Avista Corp (AVA) 2008 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first-quarter 2008 Avista Corporation earnings conference call. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's conference, Mr. Jason Lang, Investor Relations Manager. Please proceed.

Thank you, Gracie. Good morning, everyone. Welcome to Avista's first-quarter 2008 earnings conference call. Our earnings were released pre-market this morning and the release is available on our Web site at AvistaCorp.com.

Joining me this morning are Avista Corp. Chairman of the Board, President, and CEO Scott Morris; Executive Vice President and CFO Malyn Malquist; Vice President of Finance and Treasurer Ann Wilson, and Vice President, Controller, and Principal Accounting Officer, Christy Burmeister-Smith.

Before we begin, I would like to remind you that some of the statements that will be made today are forward-looking statements that involve risks and uncertainties which are subject to change. For reference to the various factors which could cause actual results to differ materially from those discussed in today's call, I would direct you to our Form 10-K for 2007 which is available on our Web site.

To begin the this presentation, I would like to briefly recap the financial results presented in today's press release. Our consolidated results for the first quarter of 2008 were net income of $0.47 per diluted share compared with earnings of $0.26 per diluted share for the first quarter of 2007.

Now, I will turn the discussion over to Avista's Chairman of the Board, President, and Chief Executive Officer, Scott Morris.

Thank you, Jason, and good morning, everyone. Overall, we're pleased with our results for the first quarter of 2008. Our quarterly results represent a significant improvement over the results for the first quarter of 2007.

In Washington, we received some much-needed rate relief effective at the beginning of 2008. This was a primary driver for the improvement in our utility results. In addition to our improved utility results, the primary reason for the improvement in our consolidated results was the $7.6 million net loss at Avista Energy in the first quarter of 2007.

With the sale of that business behind us, we now have greater stability in our earnings and although our earnings were slightly less than we originally planned, we are confident that we will meet our earnings forecast for the year.

The slight shortfall in earnings relative to our expectations for the first quarter of 2008 was largely due to higher-than-expected electric resource costs and the absorption of $3.4 million of costs under the energy recovery mechanism in Washington. This was primarily due to colder-than-normal weather and, as a result, is partially offset by higher-than-anticipated natural gas margins.

And while we have good snowpack conditions, the temperatures remained cool, so that runoff during the first quarter was well below normal. As such, we needed to purchase power and fuel for generation to meet higher-than-expected retail demand.

Based on the current snowpack conditions, we're hopeful that we will have favorable hydroelectric generation conditions during the period May through July. In terms of snow water equivalent, which is what we focus on, the Spokane River Basin is about 150% of normal for this time of year. The Clark Fork River Basin was about 125% of normal snow water equivalent.

However, I will offer some words of caution about these figures. These high percentages are largely driven by the fact that the snow has not been melting. The value of the snowpack in terms of electric generation depends on when the snow melts. And due to the cold spring we've experienced so far, we're hopeful that the strong runoff conditions will support hydroelectric generation further into the summer than normal.

However, if we experience above-normal temperatures for extended periods, the snow could melt off rapidly and we would not be able to capture the value. In addition, if we do not receive at least normal amounts of rain this spring, the amount of available water could be negatively affected.

We're pleased with the position that we're in, but we are cautious about predicting the ultimate benefits of the snowpack. Actual hydroelectric generation will depend on precipitation, temperatures and other variables during the remainder of the year. It's important to note that the amounts recognized under the ERM can vary significantly from quarter to quarter, due to a variety of factors, including the level of hydroelectric generation, as well as changes in purchase power and fuel costs. The

As approved by the Washington Utility and Transportation Commission, electric rates for Washington customers increased by an average of 9.4%, which is intended to increase annual revenues by $30.2 million. Also, natural gas rates increased by an average of 1.7% which is intended to increase annual revenues by $3.3 million.

As approved by the Public Utility Commission of Oregon, annual revenues from our Oregon natural gas business increased by $900,000 beginning April 1, and are expected to increase an additional $1.4 million on November 1. The November 1 increase is related to placing into servicing a natural gas construction project and the allocation of natural gas storage assets to our Oregon operations, and may be adjusted downward if actual costs are lower than if actual costs are lower than currently estimated.

