Macquarie Infrastructure Holdings, LLC
Q1 2019 Earnings Call Transcript

Published: 2 May 2019

[Operator:]

Good day, ladies and gentlemen, and welcome to the Macquarie Infrastructure Corporation First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Jay Davis, please go ahead.

[Jay Davis:]

Thank you and welcome to Macquarie Infrastructure Corporation's earnings conference call, this covering the first quarter of 2019. Our call today is being webcast and is open to the media. In addition to discussing our quarterly financial performance on this call, we have published a press release summarizing the results and filed a financial report on Form 10-Q with the Securities and Exchange Commission. These materials were released last evening and copies may be downloaded from our website at www.macquarie.com/mic. Before turning the proceedings over to Macquarie Infrastructure Corporation's Chief Executive Officer, Christopher Frost, let me remind you that this presentation is proprietary and all rights are reserved. Any recording, rebroadcast or other use of this presentation in whole or in part without the prior written consent of Macquarie Infrastructure Corporation is prohibited. This presentation is based on information generally available to the public and does not contain any material non-public information. The presentation has been prepared solely for information purposes and is not a solicitation of an offer to buy or sell any security or instrument. This presentation contains forward-looking statements. We may, in some cases, use words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this presentation are subject to a number of risks and uncertainties. A description of known risks that could cause our actual results to differ appears under the caption Risk Factors in our Form 10-K. Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which we are not currently aware could also cause our actual results to differ. These forward-looking statements are made as of the date of this presentation. We undertake no obligation to publicly update or revise any forward-looking statements after the completion of this presentation, whether as a result of new information, future events or otherwise, except as required by law. During today's call, we will at various times make reference to the non-GAAP measures, earnings before interest, taxes, depreciation, and amortization, or EBITDA, and free cash flow as defined by us. A reconciliation of these non-GAAP measures to the most comparable GAAP measures can be found in the tables attached to our earnings press release published last evening. In addition to Christopher Frost, participating in today's call is Macquarie Infrastructure Corporation's Chief Financial Officer, Liam Stewart. At this time, it is my pleasure to introduce Macquarie Infrastructure Corporation's Chief Executive Officer, Christopher Frost.

[Christopher Frost:]

