LSB Industries, Inc.
Q4 2019 Earnings Call Transcript

Published: 25 Feb 2020

[Operator:]

Greetings and welcome to the LSB Industries Fourth Quarter 2019 Earnings Conference Call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Kristy Carver, Senior Vice President and Treasurer for LSB Industries. Thank you, you may begin.

[Kristy Carver:]

Thank you, Melissa and good morning to everyone. Joining me today on the call are Mark Behrman, our Chief Executive Officer; and Cheryl Maguire, our Chief Financial Officer.

[Mark Behrman:]

Thank you, Kristy, and good morning, everyone. We're glad that you could participate in our call this morning and appreciate your interest in LSB Industries. We concluded 2019 having made great progress throughout the year, and put ourselves in position to deliver stronger EBITDA and cash flow in 2020 and the years beyond. I am pleased that despite the unplanned downtime we experienced in the fourth quarter, we increased the operating rates of our ammonia plants for the third consecutive year, an indication that the measures we've taken to improve plant reliability have been yielding results. We also had a significant focus on increasing our sales volumes to match our full production capacities, which included a review of our product balance with a goal of shifting our production and sales mix towards the products that carry the most attractive margins. Our marketing and sales teams did a good job throughout the year to both increase volumes and put us in a position to further grow and shift product balance to improve our margins. To that point, we recently agreed to provide one of our existing mining customers, additional significant low density ammonium nitrate volume annually for three years to support a new contract award they received. This new volume is included in our outlook on Slide 11. Sales under this agreement are expected to begin next month. Additionally, we're in the final stages of contract negotiation on some significant new industrial business beginning in 2021 and we will provide further details in the coming months. To further emphasize the improvement in our ammonia on-stream rates, please turn to Slide 4. For 2019, we improved our average ammonia on-stream rate across our three facilities by an additional two percentage points over 2018 to 91%. Relative to 2016, this represents a more than 10 percentage point improvement, which we view as a significant accomplishment. As the bar on the far right of this chart indicates, we expect further progress in the current year and expect to meet our targeted mid 90s ammonia on-stream rate for the full year of 2020.

[Cheryl Maguire:]

Thanks Mark and good morning. Page 5 of the presentation provides a consolidated summary statement of operations for the fourth quarter of 2019 as compared to the fourth quarter of 2018. In reviewing our operations for the fourth quarter, total net sales in Q4 2019 decreased 22% to 73.9 million from 94.7 million in Q4 2018. Gross Profit declined by 24.7 million from a profit of 12.4 million in the fourth quarter of 2018 to a loss of 12.3 million in the fourth quarter of 2019, and lower overall selling prices, particularly for ammonia, following a delayed corn harvest, leading to an overall fall ammonia application season that fell short of our expectations. In addition, lower ammonia operating rates due to the extended turnaround at Pryor and downtime at El Dorado as well as higher turnaround costs and higher legal costs relating to our lawsuit against Leidos contributed to the year-over-year variants. Additionally, in the fourth quarter of 2018, we received a 4.4 million favorable settlement with a subcontractor responsible for past faulty work at our Pryor facility. During the fourth quarter of 2019, we recognized a non-cash write down of non-core assets of 9.7 million. This equipment was determined to be obsolete after completion of the extensive updates and upgrades we've made to our facilities, combined with a review of our strategic direction moving forward. This non-cash charge is reflected in other expense on our income statement.

[Mark Behrman:]

