塞拉尼斯 (CE) 2016 Q2 法說會逐字稿

Good morning and welcome to the Celanese second-quarter 2016 earnings conference call.

(Operator Instructions)

Please note, this event is being recorded.

I would now like to turn the conference over to Chuck Kyrish. Please go ahead.

Thank you, Gary. Welcome to the Celanese Corporation second quarter 2016 earnings conference call.

My name is Chuck Kyrish, Vice President Investor Relations. With me today are Mark Rohr, Chairman and Chief Executive Officer; and Chris Jensen, Senior Vice President and Chief Financial Officer.

Celanese Corporation's second-quarter 2016 earnings release was distributed via business wire yesterday after market close. The slides for the call and our prepared comments for the quarter were also posted on our website www.Celanese.com in the investor relations section.

As a reminder some of the matters discussed today and included in our presentations may include forward-looking statements concerning, for example, Celanese Corporation's future objections and results. Please note the cautionary language contained in the posted slides.

Also, some of the matters discussed and presented include references to non-GAAP financial measures. Explanations of these measures and reconciliations of the comparable GAAP measures are included with the press release and on our website in the investor relations section under financial information. The earnings release and non-GAAP reconciliations have been submitted to the SEC in a Form 8-K. The slides and prepared comments have also been submitted to the SEC in a Form 8-K. This morning we will begin with introductory comments with Mark Rohr and then we'll field your questions.

I would now like to turn the call over to Mark.

Thanks, Chuck, and good morning, everyone. Our prepared remarks will released with earnings, so I will keep my comments brief and open the line for your questions.

For the quarter, I am pleased to report GAAP diluted earnings of $1.50 per share and adjusted earnings of $1.59 per share. We generated year-over-year growth, despite roughly $0.20 of headwinds from plant turnaround activity in the quarter, including the first ever turnaround at our POM facility in Frankfurt, Germany. Our operations team did a terrific job planning and executing multiple turnarounds in the quarter. I would like to thank them for getting us up and running safely and on schedule.

Segment income for the quarter was $312 million and we expanded our margin by 110 basis points over the prior year to 23.1%, reflective of continued momentum in our engineered materials business, resilient performance in the Acetyl Chain, and focused productivity actions. In engineered materials we grew volumes 8% year-over-year across an increasingly diverse set of end uses. We launched a record number of new projects in the quarter at 335 and remain on track to achieve our ambitions goal of 1200 new product launches for the year.

We generated record free cash flow in the quarter and our balance sheet stands in a strong position, evidenced by the upgrade in our credit ratings to investment grade by both Moody's and Standard & Poor's. This upgrade validates the tremendous progress we have made over the last several years to strengthen our businesses and deleverage our balance sheet, and it's a natural step in the evolution of Celanese. We also returned over $250 million in cash to our shareholders in the quarter, deploying $200 million in cash to repurchase 2.8 million shares and paying $54 million in dividends.

Looking to the remainder of 2016, we see the economic landscape in the US and Europe as relatively stable. In China, we are having great success in engineered materials, driven by trends in the use of specialty materials, while at the same time the Acetyl Chain continues to deal with historically low acetic acid margins. As always, we focus on what we can control to serve our customers and drive a differentiated result regardless of prevailing economic conditions.

The strength we have built into our commercial models, combined with our ability to consistently drop productivity gains has allowed us to overcome unprecedented challenges and headwinds, while consistently growing our earnings and cash flow. We have maintained our view of 8% to 10% growth in adjusted earnings per share for the full year of 2016, based on our expectation that the global economy will gain momentum as we finish out the year.

With that, I will now turn it over to Chuck for Q&A.

Thanks, Mark. As a reminder, we would like to limit the questions to one question and one followup. Gary, let's go ahead and get started.

We will now begin the question-and-answer session.

(Operator Instructions)

The first question comes from Duffy Fischer with Barclays. Please go ahead. Hello, Duffy. Your line is open. Our next question comes from P.J. Juvekar with Citigroup. Please go ahead.

Yes, good morning. I have a question on acetate. For the last two years the industry had talked about inventory destocking which should have ended by now and in fact in the first quarter your volumes are up 17%, which were up only 2% this quarter. So can you talk to us about this destocking versus if there is a secular change in buying patterns?

