Boise Cascade Co (BCC) 2015 Q1 法說會逐字稿

Good morning, my name is Kevin and I'll be your conference facilitator today. At this time, I'd like to welcome everyone to the Boise Cascade First Quarter 2015 Conference Call. All lines have in placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. (Operator Instructions) Before we begin, I'll remind you this call may contain forward-looking statements about the Company's future business prospects and anticipated financial performance. The statements are not guarantees of future performance and the Company undertakes no duty to update them.

Although these statements reflect the management's expectations today, they are subject to a number of business risks and uncertainties. Actual results may differ materially from those expressed or implied in this call. For a discussion of the factors that may cause actual results to differ from the results anticipated, please refer to the Boise Cascade's recent filings with the SEC.

It is now my pleasure to introduce Wayne Rancourt, Executive Vice President, CFO and Treasurer of Boise Cascade. Mr. Rancourt, you may begin the conference.

Thank you, Kevin. Good morning everyone. I'd like to welcome you to Boise Cascade's first quarter 2015 earnings call and business update. Joining me today on the call are, Tom Corrick, our CEO; Nick Stokes, Head of our Building Materials Distribution Operations; and Dan Hutchinson from our Wood Products Operations is joining us by phone. Moving to slide two, I would point out the information regarding our forward-looking statements. The appendix to the presentation includes reconciliations from our GAAP net income to EBITDA.

And with that, I'll turn the call over to Tom Corrick.

Good morning. Thank you for joining us on our earnings call today. I'm on slide three right now. The first quarter demand environment was modestly weaker than we expected however, builders and dealers remain optimistic in their outlook for 2015 and sales of new homes have strengthened substantially over the last six months. We still expect housing starts in 2015 to show full year improvement of about 10% from 2014, despite this slow start in the first quarter.

Our total Company sales in the first quarter were up 6%, with both segments reporting similar revenue increases. Our net income of $7.6 million was up 37% from the year ago quarter, driven by stronger results in Wood Products. Plywood pricing was strong during the quarter, in the phase of challenging markets for Lumber and OSB. Plywood production was impacted in March to a small degree by the Chester, South Carolina dryer replacement project. The new dryer is currently expected to come online during the first week of May, which is about a month behind the original schedule.

In addition to plywood pricing, EWP pricing and volumes improved from the year ago quarter, contributing to the earnings improvement. Partially offsetting the positives in plywood and EWP, we did experience a quarter-over-quarter decline in our lumber pricing and an increase in log costs. BMD reported stronger revenues in the quarter, but weaker than expected commodity lumber pricing, which declined throughout the quarter, negatively impacted their gross margin percentage.

Operating costs also increased as a result of higher sales volumes. The $6.1 million of EBITDA reported for the quarter was modestly below our expectations back in mid-February. We still remain optimistic that 2015 will show improvement in demand compared to prior year as we move into the second quarter. I'll have Wayne cover the financial results in more detail and then I will come back with a few more comments on the outlook before we take your questions.

Thank you, Tom. Turning to slide four, Wood Products' first quarter sales, including sales to our Building Materials Distribution segment were $309 million, up 5% compared with last year's first quarter. The sales improvement was driven primarily by our plywood sales price increase of 6% as well as engineered wood products sales volume and price increases. Wood Products reported first quarter EBITDA of $31.7 million, up $8.7 million from the prior year quarter. The improvement in EBITDA was due primarily to higher wood -- excuse me, higher plywood and EWP sales prices offset partially by lower lumber sales prices and higher log costs.

BMD's sales in the quarter were $623 million, up 6% from the year ago quarter. Volumes were up 7% and pricing was down less than 1%. BMD generated EBITDA of $6.1 million during the quarter, which was down $2.1 million from the $8.2 million reported in first quarter of 2014. The first quarter of 2014 EBITDA number included $1.6 million of gains from selling surplus properties.

In the first quarter, BMD generated $2.4 million more in gross profit dollars than in the year ago quarter as a result of the increased revenues. However, that was more than offset by higher selling and distribution expenses which were up $2.5 million. We would expect BMD's gross margin percentage to improve in the second quarter if commodity prices stabilize or increase.

Beginning this year, pension expense will be reported in our corporate segment instead of our business segments. We reported $2.1 million of pension expense in first quarter, which drove the negative variance in corporate costs. For comparison, pension expense was only $278,000 in the first quarter 2014, most of which we reported in the operating segments.