We recently filed general rate cases in both Washington and Idaho. The filings are designed to recover increases in fuel and purchased power costs and any growing customer demand, infrastructure investments to increase capacity and reliability for licensing costs for our Spokane River hydroelectric projects, and expanding the storage and delivery capacity at the Jackson Prairie natural gas storage project.

Our request in Washington is for base rate increases averaging 10.3% for electric and 3.3% for natural gas. Combined, this is designed to increase annual revenues by $43.2 million. This request is based on our proposed rate of return of 8.43%, with a common equity ratio 46.3% and a 10.8% return on equity.

Our request in Idaho is for base rate increases averaging 16.7% for electric and 5.8% for natural gas. Combined, this is designed to increase annual revenues by $36.9 million. This request is based on a proposed rate of return of 8.74% with a common equity ratio of 47.9% and a 10.8% return on equity. Any rate adjustments, if approved by the Washington and Idaho commissions, would likely become effective in 2009.

Over the next few years, we're planning for significant investment in our utility infrastructure. For the first quarter of 2008, our capital expenditures were approximately $48 million. For the full year of 2008, our capital budget is approximately $200 million, and we're expecting our capital budgets to exceed $200 million in 2009 and 2010. The future investments are in traditional utility plant, and that will be used to provide service to our retail customers. We anticipate upgrading certain hydroprojects, and we will continue to reinforce and expand our natural gas and electric distribution system.

We're close to completing the acquisition of a wind generation site. We expect to construct a 50 megawatt generation facility at an estimated cost of about $120 million. This amount is not included in our estimate of future capital expenditures.

And then finally, I would like to comment about the economy in our service territory. Our regional economies taken as a whole continue to grow faster than the national average when measured by job and population growth. Our service territory appears to be faring better than certain other parts of the country because of our job growth -- has kept the housing market in balance and foreclosures in check.

The agriculture, mining, health care and manufacturing sectors, which are primary industries in our service territory, are performing well. And particularly, strong prices for wheat and metals have led to a resurgence of those industries.

Housing prices for 2007 increased in the majority of our service area, and have remained stable in early 2008. The primary exception to this was the Medford, Oregon area, which has experienced a modest decline in housing prices. This area did experience a large run-up in prices, and was more below vulnerable to declines, especially due to its proximity to California. Recently, the unemployment rate has drifted upward to near the national average, but is still remarkably low by historical standards.

Now, I will turn this presentation over to Malyn Malquist for an update on the financial results for each segment of our business, our financing activities and our earnings guidance.

Well, thanks, Scott, and good morning, everyone. Avista Utilities contributed $0.44 per diluted share for the first quarter of 2008 compared to $0.37 per diluted share for the first quarter of last year. As Scott mentioned, the improvement in results was primarily due to the Washington general rate case implementation.

Also contributing to the improvement in utility results was a decrease in interest expense, primarily due to our redemption of preferred stock and the maturity of long-term debt in 2007. The positive effects of the general rate increase and the decrease in interest expense were partially offset by expected increases in other operating expenses, depreciation and amortization, and taxes other than income taxes.

Turning to Advantage IQ, the Company's net income for the first quarter of 2008 was slightly higher than the first quarter of 2007 due to an increase in operating revenues as a result of customer growth, partially offset by a decrease in interest revenue on funds held for customers and increased operating costs.

Total revenues increased 14%, driven by service revenues that increased 23% partially offset by a 22% decrease in interest revenue. Results were very good for the first quarter at Advantage, and we fully expect its service revenue to continue to grow. But if we see lower Fed funds rates, this will further dampen our solid growth in this subsidiary. That's why we have guidance at $0.10 to $0.12 per share for this segment instead of what looks to be more positive results based upon annualizing first-quarter numbers. The business is solid, it's showing excellent and profitable customer growth. And at some point, one would expect an increase in interest rate levels, which would provide further upside for this business.

In our other businesses, our results improved over the prior year primarily because of the net loss from Avista Energy in the first quarter of 2007. The remaining activities of Avista Energy are no longer a reportable business segment, and are included in Other for segment reporting purposes.

Over time, as opportunities arise, we plan to dispose of assets and phase out operations that do not fit with our overall corporate strategy. However, we may invest incremental funds to protect our existing investments and to invest in new businesses that fit with our overall corporate strategy.

With respect to cash flows during the first quarter of 2008, positive cash flows from operating activities and borrowings under our committed line of credit were used to fund our cash requirements. These cash requirements included utility capital expenditures of $48 million and dividends of $8.8 million.

