Alliance Resource Partners LP (ARLP) 2016 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the third-quarter 2016 Alliance Resource Partners and Alliance Holdings GP earnings conference call.

(Operator Instructions)

As a reminder this conference is being recorded. Now I would like to introduce your first speaker for today, Senior Vice President and Chief Financial Officer Mr. Brian Cantrell. Please go ahead, sir.

Thank you, Andrew, and welcome everyone. Earlier this morning we released 2016 third-quarter earnings for both Alliance Resource Partners or ARLP, and Alliance Holdings GP or AHGP, and we will now discuss these results as well as our outlook for the balance of the year. Following our prepared remarks we will open the call to your questions.

Before we begin, a reminder that some of our remarks today may include forward-looking statements that are subject to a variety of risks, uncertainties and assumptions which are contained in our filings from time to time with the Securities and Exchange Commission and are also reflected in this morning's press releases.

While these forward-looking statements are based on information currently available to us, if one or more of these risks or uncertainties materialize or if our underlying assumptions prove incorrect, actual results may vary materially from those we projected or expected. In providing these remarks, neither partnership has any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Finally, we will also be discussing certain non-GAAP financial measures. We have provided definitions and reconciliations of the differences between these non-GAAP measures and the most directly comparable GAAP financial measure at the end of the ARLP press release, and we refer you to ARLP's website and Form 8-K for a copy of the release filed this morning. Now that we're through with the required preliminaries, I'll turn the call over to Joe Craft, our President and Chief Executive Officer. Joe?

Thank you, Brian, good morning everyone. Today, ARLP reported another solid quarter of operating and financial results. All key operating and financial metrics, including record sales volumes, came in at levels equal to or better than our mid-year, forecast which we used for our prior guidance.

As discussed during our last earnings call, we're beginning to see positive signs for the markets we serve. We expressed a view on our call that coal shipments in the second half of 2016 would increase approximately 4.5 million tons compared to the first half of the year. We are pleased to report today, our coal sales volumes actually grow ahead of this pace during the 2016 quarter, increasing 2.8 million tons sequentially to a record 10.8 million tons.

As a result, our inventories declined 2.2 million tons to 2 million tons at the end of the third quarter. We had significant buying activity during the 2016 quarter and we are continuing to see increased buying interest due to the summer burn, the forward natural gas price curve, replenishing of customer stockpiles and the recent rally in the export market.

Since the second quarter of 2016, we have secured price and volume commitments for deliveries through 2020 of 11.2 million tons, including 3 million tons to be shipped to the export markets over the next six months. ARLP now has secured price and volume commitments for 2017, 2018, and 2019 of 29.1 million tons, 17.4 million tons, and 8.9 million tons respectively.

On the strength of higher coal sales volumes and ongoing cost-containment efforts, ARLP reported increases to net income and EBITDA compared to the sequential quarter and the 2015 quarter. Distributed cash flow also improved to $128.9 million, 5.5% higher than the sequential quarter, lifting our distribution coverage ratio to 2.43 times for the 2016 quarter.

Looking to the fourth quarter of 2016 and beyond, assuming normal weather patterns, we currently anticipate the recent improvement in the domestic and thermal coal markets should continue as higher natural gas prices spur an increase in demand for coal and supply for domestic consumption will be reduced due to increased shipments of US coal into the export markets. Even though the industry supply-and-demand balance is becoming more favorable and prices are on the upswing, we believe coal pricing still needs to show more strength before we begin increasing production.

Until then, we will continue our strategy of matching ARLP's 2016 production levels to contracted sales and commitments. In 2017, production is currently planned to be at our revised 2016 sales volume guidance ranges as we continue to optimize our lowest cost mines. This strategy led us to our decision to cease production at our Pattiki mine by the end of this year, and to increase production at our Hamilton mine with the goal to get this longwall mine to full capacity in 2017.

Doing so will help us to further reduce ARLP's cost per ton in the Illinois Basin next year.

As evidenced by our performance through the first nine months of 2016, ARLP has successfully managed through a very challenging market environment for coal. This performance, along with expectations for continued favorable market conditions, has led ARLP to increase its 2016 full-year's guidance as Brian will discuss in a moment.