Thank you, Jay. And thanks to those of you joining our call this morning. MIC's financial and operational results for the first quarter of 2019 were consistent with our expectations and reflect the solid progress that we continue to make relative to our strategic priorities. 12 months ago, we set out three strategic priorities that we believe will restore MIC to growth and cash generation. The first priority was a focus on reinforcing the infrastructure characteristics of MIC's businesses. To date, this has involved primarily repurposing and repositioning portions of IMTT in response to shifting market conditions and taking advantage of what we believe are accretive investment opportunities. The second priority was a renewed focus on managing our capital resources efficiently. Over the past year, this has involved the sale of smaller and non-core businesses generating total proceeds to MIC of approximately $900 million, including the recently announced sale of the portfolios of operating renewables. The third priority has been increasing MIC's balance sheet strength and financial flexibility. Positioning the company to take advantage of attractive opportunities when they arise and to weather periods of economic stress should they occur. Since January 2018, consolidated leverage has been reduced from approximately five times net debt to EBITDA to under four times. Continued execution against these priorities helped deliver solid results in the quarter and enabled us to reaffirm 2019 guidance. At IMTT, utilization improved sequentially from 82% recorded in the fourth quarter of 2018 to an average of 82.5% in the first quarter of 2019. Since quarter-end, utilization has improved further to approximately 83%. Excluding the impact of the refinery termination fee and storage revenues related to the refinery, and normalizing to the timing of property tax payment, EBITDA generated by IMTT in the first quarter of 2019 declined by approximately 10% year-over-year. The results of the first quarter was flat with the fourth quarter of 2018, but notably reflects an offset of the refinery barrels that came off contract in December. The $39 million of fee cash will be used to fund various opportunities at IMTT and is, for example, more than sufficient to fund the expected phase two repurposing. IMTT continues to make good progress on the development of great projects. As noted in last night's press release, IMTT will accelerate the construction of 157,000 barrels of Methanex in Geismar. The balance of the 714,000 barrel project remains subject to Methanex moving ahead with construction of a third methanol manufacturing plant in Geismar. During our last call, we highlighted the fact that IMTT has signed agreements related to projects with an aggregate value of $175 million. Those projects are expected to generate roughly $20 million of incremental EBITDA stabilization and a partial contribution in 2020 and imply an increasing nine times multiple. Importantly, the projects have a weighted average initial contract term of 17 years. We are pleased with both the quantity and quality of projects being advanced by IMTT. Many have even better economics than those already announced and all are consistent with the objective of enhancing the capability, capacity and connectivity of IMTT. We believe that a number of these are close to being finalized and we are looking forward to sharing additional details with you throughout the remainder of the year. The team at IMTT is doing what needs to be done to return the business to growth. During our last call, I also mentioned that we're continuing to invest in the people and systems necessary to support our strategic priorities. This includes making selective senior hires to build out the leadership of the operating businesses. I am pleased to report that Mike Reed has joined IMTT as Chief Commercial Officer reporting to CEO, Rick Courtney. Mike joined the business effective April 1 with responsibility for all commercial aspects of storage, leasing and project development across IMTT's operations. Prior to joining IMTT, Mike was CEO and president of Pin Oak Terminals where he was responsible for the development of facilities at Mt. Airy, Louisiana and Corpus Christi, Texas. He brings a wealth of relevant industry experience and customer relationships to the commercial team. Atlantic Aviation delivered a strong result for the quarter with its gross margin up 8% and EBITDA up 13% versus the first quarter in 2018. Good performance against a backdrop of FAA reported quarterly flight activity that was essentially flat year-over-year. Atlantic benefited from seasonal positives in the form of good snow conditions in the Intermountain West during the quarter. Flight activity to this region was good, as were hangar rentals and revenue from ancillary services such as deicing. Trading to-date at Atlantic in the second quarter has continued to track to plan, reflecting in part of the fact that Easter and Passover both fell into April this year. Efficient capital deployment continues to be an important part of our effort to return the company to growth and cash generation. Not only at IMTT, but across the MIC portfolio generally. Capital deployment in the first quarter totaled $40 million, on the low side relative to the full-year target and reflective of the seasonality in construction and high water levels on the Mississippi River impacting projects at IMTT. Although the weather is warming, the river has been slow to recede to levels at which dock and nearby works can proceed. Nevertheless, we have reviewed the growth capital projects of the businesses. And with another $205 million of projects already committed to, we reaffirm the guidance for growth capital deployment in a range of $275 million to $300 million for 2019. Similar issues primarily related to cold-weather kept maintenance capital expenditures to about $10 million for the first quarter. Here again, full-year expenditures are expected to be in line with prior guidance at a bit under $70 million. At this point, I'll turn the floor over to MIC's Chief Financial Officer, Liam Stewart, for additional color on these and other matters related to the first quarter 2019 results.

[Liam Stewart:]