We have long-term debt maturities of $318 million in 2008. This includes the $273 million of 9-3/4% notes that mature on June 1, 2008. A few weeks ago, we issued $250 million of 5.95% first mortgage bonds due in 2018 for the purpose of funding the majority of this high-cost obligation. We're currently planning to issue additional long-term debt during the second half of 2008 to fund other maturing debt, as well as to provide additional funding for capital expenditures and other corporate purposes.

As we have indicated in past calls, management intends to recommend that the Board consider gradually increasing the dividend payout ratio to become more in line with the average payout ratio for the utility industry, which is currently approximately 60% to 70% of earnings. Based upon our current annualized dividend rate of $0.66 per share and our current earnings guidance for 2008, our payout ratio would be about 42% to 49%.

As you will recall, the Board raised the quarterly dividend by 10% from $0.15 to $0.165 per share in February. Management intends to recommend that the Board further review our dividend level during the second half of 2008.

The Board considers the level of dividends on a regular basis, taking into account numerous factors, including financial results, business strategies, and economic and competitive conditions. The declaration of dividends is within the sole discretion of the Board.

In December 2006, we entered into a sales agency agreement to issue up to 2 million shares of our common stock from time to time. We are currently planning to begin issuing common stock under the sales agency agreement during the second half of 2008 in order to maintain our equity ratio at an appropriate level. The issuance of common stock should also help us maintain or improve upon certain financial metrics necessary to maintain or improve our credit ratings. These planned issuances were incorporated into our 2008 earnings guidance.

We are confirming guidance for 2008 consolidated earnings to be in the range of $1.35 to $1.55 per diluted share. The Company expects Avista Utilities to contribute in the range of $1.20 to $1.40 per diluted share for 2008. The outlook for the utility assumes, among other variables, normal precipitation, temperatures and hydroelectric generation for the remainder of the year.

We're confirming our guidance for Advantage IQ in the range of $0.10 to $0.12 per diluted share. And we expect the other businesses to be between breakeven and a loss of $0.03 per diluted share.

Now, I will turn the call back to Jason.

Thanks, Malyn. And now, we will open up this call up for questions.

(Operator Instructions). James Bellessa, DA Davidson and Company.

On the balance sheet, it says that the current portion of long-term debt is $179.7 million. But you're telling us that $273 million is maturing on June 1. How come that 273 is not in the current portion of long-term debt?

We're going to ask Christy Burmeister-Smith, our controller, to answer that question.

I really kind of hate to say this, but it's tricky accounting. Due to the fact that we have already financed that debt, we were allowed to put it in long-term. The refinancing is already in place.

So the 273 has been taken off your balance sheet, and the new financing for $250 million is on your balance sheet?

No, the old financing is there, but it's in long-term. The new financing is not there yet, because it occurred in April.

I see. In your release today, you indicate favorable hydrogeneration conditions during the period of May through July. So do I have to assume that April was not normal hydrogeneration period?

Jim, that is correct. We continue to see our streamflow -- our temperatures were colder than normal. And so I would expect -- and we haven't closed the books on April yet, but I would expect that we would see gas margins up. But I also would expect to see that we would eat further into the ERM balance because our hydro conditions were well below normal for the month.

In your guidance statement, you say that you are assuming, among other things, normal hydroelectric generation. Heretofore, you have been assuming slightly above. What happened?

Well, I think what's happened is that we've seen the first four months of the year be below average. And now, even though the snowpack -- it looks very good, and we do expect to have a bit longer runoff period, we're not sure that that will fully makeup for the below normal that we had. In other words, we think it's going to be pretty close to normal by the end of the year. We don't think we will necessarily be above normal now, because it will probably -- not probably; we will end up spilling some of that hydro, and not be able to generate power with it.

Jim, as you know, it's just hard to predict how the shape of the hydro is going to come off. And we're sitting in great shape from a snow water equivalent perspective. But you and I both can't predict the weather, so we don't know how warm it's going to get, how fast. If it comes off perfectly, we'll be in great shape. If it doesn't come off perfectly, then -- you know, it's just -- we can't predict the shape.

I'm assuming that in your previous guidance up to today you were telling us that you are going to get a slight ERM benefit this year. Has that now changed?

