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Edited Transcript of SJI earnings conference call or presentation 28-Feb-19 4:00pm GMT

Q4 2018 South Jersey Industries Inc Earnings Call

Folsom Mar 7, 2019 (Thomson StreetEvents) -- Edited Transcript of South Jersey Industries Inc earnings conference call or presentation Thursday, February 28, 2019 at 4:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Ann T. Anthony

South Jersey Industries, Inc. - VP, Treasurer & Acting Corporate Secretary

* Cielo Hernandez

South Jersey Industries, Inc. - Senior VP & CFO

* Daniel Mark Fidell

South Jersey Industries, Inc. - VP of IR

* Michael J. Renna

South Jersey Industries, Inc. - President, CEO & Director

* Steven R. Cocchi

South Jersey Industries, Inc. - Senior VP of Strategy & Growth and Chief Strategy & Development Officer

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Conference Call Participants

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* Christopher Ronald Ellinghaus

The Williams Capital Group, L.P., Research Division - Senior Equity Research Analyst of Power and Natural Gas

* Dennis Paul Coleman

BofA Merrill Lynch, Research Division - Global Head of High Grade Debt Research and MD

* Scott Walker

MFS Investment Management Company (LUX) S.A.R.L. - Investment Officer, Portfolio Manager & Equity Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Q4 2018 South Jersey Industries Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mr. Dan Fidell, Vice President of Investor Relations. Sir, you may begin.

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Daniel Mark Fidell, South Jersey Industries, Inc. - VP of IR [2]

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Thank you. Good morning, everyone, and welcome to SJI's fourth quarter and 2018 full year earnings conference call and webcast. I'm joined here today by Mike Renna, our President and Chief Executive Officer; as well as several additional members of our senior management team.

Our earnings release and the presentation slides that accompany the call were issued yesterday after the close of the market and are also available on our website at www.sjindustries.com. The release and the associated 10-K provide an in-depth review of earnings on both a GAAP and non-GAAP basis using our non-GAAP measure of economic earnings. Reconciliations of economic earnings to the comparable GAAP measures appear in both documents.

Let me note that throughout today's call, we will be making references to future expectations, plans and opportunities for SJI. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the company's forms 10-K and 10-Q on file with the SEC.

With that said, I'm pleased to introduce our CEO, Mike Renna, who will discuss our current earnings performance and outlook. SJI's Chief Financial Officer, Cielo Hernandez, will then review the financial performance of our individual segments and balance sheet, and Mike will then review our financial guidance. After that, we'll then be happy to take your questions.

So with that introduction, let me now turn it over to Mike.

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Michael J. Renna, South Jersey Industries, Inc. - President, CEO & Director [3]

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Thanks, Dan. Good morning, everyone. Before we start, I want to take a moment at the outset to address 2 senior-level management changes at SJI. Our Executive Vice President, Steve Clark, is retiring from the company effective today. Steve has distinguished himself in countless ways over a very long and successful career and has shown effective leadership at every level across the company. As you know, Steve was our CFO for over 5 years, and then more recently, he brought that same leadership and steady hand to our nonregulated operations. Like many of you in the investment community, we will miss Steve's intellect, wise counsel and good humor very much. On behalf of your SJI family, Steve, we wish you and Liz all the best as you begin this exciting chapter and we thank you for a job well done.

I'd also like to welcome and introduce you all to our new Senior Vice President and CFO, Cielo Hernandez. We are thrilled to have a proven leader like Cielo join our team. She brings not only strong technical expertise but also an impressive track record of partnering with business units to drive operational excellence and profitability, exactly the leadership and principled approach that is integral to our business transformation efforts. Many of you will have an opportunity to meet Cielo as we make the rounds in several meetings and conferences in coming months. And you will hear some remarks from Cielo shortly about our operational performance, but first, I want to give you an update on our business transformation activities.

In addition to record earnings, 2018 certainly witnessed some of the most significant change in our company's history. I'm very pleased with our progress and excited by our future.

With regard to our Elizabethtown and Elkton acquisitions, the process was seamless with financing, regulatory approval and closing in less than 9 months. Full integration is on track to be completed in Q1 2020.

On the regulatory front, we achieved multiyear extensions of our SHARP infrastructure and energy efficiency programs at SJG and filed an infrastructure replacement proposal for ETG with a BPU in October.