Thank you, Chris. MIC's results for the first quarter positioned the company well relative to delivering on the 2019 guidance. We have reaffirmed expectations that MIC's businesses will generate full-year EBITDA in a range of $610 million to $635 million and free cash flow in a range of $400 million to $445 million. Both of these are subject to the continued stable performance of the businesses and no material changes in the macroeconomic backdrop. We expect IMTT to generate EBITDA in 2019 in a range of between $248 million and $258 million or a headline between $287 million and $297 million, including the refinery termination fee received in the first quarter. IMTT generated EBITDA of $104 million in the quarter, $65 million excluding the refinery fee and free cash flow of $77 million. The conversion of EBITDA to free cash flow was helped by lower interest expense and maintenance capital expenditures and offset by an increase in taxes. We believe that Atlantic Aviation will generate EBITDA of between $275 million and $285 million for the year. The business posted a robust $79 million of EBITDA in the first quarter. Free cash flow was down slightly versus the prior comparable period at $56 million, largely as a result of increased interest expense. Recall that the refinancing of Atlantic in December resulted in both an increase in the amount and cost of the debt at Atlantic Aviation. A portion of the cash generated by that refinancing will be used to repay the holding company level convertible notes that mature in July. Results for the MIC Hawaii segment were consistent with our expectations. The year-over-year growth reflects the implementation of new utility rates in July of last year. Together, we've realized gains on propane hedges. The result was also helped by the absence of the negative EBITDA generated in the fourth quarter of 2018 by the mechanical contracting business that was sold last November. Except for an increase in taxes, the improvement in EBITDA was converted into free cash flow. Our guidance for MIC Hawaii was unchanged with EBITDA for the year expected to be between $60 million and $65 million. Turning to the consolidated balance sheet, MIC ended the first quarter with net debt of 2.5 billion, including cash of approximately $600 million. Leverage associated with continuing operations was 3.8 times net debt to EBITDA over the trailing 12-month period. Available liquidity, including undrawn credit facilities, totaled approximately $1.6 billion. The funding of growth capital projects and the repayment of the convertible notes that mature in July will consume the majority of the cash currently on the MIC balance sheet. While we expect that leverage will increase from the current sub-4 times level as a result of deployment of the cash, we foresee leverage at year-end being on the low end of the prior guidance of 4 to 4.25 times net debt to EBITDA. Regarding the divestiture of the operating renewable portfolios, we have entered into two separate transactions and anticipate they will close by the end of the third quarter. We currently expect that the proceeds of these transactions, net of fees and taxes, will be approximately $160 million to MIC and that approximately $302 million of debt will be deconsolidated. We also continue to expect that MIC will not incur a material current federal income tax liability on its projected operating income in 2019. That income is forecast to be approximately $145 million for the year and to be offset by the roughly $152 million of net operating loss carryforwards on the books at the start of the year. The gains on the sales of the portfolios of wind and solar assets will generate both federal and state income tax liabilities. Based on the net proceeds of $160 million, you can see that we are expecting those taxes to be around $50 million. In addition to the operating renewables, the potential sale of MIC's interest in its solar power development joint venture could also generate gains that would increase the amount of taxes due. I also wanted to mention the action taken by Standard & Poor's on March 16, in part as a result of a change in evaluation methodology, S&P elected to reduce its issuer credit rating for MIC from BBB-minus negative outlook to BB-plus stable outlook. As we noted in our press release at the time, the action is not expected to have any impact on the performance and prospects of the company. There are no covenants in any of the debt facilities across MIC or its operating businesses were affected nor does it result in any changes in the cost of those facilities. I note again that MIC's balance sheet is considerably stronger this year compared with last, with leverage down from 5 times to less than 4 times. The company also has considerable financial flexibility in the form of approximately $600 million in cash on hand and access to an additional $1.6 billion in currently undrawn credit facilities. On the back of the company's financial and operating results during the period, the MIC board has authorized the payment of a cash dividend of $1 per share for the first quarter, consistent with the guidance we provided in February. The first quarter dividend will be paid on May 16 to shareholders of record on May 13. Including the refinery termination fee, the $1 dividend represents a payout of approximately 54% of the adjusted free cash flow generated during the period. For the full year, we continue to expect that the distribution of $1 per share per quarter will result in a payout ratio of approximately 82% of adjusted free cash . With that, I'll hand the call back over to Chris for a few additional observations.

[Christopher Frost:]