P.J., I think that destocking has been talked about by a lot of people and I think that's been pretty well reflected in comments that various producers and consumers have made in the marketplace. We think that is kind of running its course and we don't see a material change in that going forward.

In China, we review that material that has exited the Chinese market is out for good and we don't really see that changing very much going forward, certainly not in the near-term anyway. So, no, I don't think there has been any real change in the market other than the fact that the capacity outside of China, the Western capacity utilization has gone from effectively 100% to effectively 80% and we're seeing a lot of activity on the part of buyers to try to stir up the market and that has resulted in some price declines.

So you would say it is more of a pricing issue rather than volume issue?

Well, the volume piece of it, P.J., was the first part you referred to, which was the destocking phenomena as well as the elimination of imported material into China. And that was -- elimination of imported material was the biggest chunk of that by far. That has also been part of it, but I think to your point is that has kind of run its course.

Okay. And then secondly, can you spell out your (inaudible) opportunity with GUR? What it is today and where could it be by 2020? Thank you.

Yes, GUR is a really interesting product. It has a lot of great characteristics that are into a number of uses. Derivatives of it go into lithium ion battery separators and that is a pretty hot market for us.

There are a lot of industrial applications for GUR as well that continue to grow. We are running our plan pretty hard from a capacity point of view and there are certainly opportunities we think to expand and grow that business as we move forward in the years ahead.

Thank you.

Thank you, P.J.

Gary, let's go to the next question please.

The next question comes from David Begleiter with Deutsche Bank. Please go ahead.

Thank you. Good morning. Mark, on acetate tow, in terms of the aggressive activity you referenced, is it one competitor? Is it more than one competitor? And why do you think that they are doing this now?

Well, it's -- perhaps I shouldn't have put those words it, but I'm seeing activity out there that would indicate that people are starting to Chase volume and so if it is people it is more than one. And the dilemma with that is that -- that people get into is that once you start that cycle it's kind of hard to break it. I think that folks out there that have the view that they are more entitled to volume than others and that's just a dangerous precedence, so I hope we don't get into that, David, and if we do, it's a zero-sum game so market share can shift around but at the end of the day you don't really -- in a declining market like this you don't build volume by lowering price. You don't create additional demand in that scenario, so it's kind of a silly thing to do.

Mark, you referenced potentially down earnings in tow in 2017. Could the segment be -- can you quantify the magnitude of the decline of the consumer segment in 2017 potentially?

Well, I think what we've said in prior conferences, Deutsche Bank conference in particular, we made a comment that it could be down 10% to 20% and that, but it could also be flat. We're kind of sticking with that. It's a pretty broad range, and I don't mean that in a bad way, David, but we are in the contract season now, so it is kind of hard to call it in that process, but I would characterize it as something like that.

Thank you very much.

Gary, let's move on to the next question, please.

The next question comes from Vincent Andrews with Morgan Stanley. Please go ahead.

Thanks. Good morning, everyone. Could I just ask on -- started to beat on tow a bit, but there have been a lot of capacity curtailments in the past few years and it really seemed like the industry was being rational, and I think at a recent conference, Mark, I think I've read that you thought that more capacity could come out fairly easily and so I'm just wondering why we aren't seeing that. I was kind of thinking we might see some curtailments from somebody in the industry before we got into the 4Q contracting season. Why do you think that is not happening?

Well, I don't know. It's a little disappointment to me. If you look at the asset base, we have -- we think it's the best in the world and if it's not the best it's right there with the best in the world. The productivity steps we have taken, the multiple shutdowns that we've incurred, we've shut down assets that are from a production cost point of view a heck of a lot better than assets that are still in the marketplace today. So it's a bit frustrating to me that others haven't elected to do so. Vince, you'll just have to ask them why they are not doing it.

Okay. We will do that. And then, Chris, could I just ask you. You made some comments in the prepared remarks about Section 385 of the tax code and some concerns you have about it. Could you put that in some type of perspective for what, if any, the impact could be for Celanese maybe in 2017?

Yes, I probably won't give you a very satisfying answer, because it is such a fluid situation and what I mean by that is we're talking about a proposed regulation, not a regulation, and the pushback from industry, including both parties in Congress getting involved in the fray, is substantial. So we've heard that there have been over 150,000 comment letters written in response to the proposal and our understanding is they are required to address every single one of those before they move forward. So it's really hard to say how long that is going to take and I don't want you to think that I'm hiding from anything here. We can't quantify it until we see what direction it's going.

