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Edited Transcript of SHLX earnings conference call or presentation 3-May-19 2:00pm GMT

Q1 2019 Shell Midstream Partners LP Earnings Call

HOUSTON May 9, 2019 (Thomson StreetEvents) -- Edited Transcript of Shell Midstream Partners LP earnings conference call or presentation Friday, May 3, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jamie Parker

Shell Midstream Partners, L.P. - IR Officer

* Kevin M. Nichols

Shell Midstream Partners, L.P. - President, CEO & Director of Shell Midstream Partners GP LLC

* Shawn J. Carsten

Shell Midstream Partners, L.P. - CFO, VP & Director of Shell Midstream Partners GP LLC

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Conference Call Participants

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* Derek Bryant Walker

BofA Merrill Lynch, Research Division - VP

* Joseph Robert Martoglio

JP Morgan Chase & Co, Research Division - Analyst

* Shneur Z. Gershuni

UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst

* Theresa Chen

Barclays Bank PLC, Research Division - Research Analyst

* Torrey Joseph Schultz

RBC Capital Markets, LLC, Research Division - Analyst

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Presentation

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Operator [1]

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Good morning. My name is Crystal, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2019 Shell Midstream Partners Earnings Call. (Operator Instructions) As a reminder, this conference call may be recorded. I would now like to turn the call over to Jamie Parker, Investor Relations Officer. You may begin your conference.

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Jamie Parker, Shell Midstream Partners, L.P. - IR Officer [2]

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Thank you, Crystal. Welcome to the first quarter earnings conference call for Shell Midstream Partners. With me today are Kevin Nichols, CEO; and Shawn Carsten, CFO.

Slide 2 contains our safe harbor statement. We will be making forward-looking statements related to future events and expectations during the presentation and Q&A session. Actual results may differ materially from such statements, and factors that could cause actual results to be different are included here as well as in today's press release and under risk factors in our filings with the SEC.

Today's call also contains certain non-GAAP financial measures. Please refer to the earnings press release and Appendix 1 of this presentation for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measures.

We will take questions at the end of the presentation. With that, I'll turn the call over to Kevin Nichols.

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Kevin M. Nichols, Shell Midstream Partners, L.P. - President, CEO & Director of Shell Midstream Partners GP LLC [3]

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Thank you, Jamie. Good morning, everyone, and thank you for joining me for the Shell Midstream Partners first quarter results.

On today's call, I will start by taking you through the first quarter performance. I'll then offer an update on where we are with Zydeco, and I'll close with an update on a few of the capital projects that we are currently being -- that are currently being built by our sponsor. I'll then hand the call off to Shawn who will walk you through the first quarter financials.

So beginning with the first quarter performance. The partnership continues to deliver value to unitholders, generating $132 million of net income and $170 million of adjusted EBITDA. And if we look at our portfolio and start with the offshore, we continue to deliver against our strategy as our asset base benefits from healthy volume growth in the Gulf of Mexico.

Now in this quarter, total volumes were slightly down as we took the Proteus and Endymion system off-line and we did that to connect the Mattox pipeline, all in preparation for Appomattox first oil. And looking at the Amberjack system, we saw yet another quarter of volume growth. This increase came from the ramp-up of the Big Foot and Claiborne fields as well as continued infield drilling activity around Jack/St. Malo.

In fact, in 3 quarters since we've acquired the asset, Amberjack volumes have grown an impressive 17%. This equates to an additional 53,000 barrels a day, and we expect this continued growth as producers have activity -- strong activity around the footprint.

And turning to the Eastern Corridor, our growth theme continues with another tie-back this quarter, building on the 8 tie-backs that were delivered in 2018. And this tie-back activity has led to organic growth of some 20% over the last year.

Finally, looking at Mars, volumes remain robust as we have seen organic growth of 19% when compared to the first quarter of 2018. And I expect this demand for the system to remain strong as producers pursue infield development.

Now all of this Gulf of Mexico activity provides additional proof points that the Gulf of Mexico remains an important part of production and the production story in the United States. In fact, the Energy Information Agency (sic) [Energy Information Administration], EIA, just updated their forecast for the Gulf of Mexico and they now expect the Gulf of Mexico to hit yet another record high of 2.1 million barrels a day in 2020, and that's up from 1.7 million barrels a day in 2018. And industry continues to make significant progress, lowering costs and breakeven prices, making the Gulf a resilient part of our current and future portfolio.