Thanks, Liam. I'll wrap up with a few comments from what we see as MIC's prospects for the remainder of the year. At a high level, the key initiatives underway at IMTT involve leasing existing storage capacity, notably in response to IMO 2020 related storage demand increases and evaluating projects and contracting with counterparties for the development of additional capacity, capability or connectivity in response to customer demand. Our confidence in the performance and prospects of IMTT as it relates to the impact of IMO is based on a number of factors. Research and market commentary is in general supportive of our thesis that the implementation of IMO will generate increasing demand for storage in the latter half of the year ending 2020. More important, however, is what IMTT is observing today in its key markets. These observations include existing customers looking at extending contracts for longer durations. The fact that some customers want to have these conversations now suggest they're not only concerned about securing storage, but may also be concerned about a potential change in the pricing dynamic caused by a shift in the supply/demand balance. New York Harbor is one of the largest bunker markets in the world and likely to feature significantly in the implementation of IMO. The ability to meet the very needs of the market for marine gas oil, for blended bunker fuel or for traditional fuel oil will be key in Bayonne. The highly flexible tank capacity that allows for product segregation and blending in response to different strategies from customers and the advantaged marine and rail access offered by IMTT places the business at a competitive advantage in addressing those needs. The supply of various products that will be in demand are expected to be delivered by both existing and new customers, each with a fundamental long-term need for storage. A number of these customers are looking for related infrastructure, including dedicated tank and pod systems and transport capabilities, including railcar handling, particularly as it relates to getting low sulfur product into the market. The impact of IMO is not entirely clear, however. It is likely that the impact will be different in each of the two key markets in which IMTT operates. The lower Mississippi River complex is more likely involved in the storage, blending and handling of a full range of feedstocks and finished products in support of the refineries in the region. The New York Harbor market is more likely to be driven by the demands of end users and the bunker fuel is for a wide range of products. In all, we continue to believe that the impending implementation of IMO will firm the market for storage capacity during the balance of this year and into the next. That demand, together with solid marketing efforts, is expected to drive utilization of IMTT into the low 90% range in 2020. The opportunity at Atlantic Aviation lies in successfully capturing additional market share across the 70 airports on which the business operates, as well as identifying additional development opportunities. Development opportunities could take the form of acquisitions of SPOs or the construction of ramps and/or hangars that drive additional fuel and rental revenue. But the part time [ph] such opportunities remains robust. Before I open the call to your questions, I wanted to mention we have updated the MIC environmental, social and governance report. The updated version highlights some of the important steps being taken at each of MIC's operating businesses to increase safety, reduce emissions and strengthen community engagement. You can download a copy of the report from the MIC website. It can be found behind the sustainability tab at the top of the homepage. In summary, MIC financial and operating results for the first quarter of 2019 were in line with expectations and bolstered by ongoing execution of initiatives supporting the company's three strategic priorities. We remain confident in the company's prospects for 2019 and have reaffirmed guidance for key financial metrics as well as for dividend of $4 per share annualized. Thank you again for your participation in our call this morning. At this time, I will ask our operator to open the phone lines for you questions.

[Operator:]

Thank you. [Operator Instructions] And our first question comes from the line of Jeremy Tonet with J.P. Morgan. Your line is now open.

[Jeremy Tonet:]

Good morning. Atlantic Aviation came in much stronger than we expected. You listed some of the drivers there, but I was hoping you could provide a little bit more detail on what contributed to these results. Was the seasonality a bit stronger-than-expected or maybe just you could remind us about the seasonality across the year? Anything would be helpful. Thanks.

[Liam Stewart:]

Hey, Jeremy. It's Liam. I think there are a couple of things in terms of Atlantic's performance in the first quarter. I think the first thing is that, proportionally, the first quarter, as you mentioned is a very large quarter. So, we do get historically more than a kind of proportionate allocation of EBITDA in that first quarter. And I think that's consistent if you track back over the last couple of years. And I think in the sort of Mountain West region, as Chris mentioned in the prepared remarks, we had very strong snow conditions, which sort of impacted a lot of activity there as well. And then, sort of outside of that, in the sort hangar, rental and ancillary services had a very good quarter as well. So, from an overall perspective, a very pleasing result. But as you said in your question, it is typically the largest quarter for years for that business.

[Jeremy Tonet:]

Great, thanks for that. And then, kind of shifting over to IMTT, I was just wondering if you could talk a little bit more about – still looks like you're looking to repurpose up to 3 million barrels. The target will be an extra million this year, bringing it to 2.3 million barrels. Wondering if you could talk a bit more as far as what led you to that level – this trajectory of kind of repurposing at this point. And with IMO 2020, have the conversations really started to materialize in the sense that this event is coming in and influencing contract discussions or is that something a bit more in the future, any color that you could provide there?

[Christopher Frost:]

So, Jeremy it's Chris here. Good morning. You're right. When we announced the repurposing strategy, we announced that we intended to repurpose up to 3 million barrels subject to customer demand. And that represented roughly a quarter of the heavy and residual storage capacity on the lower Mississippi River. The 3 million barrels also included the 800,000 barrels crude tanks associated with the sole refinery. As regards to our plans this year, we're targeting repurposing around a million of those barrels either to -- away from heavy and resid into clean product. But as mentioned on our fourth-quarter call, we're also developing a number of projects which could see those barrels remain in heavy service, but because of loss of larger projects connecting IMTT/St. Rose to some of the larger system players in that region. And so, that's what we're currently working on and we're actively engaged in various conversations and discussions with customers around those initiatives.

