Cleveland-Cliffs Inc (CLF) 2008 Q3 法說會逐字稿

Good morning. My name is Michelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Cliffs Natural Resources third-quarter and nine months conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

Mr. Baisden, you may begin your conference.

Thank you, Michelle. Before we get started today, let me remind you that certain comments made will include predictive statements that are intended to be made as forward-looking within the Safe Harbor protections of the Private Securities Litigation Reform Act of 1995. Although the Company believes that its forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties that could cause actual results to differ materially.

Important factors that could cause results to differ materially are set forth in reports on Form 10-K and 10-Q and news releases filed with the SEC, which are available on our website. Today's conference call is also available and being broadcast on our website, cliffsnaturalresources.com. At the conclusion of the call, it will be archived and available for replay for approximately 30 days.

Joining me today are Cliffs Chairman, President, and Chief Executive officer, Joseph Carrabba, and Executive Vice President and Chief Financial OFFICER, Laurie Brlas.

At this time, I will turn the call over to Joe for his prepared remarks.

Thanks, Steve. We are pleased to join you today to report our strong third quarter in nine months performance and to speak with you for the first time under our new brand, Cliffs Natural Resources. Today Cliffs is a global mining and natural resources company with a primary focus on steelmaking raw materials. The Company has operations in North America, South America, and Australia and markets products in North America, Asia, and Europe.

In rebranding the organization, we chose to stay true to our roots while recognizing our increased mineral -- our increasing mineral diversity, expanded reach, and genuine commitment to the environment. We expect the new brand to reinforce understanding of our business model and vision in the industry. It also positions us well with junior miners looking for a strong international partner to help bring deposits to market as well as with the international finance centers as Cliffs looks to attract a more diverse investor base.

Before Laurie presents an overview of our financial results, I'd like to take a moment to update you on our corporate development and operational achievements during the quarter, the most significant of which is our pending definitive merger agreement with Alpha Natural Resources. If shareholders vote to approve the merger, Cliffs Natural Resources will be positioned as a major global player and a leading independent supplier of critical raw materials to the North American and international steel industries.

The industrial logic for this combination is rooted in the critical mass and met coal that would be achieved and the extended reach, the combined company would have into world's steelmaking markets. It also stands to reason that the combined company would participate and benefit from further consolidation in the industry.

This consolidation scenario and the benefits that accrue to shareholders is one that has already played out in other global production basins as well as in other industries. We've seen it in seaborne iron ore. We've seen it in global steel, and we believe it will eventually be seen in Appalachia. In fact, the current global disruptions, the oversold state of commodities today could prove to be the needed buying opportunity for those properly positioned in the industry.

With that as a backdrop, we have set the record date and shareholder meeting dates for the merger and look forward to continuing to make our case to all of you.

In addition to the Alpha deal, during the third quarter, Cliffs launched a tender offer for the Portland Limited shares not already owned. Our offer of AUD21.50 per share has resulted in a current ownership position of over 96.3% and places us over the threshold to achieve compulsory status for the remaining ownership. We expect to complete the mop up by year end.

In aggregate and at the current exchange rate, we will pay approximately $370 million for the minority interest. This equates to about $26 a ton for high-quality iron ore reserves.

In the third quarter, we also reached a deal to buy out our minority partner at the United Taconite Mine in Minnesota. Consideration for this 30% interest includes 4.3 million shares and approximately $100 million in cash and 1.2 million tonnes of iron ore pellets. Based on current market prices, this would total an estimated $380 million of consideration for 45 million tonnes of iron ore reserves and mine capital or about $8.50 a tonne of finished pellets.

Both of these deals illustrates Cliffs' aggressive pursuit of organic growth opportunities that carry no integration or execution risk.

In our North American Iron Ore segment, we also announced a planned expansion project at our Empire and Tilden mines in Michigan. The project, which will require approximate $290 million of incremental capital investment, will allow Empire to produce 3 million tonnes annually through 2017 and increase Tilden mine production capacity at more than 2 million tonnes annually from its previous capacity.

As part of the expansion, we plan to mine additional ore from Tilden, which is located adjacent to Empire and process it utilizing extra processing capacity at Empire. Utilization of this capacity will enable Tilden to increase production to more than 10 million tonnes annually. Bottom line is this project will provide approximately 38 million incremental equity tonnes over the next nine years for an investment of approximately 650 a tonne.

I would also like to acknowledge Northshore Mining's Babbitt mine in Silver Bay, Minnesota for being recognized for its outstanding safety performance in 2007 and winning the industry-coveted Sentinels of Safety Award. Congratulations should go to the entire North Shore team.