With respect to our core nonregulated operations, we achieved record wholesale marketing results, driven by cold weather and 3 additional fuel management contracts that became operational. Regarding business transformation, we successfully executed the sale of our noncore solar and retail gas marketing assets using cash proceeds to pay down debt and strengthen our balance sheet.

We also launched a series of initiatives designed to better align internal resource with our strategy and opportunities. Leveraging people, process and technology, we were able to cost-effectively absorb ETG and Elkton while simultaneously driving down costs all across our businesses. These business transformation efforts, which included a very successful early retirement incentive program, will help support our growth plans into 2020 and beyond. Again, we did all this while achieving record economic earnings of $116.2 million in 2018. I could not be prouder of our employees and their commitment to excellence.

In the first few months of the year, we have further strengthened our balance sheet using proceeds from our noncore asset sales and the issuance of our equity-forward in January for repayment of debt. As we look toward the remainder of 2019, we're focused on completing our review of the remaining noncore nonregulated businesses; effectively integrating our ETG and Elkton acquisitions, including winding down our transition services agreement with Southern; achieving significant cost savings from the business transformation initiatives mentioned earlier; and effectively executing our regulatory strategy, all of which provide the foundation for top-tier financial growth, including expected long-term 8% to 10% rate base growth and 6% to 8% economic earnings per share growth.

I've never been more optimistic of our future, and I look forward to reviewing our progress with you as the year goes on.

And with that, I'll now turn it over to Cielo to review our operational performance.

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Cielo Hernandez, South Jersey Industries, Inc. - Senior VP & CFO [4]

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Thank you, Mike for that warm welcome. I'm very positive about our future growth. I'm excited to join SJI and I look forward to meeting with many of you in the investment community in the months ahead.

As Dan noted earlier, both the earnings release and the slide deck we have made available will provide you with a detailed information regarding GAAP earnings, and I will encourage you to review the information as well.

For the purpose of this call, as we normally do, we will focus our discussion on our non-GAAP measure of economic earnings as management believes that this measure provides value insight into the performance of our business.

SJI 2018 economic earnings were at $1.38 per share as compared with $1.23 per share in 2017. The improvement reflects a combination of the strong results at South Jersey Gas and Energy Group. That was partially offset by the impact of acquisitions and divestitures.

SJI fourth quarter economic earnings were $0.39 per share compared with $0.50 per share in 2017. The quality variance reflects the additional Elizabethtown Gas and Elkton Gas and improved results at Midstream and Energy Services, offset by interest costs and share dilution related to acquisition financing and lower results at Energy Group due to much warmer weather.

I will now briefly review the 2018 full year performance drivers of each of the business segments. Our gas utilities contributed earnings of $1.05 per share compared with $0.91 per share in 2017. The $0.14 per share improvement were evenly split between SJG and ETG. The SJG improvement reflects the impact of base rate case, the roll-in of investments for infrastructure replacement and improvement in customer growth. Exciting.

On a net basis, SJG customer growth was 1.9% over the last 12 months, well above the national average, with 3/4 addition from conversion.

ETG contributions reflect our [partner-deal] ownership of the assets with profitability driven by 2017 base rate case and customer growth.

Elizabethtown added more than 2,000 net customers over the last 12 months, which represent to a 0.8% growth rate. In the future years, we expect an increased rate case driven by enhanced focus on conversion opportunities.

Midstream contributed earnings per share of $0.04 compared with $0.06 per share last year. The annual variance is skewed with 2017 results, reflecting a catch-up of our AFUDC related to prior period that has not been seen after period [record] until the original receipt of the first approval.

Turning to our nonregulated operation. Energy Group contributed economic earnings per share of $0.50 compared to $0.27 per share last year. The $0.23 per share increase largely reflects strong results from our wholesale business, driven by our portfolio optimization during the cold weather that we had in Q1 2018 compared with an extremely warm weather in the prior year Q1 2017 and the input of the federal tax reform. Fuel management earnings improved by $0.03 per share, driven by a larger portfolio of contracts.

Now Energy Services contributed roughly breakeven results and a slight improvement versus last year. In June 2018, we announced the sale of our solar assets to an entity managed by Goldman Sachs Asset Management.