Turning to Slide 5, our first quarter plywood sales volume in Wood Products were essentially flat with the same period a year ago. Our $312 average net sales price for plywood was up 6% compared to first quarter 2014 and roughly in-line with 2014's full year average for plywood. Sequentially, plywood prices were down $18 or 5% from our fourth quarter average, which had the benefit of stronger October pricing. Although second quarter plywood pricing started out roughly in-line with the first quarter average, pricing -- the continued pricing softness for other commodity building products is currently weighing on plywood pricing. It's not clear at this point, what direction plywood pricing will take in the second quarter.

Turning to Slide 6, our first quarter sales volumes for LVL and I-joists were up 7% and 2% respectively compared with the year ago quarter. Our LVL and I-joists sales price realizations improved 3% and 8% respectively from the year ago quarter. Continued growth in housing demand and the resulting increase in sales volumes and pricing for EWP will be key drivers of our earnings growth going forward.

Moving to Slide 7, BMD's first quarter sales were $623 million, up 6% compared with the year ago quarter. By product area, BMD's sales of commodity products decreased 1%, general line product sales increased 16%, and EWP sales increased 13%. The gross margin percentage for BMG declined by 20 basis points compared with last year's first quarter, primarily as a result of lower gross margins on commodity lumber products.

On Slide 8, we have set out the key elements of our working capital. Company net working capital, excluding tax items and accrued interest increased $46.6 million during the first quarter. With higher sales, receivables increased from year-end. Our inventory growth was supported by higher accounts payable. We did also pay out accrued incentive compensation and customer rebates in the first quarter, which drove the decline in accrued liabilities. As a reminder, this statistical information filed as Exhibit 99.2 to our 8-K has receivables, inventory and accounts payable data broken down by segment for those interested in more detail.

Moving on to Slide 9, we used $29 million of cash in the first quarter and ended the quarter with total available liquidity of $476.5 million. For those modeling cash flow, we made $12.9 million in pension contributions in first quarter. Our effective tax rate was 37.5% and at this point, I would expect our book tax rate for 2015 to range between 36% and 38%.

Following our last board meeting, we increased our guidance for 2015 capital spending to $85 million to $95 million for the full year. The Board also authorized an open-ended share repurchase program for up to 2 million shares. Tom will now touch on capital allocation and his closing remarks.

Thank you, Wayne. The consensus estimates for 2015 housing starts in the US have been declining as economists gauged the impact of the first quarter weather and the outlook for the economy. Current consensus is 1.14 million starts in 2015, which is in line with our original planning level of 1.1 million starts. We continue to believe the demographics in the US will support a return to a normalized housing starts level of 1.4 million to 1.5 million starts. With that in mind and based on our assessment of future demand and cash flow needs within our businesses, we've requested and received Board approval to accelerate a number of high return internal capital projects to support future earnings growth in our Wood Products segment. The planned $30 million increase in capital spending in 2015, above what we spent in 2014 reflects the start of those projects.

The largest capital project being undertaken will modernize our Florien, Louisiana plywood mill. We are replacing two older dryers with a new larger and more efficient single dryer, that is expected to come online in early third quarter 2016. The Florien expansion project will also include improvements beginning in the wood-yard and flowing throughout the mill to the shipping area. We expect the project to provide us with additional low cost, internally generated veneer to support our growth in EWP in 2016 and beyond.

In BMD, most of the incremental capital employment is expected to be into working capital, as we expect volumes to grow seasonally and as housing improves. We will also continue to review opportunities in our distribution footprint.

Our priorities to remain to focus on operational excellence, while pursuing organic and strategic growth. We want to grow organically and pursue acquisitions that we believe will provide a favorable return to our investors. We said on our last call that if we generated cash beyond what we expect to be able to reinvest in growing the business constructively, we would look at share repurchases or dividends. I'm pleased that we now have a two million share repurchase authorization in place to provide us with additional capital allocation flexibility.

In closing, we are optimistic about the balance of 2015 and are looking forward to growing our Company and earnings as housing continues its gradual recovery. Thank you again for joining us on our call this morning. We would welcome any questions at this time. Operator, would you please open the phone lines?

(Operator Instructions) Alex Ovshey, Goldman Sachs.