Before I continue with a discussion of our outlook and turn the call to Laurie for a financial review of the quarter, I would be remiss if I didn't recognize the highly precarious economic environment we are currently operating in. I want to assure our investors that this management team is fully conscious of its challenges and will continue to take prudent steps to position Cliffs to weather any difficult times ahead.

As you saw in our release on Tuesday, we are idling three furnaces in our North American Iron Ore segment. This production curtailment is designed to bring our production in line with our customers' announced production cuts. I've also challenged our operators and managers on upcoming capital projects and other planned expenditures and please be [assured], we will continue to do so.

With that, I will turn the call over to Laurie.

Thanks, Joe, and good morning, everyone. In order to open the floor for questions in a timely manner, I will limit my comments today to the more critical financial metrics and not repeat all the detail found in the press release.

During the quarter, we eclipsed the previous record revenue set last year with topline growth of 92%. Reported revenues for the third quarter of $1.2 billion considerably exceeded last year's $620 million. Net income reached $175 million, an increase of $118 million or 207% from the $57 million reported in the third quarter last year. Cliffs achieved diluted earnings per share of $1.61, up 198% compared with the split-adjusted $0.54 reported last year.

As the US dollar has strengthened significantly and suddenly against the Australian dollar, it has affected the currency hedging in our Asia-Pacific business. We had negative mark-to-market adjustments of approximately $94 million pretax in the current quarter. Excluding that adjustment, Cliffs' diluted earnings per share would have been $2.13 or a 294% increase.

Turning to the business segment results. For the quarter, North American Iron Ore generated record sales margin of $259.3 million, up more than 154% from the year ago period. This increase reflects a 42% jump in average realized pricing for blast furnace pellets with revenue per tonne reaching $92.73 compared with $65.15 last year. Our North American Iron Ore segment benefited from higher benchmark pricing and higher steel pricing as well as renegotiated and new supply agreements with some of our customers.

Due to increasing royalty payments, fluctuating natural gas and diesel fuel costs, as well as deferred maintenance activities that will now be completed at Empire due to the expansion that Joe referenced, we are seeing significant year-over-year pressures on our costs. Per tonne costs in North American Iron Ore was $60.47, compared with $48.34 last year.

In North American Coal, average realized per tonne price reached $100.34, an increase of 41% compared with the $70.92 realized in the two months of the previous year's third quarter that we owned the business.

As we continue to enhance long-term mine planning and development activities, hire and train miners and face rising supply, service, and royalty expenses, our North American Coal segment continues to report much higher cost of goods sold compared with others in our industry. Cost per tonne in the third quarter was $115.22. However, much of this year's effort and activities are designed to optimize production and result in higher production and fixed cost leverage in future years.

In Asia-Pacific iron ore, average price realization for lump and find rose 106% to $111.55 per tonne for the quarter, primarily reflecting the international benchmark settlements for Australian producers. As we increase our ownership position in Portman, there will be a fair value adjustment to the fixed assets and mineral reserves, which will increase our depreciation, depletion, and amortization.

In addition, accounting requires that we step up the inventory to fair value, which temporarily drives up cost of goods sold until that inventory turns. In the third quarter, cost of goods sold of $63.76 per tonne was impacted by approximately $4 per tonne resulting from the inventory fair value adjustment and $2 in additional depreciation, depletion, and amortization related to the incremental 5% we acquired as part of Portman Limited's share of tender program.

Turning to the balance sheet, I want to begin by saying that we have a strong focus on cash generation and ensuring a healthy balance sheet. Even during the last year's rising prices, [maintained] a relatively conservative balance sheet and that has positioned us well for the current uncertain economic environment.

At September 30, we had $388 million in cash and cash equivalents, compared with $157 million at December 31. The Company had $525 million of borrowings outstanding including our recently closed $325 million private placement and $200 million of borrowings under our $800 million credit facility. This compares with $440 million in borrowings outstanding at the beginning of the year. What that means is despite the projects we've undertaken this year, we've driven our net debt down from $283 million to just $137 million.

Outside of the term loan, we currently have no borrowings under our revolving credit facility. Our debt to EBITDA ratio is currently just 0.5 times and debt to total capital stands at 24% with net debt to total capital at only 6%. With cash on hand and unused capacity on our revolving credit facility, at quarter end we had nearly $1 billion in available liquidity.

As evidence of our management focus, the rating agencies gave us an investment grade rating and despite the current credit environment, we've closed on an unsecured loan agreement led by J.P. Morgan for approximately $1.5 billion earmarked for financing our agreement with Alpha. Terms are competitive and the agreement will become effective upon closing of the transaction.