So turning now to our balance sheet review. SJI remains committed to a capital structure that supports our capital spending plan while we maintain a balanced equity-to-total capitalization, ample liquidity and solid investment-grade rating.

At December 31, 2018, our equity-to-total capitalization was about 28.9% compared to 43.7% at December 2017, reflecting acquisition financing. As previously communicated, our growth plan embeds conversion of mandatory convertible equity units in 2021. Including this conversion, our adjusted equity-to-total capitalization ratio, a non-GAAP measure, was 35.3% at December 31, 2018.

As Mike mentioned, our balance sheet strengthening activities remain our core focus and have continued into 2019.

In January, we settled our equity-forward sale agreement, receiving net cash proceeds of approximately $189 million. We deployed a majority of those receipts for debt repayment in late January.

In 2019, we have also deployed a majority of our more than $300 million in cash proceeds from the sales of our solar and retail gas marketing assets for debt repayment.

Lastly, I wanted to remind you that in November, the SJI Board of Directors voted to increase the company's regular quarterly dividend to an annualized rate of $1.15 per share. With this latest rate, SJI has now increased the dividend each of the last 20 years.

That concludes my review of our operational performance. I will now turn it to Mike to review our guidance.

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Michael J. Renna, South Jersey Industries, Inc. - President, CEO & Director [5]

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Thank you, Cielo for that great review of our operations as well as our balance sheet strengthening activity.

Turning to our guidance. In 2019, we expect economic earnings to be in the range of $97 million (sic) [$98 million] to $107 million or $1.05 to $1.15 per diluted share. Consistent with our strategy, regulated operations are expected to contribute 80% to 85% of economic earnings, excluding acquisition-related interest costs. I think it is important to point out that our 2019 guidance reflects the costs associated with the transition services agreement we have with Southern, which we intend to exit by early 2020; financing and operational requirements associated with our ETG and Elkton acquisitions and divestitures of our noncore nonregulated businesses; and timing associated with the execution and implementation of our regulatory strategy.

For additional clarity, 2019 guidance reflects the cost of several transition year items that I just spoke of, including $0.24 per share of additional interest expense related to the acquisition financing and the $0.08 per share in transition services costs. In addition, 2018 performance included $0.09 per share related to a very cold weather experienced in January that year, which was not considered repeatable.

It's important to note that it is the growth in our utility businesses and reduced O&M resulting from our BT initiative that are partially offsetting these transition year items, along with our more conservative expectations from wholesale.

Capital expenditures are expected to be approximately $525 million in 2019, with more than 97% supporting regulated operations and projects. And following our equity-forward draw in February, we do not anticipate any additional equity issuances in 2019.

Looking to 2020, however, we expect earnings to rebound significantly above both 2018 results and our stated 6% to 8% long-term growth rate. 2020 earnings are expected to benefit from our exit of the transition services agreement; accelerated utility customer growth and infrastructure replacement at both SJG and ETG; execution of our regulatory strategy, including recovery of base utility investment; reshaping of our wholesale portfolio, including the expiration of legacy marketing contracts; and significantly lower operating costs driven by 2019 business transformation activities.

Capital expenditures are expected to be approximately $540 million in 2020, again, with more than 97% supporting regulated operations and projects. As previously communicated, we anticipate an equity issuance of $125 million to support our planned utility redundancy project.

As we further execute our business transformation and regulatory initiatives over the coming months, we look forward to providing you with additional guidance in conjunction with our Q1 2019 earnings release on May 8.

And before we open it up to questions, I want to provide an update on our PennEast project at BL England. With respect to PennEast, we have made great strides in completing the remaining land surveys and anticipate filing a completed application with the NJDEP over the coming months. The current project time line assumes construction start in late 2019. There is always, however, the potential for delays, and I want to assure you that our guidance reflects those impacts.

We remain very encouraged by recent actions and are confident this critical project will soon bring clean, affordable natural gas to the region.

With regard to BL England, we are very disappointed by the decision by Rockland Capital to exit this important project, but I want to assure you, however, of 2 important takeaways. First, this announcement is bad for the region as repowering BL England with natural gas was a cost-effective and environmentally prudent solution to a known PJM constraint point.

