if I can come back to just the transaction last week, help clarify just a quick follow-up here. I mean, as you think about that $0.45 in the organic growth of that business, just again, to come back to off of the run rate 2021, 2022, 10 times multiple, how do you think about that? That’s a – how do you think about the growth to the 5-year outlook first-off just to reconcile that, and I’ve got a follow.

[Jerry Norcia:]

Well, I think, Julien, the first thing is that the transaction supports the 7.5% growth, 2019 over 2020. And then as we’ve mentioned, we reestablished 2020 as the base for the 5% to 7% growth going forward long-term. So, we view the transaction not only as providing a lift, 2019 over 2020, but certainly provided an uplift long term as well in the plan and filled all the growth needs that we have at GSP.

[Peter Oleksiak:]

I think just to add on as well in this segment in particular, we’re feeling really good with the growth rate going forward. We will be talking in more detail at EEI about this. I can tell you though that we have a previous disclosure out there of 2023, and we’re going to be more than achieving that.

[Julien Dumoulin-Smith:]

Got it, okay. But just from a planning perspective, as you think about the other investments that have been talked about before, the NEXUS laterals, Link expansion capital, perhaps generator and connections. What are you thinking about it? And I know we’re getting ahead of the GSP disclosures perhaps coming up here in a couple weeks. But I just want to clarify, what else are you thinking about out there on GSP?

[Jerry Norcia:]

Well, Julien, again I’ll repeat that. It certainly supports the 7.5% growth, 2019 over 2020. And if you lock in that growth and then grow 5% to 7% from there, this transaction as well as the other investments in GSP, and let’s not forget that the bulk of our investment is going into our 2 utilities, those high growth rates from our utilities, high growth rate from GSP, as well as the strong growth off the P&I base will support 5% to 7% growth over the new 2020 base, and we’ll provide a lot more detail by business segment at EEI.

[Peter Oleksiak:]

Yeah, we will, and in this segment in particular, we have some great growth platforms now, so we’re not looking for any big new acquisitions. So, we have a lot of opportunities. You mentioned a few just in your question there. So between Link and NEXUS, and now this new Blue Union and LEAP asset, we’re going to have a lot of organic growth opportunities, but we’ll give more updates here at EEI.

[Julien Dumoulin-Smith:]

Got it. If I can clarify quickly the early 2020 outlook, I mean it looks like it implies even ex the latest transaction, a pretty healthy degree of growth off the 2019 base for GSP. Can you talk about what’s driving that? I mean, as you say, it seems like a 12% type growth number?

[Jerry Norcia:]

Well, two things, the transaction, as we mentioned, is providing significant accretion next year. So, it is filling a portion of the growth objective of GSP, but I can tell you we’re also planning very carefully for the balance of the platform at GSP in light of market conditions.

[Julien Dumoulin-Smith:]

Nothing specific though, and that’s for next year.

[Jerry Norcia:]

That’s for next year.

[Peter Oleksiak:]

That’s for next year, correct.

[Jerry Norcia:]

So we’re working very closely with all the producers. So our plans reflect that. It will be in – be very careful.

[Julien Dumoulin-Smith:]

Got it. All right. Well, I look forward to see you guys and hear more in a couple of weeks. Cheers.

[Operator:]

We will now take our next question from Michael Sullivan of Wolfe Research. Please go ahead.

[Michael Sullivan:]

Hey, good morning.

[Peter Oleksiak:]

Good morning.

[Jerry Norcia:]

Good morning.

[Michael Sullivan:]

Yeah. So first, I just wanted to follow-up on that last question. So is there any more detail that you can give us as to how the base midstream business is growing sort of ex the transaction you just did. And then I think also the – upping the stake in Link and the Generation Pipe, just kind of, what the base business is doing? And how that stacks up to what you were previously anticipating?

[Jerry Norcia:]

Well, what we can say is that if you look at all those investments and that drives a 30% – 34% growth year-over-year in the GSP segment, and overall, allowed us to lift our corporate growth of 7.5% year-over-year, and sets us up really nicely long-term that meet our 5% to 7% growth corporately, along with our growth at our utility. So we typically don’t describe each platform, but what I can tell you, I’ll repeat is that the balance of our platforms, we are planning for it very carefully next year in light of the market conditions. So the 34% reflects that and supports our 7.5% growth year-over-year.

[Michael Sullivan:]

Okay, thanks. And then switching over to P&I. Can you just give any color around the recently acquired REF units that you mentioned? How much of a contribution that was towards 2020 and when those will roll off?