I can tell you what our objective is and this is what we're working on right now along with every other multinational that I've talked to. Our objective is to find ways irrespective of how this pans out to meet the cash commitments that we talked about over the next two years and that's what were working through. And when I see they meet the cash commitments, I mean without some significant detriment to our tax rate.

Okay. Understood.

Vince, let me comment on that. That's a question back from someone last night. This isn't about our income tax structure, it's really about our ability to manage cash and cash generated in Europe. That's really the big issue that I think most multinational (inaudible) 385. Again, it's not the tax structure on earnings, it is the fact that you've actually not earned money and the classic ways we have of handling that money in Europe and pooling it and things like that are all being challenged by this law was put in place ostensibly to reduce the number of inversions that have been occurring. So it is an unintended consequence of the ruling.

Thanks very much.

Thank you.

Gary, let's move on to the next question please.

The next question comes from Bob Koort with Goldman Sachs. Please go ahead.

Thank you. Good morning.

Hey, Bob.

Mark, I wanted to talk a little bit about that AEM business where your volumes have just been terrific and just wondering if you could put in context what you see maybe the market growing in those businesses. I'm trying to isolate your particular product lines and maybe the internal product development process and how that is manifesting in above-market growth rates. And then maybe as you think into the second half and into next year I know a lot of investors seem quite cautious and anxious about SAR numbers, auto SARs. I know that's not the only thing you do in AEM, but how do you think about that influence on your go-forward numbers in AEM? Thanks.

Thanks, Bob. What we've developed is a model that would be wrong to say we're agnostic about materials, but we try to be agnostic about materials. We try to go in and really present all these different platforms and options through our engineers to the engineers at the OEMs. We are currently moving six to seven platforms and I would hope that in the not-too-distant future that number grows to almost double that, the number of platforms that we're moving out into the marketplace.

So what that's done is it's availed us to a lot of new business opportunities that we didn't get from a classic perspective. So we're seeing markets like industrial and medical really take off in a lot of ways. We're seeing consumer appliances and those kind of product lines, think of refrigerators, washing machines. We're seeing a lot more interest in designing sophisticated material into their products. So we think the potential of that is best summarized by our statement of product launches.

We move -- if you look back in the 2014 timeframe from 300 to 1000, we will be at 1200 this year, I expect we will be pushing 1500 next year and 2000 year after that. That's the kind of growth rate that we believe and you've seen the benefit of going effectively from 300 to 1000 and 1000 to 1200. You're seeing that in our volume. So I think that's what should continue as we go out there.

Auto sales, I saw numbers the other day of 91 million units for the year, I think up about 2.9% to 3% is the current forecast. Pretty flat in the US, Bob, to your point. Europe is up pretty strong and of course places like Latin America or South America I should say, are down double digits.

So we think that maybe it is kind of peaking in the 90 million unit kind of range, but again our objective is substitution. We think there are a lot more opportunities to open that substitution business to go. Auto is important for us, but it's getting less important every day.

One example to that, Bob. So we sort of track this by various sectors and you heard Mark talk about consumer where we're going after some really great opportunities. So those volumes if you do second quarter versus prior year are up over 20%, and that's kind of how it's tracking this year.

Very good. Thanks, guys.

Great.

Carrie, let's go to the next question, please.

The next question is from Frank Mitsch with Wells Fargo Securities. Please go ahead.

Good morning, gentlemen. Mark, if I listen -- if I read between the lines it does not sounds -- on the (inaudible) side it does not sound like Celanese is contemplating shuttering any assets to get that capacity utilization number up over that 80% level. I presume that's correct?

Yes. We think we have done our fair share.

Alright. Terrific. And you also referenced volumes being a bit better in Q2 due to unusual purchasing patterns in Europe. What exactly was that?

Well, classically volumes are up a bit in the first quarter. We have some contractual activity the gave us opportunity to move some more volume and I don't want to get into specifics of that, but there was some opportunistic events that occurred the gave us a chance just to move incremental volume.

Okay. Terrific. And you mentioned obviously $0.20 negative impact from turnarounds in Q2. Can you split that between the AEM and AI side of things?

It is one-third AI, two-thirds materials.

Alright. Terrific. And then lastly you mentioned that you expect the global economy to improve in the back half of the year. Here we are three-four weeks into Q3. Are you seeing signs the give you more confidence that you will see that reacceleration?