Based on this performance and our expectations, the Alliance Board selected to maintain our current quarterly unit distribution by $0.4375 per unit at ARLP and $0.55 per unit at AHGP. I'll now turn the call over to Brian for a review of our financial results. Brian?

Thank you, Joe. As Joe just mentioned, the Alliance Partnerships delivered solid results for the 2016 quarter, posting quarter-over-quarter and sequential increases to net income and EBITDA on the strength of record quarterly coal sales volumes. Taking a closer look at the details, coal sale volumes at 10.8 million tons in the 2016 quarter were higher compared to both the sequential and 2015 quarters by 35.1% and 4.5% respectively.

Reflecting our previous comments regarding ARLP's strategic decision to keep 2016 production levels in line with its contracted coal sales position, production volumes were 149,000 tons, or 1.8% higher than the sequential quarter but fell 25.7% compared to the 2015 quarter. Revenues totaled $552.1 million for the 2016 quarter, down slightly from the 2015 quarter, as lower price realizations impacted coal sales revenues despite increased sales volumes.

Compared to the sequential quarter, however, record sales volumes led total revenue higher by 25.7%. ARLP's net income and EBITDA were also higher during the 2016 quarter compared to both the 2015 and sequential quarters with net income increasing by 7.7% and 8.6% respectively, while EBITDA rose 1.9% and 5.2% respectively.

Earnings per unit also increased quarter over quarter and sequentially by 49.2% and 11% respectively. The sharply higher increase to EPU compared to the 2015 quarter reflects the reduction of incentive distribution rights allocable to our general partner resulting from ARLP's decision to adjust its distribution earlier this year.

I would also like to point out that as you compare the 2016 and 2015 quarters and periods, please keep in mind the results in 2015 were impacted by the flow-through of losses related to our equity ownership in White Oak, prior to our acquisition of the Hamilton mine, and by a $10.7 million non-cash impairment charge due to the surrender of non-core undeveloped coal reserves and related property.

Our balance sheet remains strong at the end of the 2016 quarter. ARLP reduced its total debt by $184.4 million during the 2016 quarter and increased its liquidity by 28.2% sequentially, to $505.7 million. Our leverage at the end of the 2016 quarter also improved to a very conservative 1.12 times net debt to trailing 12 months adjusted EBITDA. Compared to 1.34 times at the end of the sequential quarter.

With the support of its lead banks, ARLP recently launched the process to amend and extend its existing revolving credit facility by two years. We're wrapping up final commitments and documentation for this extension and currently expect to close this facility within the next 30 days. I'll now turn to an update of ARLP's 2016 full-year guidance.

As outlined in our release this morning, we are increasing our previous full-year guidance for coal production to a range of 34.5 million to 35.5 million tons and are also increasing estimated coal sales volumes to a range of 36.5 million to 37 million tons. Both reflecting the previously discussed export tons recently booked by ARLP for shipment this year.

Incorporating recent spot transactions and reflecting anticipated sales volumes in pricing for the remainder of the year, we're now anticipating our full-year 2016 average coal sales price per ton should be approximately 5% to 6% lower than 2015 realizations. Based on our adjusted sales volume and pricing expectations, ARLP currently anticipates full-year 2016 revenues, excluding transportation revenues, in a range of $1.88 billion to $1.92 billion.

On the cost side, cost control initiatives at our mines and the shift to production to our lower cost operations are expected to further reduce ARLP's total segment adjusted EBITDA expense per ton for 2016. We're now anticipating full-year per ton cost should be 6% to 7% lower than the 2015 levels, which is well below our prior guidance estimate of cost per ton improving by 3.5% to 6% compared to last year.

Based on performance through the first nine months of 2016 and updated volume, price and cost expectations, ARLP is adjusting its full-year 2016 estimate per net income to a range of $300 million to $310 million, and increasing its estimate for EBITDA to a range of $650 million to $660 million. I'll now turn to an update on our anticipated capital expenditures and investments for 2016.

ARLP's operational efforts to efficiently manage capital are ongoing and continue to result in lower-than-expected capital expenditures. As a result, we are again reducing 2016 total estimated capital expenditures to a range of $97.5 million to $102.5 million, down an additional 5% from prior guidance and 27.5% below expectations from the beginning of the year at the mid-point.