[Jerry Norcia:]

Yeah, we did acquire some new units that here in the late summer, and we did redeploy those at existing sites, where with it some units were sunsetting. So REF is flat. The way to think about is, REF is flat year-over-year. So the growth we’re seeing is really around the origination that we’ve been doing over the last few years. These additional units in REF will contribute about $30 million over the next couple of years, which is a really nice chunk of cash and it really helps reduce equity needs over the next 3 years.

[Michael Sullivan:]

Okay. And when do those roll off, the new ones that you just acquired?

[Jerry Norcia:]

Yeah. The new ones as well as all the existing is the end of 2021. They all sunset at that point in time.

[Michael Sullivan:]

Great. Okay. Thank you very much.

[Operator:]

Our next question comes from Andrew Weisel of Scotia Howard Weil. Please go ahead.

[Andrew Weisel:]

Hey, good morning, everybody.

[Peter Oleksiak:]

Good morning.

[Jerry Norcia:]

Good morning, Andrew.

[Andrew Weisel:]

Just one quick one. Obviously, a nice dividend increase today. My question is going forward, is there any change to the dividend policy, given the mix shift with about 35% of next year’s earnings come from – coming from the non-utilities, and all the credit updates that you talked about earlier? How do we think about the dividend policy going forward?

[Jerry Norcia:]

Well, typically, we have said and continue to maintain that will grow dividends in line with our earnings growth, but we’ll be able to provide a little more color in detail on that at EEI as to how will it look going forward. But certainly it will be in line with earnings growth.

[Peter Oleksiak:]

With earnings growth. Yeah, we haven’t really changed that philosophy, Andrew.

[Andrew Weisel:]

Okay. So the same policy will continue going forward then?

[Peter Oleksiak:]

Yes. That’s correct.

[Jerry Norcia:]

That’s correct.

[Andrew Weisel:]

Okay, great. That’s all I had. Thank you.

[Operator:]

Our next question comes from Shahriar Pourreza of Guggenheim Partners. Please go ahead.

[Shahriar Pourreza:]

Hey, guys.

[Jerry Norcia:]

Hey, good morning, Shahriar.

[Peter Oleksiak:]

Good morning.

[Shahriar Pourreza:]

I apologize, I jumped on a second late. The comment that you made just around planning in light of market conditions, so like the 33.8% includes that. Is that – can you just elaborate what you mean by that? And is that tied to a specific asset in the producer. So I’m kind of curious if you can just touch a little bit on what you mean by that?

[Jerry Norcia:]

Well, we’re looking at all our platform, Shahriar. And certainly, we’re operating in a low price environment. So as we continue our conversations and discussions with our partners, we are forecasting earnings growth of 34% in this business line in light of these market conditions. If the market conditions improve, things could change. But certainly, we’re planning carefully for this business segment at this point in time. In addition to the balance of our portfolio, which we feel very comfortable will help us deliver a 7.5% growth year-over-year.

[Shahriar Pourreza:]

So this isn’t really tied to credit quality or financial conditions of the actual producers, but more of a pricing environment, which…

[Jerry Norcia:]

Both pricing and production. Yes, that’s correct.

[Shahriar Pourreza:]

Okay. Got it. And then just as you guys look at the contracts, what remains at NEXUS. There is a portion of it, obviously, that’s still under short-term contracts. Is that – are these market conditions, do they continue to dictate that you’ll remain within that kind of a tenure of these contracts? Or is there an opportunity to actually contract longer term?

[Jerry Norcia:]

Sure. We have started to see interest in and terming out longer than we’ve seen in the past. So we find that as an encouraging signal from the market that there is desire to contract somewhat slightly longer-term. And so we continue to move our contract portfolio in excess in that direction. So we are seeing positive signal there.

[Shahriar Pourreza:]

Got it. Got it. And let me just ask you one last one. Is the signals that you are seeing as far as longer-term contracts, is that predicated on the delay of 2 existing pipe projects?

[Jerry Norcia:]

Certainly, we think that could be having an impact. And, of course, production continues to grow in the Appalachia at this point in time. So we believe that it’s a combination of those factors was creating more interest.

[Shahriar Pourreza:]

Perfect. Thanks, guys. Congrats.

[Operator:]

Thank you. Our next question comes from the line of Angie Storozynski of Macquarie. Please go ahead.

[Angie Storozynski:]

Good morning. Most of my questions have been asked and answered. But I have a question about your renewable natural gas type of plans and investments. I mean, we’ve seen this sharp decline in RIN prices. And I’m just wondering, if you guys have a view where those prices will go and how it’s being depicted in your 2020 guidance?