In the third quarter, Cliffs generated cash provided by operations of $499 million bringing us to a nine-month total of $582 million. This is an increase of over 600% from the nine-month period in 2007. For the full year, we expect approximately $700 million to $750 million in cash from operations.

Capital expenditures for the nine months were approximately $148 million and we expect approximately $240 million in total for the full year. As such, we will generate about $500 million in free cash flow in 2008 compared with $89 million in 2007.

Total operating expenses for 2008 excluding any currency hedge adjustments are projected to be about $140 million. We expect an effective tax rate of around 26% and depreciation and amortization of about $180 million.

In short, we have an extremely strong balance sheet, a tremendous ability to generate cash and diversify operations and assets.

And with that, I will turn the call back over to Joe.

Thanks, Laurie. Before we take your questions, I will provide our expectations for 2008. However, it is important to note that given current economic uncertainty, tightening of credit facilities, and our customers' effective reductions in steel production, it reduces the degree of certainty with which we can forecast.

In 2008, based on supply agreement commitments, we still expect sales of 25 million tonnes for our North American Iron Ore business, with revenue per tonne of $91 and a cost per tonne of $57.

In Asia-Pacific iron ore, 2008 revenue per tonne is expected to be approximately $98 with cost per tonne of $58. Sales and production volumes are both predicted at approximately 8 million tonnes.

In North America Coal, we are developing short- and long-term strategic plans making capital improvements and enhancing efficiencies. In 2008, we expect revenue to average $93 per tonne and cost per tonne of $97. Reduction is expected to reach 3.6 million tonnes.

Before moving on, I want to take a few moments to talk to you about why we think from a production standpoint 2009 will be a very different year in are North American Coal business. Admittedly, the job of getting these coal mines up to Cliffs' standards has been a tough one and one we may have underestimated in hindsight. However, we've spent a lot of time this year putting the right management team in place, sorting out a solid mine plan for next year, and procuring delivery of the right capital equipment to optimize production for these properties.

On the commercial side, we also expect the strong pricing of met coal to significantly enhance our sales margins in this business. We are currently in the negotiating season and close to reaching a number of deals, but currently remain uncommitted for the vast majority of our 4.6 million tonnes of expected production.

Again though, continued volatility in the global financial markets has injected a high degree of uncertainty. Visibility into the international market is now less clear because of recently announced production cuts by steel producers. Because of this, it is nearly impossible to provide any reliable 2009 guidance.

Notwithstanding our and the entire industry's lack of clarity in the current year, Cliffs continues to deliver strong performance and is successfully positioning the Company. We are prepared to weather any difficult times that lie ahead and we will continue to explore avenues -- all avenues of creating value, both in the short- and long-term. We believe our approach will continue to serve us well going forward.

With that, let me open up the call to questions.

(Operator Instructions) David MacGregor, Longbow Research.

Good morning, everyone. Just on met coal and mindful of course that you're in the middle of negotiations and your customers are probably all on this call as well, I'm a little surprised to hear that you're still uncommitted of the vast percentage of your production. Can you talk just maybe conceptually about how much of your production you'd like to get committed here over the next few weeks or the next month or so or however long it's going to take you to complete these negotiations. But give us a sense of just how much of that production you'd like to sell forward and also with respect to 2010 as well.

David, as we said on the call, certainly things have changed. It's protracted the negotiations. Our coal -- our Oak Grove and Pinnacle low-vol coal is still a sought after coal within the marketplace, but it's certainly been a difficult time I think for the buyers to come to grips with the high coal prices that are being maintained throughout this economic cycle that we are in right now.

We would like to tie up the majority, the majority being 75%, 80% of our coal before year end, and we wouldn't mind keeping some coal open for spot as we go forward. In '10 as we've talked about before, we certainly want to take advantage of the market. We think the met coal market is still short in supply irregardless of the steelmaking capabilities being cut back, and we want to take advantage of that market.

But we would entertain contracts in the two- to three-year range. We certainly don't want to go long-term like we are in iron ore. The coal market just reacts differently to those types of situations.

Okay, thank you. On the foreign exchange hedge, just knowing that the Aussie buck moved about 17% in the third quarter but we are already down about 12.5% so far in the fourth quarter, should we expect a similar fourth-quarter type of hit on the ForEx hedge or has something changed in terms of the structure of that program?

Well, if the dollar obviously continues where it is today, yes, you would expect something similar to happen at the fourth quarter. I guess it's anyone's guess where we will be at at 12/31. If we get back up to the level we were at September 30, there will be no adjustment. So a little bit difficult to predict right now.