Our participation in the acquisition of the oil and gas mineral interest continues to progress as expected during the 2016 quarter. And ARLP received its first distribution from Cavalier Minerals of $1.4 million related to this activity. We continue to expect ARLP will complete its current commitment to acquire minerals by the end of the year, and are confirming our prior estimate for 2016 full-year investment in a range of $80 million to $85 million.

Our expectation for ARLP's distributable cash flow is increased to $455.8 million, at the midpoint of our EBITDA guidance range of $655 million. This equates to a distribution coverage ratio of 1.84 times on distributions expected to be paid in 2016.

This concludes our prepared comments this morning. We appreciate your continued support and interest in both ARLP and AHGP. And now with Andrew's assistance we will open the call to your questions and then wrap up with closing comments. Andrew?

(Operator Instructions)

Mark Levin, Seaport Global.

Hi, guys, how are you doing?

Hey. Good morning Mark, glad to have you on.

Thanks, good to be on, so just a couple of quick questions. One I know it's early, and we are well before 2017, you probably haven't done but so much budgeting? But when you think about CapEx in 2017 versus 2016, where would you come down?

And then also on the cost side as you guys ramp the Hamilton mine up towards full capacity, basically high grading your asset base, what might cost look like in a world in which, in 2017, which Hamilton is running a lot harder?

Okay, on the capital, we're right in the middle of our budgeting process. So I don't have a number. I think our capital expenditures will continue to be lower than what our maintenance capital is that we use distribution purposes because we still have quite a bit of excess capital from the mines that we closed in 2016. So we'll be able to utilize a lot of that equipment and therefore not have to purchase equipment in 2017 at a pace that is reflected in our five-year guidance that we use for our maintenance capital.

Which, Mark, as a reminder, our current five-year per ton estimate for maintenance capital is about $475 [million]. As Joe mentioned, we do have excess inventory on hand from some of the mine idling and closures that we've gone through recently so we do anticipate that coming down but to give a precise number, it's a little bit premature in our cycle.

As far as cost, if we look forward to 2017, if we are successful and are able to run our Hamilton Mine at full capacity, we think our cost could come down compared to 2016 and somewhere in the 5% to 10% range.

That's quite an accomplishment. On the -- let me just talk a little bit about exports. If the APIQ price were to continue to appreciate, and you think about 2017 even sooner? How much could you do from an export perspective? What kind of APIQ price do you need to kind of make the economics of exporting look more valuable to you then placing them domestically?

And then, maybe a way to just kind of think about the net back? I know export's not a big part of your business, but if things were to happen could you move significant amount of tons overseas?

We could move more tons. As Brian mentioned we contracted for 3 million tons are being sold in the fourth quarter this year, and the first-quarter of 2017. Beyond that, we need to evaluate what the demands of the domestic market are going to be relative to the export market. We have potential to increase production with additional capacity at both Gibson South and River View.

We are also looking to participate in the export market at our Pattiki mine, which is a metallurgical mine. We could produce some tons there and we are evaluating selling into that market as well. I think the volume in the mid-market probably would not be more than a half million tons, but it's still at the prices that we are seeing right now those could be added to the sales volumes as well as revenue numbers in 2017.

As far as whether we continue to participate at the pace we've been on the last two quarters, it will definitely be on price but it's also going to be relative to what the domestic market brings. So this past quarter, I would say, that they're ahead of the domestic market but it's my expectation that the domestic market will catch up and surpass the export market.

If the prices at APIQ are what is in the curve as we look at it today. Where that curve stands or where the current spot prices are it's hard to know. We will look at the export market opportunistically. It is not a strategic long-term play for us, but if it provides opportunities I'm optimistic way we'll take advantage of it.

That make sense. One last big picture question and then I'll let everybody else get on. When you think about coal burn, Joe, in the United States in 2017, if you're just to assume a normal winter -- hopefully will have a colder than normal winter but just kind of assume a normal winter and the current gas curve as it stands today, what you think US coal burn looks like in 2017? What you think Illinois Basin coal burn looks like in 2017?

Most people that are in the business predicting these things, most people believe it will go up anywhere from -- this is industry wide -- 20 million to 40 million tons. A large percentage of that would be Powder River Basin. As we look at Illinois Basin, I think the increase in demand domestically might be 5% to 10%, but I think the real opportunity for Illinois Basin is the fact that -- the question was asked earlier, and that's the APIQ curve and how much volume will move out of Illinois Basin for export.