[Peter Oleksiak:]

So thank you for that question. The bulk of our returns from RNG asset investments are in the dairy sector, and most of the value from that comes from the low carbon fuel standard that exists in California to displace essentially diesel and gasoline in the CNG markets. We have seen a decline in the RIN pricings, but we have seen it also start to recover recently. But it forms a small portion of our forecast for these assets and these investments, which with the LCFS they still remain very attractive assets and very attractive returns. Our outlook, you asked, how do we feel about how it’s looking. Feel that the EPA will issue a volume obligation. They’ll be more in line with the supply that’s available. And I believe that’s why we’re starting to see somewhat of whatever recovery in the pricing for the RINs.

[Angie Storozynski:]

Great. Thank you.

[Operator:]

Our next question comes from Sophie Karp of KeyBanc. Please go ahead.

[Sophie Karp:]

Hi, good morning.

[Jerry Norcia:]

Good morning, Sophie.

[Sophie Karp:]

question, so just wanted to come back real quick to the midstream segment, the $0.15 accretion that you talked about on the call earlier, when you announced the deal? Is this fair to think about the 2020 as $0.15 of the growth comes from that and the rest from other organic opportunities at this time?

[Jerry Norcia:]

Yeah. Actually that’s a good way of thinking about it. Yeah, the 15%. Part of that 7.5% includes that 15% for sure.

[Sophie Karp:]

$0.15 you mean?

[Jerry Norcia:]

Yeah, $0.15. Yeah.

[Sophie Karp:]

Okay. Thank you. And then, I wanted to dig a little more into utility earnings. So being roughly flat year-over-year in the DTE Electric rate. And I understand there’s been a weather volatility last year and this year. But sort of the way you describe it, if we stripped away the weather impacts completely, would that have grown in line with your, kind of, long-term rate that you’re projecting? And is there something within the rate implementation growth, of course, that is unusual this year?

[Jerry Norcia:]

Yeah, that’s correct. We had – last year was one of the hottest we’ve had here – on record here in Michigan in the region. So you take that away and normalize weather this year, we had positive weather this year of $27 million, but last year was much higher. That was over $60 million, that when you take that away, kind of, look at the rate base growth, it will be in line with the 7% to 8% that we expect from this segment.

[Sophie Karp:]

All right. Thank you.

[Operator:]

Our next question comes from David Fishman of Goldman Sachs. Please go ahead.

[David Fishman:]

Hey, good morning.

[Jerry Norcia:]

Good morning.

[David Fishman:]

Just going back to the Haynesville acquisition and thinking about the $600 million of growth CapEx. I was just wondering, and I apologize if you said this on the call a couple weeks ago. But when you think about the $600 million, I know part of its related to the LEAP growth. But is there something that effectively guarantees that growth happening? Or is that just based on your expectation for expansions based on Blue Union and where you think demand will be?

[Jerry Norcia:]

Actually, all of the growth is fully contracted with Indigo. And so the $600 million plus the other $400 million that we talked about approximately about $1 billion is fully contracted growth over the next 18 to 24 months.

[David Fishman:]

Okay. So that’s something you already have the contracts in place for and that will be achieved?

[Jerry Norcia:]

Yes. That’s correct.

[David Fishman:]

Okay. And then going back to the equity guidance. So I think you discussed this a little bit, but its $1.5 billion to $2 billion, and then $1 billion of that is the convert? And then it says you can do about $300 million internally. Is that – are you able to do that kind of level every year of $200 million to $300 million of equity internally to getting you to around the midpoint or higher end if needed?

[Jerry Norcia:]

Yes, David for the next few years, we should be able to do up $200 million to $300 million, a lot of that is going into funding our pension, which were a few years away from doing that.

[David Fishman:]

Okay. And then my last question, I think, you’re alluding a little bit to, I mean, NEXUS, maybe there are some other parties, who are looking to potentially kind of term out those contracts, which is good. But also just thinking about the generation pipeline and connecting there, could you remind us what those contracts, kind of look like or if they’re – are they 5 years or are they in the double-digits? And then, also if you were to contract with them, would it likely be the off-taker side or would it be a producer looking into contract on NEXUS?

[Jerry Norcia:]

Well, the generation pipeline, just to remind everyone, is very proximal to the NEXUS pipeline. And it stands on its own, with its own long-term contracts. And it gives us a nice return and nice accretion. The plan is to connect that asset with several miles of pipe to NEXUS. And that will provide approximately 400 million to 500 million a day outlet for that pipeline. But again, just to repeat, we do have long-term contracts, they are about 13 years in length, so very nicely contracted piece of pipe with demand charges.

[David Fishman:]

Okay, great. Thank you. I appreciate it and congrats again.

[Operator:]

Our next question comes from Paul Fremont of Mizuho. Please go ahead.