Thank you, Cheryl. 2019 was a difficult year for farmers and as a result demand for fertilizers. The root cause of the challenges was weather, which was very cold and wet throughout much of the major US farming regions beginning in the fourth quarter of 2018 and persistent too much of 2019. Weather related issues culminated with heavy rains and early snows in this past fourth quarter, which delayed the already late corn harvest and prevented farmers from having a meaningful full ammonia application season. As it relates to our outlook, this past year plus period of weather resist provides us with a tailwind headwind situation for 2020 with respect to the agricultural market. The tailwind is with all the wet weather and the absence of a meaningful full ammonia application season, the soil in the major corn forming regions is depleted of nutrients relative to what would be considered ideal soil conditions getting into the spring planting season. Additionally, with the weak corn harvest, which reflects the USDAs estimates of approximately 89 million planted acres, current stocks are at multi year lows. That combined with the current soybean to corn futures ratio all support an increase in planted corn acres for 2020 with various industry sources projecting as many as 96 million acres planted. While the demand picture looks good, the headwind is that the current supply situation isn't ideal from a pricing perspective. More specifically, due to the reduced amount of fertilizer that was consumed in 2019 because of the poor planting conditions, inventories of various agricultural products, particularly ammonia and UAN are high, which has selling prices currently back to or below 2017 levels. Exacerbating pressure on ammonia selling prices in our southern plains market is the closure of the Magellan ammonia pipeline, which several of our competitors had used to transport product to other regions to either store or sell on a spot basis. The closure has forced them to distribute their product primarily by a truck to customers elevating supply in the markets in closer proximity to their facilities, pressuring selling prices and increasing logistics costs as a result of increased trucking demand. With a robust spring ammonia application season and the improving sales of the phosphate sector in the US, we believe we will see an increase in demand and that will help rebalance ammonia inventories. With respect to UAN, while we have indications that farmer and retail a storage levels are currently very low, as they both appear to be delaying their purchases for spring and hopes of getting better selling prices, which coupled with the increase in imports as trade flows adjust to the impact of the European Union tariffs has depressed UAN prices to levels not seen since 2017. The good news for this product is we believe that there will be a meaningful growth in demand at 2020 and there is a mostly price differential with urea, helping to improve farmer economics and the anticipated growth in planted corn acres. The increased demand might not be totally realized until mid Q2. While we are currently seeing pressure on nitrogen selling prices. We believe that the global demand for nitrogen over the next three to four years will outpace net capacity additions and help to increase overall selling prices. As it relates to our industrial products, as we have stated on the past several earnings calls, due to the elevated inventories of ammonia resulting from the week agricultural demand over the past year, coupled with the additional ammonia production in the Gulf region coming from producer plants expansions in recent years, the Tampa ammonia prices depressed. This translates into weaker pricing for industrial ammonia sales out of our El Dorado and Cherokee facilities, since industrial ammonia pricing in the market is indexed to the Tampa index price. Pricing for the balance of our industrial products such as nitric acid and all of our mining products such as low density ammonium nitrate, are linked to natural gas prices. Since the vast majority of these contracts are cost plus arrangements, our margins for these products remain stable regardless of the change in feedstock cost. Fortunately, while market dynamics such as weather and pricing are out of our control, we view our ability to deliver a growth year in 2020 is very much in our control. As I stated in my remarks earlier in the call, we anticipate further improvements to our operating rates this year, which when combined with our standard production capacities for urea and sulfuric acid, and the absence of any scheduled turnarounds at our facilities, positions us very well to drive increased production and sales volumes in 2020. As I stated earlier in the call, to capitalize on higher production volumes, we've been ramping up our sales and marketing efforts in recent quarters, and have already secured and are continuously pursuing new business opportunities for our industrial and mining products, including the two that I previously mentioned. Additionally, with more reliable and greater UAN production, we expect increased sales of that agricultural product. Finally, as Cheryl indicated earlier, prices for natural gas the primary feedstock for all of our products continue to trend lower and appears unlikely to rise meaningfully for the foreseeable future, it's posed well for our production costs. Collectively, these factors make us confident in our ability to deliver significant year-over-year growth in adjusted EBITDA and free cash flow in 2020. Before I pass the call back to the operator to begin the Q&A session, I'd like to mention that I'll be attending a lunch in New York on March 16, hosted by Bank of America that is targeted to high yield investors and Cheryl will be participating in the Sidoti & Company spring conference in New York on March 26. We hope to see some of you there. That concludes our prepared remarks, and we will now be happy to take your questions. Thanks.

[Operator:]

Thank you. At this time, we'll be conducting a question-and-answer session. Our first question comes from line of Joe Mondillo with Sidoti & Company. Please proceed with your question.

[Joe Mondillo:]

Hi, good morning, Mark, Cheryl.

[Mark Behrman:]

Good morning, Joe.

[Joe Mondillo:]

So Mark, I was wondering just regarding the oversupply that we're seeing in the channels. How abnormally high is the supply there and what is your sort of sense of how long – I think demand has been a little late to start the year, but as we certainly as we get closer to the planting season, demand should pick up for multiple different factors that you actually pointed out. How quickly relative to the high yield supply that you see how quickly does that sort of resolve? And do we start to see maybe pricing start to improve given the changing of supply and demand?