Couple of ones for you, so not too long ago, we had the announced combination of a couple of big players in distribution channel. Wanted to get your thoughts on implications for your business. And then as a follow-on to that, where you guys stand in terms of growing your distribution business and the appetite to do it inorganically via M&A?

Alex, I'll ask Nick to answer the first part of the question and I'll will take on the second part.

Perfect.

Certainly, Builders FirstSource and ProBuild today are significant customers of ours. We look forward to working with them through their integration and are confident that the new company will be a significant customer of ours going forward. I would remind everybody that BMD is one of just a handful, if not the premier national distributor, and as the national footprint of those, combined entities comes together. I think, we're in a unique position to offer them products and services that create real value for them.

Makes sense, Nick. Thanks.

Relative to acquisition opportunities for distribution, I think our focus primarily right now Alex is trying to identify opportunities to fill in holes in our geographic layout of our yards. In general, where you're in the distribution business where you're purchasing facilities in a town where you already have a presence or in an MSA, where you already have presence, it's very difficult to maintain -- to obtain synergies in that transaction as suppliers to the distribution yards typically want at least two distributors in the marketplace and customers tend to want at least two distributors. So, there tends to be a difficult time obtaining real synergies when you're marrying two facilities together in a single geography.

And maybe a question on the organic investments you're making. So let's fast forward three years to five years and assume we can get back to the normal housing environment, can you talk about what your plywood manufacturing footprint looks like? Do you think you could still be able to produce the same amount of plywood three years to five years from now as you're doing today with the investments that you're putting into the mills right now?

Obviously, there's a lot of factors that would go into that. But the intention of our capital program going forward is to be able to maintain our level of plywood production and to be able to maintain our market share in EWP as housing returns to 1.5 million starts.

That's the goal. And then just a last one for you on EWP. So over the last couple of years, it looks like the volume numbers that you guys have reported have come in better than single family starts, which I think is the most important driver. I don't know if that's an industry wise phenomenon or the entire industry is doing better or just you guys are doing better than single family. So the question really is, do you think that trend continues, that the EWP volumes, so LVL can continue to outperform single family starts to some extent?

Well, there's still -- particularly on the beam side of the business, there is still -- I think substitution going on for 2X10s. So there is increased penetration for the product line into new residential construction. So I think there will be a continued trend, probably not as aggressive as we've seen in the past as the product matures. But I think, we'll continue to see some growth above and beyond housing starts.

Excellent.

Ketan Mamtora, BMO Capital Markets.

I just want you to talk a little bit about log costs. Can you talk about any benefit that you might be seeing on the West Coast? And then, what you're seeing in U.S. South?

Yeah, I think on the West Coast, it became more pronounced in last 60 days in terms of the declines in log cost and one of the things I'd remind you is that, we do maintain log inventories at our mill sites and we do have committed logs that we purchased, that we refer to as timber under contracts that we'll harvest generally over the next 18 months to 24 months. So we don't have that volatility you would normally see in the spot market, flowing through our P&L in any given quarter. But we had very modest, less than 5% increases in our wood costs year-over-year on the West Coast and we actually saw modest declines in wood cost in the South.

That's interesting. I would have thought it to be other way.

Well, again it's not totally reflective of what's going on in the spot market because of the interactive wood we have and what we have in inventory.

And then second question on plywood, obviously plywood prices have continued to remain quite strong. Are you guys seeing any supply moves in plywood at this time?

There are a few things going on Ketan, Georgia Pacific announced last year that they were evaluating bringing on one of their idled plywood facilities, which at this point, I think they contemplated, they would make an announcement sometime late this year. I haven't heard anything since then. Wood Resources is rebuilding and restarting a plant in Mississippi. And Swanson had a small plant in Western Oregon burned down last year that they've announced, they intend to rebuild. That plant frankly operates in a segment of the plywood business, it's very specialized that I don't think it will have much impact on us.

That's what we know about on the supply side. I think, it's important to note on the demand side that there are some pretty significant drivers of growth. First, plywood is very much tied to the general economy. About 80% of the production goes into a variety of things other than new residential construction. And we would expect demand for that to grow in line with the economy. There is another significant, still 20% roughly of new residential is done with plywood.