[Anthony Crowdell:]

Hey, good morning guys. It’s Anthony Crowdell.

[Jerry Norcia:]

Hey, Anthony.

[Peter Oleksiak:]

Good morning, Anthony.

[Anthony Crowdell:]

Hi. You may have addressed this on the actual call maybe two weeks ago. But one is just if you – what makes you confident on the competitiveness of the Haynesville? And then second, just if you could help me understand the difference between minimum volume commitment charges and also with demand charge.

[Peter Oleksiak:]

So let’s start with the competitiveness of the Haynesville. We had the opportunity through this transaction to review all 1,700 of their proposed drilling locations. And we did that ourselves along with 2 reserve consultants. And we can tell you, after that analysis, we felt that the resource is extremely strong, whereby there are at least 10 years of drilling available at sub $2 prices. So that’s one. Number two, the pipeline is being constructed, creates great interconnectivity with the Gulf Coast markets, including industrial, power and the emerging LNG markets. And the proximity to those markets provides a very large basis advantage that other resource basins don’t enjoy. So we felt that the quality of the resource, the interconnectivity of the resource with growing markets, and three, the positioning of the resource, which provides it with basis advantage, create a really nice package of high returns and strong cash flows. In terms of MVCs and demand charges they are essentially the same thing. MVCs are monthly demand charges, just that in the gathering business they call it a minimum volume commitment. And in our pipeline businesses, including the pipeline that we’re building for this asset, they call it a demand charge. But they are essentially equivalent in nature.

[Anthony Crowdell:]

Great, thanks. Thanks for taking my question.

[Peter Oleksiak:]

Thank you.

[Operator:]

Our next question comes from Gregg Orrill of UBS. Please go ahead.

[Gregg Orrill:]

Yes, thank you. Apologize if you’ve said this already, but how much are you issuing in new converts related to the acquisition and when?

[Peter Oleksiak:]

Yeah, we’ll be issuing approximately $1 billion. And we’re going to finalize the exact dollar amount here shortly, but it will be about $1 billion.

[Gregg Orrill:]

And when would that be?

[Peter Oleksiak:]

It will be here in the fourth quarter. We want to close this transaction early December. So we’re going to be looking at the market and working conditions, but it will be between now and then.

[Gregg Orrill:]

Thank you, Peter.

[Peter Oleksiak:]

Yeah.

[Operator:]

Our next question comes from Charles Fishman of Morningstar Research. Please go ahead.

[Charles Fishman:]

Good morning. I only have one left. On the P&I segment, I didn’t hear you talk or give any update on any industrial projects. I think with the last one you had was the Ford complex? Or is that something you want to wait the EEI for or anything you can talk about now?

[Jerry Norcia:]

We essentially have secured 3 co-gens this year. One we were – two we were public about, Stelco, in Ontario with their Lake Erie Works facility. We signed a long-term arrangement with them to develop a co-gen Facility. And then we also have a commercial customer that we haven’t yet disclosed that we signed a purchase agreement with, the purchase at co-gen facility. And lastly, we signed an operating agreement with Wayne County for their correctional facility to operate their industrial services assets. In addition to that, we also closed two RNG projects in Wisconsin this year. So, three co-gens and two RNG projects, which gives us to be approximately the $15 million origination target that we are pursuing this year.

[Charles Fishman:]

So, I guess, gas price somewhat bearish outlook that people have, that is a little bit of a tailwind for these co-gen projects, correct?

[Jerry Norcia:]

Yeah, there are really two factors. One is the fact that gas prices continue to be at low levels. And secondly, electric rates continue to rise, so the spread between gas and electric to produce power continues to widen and that creates an attractive opportunity for customers that have won a large electric need. And two are usually typically have steam host as well.

[Charles Fishman:]

So it’s when a customer has that thermal need is where you see the opportunities?

[Jerry Norcia:]

Yes.

[Charles Fishman:]

Got it. Okay.

[Jerry Norcia:]

There is a high thermal need and a large electricity need. Those two factors make co-gens very attractive.

[Charles Fishman:]

Okay, got it. Thank you.

[Operator:]

Thank you. And now I would like to turn the call back over to Jerry Norcia for any additional or closing remarks.

[Jerry Norcia:]

Well, I’ll wrap up by thanking everyone for joining the call. 2019 again is shaping up to be another very successful year. We look forward to seeing many of you at EEI in a few weeks, where we will describe in more detail our growth strategies and our 5-year outlook for each business line. We’ll also describe our financing and dividend strategies in more detail. DTE story will continue to be a strong one into the future that will deliver premium shareholder returns. So thanks again for joining us and have a great day.

[Operator:]

Thank you. That will conclude today’s conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.