Yes, it has. [If] we were making that prediction today, I think we would see a negative balance on the ERM by the end of the year. That will be at least partially offset by better-than-expected gas margins for the first four months of the year.

And Advantage IQ -- from time to time, you tell us the number of billed sites and how much that might have increased and the total billed sites. What can you tell us there?

We're going to look at up. It will take us just a minute to find that.

Jim, Advantage IQ had an excellent Q4 of last year. So a lot of those new accounts came into billing in the first quarter of 2008.

Are you saying the billed sites, then, for the quarter didn't grow much?

I actually did believe that they did, but I'm having a hard time putting my hands on the number. We signed a significant account that came online largely in the first quarter -- that was 7-Eleven. And so I'm sure that the sites increased. I just can't put my hands on the number right away.

James, can we call you with that number? Jason can do that -- thanks.

It will be in the 10-Q, too, that number.

And that won't be plowed for a few days, is that right?

Correct.

Can you tell us more about this 50-megawatt wind project you're talking about?

Yes, as you know, Jim, we are looking at adding some renewables to our portfolio. If you look at our Integrated Resource Plan, we have some wind and some other renewables that we had planned on adding throughout the next 10 years.

What we're looking at is looking at some wind sites that are in our service territory, close to our current -- to our transmission. There's been such a rush on wind sites in the Pacific Northwest we didn't feel comfortable waiting until the latter part of the next decade to make wind investments. So we moved up some of those investments, and have the opportunity to purchase the site very -- in the middle of our service territory with our transmission and we'll make that announcement soon. It will be 50 megawatts and it will cost about $120 million.

We'll continue to look at sites in our service territory. We're hopeful we can find a couple more sites at least to develop that are close to our current transmission system.

And what's your best guess when you'd go operational with this project?

2012.

Thank you.

Jim, I'm going to come back to the Advantage question. Number of sites billed at the end of the first quarter was 214,000 sites versus 199,000 sites at year-end.

Now remember, sites versus bills processed can be very different, because for most of those sites, we do electric and gas. For some of them, we do telecom. And they may have multiple meters at each site. So I just want to -- I think the number of bills processed is much, much higher than this number that I just gave you. And I don't have that number right at hand. But you can still see 15,000 sites was the growth from for the quarter. So still, that's very good, solid growth.

You don't have the year-ago figure, do you?

I don't have the year-ago figure. I just have the year-end versus the quarter end.

Brian Russo, Ladenburg Thalmann.

Could you just kind of remind us of the mechanics of the ERM -- how much is the total deadband?

Sure. So the first $4 million of additional costs or benefit is 100% absorbed or kept by the Company. The next $4 million is shared 50/50, and then anything beyond that is 90/10 sharing -- so 90% picked up by the customers and 10% by the Company.

Okay, and I'm just curious -- I would imagine that a favorable hydro year may have created an earnings profile up near the top end of your range, and a weak hydro year towards the bottom end of the range. I think you are assuming normal hydro now. Does that imply kind of a middle of the range? Just curious why there was no revision in the range of earnings.

Brian, I want to go back to my previous answer. I'm sorry; I misspoke myself. My colleagues here caught me. It's $4 million, 100%; and then it's $6 million on top of that is 50/50. So I apologize for that. So basically, there's $10 million before you hit the 90/10 sharing.

We're not revising our guidance because, as I mentioned in my response to Jim, we've actually seen some improvement in gas margin as a result of colder-than-normal weather for the first three-plus months of the year. And so there was an offset there.

I do believe we're going to eat some of the ERM -- is my best guess at this point, versus capturing some benefit from the ERM as we were -- as we put into our guidance. But we're still very comfortable with the guidance, and I think with normal hydro, one would expect that we would be fairly close to the middle of the range. But that really can vary as we go through the year.

And so what should we be looking for in terms of weather patterns in the Northwest to keep close track of the runoff? Is it just cooling degree days above normal, or is it --?

Well, Brian, I guess a couple of things I would look at is precipitation patterns in the Northwest -- that's always a key for us -- and also, temperature. And right now, the prediction is for the spring to continue to be normal precip and kind of normal temperatures, nothing out of the ordinary. And then once we get into the summer, we expect to probably be kind of warmer and a little bit drier than normal once we get into the July/August range. That's at least the latest long-term forecast. But that's -- I wouldn't go to the bank on that, either. It's just a forecast.