And our sponsors continue to show commitment to the Gulf of Mexico with the recent successful bid of 87 leases. In total, the industry took out 227 leases in the March bid round. And this all aligns with our corridor strategy where we have developed a strong portfolio offshore positioned to capture these new volumes as the Gulf continues to be developed.

Now let's take a look at the onshore portfolio. Our terminals and storage assets showed better performance in both revenue and costs. And with the exception of Zydeco, the rest of the onshore assets all performed in line with previous quarters. Onshore volume was down primarily due to Zydeco as this was the first quarter of the expiration of 2 contracts. We saw approximately 628,000 barrels per day of throughput on Zydeco as compared to 704,000 barrels per day in the prior quarter.

And as I've previously discussed, the Texas and Louisiana markets continue to evolve as the U.S. crude supply grows and export routes continue to be built to handle this excess supply. Zydeco is well positioned to play a key role in this growth as well as continuing to serve key refining markets in the region. And let me remind you, Zydeco is the only pipeline that connects Houston and Nederland to both St. James and LOOP. And LOOP is the only operating deepwater export hub at this time.

Now you will have seen that we have recently launched an open season, which we believe will provide the best outcome for Zydeco by delivering maximum value in the near term while preserving optionality to leverage Zydeco in the evolving and dynamic marketplace. The open season will close on May 31, and at the appropriate time, we will update you with additional information.

Now before I hand to Shawn -- the call over to Shawn, I'd like to give you an update on 2 key midstream capital projects supporting the sponsor's growth priorities: the Mattox pipeline in the offshore and the Falcon ethane system onshore. Now once online, the Mattox pipeline will transport oil from Appomattox into Proteus and Endymion and ultimately will connect to onshore markets. And thanks to the team's efficiencies gained through innovation, Mattox was completed ahead of schedule and well under budget and now stands ready to receive first oil.

The Falcon ethane pipeline system is also now under construction across Pennsylvania, West Virginia and Ohio with well over 700 people supporting the construction phase of the project. Delivery of all the pipe is complete and crews are well underway with right-of-way preparation, welding and pipe installation. And when complete, the Falcon project will stand ready to provide the ethane feedstock for Shell's world-class petrochemical plant.

Both of these projects are future potential candidates for the MLP and are great examples of continued investment by Shell in the U.S., specifically in the midstream space. As our company grows in size and scale, we will look to build these types of midstream projects at the partnership level.

So with that, I'll now hand the call over to Shawn to walk you through the financial performance for the quarter. Shawn?

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Shawn J. Carsten, Shell Midstream Partners, L.P. - CFO, VP & Director of Shell Midstream Partners GP LLC [4]

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Thanks, Kevin, and good morning, everyone. As shown in yesterday's press release, we continued to deliver value for our unitholders supported by our diversified portfolio. So let me cover a few of our key financial metrics for the quarter.

Our total revenue was $131 million, down about $11 million from the prior quarter. Now this was primarily related to lower Zydeco transportation revenue, and as Kevin mentioned earlier, this was the first full quarter of results following the expiration of 2 of our committed contracts. This decrease was partially offset by higher product revenue from the sale of allowance oil along with the continued strength in the Gulf where we see increased revenues related to Auger and the Eastern Corridor.

Our operating expense was $66 million, a decrease of about $3 million from the prior quarter. Now this improvement was driven by lower project spend on certain assets and not having a lower cost per market adjustment like we had in the prior quarter. This was partially offset by an increase in the cost associated with the sale of allowance oil, having a project spend in the Eastern Corridor and a revision to an asset retirement obligation.

Our income from equity investments was about $70 million, lower due to decreased revenue on Mars. And dividend and other income was $22 million, up slightly due to an increased quarterly dividend from Poseidon.

In total, adjusted EBITDA attributable to the partnership was $170 million, down roughly $9 million from the prior quarter. After interest expense, maintenance capital and other adjustments, total cash available for distribution was $140 million.

Now based on how we allocate earnings under the partnership agreement, our net income attributable to limited partners and our coverage ratio were both favorably impacted by the previously announced $17 million IDR growth waiver provided by our sponsor.