[Mark Behrman:]

Well, I think you got to look at different products Joe, when you think about UAN, I do think it's been slow so far for the start of this year. And I think as I mentioned, there's a standoff a little bit between buyers and sellers, the producers. I think pricing has tended to trend down in UAN as there've been more imports from Russia, Trinidad, particularly into the United States due to the European tariffs, so you're seeing some extra supply, you're seeing pricing was down and I think retailers distributors, farmer himself are really holding off on buying. No one wants to say buy and see the price go lower, but I think the good news is there will be buying as I mentioned, retailer and distributor storage is unusually low for this time of the year. We are expecting more corn acres planted and I think there's a real – as I mentioned a noticeable price differential with urea. So urea is continuing to increase in price. Actually March barges trading over $250 a ton, so Gulf UAN has now started to move up a bit. We've seen a recent $10 per ton increase in Gulf UAN pricing. So I think what'll happen is as we get close to the season there'll be a frenzy for buying and you'll see a first round of buying and then should see a second and third round the buying. And I think logistics will come into play there. I mean, there'll be a lot of just in time buying. So if you position your product properly to the end user, whether that's ultimately selling to the distributor, the retail or the farmer himself. I think you'll see prices rise and you'll be able to take advantage of that. And on the ammonia side, I think if we have a heavy spring application season, I say heavy because we had less than normalized fall application season plus the additional corn acres planted. And as I mentioned, phosphate markets – phosphate producers are big user of ammonia. Those markets are improving. I think you'll see demand really pick up and you could see and should see ammonia prices start to move up throughout the spring. How much? I can't really say at this point. I think the other thing on ammonia is costs from ammonia being produced in Trinidad have gotten a little bit more expensive, as there's higher freight as a result of higher bunker prices this year. So again, those costs are moving up, and they're going to want to see certain profitability and that that allows the market to move up here in the United States.

[Joe Mondillo:]

And when does that pre-planting ammonia application period start? I would think it's probably starting maybe now, but what's your sense of that pre-planting application, how that's trending so far and I guess, move into March?

[Mark Behrman:]

Yeah. It's been a little slow going. I mean, you've had a lot of weather particularly in certain regions of the Western Corn Belt. But we've also seen a lot of wet weather in the Eastern Corn Belt. So I think you're going to have to see that stop for ammonia to go down. We have seen some areas that have started to apply ammonia, but it's a little bit slow going right now.

[Joe Mondillo:]

Okay, and then regarding the contracts that you mentioned, in terms of your mining and industrial customers, could you give us an idea of how significant that is relative to profits for the company? I know you're contracted to more of an on a cost plus basis at the end of the business. Any way you can give a sense of, I don't know how impactful that is?

[Mark Behrman:]

Well, I think if you go back to Page 11 in the presentation, we look at our mining business as low density ammonium nitrate AN solution and then actually high density in some applications and where we did 171,000 tons combined in 2019, we're really looking for a range at 205 to 225. And so in the midpoint of that that's 26% increase about 40,000 tons increase. So you could say that most of that's attributable to a new contract award.

[Joe Mondillo:]

Okay, and then the industrial – I think you made a mention that you have potentially an upcoming industrial contract that you may be awarded, is that included into this Page 11 guidance?

[Mark Behrman:]

No, those volumes wouldn't start – would be a significant award and it wouldn't start until 2021.

[Joe Mondillo:]

And then I – this is probably nitpicking, but I know your goal has been sort of 95% plus on-stream rates, and you have a goal for 2020 at 94%. I don't know if that's – if I'm just nitpicking there, but with what the work that you did at Pryor and El Dorado at the end of last year, are you positioned right now to potentially hit 95% plus?

[Mark Behrman:]

Well, I think we're realistic in that. We're slowly inching up. So I'd love to tell you that 95% is the target for this year, but I think we're slightly below that with 2021 being at 95%. So we're not quite there yet.

[Joe Mondillo:]

Could we hit it? Okay.

[Mark Behrman:]

Sure, I mean, it's possible, but that's not really what our expectations are.