Well, I think the real science of misery index continues to go up and that can only last so long, but we are seeing -- we do think that in China, if you look at China, some of the activity that is underway right now this very minute is kind of response we think to ongoing and continued pressure for reduction in capacity utilization in China so I expect that's going to start to happen this fall. This my personal belief.

I also think that the relatively tight band on methanol that we've seen in China between the cost to produce and the MTO value is going to start expanding and you're going to see more and more methanol movement to MTO and I think that's going to shore up that business and start pushing that higher and really that's what we need. We need -- at the end of the day we need, in terms of AI, we need China to stabilize. We need them to start taking action to start shutting some capacity, and we need methanol to start easing up. So there are signs that could be happening.

Terrific. Thank you.

Gary, let's go to the next question please.

The next question comes from Jeffrey Zekauskas with JPMorgan. Please go ahead.

Hi, good morning.

The morning, Jeff.

Hi. In looking at your AEM pricing setting, I think in the first quarter it was down 2 and in the second quarter it was down 4. Is there a trend there or is down 4 where we are for the second half or is there further slippage?

Well, I think -- we talked about that in the last two calls directionally, Jeff. So what you're seeing is you're seeing a greater split between high-end product values and low-end product values. So the low-end materials, which represent still a big chunk of volume for us, are decreasing in price as there is more and more competition of some of those bigger volume products.

There is not a lot of ongoing activity in price in that so I want to say it's run its course and the guys haven't told me to expect a lot more with that but -- I'm kind of looking around the room. I'm getting head nodes here so I think where we are is kind of where we are going to be for a while.

Okay. And then in the quarter your SG&A costs were $71 million versus $80 million in the first quarter. What caused that change? Is that the right level for the remainder of the year? And can you also speak on the change in your pension liabilities because of changes in interest rates?

So the SG&A has continued to trend down because of the productivity initiatives that we've got. I don't have the split between SG&A and your fixed costs in manufacturing, but we're on track for where we talked about being around $100 million in productivity year-over-year. Pensions, you're referring to forward view?

Yes. In other words, interest rates have really come down and I think in your prepared remarks you talk about how it's difficult to forecast GAAP earnings for the year.

Oh, right. We're referring to the fact that we use mark-to-market pension accounting where some companies don't. In the fourth quarter you always have a gain or loss associated with those interest rate movements. So, yes, if interest rates go lower during the year then we'll have a bigger pension liability and a bigger loss.

Okay. Good. Thank you so much.

Thank you. Let's move to the next question.

The next question comes from around Arun Viswanathan with RBC Capital Markets. Please go ahead.

Hi. This is (inaudible - volume low) on for Arun. Thank you.

Can you speak up, please.

Yes, I'm sorry. This is (inaudible) on for Arun. I was just wondering, what are the near-term catalysts for acetic and VAM that can improve pricing for the rest of this year? It looks like there's kind of limited outages in North America for the rest of the year. Is it primarily related to methanol or what else needs to happen here?

I think there's not much -- there doesn't seem to be much volatility in that market today, so I don't see a lot of activity to improve pricing on the near-term, near-term being this quarter, out there. In a fundamental sense, a lot of the reduction, the mathematical reduction that has occurred in VAM has been methanol-driven, so what you need to see if you need to see methanol starting to shore up and starting to drift higher is one mechanism for that. I can't comment on outages or anything.

You never see those (inaudible), but this is demonstrated unlike Celanese has had a lot of trouble running for very long periods of time, so I'm sure there will be some outages, I just don't know where they'll be, but fundamentally to get price up, methanol is going to have to start easing back up a bit.

Okay, and then just as a follow-up for methanol. Is it still safe to think of that MTO as kind of the price header going forward and how should we think about there is still a large wave of capacity coming on 2017, how could that impact prices over kind of the medium term?

What you're seeing with MTO is you're seeing the introduction of really world-scale, world-class assets and those assets are going to run and they have much lower average operating costs than some of the smaller assets which are the early wants to come on. So we believe that as these big units come on line we think they are going to suck up methanol and we think they are going to be very competitive against other ethylene producers within China and so that's sort of our story and our belief system and that should be happening as we enter 2017 it should start to happen. So we think as we go through 2017 it's going to continue to grow and we think methanol is going to follow that as that consumption picks up.