Our partnership declared a distribution of $0.415 per LP unit, representing a 3.75% increase over the prior quarter. And all of this resulted in a coverage ratio for the quarter of 1.2x.

So now moving on to a few updates. With regards to Zydeco, as previously guided, we will have an additional contract expire in the second quarter. Now coupled with the system running on spot shipments and the already expired contracts, we expect to have continued volatility in the volumes that are transported.

The cumulative effect of these items had an impact on first quarter net income and CAFD of approximately $25 million. We expect the incremental impact to our second quarter net income and CAFD to each be in the range of $5 million to $10 million when compared to the first quarter impact.

And finally, in the CapEx space, we incurred $17 million in the first quarter, of which $8 million was related to growth capital. The growth capital is primarily related to continued expansion of our Permian gas gathering system and the Houma tanks project.

And the partnership's balance sheet and liquidity. As of March 31, the partnership had total debt outstanding of $2.1 billion, which equates to a debt-to-EBITDA ratio of 3.1x based on annualized Q1 adjusted EBITDA. We're comfortable with our conservative balance sheet, which allows us significant flexibility as we move forward.

So with all that, we'll now take your questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from Theresa Chen with Barclays.

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Theresa Chen, Barclays Bank PLC, Research Division - Research Analyst [2]

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First, just to clarify your comments, Shawn, on the Zydeco impact going forward. So the $5 million to $10 million incremental detriment to EBITDA and DCF from the $25 million that was recognized in Q1, is that on a per-quarter basis for Q2 through Q4 even though your third contract rolls off on time in the middle of Q2?

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Kevin M. Nichols, Shell Midstream Partners, L.P. - President, CEO & Director of Shell Midstream Partners GP LLC [3]

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Yes. Theresa, it's Kevin. Highlighting we are in the middle of an open season, so we haven't provided any guidance beyond Q2. But combining that incremental $5 million to a total of $30 million related to the contracts that are expiring and we'll provide guidance as we have more to provide later. But that's only for Q2, this one.

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Theresa Chen, Barclays Bank PLC, Research Division - Research Analyst [4]

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Great. Can you comment on the competitive dynamic of your current open season in relation to Bayou Bridge now that the portion to St. James for that pipeline is in service and they're also in the middle of an open season to bring additional barrels onto their system?

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Kevin M. Nichols, Shell Midstream Partners, L.P. - President, CEO & Director of Shell Midstream Partners GP LLC [5]

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Yes, Theresa. Thanks. No. I expected this question. So first, let me say that and remind you that the Zydeco system compared to competitor systems is better positioned by being connected to more markets, sources of crude and more destination of crude that other competitors are not able to service. So we feel pretty good about the connectivity and the positioning of the system. And as we've said in previous quarters, when you look out to public information with regards to current rates, either contract rates or spot rates, the Zydeco system is very competitive, and more so than some of the rates that are being put out by competition.

Now specifically, with the terms of the open season, it wouldn't be right for me to comment on the commercial aspects of that in the middle of the open season. We'll just have to give you an update with what comes out of the open season when that's appropriate.

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Theresa Chen, Barclays Bank PLC, Research Division - Research Analyst [6]

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Understood. Turning to offshore, so given recent competitor comments alluding that Amberjack has insufficient capacity to directly deliver all of its committed volumes to shore, can you just clarify what exactly is happening there?

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Kevin M. Nichols, Shell Midstream Partners, L.P. - President, CEO & Director of Shell Midstream Partners GP LLC [7]

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Yes. Thanks, Theresa. That's a fantastic question. First, and I think you're referring to Genesis comments, I agree with Grant and Genesis about the strong activity in the Gulf. This is a good time for the Gulf of Mexico, and you heard that in my comments. So it's an exciting time overall.

With regards to the Amberjack system, we built that system to provide over 500,000 barrels a day of flow assurance to our customers and that is whether the customers choose to stay on Amberjack all the way to shore or whether they choose to ride on Amberjack and go through a different market in one of the connections that we have offered. We have other ways to get to shore through connecting carriers.