[Jeremy Tonet:]

That's helpful. Thanks. And then, maybe just the last one with the asset sale proceeds, if you can provide a little bit more color how this kind of stacks up versus your expectations here and when you see yourself becoming a taxpayer? And does the point of becoming taxpayer kind of influence the way that you approach capital deployment?

[Liam Stewart:]

Jeremy, it's Liam. It's a good question. So, obviously, as I said in the prepared remarks, roughly $216 million of gross proceeds on the renewables divestiture. While we don't anticipate paying tax on our operating income, we do anticipate having a gain on that divestiture. And that will result I combined federal and state taxes of, say, roughly $50 million, but, obviously, sort of within the realms of those proceeds, easily accommodated. I think without talking specifically about 2020, if you think about this year, we'll have $145 million roughly of pretax income that will be offset against the net operating loss we had at the start of the year and the balance of that was $150 million or so. So, I would anticipate that we would absorb almost all of the net operating loss in the course of 2019. I think – and again, sort of without referencing specifically 2020, if you think about that $145 million roughly and then think about what that means from a sort of federal income tax liability, assuming it's sort of broadly similar and there will be some puts and takes as we get into next year, that implies that federal income taxes – or cash federal income taxes will be somewhere in the $30 million. So, we think about that within the context of the sort of overall free cash flow generated by the business. I think the way that we think about it relative to capital allocation is we sort of look at each of the projects from a strategic basis, but, obviously, tax attributes will have more benefit in an era where we are a federal income taxpayers than they would have been when we had it and are well balanced. So, it will factor into the thinking relative to growth capital deployment.

[Christopher Frost:]

I would also add, though, in terms of our strategic priorities, in terms of investing in the infrastructure characteristics of our core businesses, a secondary benefit of that is generating incremental tax shield as a result of those investments.

[Liam Stewart:]

Absolutely.

[Jeremy Tonet:]

Great. That's all from me. Thanks for taking my questions.

[Operator:]

Thank you. And our next question comes from the line of Tristan Richardson with SunTrust. Your line is now open.

[Tristan Richardson:]

Hey, good morning, guys. Just a clarification question on the repurposing, the million barrels to be repurposed this year, should we expect a return to service of those barrels this year and – or is it, they may return to service, but then they would need to be commercialized after that?

[Christopher Frost:]

Look, our guidance for this year, as I said previously, does not assume the 1 million repurposed barrels this year would be returned to service until 2020. Our growth and maintenance capital expenditure for this year does include a provision for those amounts. But in terms of generating revenues, we don't expect those to be back into service until 2020.

[Tristan Richardson:]

Appreciate it, Chris. Apologies I missed that. And then, on the repositioning side, it seems as though $175 million, just looking at your slide, it seems like a lot of those are discrete projects that may not necessarily directly be tied to IMO. So, as you guys talk about the opportunities for IMO, would that be in excess or above and beyond sort of total committed CapEx to date?

[Christopher Frost:]

I think that's probably not an unreasonable assumption. As I mentioned in the prepared remarks, there are a number of projects that we're looking at in terms of repositioning, particularly St. Rose and Bayonne where ultimately we're looking to improve the terminal connectivity either to the system players in the Gulf Coast or improving Bayonne's intermodal connectivity, whether that be rail infrastructure, pipeline infrastructure and also road infrastructure. And you will recall last year that we announced a commitment to a truck rack, which improves the ability for IMTT customers to deliver their product to their end use market. So, a lot of the repositioning projects that we're currently looking at really involved improving the connectivity of our two largest terminals to our customers' end use markets or to large system players in the region.

[Tristan Richardson:]

Great, thanks. And then, just last one for me, on the Atlantic side, could you just give us a sense of the magnitude of your organic opportunity set across the portfolio? Sort of X dollars of potential hangars, ramps, just more infrastructure on the existing footprint.