Second and more importantly, this is not expected to impact our growth plan as we've already begun to explore alternatives that will allow for a secondary supply of natural gas needed to create reliability and resiliency for the 142,000 customers in Atlantic and Cape May counties who count on us to heat their homes, provide hot meals and hot water for their families. We expect to share additional details as these alternatives clarify most likely in the first quarter with our guidance at the end of the first quarter.

As I conclude my remarks, as always, I want to thank our 1,100 dedicated employees for their outstanding work day in and day out. They remain the driving force behind our results and have been working diligently for many months and are laying the foundation for us to execute on our plan.

I am humbled by these efforts and feel fortunate to work side by side with these exceptional professionals every day.

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Daniel Mark Fidell, South Jersey Industries, Inc. - VP of IR [6]

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Thank you, Mike. Operator, that concludes our prepared remarks. We're now ready to open the line for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Chris Ellinghaus with Williams Capital.

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Christopher Ronald Ellinghaus, The Williams Capital Group, L.P., Research Division - Senior Equity Research Analyst of Power and Natural Gas [2]

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Welcome, Cielo. And Steve, I'm going to miss you, buddy. Can you elaborate in the sort of corporate segment the year-over-year change? How much of that was related to the Elizabethtown interest expense?

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Michael J. Renna, South Jersey Industries, Inc. - President, CEO & Director [3]

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For 2017 to '18 or '18 to '19?

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Christopher Ronald Ellinghaus, The Williams Capital Group, L.P., Research Division - Senior Equity Research Analyst of Power and Natural Gas [4]

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Yes, the 2018 delta in the other category, that $20 million-ish change year-over-year, how much of that is interest expense?

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Michael J. Renna, South Jersey Industries, Inc. - President, CEO & Director [5]

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Please stand by, Chris. We're getting it for you.

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Christopher Ronald Ellinghaus, The Williams Capital Group, L.P., Research Division - Senior Equity Research Analyst of Power and Natural Gas [6]

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And also, in the 2019 guidance, can you elaborate on sort of your expected effective income tax rate?

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Michael J. Renna, South Jersey Industries, Inc. - President, CEO & Director [7]

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The income tax rate for 2019?

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Unidentified Company Representative, [8]

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Yes.

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Ann T. Anthony, South Jersey Industries, Inc. - VP, Treasurer & Acting Corporate Secretary [9]

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Yes.

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Unidentified Company Representative, [10]

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The effective tax rate for 2019, was that what you're asking about, Chris?

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Christopher Ronald Ellinghaus, The Williams Capital Group, L.P., Research Division - Senior Equity Research Analyst of Power and Natural Gas [11]

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Yes.

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Unidentified Company Representative, [12]

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Yes, it will be right around the 25%, 26%.

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Christopher Ronald Ellinghaus, The Williams Capital Group, L.P., Research Division - Senior Equity Research Analyst of Power and Natural Gas [13]

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Okay, great. When did you guys find out about the BL England cancellation?

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Michael J. Renna, South Jersey Industries, Inc. - President, CEO & Director [14]

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We started to hear rumblings about it probably within the last 7 to 10 days and confirmed it within the last 4 or 5.

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Christopher Ronald Ellinghaus, The Williams Capital Group, L.P., Research Division - Senior Equity Research Analyst of Power and Natural Gas [15]

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And are you still -- I know you talked about completing the transition services agreement by early 2020. Are you still hoping to complete that sooner?

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Michael J. Renna, South Jersey Industries, Inc. - President, CEO & Director [16]

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We'll complete the majority of it by year-end. What's going to stretch into early 2020, and really very early 2020, is just kind of the final cutover of the systems.

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Christopher Ronald Ellinghaus, The Williams Capital Group, L.P., Research Division - Senior Equity Research Analyst of Power and Natural Gas [17]

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The final verification and testing-type phase?

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Michael J. Renna, South Jersey Industries, Inc. - President, CEO & Director [18]

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Yes. Yes, that's exactly right. We'll do that in January of 2020.

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Christopher Ronald Ellinghaus, The Williams Capital Group, L.P., Research Division - Senior Equity Research Analyst of Power and Natural Gas [19]

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Okay. And lastly, the equity in the guidance for 2020, can you elaborate how much of that is anticipated to go into your LNG project specifically?