But let me remind you that what producers value is that flow assurance and optionality to as many markets as possible. And no matter which way our customers choose to get to shore, Amberjack gets paid first. And so growth in connecting carriers is not a bad thing. In fact, in this case, it can be a good thing because of our SHLX interest in some of those connecting carriers like Poseidon. So customers choosing to ride on Amberjack first, we get paid on Amberjack. And if they choose to then get on Poseidon to go to shore because of our ownership position in Poseidon, we'll get paid for that growth in Poseidon as well.

So growth through connecting carriers or come riding directly to shore on Amberjack is a good thing, it's not a detraction. And we have a really good relationship with our producers in the Gulf, which has allowed us to attract those new businesses like Bigfoot or Jack/St. Malo or some of those tie-backs and connections because of the optionality that we provide. And if we need to get into a situation where we do get constrained beyond that 500,000 barrels of total takeaway capacity, we're well positioned with our customers to deal with that when that comes.

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Theresa Chen, Barclays Bank PLC, Research Division - Research Analyst [8]

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So completely understand that Amberjack gets paid first and anything incremental would be gravy for SHLX if you have an interest in the other pipelines. Just from -- just to clarify, from a customer relationship and management perspective, when you had originally negotiated to these agreements with your producers, were they planning to just pay for Amberjack all the way to shore? Or have they budgeted that they would need to divert volumes at some point as well?

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Kevin M. Nichols, Shell Midstream Partners, L.P. - President, CEO & Director of Shell Midstream Partners GP LLC [9]

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I can't speculate on what customers have chosen, but in those discussions, we looked at production profiles coming from all those different producers. And one of the first things they ask us is can I get all my barrels to shore whether it's through our system or through our connections. And so that's what we do and we demonstrate.

We have one of the most connected systems in Amberjack with the most optionality for our customers, and that's highly desirable. Because also, remember, if there's a disruption in a particular way to shore, if you provide an alternative, that's very valuable to customers because they then know that they won't get shut in just because you have an issue on a particular system. So that's all part of how we market our system to our customers.

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Operator [10]

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And our next question comes from Jeremy Tonet from JPMorgan.

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Joseph Robert Martoglio, JP Morgan Chase & Co, Research Division - Analyst [11]

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This is Joe on for Jeremy. Kind of related to the previous Zydeco question. I just wanted to ask if you could share anything about how volumes have been trending throughout the quarter and following the quarter and if you saw any impact when Bayou Bridge Phase 2 entered service. And then maybe also the -- anything generally about the portion of Zydeco volumes from Houston versus Nederland area?

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Kevin M. Nichols, Shell Midstream Partners, L.P. - President, CEO & Director of Shell Midstream Partners GP LLC [12]

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Yes. Thanks, Joe. And I know there's a lot of interest around Zydeco with regards to what's happening. Let me try and take a couple of those one at a time. With regards to Bayou Bridge and competition, let me first point out and remind you that where Bayou Bridge comes in at the Nederland marketplace and goes to St. James, that is actually where we have our biggest and longest-term contract. So that contract is secure from the standpoint of competition.

With regards to volatility on volumes and what's happening in the quarter, it wouldn't be right for me to comment at this time. We're partially way through this second quarter and just entering into it. And we've said that volumes will be volatile and it will depend on what customers bring to us, and it's hard for us to predict that. So it's really not -- I can't give you guidance on that from whether they're going to bring it to us in Houston or bring it to us in Nederland or what volumes do from the offshore. So we'll be volatile for a little while after the open season. And depending on the outcome of the open season, we'll be able to give you some more guidance going forward.

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Joseph Robert Martoglio, JP Morgan Chase & Co, Research Division - Analyst [13]

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That's helpful. And then maybe just how you would think about the potentially drop-down timing. You mentioned a couple of assets at Shell, and if those are the ones you'd kind of going to be focused on or thinking about other assets.

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Shawn J. Carsten, Shell Midstream Partners, L.P. - CFO, VP & Director of Shell Midstream Partners GP LLC [14]

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Yes. Joe, this is Shawn. We haven't provided any further guidance on drop-downs. And so we're just our normal. So I will remind you that with our balance sheet, it's one of the reasons we've maintained a fairly conservative balance sheet is that we're able to kind of work our way through markets. We have about $1.1 billion of available liquidity to do what we need to do if there's something to be done. But at this point, we're not providing guidance around future drop-downs.