Right now we are not seeing a supply response in Illinois Basin. Third quarter production was actually down compared to earlier in the year. And based on the moves that we are making, we're really not increasing production above 2016 levels that much in 2017 ourselves. So we're not seeing a rush to increase supply. The demand may be in the 5% to 10% level if we have the pricing environment for gas that we are seeing today.

Right, thank you very much for your time, appreciate it.

Thanks, Mark.

Noah Lerner, Hartz Capital.

Good morning, Joe. Brian, same to you. Good morning. Nice rebound quarter -- really like to see it. Question -- appreciate the information on the volumes, but I was wondering if you could you just talk a little bit -- without giving away the secret sauce right now -- what you're seeing as far as pricing in those out years?

And how does it compare to the current pricing that we are receiving? In other words, if we keep the volumes flat, are we still going to take a hit to total cash flow because the pricing in those out years is lower?

Yes, no, on our last call, we indicated we thought that we could see our top line impacted by 12% to 15% year over year. At that time, frankly we were anticipating the impact would be down closer to that 15% range. Recently we've seen pricing improve somewhat so I think the 12% to 15% is probably still a good range for expectations heading into next year compared to this year, but it will likely be closer to the lower end of that range.

And if you look at the out years and beyond that, with the supply and demand balance that I expect will occur, that we are seeing, I think will get even better. Added to some depletion that is going to happen just because there are certain mines that are going to be mining out in the 2017, 2018 time period. We believe that the forward price curve should be stronger than 2017, and we should be getting back to pricing numbers that we saw in the 2015 time period

Great, thanks a lot, appreciate it.

Thanks, Noah.

Paul Forward, Stifel

Thanks, good morning, Joe, good morning, Brian.

Good morning, Paul.

I guess just getting back to the Hamilton -- you've been operating around 2 million ton per year rate? But you could do could you remind us what you think the capacity could be? Is that a 6 million ton per year mine potentially?

If you could place all those tons into the market and I think you said you get there in 2017 assuming the market needed that coal. In your current planning, how quickly do you think you can get there? Early in the year or later in the year?

We're going to start to ramp up this month or November, we're going to try to ramp to about a 7.5 million ton run rate, and that tonnage will be effectively displacing the Pattiki 2016 volumes. It will displace the Hamilton -- excuse me, the Hopkins County volumes that we had in 2016, the 400,000 tons or so. We're probably going to be reducing some production in West Kentucky, depending on where the markets are so that we could get to that level.

So it may be that we have some additional reductions in West Kentucky of 1 million to 2 million tons, depending on where the markets are. As we have been able to book some of these export shipments, a bunch of those are going to be coming from Hamilton. And I think, we're pretty confident that we're going to be able to sell out in 2017, largely because of the opportunity that will present itself in the export market.

So Hamilton is more of a rather than maybe serving domestic customers from there, and freeing up some of your other production go to exports, instead you would -- it's just I guess logistically better to move Hamilton directly to the export markets, is that right?

No, we prefer to move it on rail to domestic markets, and that's what we're going to try to do. But we're still developing that market so if we didn't have an export market, instead of hitting at 7.5 million rate, it may be closer to the 6 million that you mentioned.

But even at 6 million, it definitely improves our cost for the entire Illinois Basin year over year. So when I gave you the range before of 5% to 10%, if we are only 6 million at Hamilton, it's going to be closer to 5% reduction year over year. we're closer to the 7.5 million, it would be closer to 10%.

But we would prefer to market all of Hamilton. We would prefer to market all our coals domestically. But our customers, some of them are looking to make term commitments, and some of them are willing to take full-year commitments out of that whole basis. But we still have certain customers that want to depend on the low-cost Illinois longwalls but they're only willing to commit on a quarter to quarter basis.

So, as they do that, then that makes it difficult for us. So we got to fill those gaps by either shipping to the export market, or not producing, or putting it on the ground. There would probably be a mix of all three of those, as we compete over the next five years. It's hard to predict exactly what it's going to be.

Right. Joe, I guess along those same lines, if you're planning to move up to 0.5 million tons of this Pattiki coal into the export net markets, considering the strength there, is there any concern among customers that have been counting on coal like that for their utility? Kind of a domestic utility coal that's just not available? Are you hearing any concern among customers that, what had been counted on for 2017 in that small part of the market, is that creating any concern?