Regarding asset, I'm not really sure what you're talking about from additional capacity coming on. Their asset is way long today in China, and I think it's academic whether it's another future (inaudible) it's just very long.

Okay. Thank you.

Thank you.

Thank you. Gary, let's go to the next question.

The next question comes from John Roberts with UBS.

Thank you. On the cellulose acetate resin lines that feed the fiber lines, can the resin lines be repurposed to engineered polymer or is the demand for those types of polymer so small that wouldn't be an option?

We sell some of that but the demand generically is pretty low for those products, so we continue to look for ways to promote that and push it, but it's -- you're talking a few percentage of the volume of cellulose resin that goes into the polymers. It's a small percentage of the industry that goes that way.

Okay. Thank you.

Gary, let's go to the next question.

Next question comes from Jim Sheehan with SunTrust Robinson Humphrey. Please go ahead.

Thanks. Mark, I remember a couple of years ago you had some issues with methanol supply and it created big headwinds for your business and you guys really worked hard and divide expectations offsetting the impact to that. Can you talk about strategically what you're thinking about as ways to mitigate any impacts from the filter tow in 2017?

Well, I think that was a great example going back to methanol. Methanol was a multi $100 million impact to us at the time and we were pretty creative in how we brought in a new project to offset the vast majority of that, probably all but $30 million-$40 million of it had been fully offset. On cellulose it's -- I think the -- well, let me just start by saying that when you look at the base data, this is a declining business but it is not declining at any materially different rate than it had been declining at.

The big issue that we've had in that business has been the step changes occurred in China which pushed out effectively 100 KT, 100,000 tons into the Western market which effectively reduced our capacity utilization by 20%. So you are looking at it as a one-time event. Bam, that's done and it's not going to be replicated. So there is no way that (inaudible) is going to pick up to the extent to replace 20% of the volume in the Western world.

So what we see is necessary there so the industry to restructure over time to minimize the industry's cost over time and service the customers that the industry has out there and that's good for everybody. That's going to occur. Jim, it's just going to take awhile for that to occur.

When you go beyond that, is there some magic bullet to do something with cellulosics? Is just not easy to see that. We're working on some schemes to increase volume there. I'm sure others are as well. I'm sure we'll be somewhat successful with that, but it won't be the same value question as tow or the same quantity of materials as tow.

And on the tax code, potential impacts from that proposed change, I think you've referenced some workarounds that you might have. Could you describe what kind of workarounds that you're thinking about?

Well, as Mark mentioned, this is really kind of about cash management and how you move cash around your company, and some things that were written in that proposal make the typical transactions that you use a little more challenging. What we think is there are going to be certain provisions for how you avail yourself of current year earnings around the world and that those can pass through more easily than sort of prior-year earnings. So that's really kind of what we're working on is are there ways to still effectively move your money around?

Thank you.

Jim, on the first question, that first question of yours referenced to cellulosics is in particular. When you look beyond cellulosics you are looking from a corporate point of view, I'll mention two things.

One is that you are seeing examples of materials of the strength of the growth of that model. We don't think that's anywhere close to being fully realized. We're investing a lot of energy and effort to effectively double from 1000 to 2000, effectively double the new product launches and projects that we have ongoing per year into that market place. There is tremendous value associated with that, tremendous value.

Our M&A effort remains very active and strong and we've seen small things like cool poly. We have bigger things on the horizon that we are working to bring home and hopefully we will bring those home. That would take us, if we can do that, from six platforms of materials to multiples of that, so call it 10 or 12 platforms in the marketplace. So that should give us a chance to even further grow and further expand and push.

In the acetyl chain, we think there are opportunities for that industry to consolidate that industry to be more cooperative in terms of who's producing what products for the marketplace and one another, and so we think those activities will be part of this and we're working this very hard. And, lastly, there is productivity and this year, as Chris mentioned, we're going to roll out some net $100 million we will keep working that next year. It's too early to put forth a number for next year, but we've been doing that for a number of years and you should expect that you'll see a pretty healthy expectation for us on productivity as we continue to go forward.

Appreciate the color, Mark.

Thanks, Jim.

Gary, let's go to the next question.

Next question comes from [Alexi Efermaub] with Nomura Securities.

Good morning. Thank you. Your volumes grew 8% in the second quarter. Can you sustain this level of growth into the second half?