So if we see a 10% increase in housing starts, as we forecasted this year, we'd also see a corresponding increase in the use of plywood in new res. And the final component is as new res takes off, we need to divert veneer away for plywood to EWP.

And the three factors together, if you saw a 10% increases in housing starts this year and next year, would more than use the incremental production, that would be potentially represented by those three facilities.

And then one last question. Wood product pricing generally apart from plywood have actually continued to fall through the quarter, which is very surprising and unusual for this time of the year. What is your read of the situation?

I think there's a lot of factors that play here. I think, currency is having an impact both in terms of what's leaving North America and to a lesser degree, what's flowing into North America. I think there were some things going on the tax front that probably accelerated shipments of lumber in the first quarter from Canada into United States on the import tax. There is a variety of factors and it doesn't take much of an over-supply to cause pressure on pricing.

Chip Dillon, Vertical Research.

First question is, could you -- just a housekeeping thing. Could you let us know what your lumber realizations were in the fourth quarter as well as the first quarter?

Sure. Lumber was $510 first quarter and in the fourth quarter, it was $544. And a reminder, we tend to be focused on Ponderosa pine that goes to industrial converters.

And then, when you look at the plywood pricing, you mentioned it's up. I do see, it certainly was up year-over-year, but it was down from the fourth quarter and I didn't know if there is a mix issue or a seasonality factor that we need to keep in mind?

Frankly, we were surprised the $330 we saw in the fourth quarter is very atypical seasonally to have only $5 drop from third quarter to fourth quarter was unusual. So the $312 that we got in the first quarter seasonally is actually a pretty good number to be starting the year.

And Chip, the other thing I would add there is, if you went back and really de-constructed numbers in the fourth quarter, very, very strong October, with falling prices for the rest of the year in plywood, we actually in general kind of where we went into the quarter, the first quarter is where we came out.

And another thing is, just as you'd expect, the volumes were higher on October than they would have been in November-December because of the holidays. So as Tom points out, the fourth quarter average benefited from October, both from a volume and a price level.

And then another question on the distribution side. As you look out over the last couple of years since the IPO and before and coming out of the crisis, how has the either the availability or not of attractive distribution acquisition -- potential acquisitions changed, I mean, are there more that are available, are there fewer, are there a lot available, whether they're asking too much? And I guess, as a related question, maybe it doesn't make sense to buy someone else, maybe you'd grow organically with the market -- in a given market, but could you just address those issues?

Yes, I think if you think about our distribution footprint and if you were to pull out a map, we don't have very many MSAs if any that are of significance that we don't reach today either directly like in the case of Dallas and Houston or through long truck hauls into West Texas. So as the volumes come back, we will look for opportunities using West Texas as an example, and try to acquire in that market or consider organic growth and put sales people, put product on the ground and once we reach critical mass, open the facility. And you saw us just do that late last year in Kansas City. And we've got a couple of other adjacent markets we'll look at. And clearly the preference would be to buy, if we can find the right acquisition opportunity, but we are fully prepared to go in when the volumes make sense and we can get a good economic return for investors.

And as Tom Corrick alluded to, being the largest wholesale national distributor and having the footprint in place today and having the leading position with a number of our key branded suppliers, if we acquire somebody and they were the second distributor for that supplier, the supplier would open up a third distributor. If we bought their other distributor and we have the same issue for the customer side. We're very big supplier today to ProBuild, 84 Lumber, BMC, Stock, Builders FirstSource et etcetera and over half of our business is with local independents. And if we bought a significant distributor in an MSA, where we already have a presence, they will likely open-up a second distributor if we were to consolidate in an MSA where the two of us had considerable market share.

So when we look at the synergy opportunity in the distribution business, it's probably more likely in an adjacent distribution space or single market activity, I don't think you'll likely see us do a large US distributor. We could obviously do distribution outside of the US and there would be some limited synergies there. But given our large market presence today, it's more difficult to contemplate doing that and in our current distribution arena.

It just seems like it and we don't get nearly the insight you all have because a lot of -- at least the numbers I see from people like BlueLinx and others who seem to not be generating a lot of cash and profitability and others that as the market grows, the physical volumes come back, pricing coming back, that some of these other players will be able to grow with the market, assuming they can get their hands on working capital, but it seems like you're sensing there others that could handle that?