I think if you were to see a period of well-above normal temperatures, that would be a bad thing for us. If you continue to see below-normal temperatures, which we've had for the last couple of months -- if that pattern were to continue, that actually would be a pretty good thing for us, because it would help the snow melt come off over a longer period of time.

Okay. And I read recently that FERC approved a transmission line by Pacific Gas and Electric. And I think it runs through your service territory, where you may have an opportunity to get involved in that project. Can you just comment on that, please?

Sure, Brian. We have continued to look at transmission opportunities in and around our service territory. And the Pacific Gas and Electric line is one that -- its preferred route is right through the heart of our service territory. So we are continuing to work with Pacific Gas and Electric and other partners to study the feasibility of that line and our investment opportunities.

And it's been a very preliminary process -- it's really a Phase I study, we call it. And we will continue to look at it. And if we have opportunities to invest in it, and we think it's in our best interest, we'll do that.

Any time line in terms of when it could possibly be commercially available?

I think the best case scenario is sometime in the middle of the next decade. So it's a very long-term project.

All right. And then, I also noticed on the balance sheet, accounts and notes receivable were up quite a bit. I was wondering if you could just comment on that.

This is Ann. (technical difficulty) just the last year at this time, we had outstanding borrowings on our accounts receivable line, which nets against the accounts receivable. So this year, because we didn't have any borrowings on our accounts receivable line, the accounts receivable is higher.

And the amount -- let me check on the exact amount that was outstanding at the end of last year at this time.

Paul Ridzon, KeyBanc Capital Markets.

How big could the wind get, and what do you kind of need to do to get to where Washington wants you?

In our Integrated Resource Plan, Paul, that we have 300 megawatts of wind over the next 10 years. Plus, if you look at our IRP that we've shared, there's a category called other renewables. And right now, some of those other renewables just aren't cost-effective. So they might be other renewables, but they might turn into wind. So we're looking at that overall renewable package.

We had predicted that the wind would come in later in the next decade. But what we have been seeing is, again, the cost of those sites really has made us think that we might want to move some of that construction up a little bit closer. So that's why we're going to make some very targeted investments, probably earlier rather than later.

To meet the renewable portfolio standard law that was passed in Washington by 2012 we need roughly between 8 and 10 megawatt of energy. And as you know, most wind sites are about -- you get about a third of what you build. So 50 megawatts will be a little bit over what we need, but not that much.

Do you have options on these turbines for the 50 megawatts?

We haven't finalized those, but we are confident that we will be able to have them here and be able to construct and have it in service by 2012.

I know it's a hard question to answer, because there's so many moving pieces. But was cold weather a hurt or a help in the first quarter?

Paul, it was a bit of a hurt. Scott mentioned that we were slightly below where we thought we would be at the end of the first quarter, and that was entirely weather driven. Fortunately, there was an offset in improved gas sales to the negative ERM balance. But it cost us $0.02 or $0.03 a share.

Simply put, Paul, the snow just didn't melt. It just stayed in the mountains. So we just had below normal streamflows. And we weren't getting the hydro that we would normally expect.

And then having to burn more expensive gas?

Yes.

What gas is embedded in rates?

It's a little bit less than 8. And so today, it's a little over 10. So that was the other kind of negative factor that impacted that ERM balance.

Paul Latta, McAdams Wright Ragen.

Scott, you talked a little bit about CapEx -- $200 million, and perhaps greater in subsequent years. Can you give a little may be a breakdown or a little more color on -- is there any big lumps in the capital budget for this year or the next year, or any particular areas that are drawing marginal dollars within that budget?

Probably the largest portion for this year is our continued expansion at our Jackson Prairie natural gas storage facility in Washington. That's going to be roughly $15 million this year. We continue to invest in Noxon Rapids, which is -- those numbers are in the $4 million to $6 million range, depending upon how we upgrade those turbines.

And then after that, the numbers are just a lot of smaller projects. There's nothing really huge that we're planning on. Probably the largest investment that's not included is that wind investment we plan on making, and we will have to start making some capital expenditures maybe by the end of this year, early next, as we put options on the turbines that Paul Ridzon that was talking about. And we'll have to start making some payments on those as we take out those options. But that's about it.