[Joe Mondillo:]

Okay. And regarding, I guess, more so Pryor, but I guess El Dorado too, where are we in regard to – I mean, I guess, to your answer to that Pryor question, I guess we need to do some more work on the facilities. Could you just update us on future plans in terms of what you need to do to get to the 95% plus? How much?

[Mark Behrman:]

I think it's just a progression. I mean, I don't know that it's any major equipment or anything like that. I think we're certainly – the expectation at El Dorado is certainly to be above 95%. At Cherokee we've run really well at or around 95%. I don't think there'd be any difference there. And then so we're talking about Pryor and as I said, not a lot of equipment. We will – it's more processes, procedures proactiveness things like that that we've been working on over the last few years and we'll continue to develop.

[Joe Mondillo:]

Okay. Regarding cash flow on the balance sheet, in terms of cash flow ?

[Cheryl Maguire:]

Yeah, Joe, I'm sorry, we didn't hear you. You were breaking up. Can you say that again?

[Joe Mondillo:]

Yeah, I'm sorry. I was just wondering, do you anticipate any uses of cash for working capital, whether it's inventory in the beginning of the year or what?

[Cheryl Maguire:]

No, Joe, I mean, nothing outside the ordinary. No, we've guided to interest 45 million to 50 million and CapEx 25 million to 30 million, so really nothing outside of the normal business.

[Joe Mondillo:]

Okay, and what was the CapEx that you did in 2019?

[Cheryl Maguire:]

36 million, running a bit higher in '19 related to the two turnarounds that we had, plus I'd point out also includes the sulfuric acid converter down at El Dorado which was financed.

[Joe Mondillo:]

Okay, and that's regarding the non-cash factor of the CapEx?

[Cheryl Maguire:]

Yes.

[Joe Mondillo:]

Okay. And so the cash CapEx for 2020 will be 25 to 30?

[Cheryl Maguire:]

Yes.

[Joe Mondillo:]

Okay. And then just regarding the balance sheet, just could you update us on what your thoughts are on the liquidity? I think you said 65 million if you count the cash and your revolver, how you're thinking about that and then probably more importantly, what your updated thoughts are on opportunity of refinancing the balance sheet including the preferred?

[Cheryl Maguire:]

Sure. So with respect to liquidity, we're in a lower price environment. So if we think about Tampa sitting around 250 today, I mean although we don't expect it to be the case, let's assume it stays there for the full year. Gas has been running lower and so – and looking at various industry sources, most forecast gas next year to be in the 250 range or lower. So I'll point you to our grid in the back of our earnings presentation, so at 250 gas and 250 Tampa, we're around 100 million and EBITDA. Now that assumes 97% at EDC and 95% of Cherokee and 95% at Pryor, so as Mark mentioned, not sure we'll get all the way there in 2020, so let's say 90 million to 100 million. So given no planned turnarounds in 2020 and we'd also assume the lower maintenance CapEx because it's a non-turnaround year, so let's say 90 million to 100 million and 45 million to 50 million of interest and 25 million to 30 million of CapEx we would expect to generate some positive free cash flow even in a downside case. Now, with respect to refinancing the balance sheets, as the first call date is May of 2020. And I think what we've normally – what we – how we think about that is it becomes a mass exercise, what's the call premium versus the reduction in rate that we think we could get? And some of that is going to depend on pricing and the overall ag environment as well. So we'll be evaluating that through the year.

[Joe Mondillo:]

Okay, great. And then last question that I have was just the loss on the sale of property in the quarter. Could you explain what that was?

[Cheryl Maguire:]

Sure. So as you as you probably have heard us talk about, we've been making some significant investments in the business and some updates and some upgrades and so there's a couple. Some assets that we've basically determined that will no longer be needed, given the work that we've done to date and where our strategy is going forward, so some non-core assets that we just didn't feel were really needed going forward.

[Joe Mondillo:]

It's like totally random assets that go back years and years with the founding family or is this equipment or stuff that's on the facility – properties that you don't necessarily need anymore?

[Cheryl Maguire:]

I would say a combination of both Joe, I mean, we've put in a new – some new nitric acid plants down at El Dorado back in 2015. These were some other nitric acid plants that we had on the balance sheet which we decided that we were going to need going forward and some of it is some older carry assets that we – that have been around for a while and we just decided were not needed going forward.