Yes, I mean as you noted in this business and Tom Corrick alluded to in his comments, the biggest thing we think that will be an impediment for competitors growing as the market recovers, is access to the working capital, because if you are in a relatively thin margin business, trying to generate sufficient cash flow to cover the working capital needs can be a problem. So that's one of the things we benefited from during the downturn as we maintained a very strong balance sheet and we were able to grow and take share and we would expect to continue to do that throughout 2015 and 2016 and beyond as housing recovers.

There are many solid strong performing regional and local wholesale building products distributors that I think are perfectly capable of stepping into that position.

And then just lastly, getting back to the plywood versus OSB situation, is it your opinion that basically the plywood market has pretty much involved in areas where OSB just doesn't make a viable substitution at any price or have you seen any signs that OSB quality has come up to a point where they can start to nip at your heels a little bit?

Well, I think it's fair to say that the two products in many, many applications are functional equivalents. There are some packaging applications where that's probably not true. I think a lot of it's a preference issue and we always say, if you want to figure out how people buy and how people use plywood go into a Home Depot on a Saturday morning and if they're buying one sheet, they buy a sheet of plywood because it looks like wood and if you are 20 sheets they buy OSB because it's cheap. To your question, I think if you look at the first -- if you look at the APA data, it would show that we saw a slight decline in plywood shipments in the prior quarter and an increase in OSB shipments, so the big price gap we see in places where they are functionally equivalent, you're saying I think not significant, but gradual continued substitution and I would guess, primarily in the new res arena.

(Operator Instructions) George Staphos, Bank of America Merrill Lynch.

Just wanted to kind of go through a couple things. I mean, you touched a little bit about your outlook on EWP, but I was wondering, first of all, have there been any pricing increases announced in the marketplace at this point in time for the product?

There has been an increase in Canada. There's nothing in the United States.

How arduous was that increase in Canada? I was just wondering if you could give us a sense for the size of that increase. Was it in line more or less with the one that was announced last June?

Yes, probably in the 5% range.

And then I was also on the lumber front, clearly we did see a pretty significant decline in commodity prices in the first quarter. Could you just provide a little bit more detail there as far as ultimately what caused that decline, whether it was weather or market conditions and then also any color you can provide on your sense as far as the health of the housing market will be great.

Yes, on the lumber piece, I think a lot of the information is anecdotal, but I think with many of the challenges that the inland producers are experiencing with the mentioned pricing right now, they have diverted some of their production towards (inaudible) because it represents a better economic return and that increase in supply is obviously impacted price. What was the second question, again?

Hang on, it's okay. John, is your question more around dimensional lumber and how it impacted BMD as opposed to our Ponderosa pine shop lumber?

Yes, I was more concerned about the other product that BMD is selling. I just want to understand what your thoughts are as far as what's causing that price decline and just in kind of give us a sense as far as where those prices could go from here?

Yes, I would tell you, we're not a major lumber producer. But as a buyer, there's probably three or four factors that are influencing and I mean everybody knows about the winter weather that hit the Northeast. I think people are probably less focused on the amount of wet weather that hit the south and the Southeast that disrupted people getting to job sites. Obviously, we got weakness in the Canadian dollar and with China slowing down, you had fewer exports to China.

As Tom mentioned, there is an incentive to get stuff exported ahead of the softwood lumber agreement tariffs kicking in April. And then frankly as you have falling prices, buyers step away from the market because they see the prices coming down and they know if they wait, they're are likely to get a lower price, which pulls at least temporarily some demand out of the marketplace and it starts to feed on itself. So I think now that you're starting to see hopefully lumber prices stabilize, some of that will reverse, but there wasn't a lot of incentive, a, because of the weather, and b, because of the direction of prices. There wasn't a lot of incentives to put wood on the ground for buyers, because already availability and prices were continuing to decline and we would expect that to reverse now that we're getting into the spring building season.

And were there any inventory charges in the first quarter because of the price declines in BMD?

This is Nick, John, very modest and immaterial.

And also I was just wondering, I mean and -- I guess, given the fact that there were no insignificant inventory charges, I mean, I guess I would have expected something a little bit bigger, just given the size of those declines. Did you guys have something that offset that?