Yes, we think so. Naturally you have less growth in -- I don't know if you've been, Alexi, over to Europe. I was over last week and everybody's already on vacation. So August is kind of a non-event. So there is a natural falloff of bid for us in the third quarter, but directionally, yes, we think we can sustain that.

Thank you. And then I think you've provided us with some elements to kind of bridge your 2017 segment income. You spoke about it, advancing engineered materials. What about Acetyl side of the equation? Do you think you can show growth next year?

It's hard to see the activity in China and not be able to view that it's short term. It's so messy and so bloody so, yes, I believe that business will growth next year in spite of the fact that it's dealing with -- has been dealing this year through some toughness and will continue to deal with some toughness for another quarter or so.

And then final question if I may. Is consolidation in acetate tow possibly, in your opinion, from antitrust perspective from any other considerations?

Its challenging. Its challenging because -- well, it's just challenging. It depends on who it is and where it is, is what I would say. But [antitrust] today, no matter what you're doing, is challenging. Not easy.

Okay. Thank you very much.

Thanks.

Gary, let's go to the next question please.

The next question comes from Nils Wallin with CLSA. Please go ahead.

Good morning. Thanks for taking my question. I believe in the third quarter you will start to anniversary the methanol contract and of course you're on natural gas in the US and then some coal-based and oil-based in Asia, would you refresh us on how your different acetic acid assets look in terms of the global cost curve today?

Yes. Well, of course the US remains the low cost part of the world followed now by Singapore which has oil-derivative feedstock and the gasification there followed by Chinese coal. So we are running the Singapore asset harder and satisfying a lot of the demand outside of China with that asset.

Understood. And then just in terms of the tow pricing in the second quarter, would you be able to tease out how much of that was driven by raw materials versus meeting competitive pressures in the market?

Well, we don't really price that product off of raw materials. It's pretty disconnected from that.

But presumably if raw materials came down generally the annual contracts do follow to a certain degree?

No. No. There is no relationship there, at least not that I'm aware of. Pricing this year is the function of a contract last year or the year after that so there is a lag in that process. So the pricing step-down that you saw is the stuff we were talking about last year that was happening as the early tranches of volume came out of China.

Understood. And if I could squeeze in a last one. Would you be able to quantify how your cash balances are geographically? Where you hold most of your cash?

Yes, most of it is overseas. We do have some in the US right now. I think it is around $200 million. We finished the year last year with virtually none in the US and since then we've moved some back. As you know, we've had great strong cash flows and that has enabled us to return about $300 million to shareholders so far this year.

Understood. Thanks very much.

Gary, will take one more question with one follow-up.

The final question comes from Hassan Ahmed with Alembic Global. Please go ahead.

Morning, Mark. Mark, wanted to revisit the turnaround sort of guidance that you had given in Q1. If I remember correctly, you talked about $0.30 to $0.35 was for sequential headwind so my question is did it turn out to be $0.30 to $0.35? Was it higher? Was it lower?

Let me let Chris answer that.

When we said $0.30 to $0.35 there was another thing in there in addition to the turnarounds which we talked about some overlapping VAM contracts that were a benefit in Q1 that would not be there in Q2, so the $0.30 to $0.35 was really those things together and together they are in that range.

Right. Fair enough. And again sticking to the whole sort of turnaround side of things, in the AI businesses sequentially volumes were down 11%, so if I were to sort of assume that there were no turnarounds, what would that sort of volume figure look like?

I don't think we lost volume because we planned production to manage our way through these turnarounds.

Got it. So it was just purely sort of demand weakness Q1 to Q2 that resulted in that 11% decline?

Yes. If you look at, most of that is really just China and there's no point in chasing incremental volume when it's in the ditch like that. It doesn't really contribute material to your business, so you saw us pull volumes back as did many in China and just not Chase the bottom of that market.

Very fair. And one final one, if I may. The sort of Q1 guidance for (inaudible) was a $0.10 headwind. Clearly a bunch of moving parts with regards to methanol and MTB and the like, but you still think that headwind should be in the same range for 2016?

Yes, I think that business will be down $40 million or something for the year so --

$40 million to $50 million. So (technical difficulty) $0.45 of earnings from that alone.

Got it. Very helpful. Thanks so much, Mark.

Great. We'll wrap things up here. Thanks, everybody, for your time and we will be around for questions later today. Gary, at this point I will turn it back over to you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.