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Ann T. Anthony, South Jersey Industries, Inc. - VP, Treasurer & Acting Corporate Secretary [20]

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Chris, it's Ann. I think based on what we see today, the bulk of it would be going towards that LNG project as well as again supporting other capital investments down at the utilities.

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Cielo Hernandez, South Jersey Industries, Inc. - Senior VP & CFO [21]

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Chris, I have -- going back to your first question, it's about $50 million [approx].

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Christopher Ronald Ellinghaus, The Williams Capital Group, L.P., Research Division - Senior Equity Research Analyst of Power and Natural Gas [22]

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That's after tax?

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Michael J. Renna, South Jersey Industries, Inc. - President, CEO & Director [23]

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Yes, correct.

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Cielo Hernandez, South Jersey Industries, Inc. - Senior VP & CFO [24]

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Yes, that is correct.

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Operator [25]

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(Operator Instructions) Our next question comes from Dennis Coleman with Bank of America.

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Dennis Paul Coleman, BofA Merrill Lynch, Research Division - Global Head of High Grade Debt Research and MD [26]

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Let me add my welcome to Cielo, and also, good luck in your retirement, Steve. If I could just circle back to the BL England situation, can you talk a little bit about what the alternatives might be? Or are they the same scale in terms of investment?

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Michael J. Renna, South Jersey Industries, Inc. - President, CEO & Director [27]

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We're still refining the plans, but yes, they will be significant. I don't know that they'll be exactly the same scale, but they will be -- they're going to require significant investment for us to be able to provide redundancy to that region. And again, I mean, you're talking about, I guess, 35% to 40% of our customers right now are being served off of a single line that we deem to be one of the most important things that we do is providing adequate redundancy to that line. So Dave Robbins' team right now is working on a final plan for us to be able to provide that redundancy. It will be an alternative path with BL England, but it will be a significant capital investment. And to Ann's point, we'll consider that similar to what we're doing on the LNG side as part of the entire redundancy package. And $125 million of equity will probably support that redundancy package.

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Dennis Paul Coleman, BofA Merrill Lynch, Research Division - Global Head of High Grade Debt Research and MD [28]

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Okay. So it's something like a line, maybe smaller diameter or something like that, I guess, is an alternative?

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Michael J. Renna, South Jersey Industries, Inc. - President, CEO & Director [29]

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Yes, we're testing my engineering skills right now. But yes, I mean, what it would really involve would be lubing of some existing feeds into that area. But no, it would not be -- it's not planned to be a 24-inch line. It's going to be smaller scale in terms of like pipe diameter. But it will be -- it will address the redundancy issue to make sure that our 142,000 customers are protected.

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Dennis Paul Coleman, BofA Merrill Lynch, Research Division - Global Head of High Grade Debt Research and MD [30]

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Okay. And then any color on the ETG rate case filing? I think there's -- when that will happen in 2019, I guess?

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Steven R. Cocchi, South Jersey Industries, Inc. - Senior VP of Strategy & Growth and Chief Strategy & Development Officer [31]

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Yes. Dennis, this is Steve Cocchi. So I think you're probably aware of the regulatory requirements that we have for rate cases of both ETG and South Jersey Gas in terms of timing by 2020. At this point, we're anticipating making filings significantly earlier than that for Elizabethtown. At this point, we're looking at something in Q2. So the exact date will be determined when we're ready for that filing. We've got to obviously have conversations with our regulators around that as well. So stay tuned, but you should see something. At this point, we're thinking in Q2.

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Dennis Paul Coleman, BofA Merrill Lynch, Research Division - Global Head of High Grade Debt Research and MD [32]

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Great. We'll look forward to that. And then maybe one more just a little bit more detail around the 2020 information you gave us. We'll look forward to the full guidance, I guess, in a few months. But the capital budget, the $540 million, up a little bit from the spend this year. How much of that is for PennEast? If you can break that out just so we sort of know where that delta might be given your comments about delay's potential.

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Unidentified Company Representative, [33]

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Yes. I was going to say PennEast is a relatively small -- if you can hear me, PennEast is a relatively smaller number. I'm trying to think off the top of my head what that was. It wasn't a big number in 2019. Let me say a vast majority of this is going to fall in 2020.

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Michael J. Renna, South Jersey Industries, Inc. - President, CEO & Director [34]

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It wouldn't change it.