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Kevin M. Nichols, Shell Midstream Partners, L.P. - President, CEO & Director of Shell Midstream Partners GP LLC [15]

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Thanks, Joe. And I think maybe the only one other thing I would add and I forgot to mention this when you asked the Zydeco question is that I know there's a lot of passion around Zydeco. And certainly, when we have more information, we'll provide that. But I also want to point out that we have -- we've been busy diversifying our portfolio and we have a strong portfolio with growth offshore. And if you take a look our -- the rest of our portfolio onshore, it has very stable cash flow and as you saw outside of the Zydeco system, performed in line with the previous quarters or actually had some growth.

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Operator [16]

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And our next question comes from Shneur Gershuni from UBS.

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Shneur Z. Gershuni, UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst [17]

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Maybe I missed it in the prepared remarks, but any latest thoughts with respect to the IDRs? It kind of feels like we've been talking about this for a year. Just kind of the latest thoughts into -- could there be some sort of a simplification at some point?

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Kevin M. Nichols, Shell Midstream Partners, L.P. - President, CEO & Director of Shell Midstream Partners GP LLC [18]

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Yes. Thank you very much for the question, not unanticipated. I don't have much more to give you than what we have said in the past. The sponsor continues to evaluate what to do with the IDRs. They take a long-term view. They're thinking through this with the long term in mind. That's kind of what the role of the waiver was when the sponsor granted the waiver so that there was no worse off with regards to the growth of the IDRs, but I have no additional guidance at this time. We'll provide you an update as soon as we can.

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Shneur Z. Gershuni, UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst [19]

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Is there a possibility that the waiver gets extended?

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Kevin M. Nichols, Shell Midstream Partners, L.P. - President, CEO & Director of Shell Midstream Partners GP LLC [20]

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Yes. So I'm not going to talk about what may or may not happen going forward. I think the best thing to do is just to wait until I'm in a position to talk about what the sponsor's going to do with the space.

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Shawn J. Carsten, Shell Midstream Partners, L.P. - CFO, VP & Director of Shell Midstream Partners GP LLC [21]

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I will highlight, Shneur, that it extends through the third quarter of this year.

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Shneur Z. Gershuni, UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst [22]

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Okay. I know you've gotten a bunch of questions about Zydeco. Maybe I'll ask it a little differently. If the contract doesn't -- if the open season isn't as successful as you would like or as we would like, it could potentially put your coverage ratio at risk for the year. Would the parent or the sponsor consider a large drop-down at an advantageous multiple to sort of dilute the impact of contract rules? Just kind of -- more asking the question on how you're going to address it from a coverage perspective.

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Kevin M. Nichols, Shell Midstream Partners, L.P. - President, CEO & Director of Shell Midstream Partners GP LLC [23]

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Yes. So thanks. I don't -- I'm not going to talk about the various different things that could or could not happen in that type of situation. But what I will say is that I have the confidence -- that we have the confidence in our ability to deliver against the commitments that we've given you. And I think we've been demonstrated over time, throughout the entire time that we've been a public company, that we continue to deliver our commitments.

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Shneur Z. Gershuni, UBS Investment Bank, Research Division - Executive Director in the Energy Group and Analyst [24]

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No. Fair enough. You actually have delivered on your commitments on growth and coverage and so forth. So is it fair to assume that one way or another that you'll continue to hit a 120 coverage ratio or better by the end of this year?

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Shawn J. Carsten, Shell Midstream Partners, L.P. - CFO, VP & Director of Shell Midstream Partners GP LLC [25]

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Shneur, this is Shawn. We haven't provided any guidance on coverage. But just to reiterate Kevin's point, we provided mid-teens growth and we're comfortable that we'll be able to hit that and still, we are -- our commitment's requirement.

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Operator [26]

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And our next question comes from Derek Walker from Bank of America.

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Derek Bryant Walker, BofA Merrill Lynch, Research Division - VP [27]

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Just a couple for me. Maybe I'll get one in on Zydeco real quick. Maybe you can talk about the decision to do just have the open season with nonfirm capacity versus firm. It sounded like you want to preserve some optionality down the line. So any comments you can have just as far as your approach to the open season.