No, we will continue to service Dominion. We don't plan to reduce our volumes there, so this would be incremental production. And that's why we are somewhat limited to how much we can participate in the export market.

So we will continue to meet their needs and we will try to increase our production at the mine to satisfy this opportunity, if you will, in the short term for metallurgical coal in the Pattiki.

Sure, and I guess my last question would be, you received the first distribution from the oil and gas biz -- I think you said $1.4 million. Just wondered, that $80 million to $85 million investment you reiterated, just wondering if you could talk a little bit about how sensitive those distributions might be for say 2017 to moves in oil and gas prices? And can you give us any sense of just the overall magnitude of what kind of contribution you would get from this cavalier investment next year?

Yes Paul, the sensitivity in terms of timing of cash flow is really driven by the pace of drilling on the acreage that we've acquired. The concentration of our activity, principally in Oklahoma, the staff in the scoop and in West Texas and the Permian Basin, and particularly the Delaware and Midland parts of that basin, we continue to see drilling activity occurring at a reasonable pace.

And as we look at the operators who are associated with the acreage that we've picked up and look at their public filings et cetera, and disclosures on their anticipated pace of drilling, I don't know that it's necessarily related as much to commodity pricing. Again, it's back to the pace of drilling.

So we're in the middle, as we mentioned earlier, of our budgeting process for 2017 and that will obviously include expectations around Cavalier Minerals. Little bit premature again to give you a view for next year until we complete that process. But when we update our guidance for 2017, full-year in January, that will certainly be a part of it.

We would expect that it will continue at this quarter rate and start to ramp from there.

Okay, thanks a lot.

Thanks, Paul.

Lucas Pipes, FBR & Company.

Good morning, everybody.

Good morning, Lucas.

Brian, my first question is on the balance sheet? If I recall correctly, three months ago or so in July when we had the second quarter call, I think you were saying that you were talking to banks trying to adjust that upcoming maturity? Where do we stand on that today? I don't think it's come up this morning yet, if you could give us a little bit of insight into your considerations on that front, I would very much appreciate it.

Sure, I mentioned in our prepared comments that a few weeks ago, with the support from our lead banks we launched the transaction to extend our existing revolving credit facility by two years. We are wrapping up final commitments from new and existing participants, and we're completing documentation. We're currently anticipating that we will close that transaction sometime within the next 30 days or so.

Perfect, great. Very good to hear, and then as that process is coming to an end, have your thoughts on the distribution changed at all? We had a very strong coverage ratio here in this most recent period. Could you update us on where the thought process is on the distribution right now? Thank you.

Our Board considers that quarter to quarter. But as we look at our plan, given the guidance we gave you on revenue and costs in 2017 relative to 2016, that comes in at a coverage ratio of about 1.5 to 1.6 times in 2017.

If we maintain the distribution at the current level, so I think it's -- I'm confident that we can maintain and sustain the current distribution. And as for (inaudible), it will be dependent on exactly how the pricing improves. If it meets our expectations and we can get back to 2015 pricing levels like I mentioned before, you're going to continue to see improved volumes as well as pricing that will lead to more cash flow and higher distribution coverage in 2018, 2019, 2020.

It sets the stage for us to get back to starting getting back on the flow curve, but -- .

Especially if our customers continue to move toward looking on longer-term supply commitments. As you know we look at distributions on a long-term basis, long-term sustainability, so assuming the market returns to that, that too will set the stage for the possibility of future growth.

Got it, that's very helpful. I appreciate that, thank you.

Thanks, Lucas.

John Bridges, JPMorgan.

Hello, good morning, Joe and Brian, congratulations on the results.

Thank you.

I may have misheard, but I think on your last call you said you thought the cost actually be ticking up a little bit, by year end or in 2017? I was wrong. [What has] changed, is it the volumes?

What I recall is that we indicated maybe flat. At that time we really weren't focused on our 2017 operating plan, so we weren't focused on whether or not Pattiki would operate or not. So I would say back in the summer, the first quarter, when we were thinking of costs, we weren't thinking of taking Hamilton to 7.5 million tons. And we weren't really, at that time no one knew exactly what the future of some -- Pattiki and some of the other operations would be.