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Dennis Paul Coleman, BofA Merrill Lynch, Research Division - Global Head of High Grade Debt Research and MD [35]

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But if it was delayed, would it impact the 2020, the $540 million?

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Unidentified Company Representative, [36]

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Yes. Obviously, it will be delayed beyond 2020, sure. But for '19 purposes, I think we have $22 million in our plan right now for '19.

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Operator [37]

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And our next question comes from Scott Walker with MFS Investment Management.

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Scott Walker, MFS Investment Management Company (LUX) S.A.R.L. - Investment Officer, Portfolio Manager & Equity Analyst [38]

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I'm wondering if you could clarify, and maybe not with specificity but directionally, kind of embedded returns at each utility that are baked into the 2019 guidance.

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Steven R. Cocchi, South Jersey Industries, Inc. - Senior VP of Strategy & Growth and Chief Strategy & Development Officer [39]

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Scott, this is Steve Cocchi again. Look, there's obviously a regulatory lag issue that we have to deal with. We've got significant capital expenditures at both South Jersey Gas and Elizabethtown. At this point, as we just discussed, we're looking at a rate case filing at Elizabethtown. And I think more to come on the timing of a South Jersey Gas rate case. But there is clearly going to be some regulatory lag issues in 2019 until we can get in with rate cases for both companies and start to recover on all those significant capital investments that we've made. And I think what we've always said is that we expect coming out of base rate cases to earn on our authorized return on equity, which, right now is 9.6%, and that's really the standard number across the utility world in New Jersey right now.

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Scott Walker, MFS Investment Management Company (LUX) S.A.R.L. - Investment Officer, Portfolio Manager & Equity Analyst [40]

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What I'm trying to get at is I think the market clearly today is saying that people are uncomfortable with 2020, the rebound. And so I'm trying to get some way to size, if you were to earn in the mid-9s on some pro forma capital number in that year to kind of underscore market confidence in your plan.

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Steven R. Cocchi, South Jersey Industries, Inc. - Senior VP of Strategy & Growth and Chief Strategy & Development Officer [41]

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I think if you take a look at some of the pages that we've included in our deck with regard to the timing of our planned regulatory activities and the capital expenditures that we expect to include in the base rate cases, you can probably kind of calculate what type of returns we would expect to see coming out of these base rate cases. And on top of those, we've got our infrastructure programs at South Jersey Gas that have annual roll-ins to rate base as well as the proposed infrastructure at Elizabethtown that we would expect to be in place and hopefully earning return on those investments in 2020. So you've got a combination of things that if you look at the capital expenditures, assume a return similar to what you've seen in our prior cases and others across New Jersey, you can kind of figure out where we would be.

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Scott Walker, MFS Investment Management Company (LUX) S.A.R.L. - Investment Officer, Portfolio Manager & Equity Analyst [42]

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Okay. And I'm sorry. There's a lot of going on today. I think I missed it, but did you clarify that the Southern transition agreement was about $0.08 of headwind in 2019?

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Michael J. Renna, South Jersey Industries, Inc. - President, CEO & Director [43]

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It is, yes.

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Scott Walker, MFS Investment Management Company (LUX) S.A.R.L. - Investment Officer, Portfolio Manager & Equity Analyst [44]

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And that will go away but offset by some addition of cost? Or how should we think about that for '20?

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Michael J. Renna, South Jersey Industries, Inc. - President, CEO & Director [45]

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It will go away. There will be some, yes, but albeit small. There will be some addition of cost. But that data is further offset as the BT initiatives take root and we drive down overheads and costs throughout the organization. So in total, we are expecting a significant reduction in overall costs.

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Operator [46]

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(Operator Instructions) I'm showing no further questions in the queue at this time. I'd like to turn the call back over to Dan Fidell for any closing remarks.

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Daniel Mark Fidell, South Jersey Industries, Inc. - VP of IR [47]

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Thank you, everyone, for joining us this morning. As a reminder, a recording of this call is going to be available on our website. As always, please feel free to contact either myself, Dan Fidell, or Eric Jacobson for analyst and investor questions, or Marissa Travaline for media inquiries. Our contact information may be found on our earnings release and earnings presentation materials. Again, thanks for joining us today and for your continued interest and investment in SJI. This concludes our call. Have a good day.

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Operator [48]

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