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Kevin M. Nichols, Shell Midstream Partners, L.P. - President, CEO & Director of Shell Midstream Partners GP LLC [28]

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Yes. Thanks, Derek. Appreciate that. First, there's only certain circumstances under which you can offer firm space and that's guided by FERC, the Federal Energy Regulatory Commission. So in this particular case, using the existing capacity on the line that was freed up from the existing contracts, what we offer is a throughput and efficiency agreement and contract, and so that's the way under the regulations to go out to that. If you want to make an expansion or invest capital or change service in the line, you can then extend into offering up some firm capacity. But for this particular offering, it was really about addressing the space that was made free from the previous shippers.

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Derek Bryant Walker, BofA Merrill Lynch, Research Division - VP [29]

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Got it. And then maybe I think on your formal remarks, there's this commentary or an appetite to -- I think you mentioned the opportunities for -- or I guess the development pipelines that are happening at the parent and that will be potential drop-downs, but there was an appetite to eventually do that at the MLP level.

Can you maybe just give a little bit more color around that thought process? Is it -- is that a 2020, '21 sort of time frame? You mentioned those sort of when the MLP got to an appropriate size. Is that sort of after an IDR sort of simplification? Just any color you'd kind of give on sort of how you're thinking about when the MLP would start picking on projects more at the organic level?

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Kevin M. Nichols, Shell Midstream Partners, L.P. - President, CEO & Director of Shell Midstream Partners GP LLC [30]

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Yes. So I think the first thing here to realize is that there's alignment within Shell at building the infrastructure and the midstream infrastructure at one place at the partnership level is kind of the ultimate goal. Now it relates to cash out before cash comes back in. And so the size of the project as well as the duration it takes between how much you have to spend and when that contract gets turned on is the function for what you can afford.

We're also looking at different ways that we can participate in that, that maybe bring some of that forward and sooner. But I really have no guidance to give you as far as when that's going to happen or which project.

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Derek Bryant Walker, BofA Merrill Lynch, Research Division - VP [31]

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Okay. And then maybe just a quick one, last one for me is just on Proteus and Endymion. You mentioned that those were taken down to tie into the Mattox pipeline. Is that all complete now? And should we just sort of expect levels back to the 4Q sort of levels? How should we think about for 2Q?

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Kevin M. Nichols, Shell Midstream Partners, L.P. - President, CEO & Director of Shell Midstream Partners GP LLC [32]

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Yes. So that project is complete and my organization actually took over a brand-new pipeline platform called SP 89E, which is where the pipe comes up and over as well as Thunder Horse and all the rest. So while we were connecting the system in and connecting that platform, we took the system off-line. But that is up and running again as you'll see from Thunder Horse and other volumes. And I won't give you exact forward forecast of volumes, but a return to a normal flow rate is a reasonable expectation.

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Operator [33]

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(Operator Instructions) And our next question comes from TJ Schultz from RBC Capital Markets.

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Torrey Joseph Schultz, RBC Capital Markets, LLC, Research Division - Analyst [34]

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Just one clarification for me. On the earned credits through Zydeco, were all those utilized during the first quarter? Just trying to understand the impact from those credits on the guidance for 2Q.

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Shawn J. Carsten, Shell Midstream Partners, L.P. - CFO, VP & Director of Shell Midstream Partners GP LLC [35]

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Yes. TJ, this is Shawn. So thanks for the question. We use -- you'll see in actually the financial statements about $9 million of those credits, which roughly is kind of 50-50. For the contracts that have expired, the vast majority of those credits have been used. And even for the contract that continues on, a good portion of those credits were used as well. So we won't have many more to charge against the MLP.

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Operator [36]

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And I am showing no further questions from our phone lines. I'd now like to turn the conference back over to Jamie Parker for any closing remarks.

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Jamie Parker, Shell Midstream Partners, L.P. - IR Officer [37]

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Right. Well, that concludes our call today. Thank you for your interest in Shell Midstream Partners, and we'll speak soon. Thank you.

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Kevin M. Nichols, Shell Midstream Partners, L.P. - President, CEO & Director of Shell Midstream Partners GP LLC [38]

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Thank you, everybody. Have a good weekend.

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Operator [39]

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