Is there any way that you could sort of give a qualitative statement about -- within the capital budget -- you know, items that you're investing that you would regard as sort of upgrades to the system versus perhaps growth-oriented upgrades -- you know, versus (multiple speakers) yes, replacing ageable aging equipment versus (multiple speakers)?

Sure. In our CapEx budget we have about $40 million set aside for growth. And then, we've got -- the rest is really upgrades to reliability and safety and capacity. And so, that's really kind of the breakdown.

John Alli, Zimmer Lucas.

Just a quick question regarding the wind farm. When do you think the timing would be? Would you pick up the site this year, and then build in another year or two, or would it kind of be rolled in all at once?

Well, the one we're speaking of, we will finalize purchasing the site this year. We will have finalized permitting for it soon. And then the idea would be -- then we would start the construction development of that, option the turbines, and then start construction to have in service late 2011/early 2012.

And in the meantime, we're going to continue to search for other wind sites in our service territory that we can option and be able to make sure that the wind speeds are correct; there wouldn't be any permitting problems; it's close to our transmission. And if we can continue to invest in some of those sites, with the idea that after this first 50-megawatt site we'd probably have some other investments moving past 2011, 2012.

And this would be only in Washington that -- in this project?

Yes. The current project is in the state of Washington in the middle of our service territory.

Okay. And this is around $2400 a kw -- approximately how much of that is land, and how much of that is turbines?

Well, the land -- it's turbines, and it's the lease cost as part of the remittance to the landowner. I don't have the breakdown, but a large majority of it is in the turbines and the site.

I'm just trying to ballpark it in terms of the timing and when the cash is coming in and out. Is there any way you can just make a guess, maybe 400 of the 2,400 is land, and the other 2,000 is turbines, or -- is that a good way to think about it?

We can get back to you on the turbine costs. I don't have it off the top of my head. I can have Jason give you a call. But we know that the turbine costs is expensive. But I'd just better not guess. I'd like to give you a call back, and we could give you that number. That's an easy number to give you.

Brian Russo, Ladenburg Thalmann.

Could you just update us on the hydro relicensing progress?

We're pleased with the progress we're making. We've continued to work, I think, with our stakeholders. We are currently -- have made some good progress in the state of Idaho, and are going through the state of Washington process. So what I can say is that we are optimistic; that we continue to reach settlement with different interest groups, and are hopeful that we could have it licensed by the end of this year or sometime early next.

Okay, great. And then also lastly on the capital IQ, have you identified any opportunities in the demand-side management marketplace?

On Advantage IQ -- we absolutely have. We have a business segment that's really focused on helping our customers with those kinds of activities. It's a fairly small piece of our business. I think last year, that was somewhere between $2 million and $3 million of total revenue came from consulting services, is what we put that under.

And we do think that's going to expand very greatly, frankly, as we see the whole green footprint, carbon issues that our customers are struggling to deal with -- we have great tools to help them. So I think we're going to see that business grow pretty significantly over the next couple of years.

Before we lose you, Ann has the answer to your earlier question.

Yes, Brian, the reason that that increased in the accounts receivable balance as I was talking about -- our borrowings on our accounts receivables facility at the end of March were $15 million versus $85 million at the end of December. So that's -- $70 million of that delta is just due to the outstanding borrowings under the accounts receivable program.

Paul Ridzon, KeyBanc Capital Markets.

What are you thinking from a regulatory standpoint of investment in the wind, certainly on the land piece, before it's operational, and the ability to get a return on that?

Well, we would have to ask for an order to do that, Paul. And we do believe that this is -- we're really following state regulation here. And so I would like to think that we have got a fairly high probability of getting that. But we do have to ask for it.

I think that the initial cost of acquiring the site is going to be fairly minimal as a percentage of that $120 million. And so it's not a real significant amount for us to need to earn a return on. But we like -- we think it's justified.

I do think we will start spending some dollars fairly quickly on the development itself. And that, of course, would earn allowance for funds used during construction on it. But the land component is a pretty small component, frankly.

Have you gotten your accounting order yet on the Montana riverbeds?

Yes.

Okay -- that was favorable?

Yes, it was.

You have no questions at this time. I would now like to turn the call back over to management for closing remarks.

We want to thank you for joining us today. We certainly appreciate your interest in our Company. Have a great day.

Thank you for your participation in today's conference. This concludes the presentation and you may now disconnect.