[Joe Mondillo:]

Okay. Well thanks for taking the questions from me. Appreciate it.

[Mark Behrman:]

Thanks, Joe.

[Operator:]

Thank you. Our next question comes from the line of JP Geygan with Global Value Investment Corp. Please proceed with your question.

[JP Geygan:]

Good morning. Congratulations on the sales wins you announced today. That's great news. I'm wondering if you might elaborate on the statement you make on Slide 13 of your deck about your sales and marketing programs, how this might represent a shift in your process, if at all, if you can quantify the additional opportunity or not portray that relative to your production capacity and then talk about any additional investment that you might pursue making?

[Mark Behrman:]

Sure. Well I think as I said on previous calls, I mean, one of the goals is certainly to run our plants at higher production or on-stream levels. So that's going to give you some more production capacity, but also to work with our sales and marketing teams to figure out how we can actually utilize all the production capacity that we have and what's the right product mix. And I think that's been a key throughout 2019, is really working as a team on product balance. And where do we have the best margins with a lot of these facilities and you've got the ability to switch product production based on market pricing. And so we certainly look at that closely every day. The other thing I think that we've really done a good job, as we are the largest merchant marketer of nitric acid in North America, we're known for that. It's not a sideline product for us. And so the team, the industrial sales and marketing team has done a really great job and focusing on finding opportunities for us to increase sales of that product. So I think it's an ongoing exercise. I don't think it's something that is unique. I think it's something that we're taking just a more aggressive approach on, on how we think about the business.

[JP Geygan:]

Okay. You mentioned in your prepared remarks that your cost per ton has continued or will continue to decrease. Can you provide some more color around that statement, especially given that you previously talked about taking costs out of the business? And if you can provide the magnitude of how your cost per ton decreasing?

[Mark Behrman:]

Well, I mean, I can talk to you generally about that. We don't publish a cost per ton metric, but we have continued to pull costs out of the business, we're always looking for opportunities that are much more focused effort on I'll call it procurement, and really pulling our procurement and looking at opportunities where we think we can reduce costs. So cost per ton really is focused on two things, right, it's reducing costs and increasing production tons, so in combination, we're able to continue to lower costs. We're certainly not at the point where we think we've pulled all the costs out of the business nor are we at a point where we think we've maximized our production.

[JP Geygan:]

Okay, you borrowed an additional $35 million in 2019 for some margin enhancement projects. You've talked about some of those on Slide 13 of your presentation, including additional storage capacity and loading capacity. Can you provide an update on progress on some of your margin enhancement projects and what we might look for in 2020, and the effect of those projects on the business? Thank you.

[Mark Behrman:]

Sure. So we've actually completed one project up at our Pryor facility, and we're in the process of working to fine tune some additional equipment that we put in which would actually lower our costs. Second project is to build a new 20,000 ton storage dome for high density ammonium nitrate. We're in the final stages of that and within a few weeks, I think we should be completed with that project and really loading product into that facility, which will allow us to increase overall production of that product from our facility and also position product to sell at a more advantageous times of the year. There are a couple of other projects where we've done engineering and we're waiting for finalization of agreements. I think I referred to those as some newer industrial contracts. So once those contracts are signed, and the green lighted we'll actually start doing the work, and that would include loading an additional storage for some product down at our El Dorado facility. So I think we're making progress on those. And we should see some results of that this year, probably later on this year, and then some of the full results starting in 2021.

[JP Geygan:]

Great, that does it for me. Thank you for your time.

[Mark Behrman:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Travis Edwards with Goldman Sachs. Please proceed with your question.

[Travis Edwards:]

Hi, good morning, just high level as we are thinking about the earnings part of the business. And you always provide the helpful metrics, ammonia nit gas prices, which you pointed out earlier. I just wanted to check if I'm thinking about this correctly, should we assume that those baseline or illustrated number should start to go up now that you've got some incremental production and you've got some new contract wins, storage capacity, et cetera or each of these initiatives just helping to target sort of the ideal launch you made for the 97, 95 and 95?