[Liam Stewart:]

I think the sort of way that I would think about it Tristan is that we have about kind of backlog. We should have got another $205 million committed this year in addition to the $40 million. And of that, quite a large chunk of that is directed towards Atlantic as well. I think the sort of way we think about inorganic opportunities is obviously the ability to add to the additional [indiscernible] as well. But in terms of what we have on the existing footprint as well, we're seeing pretty good opportunities there, roughly another $60 million of capital committed this year in terms of projects that we have already 40 effectively signed up to. And then, we're evaluating a range of opportunities. And as Chris mentioned in the prepared remarks, we've had a very strong quarter in terms of hangar rental and ancillary services. So, where we can supplement our existing position on an individual FBO by deploying capital into those particular area, we think that's a pretty good use of that capital.

[Tristan Richardson:]

Thanks. Appreciate it, guys.

[Operator:]

Thank you. And our next question comes from the line of Ian Zaffino with Oppenheimer. Your line is now open.

[Ian Zaffino:]

Hi, thanks. So, following up on the tax side of it, what are the kind of considerations? I know you're moving towards a more tax friendly corporate structure. Is that kind of on the table? Is it feasible? And have you kind of given any thought to doing it? Thanks.

[Liam Stewart:]

Ian, I think your question is in terms of corporate structure as well. So, obviously, we're a C corporation. I think we obviously spend a lot of time kind of evaluating sort of optimal tax strategies as well. But I would say in terms of – when we initially went public, we went public as a trust to kind of limited liability company and now become a C corporation as well. Obviously, sort of that's the order on structure, has to be that balanced against sort of index inclusion [indiscernible] as well. Obviously, tax planning forms a pretty considerable part of what we did.

[Ian Zaffino:]

Okay. And then, I guess, when you think about what you've been doing historically, you've reinvested. That's giving you the accelerated depreciation. Is that going to be – I think the question is, how do you balance CapEx and what you would need to maybe spend to get some type of shield with paying this kind of 10% dividend yield. How should we think about that as outsiders looking in? Thanks.

[Liam Stewart:]

I think if you think about it in terms of our capital program, that sort of $275 million to $300 million level as well, that means roughly $30 million of cash tax liability, assuming we've run through the NOLs and it's sort of accommodated within the existing dividend structure and format as well. And, obviously, we think about one of the advantages of our capital expenditure program is the ability to generate bonus depreciation as well. So, it's really balancing that. But also, we're investing in the infrastructure characteristics of the business as well and doing things at IMTT positioned towards achieving our strategic objectives. And as I just mentioned on the Atlantic question, making sure that we're maximizing our ability to generate earnings out of any individual FBO.

[Ian Zaffino:]

Okay, thank you very much.

[Operator:]

Thank you. And our last question comes from the line of TJ Schultz with RBC Capital Markets. Your line is now open.

[TJ Schultz:]

Okay, thanks. I think first on the $275 million to $300 million growth CapEx budget, what's earmarked for the smaller and the larger Methanex projects? And then, on the larger project, I guess, one option is for them to bring in a strategic partner. Would that change the potential storage needs around that project from you all? Thanks.

[Liam Stewart:]

TJ, it's a good question. There's nothing incorporated into that outlook on the larger Methanex project because that project still requires 3.0 to get to FID. On the 157,000 barrel, we're thinking low single digit millions in terms of the amount of capital necessary to fund that as well. Relative to the larger project, I think to the extent that there was a strategic partner on the plant as well, we would have to take that as and when it arrives.

[TJ Schultz:]

I'm sorry. Can you repeat the cost on the smaller project?

[Liam Stewart:]

It's a low single digit million number. Q - TJ Schultz\ Okay, great. Thanks. Most of my questions were answered. Just one for a model, in the quarter at IMTT, you talked about some higher expenses. Some of that kind of one-time on the property tax or just kind thinking through what carries through there for the rest of the year?

[Liam Stewart:]

I think on the property tax, that effectively carries through the rest of the year. So, that's a step up relative to what it was in the first quarter of 2018.

[TJ Schultz:]

Got it, thank you.

[Operator:]

Thank you. And that does conclude today's question-and-answer session. I would now like to turn the call back to Chris Frost for any further remarks.

[Christopher Frost:]

Thank you for your participation in our conference call today. We will again be on the road meeting with investors and analysts at conferences and in one-on-one meetings in the weeks ahead. We look forward to speaking with many of you during that time. And with that, we wish you a great day.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. And everyone, have a great day.