Okay, thanks. Then in North America, you've got take or pay protection on some of these contracts. How much of your sales plan for North American Iron Ore production is protected by take or pay?

There's a good chunk of it, David, that is still protected by the take or pay. Going into this year, the [down ops] of our contracts, all those windows if you think of them as gates to go through have passed, so we're solid on the tonnage we think going into the rest of this year. And we've still got some variables going into '09 on the rest of our take or pays that to give you a member today would just be off if we did that. But it's a substantial portion of our business.

Would it be three quarters?

No.

Less than three quarters. Last question just on Amapa, I guess we saw the size of the loss there double this quarter versus last quarter. Is that number going to get bigger in the fourth quarter or do we get smaller? Do we just stay here at about $13 million per quarter rate? Help us understand just where the profitability on Amapa is going over the next year or so?

The good news is, as always to start with the hurdle rates is the facility is built. I say the majority -- they are just finishing off and doing the ramp up. The capital has been built for the plant. The mine is in a pre-stripping mode and producing ore. The railroad has been refurbished as well as the shipping. But given the long, protracted negotiation between MMX and Anglo that went from January to August, Anglo is literally just getting their feet on the ground. As you know, they are the managing partner of that.

And I think you can suspect probably similar numbers well into the first half of '09 if not the latter half of '09. The ramp up is just very slow coming on. We are disappointed about it as the equity holder of this business and we are working with Anglo's management with our technical people to try and get the ship righted there. But it is built and we are just in the middle of a management change that has taken a long time.

There was also a piece of foreign exchange loss in the current quarter, with again the dollar strengthening is impacting a lot of things. So there's a piece of that so operationally this quarter isn't quite as bad as it might appear.

Can you say how much of it was ForEx, Laurie?

I don't have that number off the top of my head, but we get that to Steve and he can get that to anyone who's interested.

I guess just can you make us comfortable that the technology works? You don't have kind of another [circle red] going down there?

No, the technology works. It's just a matter of getting the metallurgical balances and the water balances in place. We had almost a complete changeover at the top of the mine level of the management team. As you might imagine, they got some handsome bonuses when this deal was done. We've got a good manager down there now that we've got a lot of faith in and he's starting to make some changes already. But no, the technology works. It's a relatively simple process.

Okay. Thanks, Joe. Good luck.

Amir Arif, FBR Capital Markets.

Good morning, guys. I had a couple of -- actually a couple of additional questions. Just in terms of the natural gas and the diesel fuel prices dropping, how long will it take before we start seeing that in your numbers?

I think it will be well into the first half of the year. What you see is spot and what we can buy more on long-term agreements are locked in -- there is a considerable lag that goes with that. But I think we will start seeing significance -- we are certainly getting some benefit in the fourth quarter --

Getting some in the fourth quarter, yes. We are hoping to offset some of our increased labor costs.

Right. But I think to really catch up with the lag as always with pricing that you see on a spot market versus the contracted gas and diesel fuel that we buy, we will be into the first half of the year.

Okay, and in terms of the production curtailments at two of the six North American Iron Ore mines, can you give us a sense of is there a lot of variability in the cost of the mine that you shut in versus the ones that are still operating?

Well, these were the lines, not the mines, at United Taconite and Northshore. But there is a lot of variability between the lines as they are costing out. Then again, it's always size. The smaller two North Shore lines that went down are our highest cost lines of production and the United Taconite line needed some significant maintenance anyway, so we went ahead and took it on down. We can also supply the United Taconite furnace right now with concentrate stockpile that we have.

So that was the logic behind that and we will continue to measure and monitor our production capacity and make sure it matches up with sales as we go forward.

Okay, then just on the '09 outlook, I know there's too much uncertainty to give you any number, but of the three quarters or on the loan commitments I should say for '09, you mentioned less than 75%. Is that off of the '08 sales numbers or is that off of your current production run rate?

That would be off of the run rate.

Okay, sounds good. Thanks.

They are almost identical. There's not a lot of difference between sales tonnage and production.

For the '08 rate.

For the '08 rate. So they are pretty close.

Okay, terrific. Thanks.

Jorge Beristain, Deutsche Bank.

Good morning, Joe. I just had a question about the coal business. Could you quantify how much of the third-quarter cost of goods sold was a one-off in nature? And generally speaking, if you expect any absolute reductions in cost on the coal side going forward? I don't know if it's similar to the iron ore side sensitive to the fuel and energy inputs, things like this that could see some easing in the costs there?