[Mark Behrman:]

Yeah, I would say, I mean, the on-stream rates that we portray on that Slide 97, 95 and 95. We're working up towards that. So any additional production capacity would be captured in this grid. As far as storage or reduction of cost or even some of the margin enhancement projects, they should be somewhat be additive to this, but new contract awards would be included in this grid as well. We're just selling added production capacity that we have.

[Travis Edwards:]

I appreciate that clarification. And then really quick on the margin enhancement projects, I think you mentioned in the past of kind of 67 million EBITDA boost, is that still consistent with how you're thinking?

[Mark Behrman:]

Yes.

[Travis Edwards:]

Okay, great. And lastly if I may, I appreciate that you maybe now like to share, but on the math exercise of the refinancing, again, we can estimate what new rates might be, but have you – are you willing to share any sort of target as far as with the – like the ideal payback period would be for you to think any such transaction or refinancing transaction?

[Mark Behrman:]

No, I mean, I think it's a little early for that. As Cheryl mentioned, I mean, I think one of the things we really need to take a look at is where are we in the ag cycle. I mean, I'd like to see that farm up a bit so that we and potential investors are comfortable with certainly the ag markets and where they are. But I don't think that this is a complicated exercise for us, I mean, we're going to sit down, we're going to figure out. We certainly know what the call premium is and we'll have to see what the reduction in rate is and is that for five years, seven years and what are the terms of the new refinancing, so we're in the process of starting to look at that since our first call data is not infirmary.

[Travis Edwards:]

Got it, awesome. Thank you very much for the time.

[Mark Behrman:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Brian DiRubbio with Baird. Please proceed with your question.

[Brian DiRubbio:]

Good morning. Just as we think about the cadence of results for this year, I know you find those correct. You said you're going to be down about 10% or 15% in EBITDA for the first quarter. Do you expect similar drag on results for the second quarter?

[Mark Behrman:]

I think if I knew what pricing would look like, I could answer.

[Brian DiRubbio:]

Yeah, that's right. Yeah.

[Mark Behrman:]

Yeah, I'm not trying to be funny about it, I just – I think it's too early for us to tell what the second quarter pricing is going to look like.

[Brian DiRubbio:]

Okay. I guess, what I'm driving at it is that you're really looking for a hockey stick sort of rebound in the second half particularly in the fourth quarter of this year in order to meet that goal of exceeding your adjusted EBIDA number?

[Mark Behrman:]

Yeah, I think in the second half is probably a good characterization. I mean, we had turnarounds that started in the third quarter or were started or completed or just started in the third quarter of 2019. And then, of course, we had the extended turnaround at Pryor and took the plant down at the El Dorado, the ammonia plant down at El Dorado in the fourth quarter. So I would tell you that the second half of 2020 should be significantly better than the second half of 2019.

[Brian DiRubbio:]

Okay. And as we think about sort of – adjusted EBITDA is one thing, but cash EBITDA has been slightly different the last couple of years. What expenses are going to run through cash flow, if you will, that's not going to be part of your adjusted EBITDA as we can try to fine tune our models on what cash is going to look like? I know this 5 million of legal for the Leidos litigation.

[Mark Behrman:]

Yeah. Cheryl you want to answer that?

[Cheryl Maguire:]

Yeah. No, that's what I was thinking as well. It's really just the 5 million of the Leidos fees, there's no other turnaround expenses or anything this year, so that about covers it.

[Brian DiRubbio:]

Okay and then we're looking at somewhere between cash interest in CapEx of around 75 billion?

[Cheryl Maguire:]

Yes.

[Brian DiRubbio:]

Excellent, thanks for your time. I appreciate it.

[Mark Behrman:]

Thank you.

[Operator:]

Thank you. Our next question is a follow from the line of Joe Mondillo with Sidoti & Company. Please proceed with your question.

[Joe Mondillo:]

Hi, everyone, I just wanted to ask what your expectation of the timeline of how long the Leidos trial will last, if you have any idea?

[Mark Behrman:]

Well, I think it's scheduled for three to four weeks.

[Joe Mondillo:]

Okay, great. That's all I had. Thanks. Thank you.

[Operator:]

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to management for any final comments.

[Mark Behrman:]

I'd like to thank everyone for listening in on the call and participating and of course, all your interest. As I mentioned, both Cheryl and I will be in New York and we hope to see some of you there. And thank you so much.

[Operator:]

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.