So as we've gone through this year, started our planning process, evaluating the markets and the trends -- we're changing our production mix a little bit, we're increasing production a little bit more than what we were thinking in midyear. And when you look at the production mix plus the additional production coverage, our fixed cost, it does have a tendency to drive down the cost. Another factor that is in our cost number -- when we ship to the export market, there's an exclusion to excise taxes, and so we get the benefit of that.

That rolls through our cost numbers, not our revenue line item. And that's $1 a ton, roughly, cost benefit for each export ton we shipped. So that has an impact when we deal cost numbers for the rest of this year as well as next year. That's factoring on the cost side not the revenue side.

Okay, great. Another question a little bit more on the international side. Given where prices are, then it looks like there is a whole lot of demand there at the moment. What's holding you back in terms of how much coal you can get?

Is it your ability to produce, is it rail and barge capacity to get it on to water? Is it is a Pacific basin shortage, rather than North Atlantic basin? Could you give us a bit of color on that?

It was little hard to understand your question, let me repeat it to make sure. Are you saying that with the pricing, if it sustains, we would have the ability to continue to sell coal into that market in increased volume. Is that the question?

Yes, just wondered, given the very sharp pickup in prices it seems as of the volume demand is there in size?

Right. So we do have the potential to do that. We would prefer to see higher prices, and we prefer to see longer-term commitment before we start hiring more people. We don't run the Company on a quarter-to-quarter basis, so we're trying to look at it long-term. And we're trying to put our people in the best position as possible to be successful.

When we see the ability to sustain that volume, we will bring it on. If we see it's just there for too much or a quarter, and there's not commitment by our primary market, being the domestic market, then we're going to be hesitant to go out and hire a bunch of people. We've got the capital to do it, we have the equipment to do it, we've got the infrastructure there. It won't take anything to add another unit.

It's really the people concern and if we go out and hire another unit of folks we'd like to be able to give them some comfort that they'll have an opportunity to have sustained employment instead of being treated like a construction worker.

Very wise, very wise. Congratulations again. Thanks a lot, good luck.

Thanks John

Lucas Pipes, FBR & Co.

Thank you very much for taking my follow-up question. Joe, I have a quick one on the broader industry? With the rising export prices, we are hearing that some productions are starting back up? And what we're also hearing is that in some areas labor is actually surprisingly tight and it's difficult to find miners after the cutbacks that have taken place?

I wondered, given your very broad profile in the industry across two basins, how would you describe the labor situation? When you need to find a miner, do you find qualified people or is it pretty difficult right now?

Well, I'm not exactly sure what you are hearing, but I'm hearing some of the same things. But it's more for those people ramping up for the metallurgical market, not the steam market. And that production is in Appalachia and there's supposed to be other basins.

And what you saw with the Obama policy and the impact it had on Appalachia, you did see quite a few people that lost their jobs due to other regions. We had some ourselves that went to open Trail Ridge mine as well as their Illinois mine. So we don't consider it to be a major issue for the Illinois Basin, but I can understand what you are hearing.

I'll believe it's true, based on my conversations with other producers, again in Appalachia. With our operation there, we are not looking to expand that. We are not in a hiring mode, if you will, and trying to add capacity, so it's hard for me to say are we personally having difficulties but to date we have not had any troubles, let's put it that way.

Got it. Just wanted to get your perspective on that, I appreciate that very much.

Ladies and gentlemen, this is all the time we have for the Q&A session. With that said, I would like to turn the conference back over to senior VP and CFO, Mr. Brian Cantrell for closing remarks

Thank you, Andrew. ARLP's financial strength and low-cost, strategically located operations leave all of Alliance well-positioned to benefit as coal pricing and demand continues to recover. Being willing to make the difficult decisions necessary to see us through this challenging market downturn until the market improves, we're confident of our ability to deliver on our goal of creating long-term value for ARLP and AHGP unitholders.

We appreciate your time this morning as well as your continued support and interest in both ARLP and AHGP. Our next quarterly earnings release is scheduled for late January 2017, and we look forward to discussing our fourth-quarter and full year 2016 results with you at that time, as well as providing a detailed first look at our expectations for 2017. This concludes our call for today, thanks to everyone for your participation.

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