Well, if you think about the distribution business as you know that the impact to our margins is driven by the magnitude and the duration of change as opposed to the absolute levels and you look across the distribution product mix in the wood products arena, you've got products like dimension lumber and studs that fell dramatically. You've got plywood that didn't fall as dramatically. You've got OSB that fell pretty dramatically. You've got prime boards and cedar and red wood and other products, then mitigated all that to some degree. So it's a mix issue a bit.

And then just lastly, ultimately I was wondering if you could talk about the inventory levels, at distributors out there?

Yes, I don't think we see anything unusual in the distributor inventory levels. Again, I think it's just buying behavior, no one has felt the need to put wood on the ground, just given the pricing environment and the demand environment and I will let Nick speak to this, but I think in the last week, the daily sales in our distribution business have picked up noticeably. And so, if we move into the second part of April and into May, just with the weather improving and things drying out in South and Southeast, we would expect the volumes to start to pick-up meaningfully.

Yes, I would describe inventories in the channel as sufficient. I think everybody kind of has what they need at the moment. And if to Wayne's point if demand ramps up now, the seasonality starts to pick up. We've seen glimmers of that in the last 15 days and would expect that to the assumptions that we all have about housing for the balance of the year, pretty nice increase in primary demand.

The question was asked, I think we failed to answer about what our outlook was on housing. And in terms of what we're hearing from our customers and our customers' customers, the builders, really the news I think is pretty good. We are seeing positive trends. I think everybody here saw the announcement on existing home sales yesterday, some encouraging data on their own first-time buyers, which I think has been one of the holdbacks in the marketplace. New home sales have shown very healthy growth trends from last summer to this winter, certainly as the big homebuilders are reporting first quarter results, the comments they're making are encouraging.

I think as much as anything, I think and it's a pretty common theme across the board. There are some fairly significant restrictions on ramp-up and particularly focused around labor and transportation. And so I don't see it turning into a huge increase, but I think there's very good trends out there in terms of what's going on in the housing market that makes me comfortable with our forecast for 2015.

Steven Chercover, D. A. Davidson.

I wanted to follow on that theme. I mean I too think 1.1 million is still attainable, but we seem to get mixed signals. I mean, yesterday's existing home sales were great, this morning the new residential was down 11% and so, are there any trends that you can discern with respect to taste? I mean are people more into having a close-in old home as opposed to new home or what's going on?

Boy, Steve, that's a tough question. I think there are a lot of things going on and I read a lot of opinions about availability of credit and credit where student loans and you can list 1,000 anecdotal things that go on -- that are out there as explanations. I think that the controller on all of this at the end of the day is going to be demographics and the demographics still remain -- I think very positive. But there are a lot of pressures in the economy, employment being a big one that are making this a gradual process. This has hardly been the type of recovery that the prior recoveries had been that have been associated with really strong recoveries in housing.

But, it does seem that whether it's a new home or an existing home, the inventories are fairly tight, so sooner or later, we got to see tension. Is that -- do you agree with that?

That's -- how it feels to us, yes.

Yes, it's certainly how it seems here at least in Oregon. And then switching gears a bit, I might have missed it, but the delayed dryer install on the East Coast, is that going to impact production at all in Q2?

It will Steve, but it won't be different than the impact we saw in Q1.

It's probably 1% to 1.5%, it's not, you'll lose it in the rounding.

I mean, is that the kind of thing that you can basically offset with your objective of balancing supply and demand and --

Well, the new dryer will have more capacity than the old dryer did. I think honestly Steve, I don't think you need to worry about it from a modeling perspective.

Okay and the facilities that you might operate below capacity, I mean, are you referring to BMD or it's right to EWP where that's already the case or are you thinking of flexibility on your plywood and lumber production?

Well, certainly there is lots of flexibility on lumber production. In general right now, just given demand and pricing in plywood were running our dryers pretty much full on and in EWP, we clearly have lots of excess capacity in place and our focus is on growing sales and maintaining and increasing prices. So we're going to be thoughtful about how we bring on incremental capacity. We have lots of flexibility on both our EWP plants and that we can be on some fairly thoughtful manning strategies or in partial shifts without having to be two shifts or three shifts.

And what's the current operating rate in EWP, please?

I would guess about 70%.

And I'm not showing any further questions at this time. I'd like to turn the conference back over to our host.

Thanks everyone for joining us. We look forward to talking with you next quarter.

Ladies and gentlemen, that conclude today's presentation. You may now disconnect and have a wonderful day.