We didn't have a disruptive change that I could point to like the geological disruptions we've had in the past. The costing really is to continue to develop the mines to get ahead of these long-wall panels to make sure we can get as far out ahead as we can. We do have a longwall move scheduled -- one starting in the next couple of weeks and one in December at both of the mines that will set us up for '09. So we had to spend a lot of money to get ahead of that to set up us for '09, which we think is going to be a healthy pricing year that goes on.

Quite frankly the underestimation that we've got is for the most part giving a long lead time on the capital equipment. This older equipment that we are still doing the work with through '08-- we've barely replaced any of the continuous miners or any of those types of things just for the lead times. We did underestimate the difficulty of maintaining those old machines. And I'm happy to say we've got two continuous miners coming in here in the next couple of weeks finally. So just purely an underestimation of the maintenance on those old machines.

But with the volume in Q4, we do expect a pretty significant improvement in Q4 from what you saw in Q3. There's a lot of volume dependency on this.

Okay, on the coal side of the fence, again I appreciate you are in negotiations right now, but two things. One is could you talk a bit about the psychology of the buyers? Obviously in hindsight you locked in fairly low [coal] prices particularly of met coal for 2008. Is there some sense that you guys left pricing on the table in '08 and that is something that the clients appreciate?

Secondly, could you talk a little bit about given the strong change in the dollar? At the margin, are we seeing less demand for US metallurgical coal exports and at the margin are you seeing any impact of increasing imports due to the changing exchange rate?

Jorge, what I think you are seeing more than anything from the buyers side -- and I can't blame them for being this way -- is just an overall nervous in the economy and trying to react to the cuts in the steel business that their respective companies are going through. So as I said before, I think the negotiations are just very protracted and very cautious.

I don't think -- there's -- nobody gains points anymore for -- or appreciation for money left on the table last year. You know, it's just the way business is conducted when it comes to that. So I don't see it there. As you know, the European season just kicked off last week with coal trends and again, I think the buyers are going to take their time before they settle in and they're going to watch this thing a little longer. So I think it's just nervousness in the overall market more than anything is just extending these contract discussions.

Okay, sorry, just my third question that leads into it is the outlook for US steel output has changed on a dime in the past three months and obviously your brownout of these pelletizers. Do you have a sense of how long this might be? Do you see that this is sort of a steel coming down to just clear out inventories, bracing for just a massive decline in US steel demand? What is your sense of how bad this downturn could be and what the length could be based on what you know today?

I wish I had that answer, Jorge. I would be sitting in a different office probably. No, I think our read on this thing is -- our folks were just in China two weeks ago talking to customers there from Portman. We think the Chinese business will come out quicker in '09 and we thank at least we are planning for a very long year in the US in 2009. We think the recession will hold longer and you've got to think about the supply chain.

You know, we really started seeing economic difficulties in this country towards the end of '06 with housing and credit and it has really taken this long on the lag side for it to reach raw material suppliers in the United States. So I think the inventory isn't just in the steel industry. It's got to clear through the auto industry, the housing market, and everything else. So I think it's going to be a very long, protracted recession in '09 that we're going to have to weather through.

Great, thanks.

Meredith Bandy, BMO Capital Markets.

Just some of these questions have sort of already been touched on. When you say that the North American pellets lines that were idled were higher in cost, at the higher cost end, would that imply that you're going to have lower cost next year or with a lower volume are you going to be flat? What is the direction of the cost next year, just given that?

I would think that it will go up. There is definitely a volume impact. It's not -- there is some variable costs you take off, you take off the highest cost lines, but there's a fixed amount that would cause the overall cost to increase. We are not really ready to give magnitude in full obviously indications for '09, but I would say up.

Then the $91 per tonne guidance that you recently gave, I'm assuming that is still based on 775 averaged hot rolled coil. Is that right?

Yes, it is.

And the hot rolled coil price you're concerned about is really the one I think its Arcelor Mittal operation, what they are realizing. Is that correct?

It's based on one of our customers' facilities, Meredith. We haven't ever commented on which customer that was.

Okay, then can you give us any guidance about -- because 775, I know that the steel prices have obviously come way down, but is that operation realizing below sort of what we would see on Bloomberg or an index of US hot rolled?

That's the full year average for this specific site and we actually get productions from them that we utilize. So there is a mix of contract and spot just like anybody else. So it may be very different. It may be consistent with what you would see on Bloomberg. I'm not --

I think, Meredith, you know, it's like we talked about with diesel and natural gas. What you see is spot and reactions that come to that. It's the same way. There's always a lag feature on the way up and on the way down in all of these pricing scenarios.

Okay, that's great. Thank you very much.

Mark Liinamaa, Morgan Stanley.

Good morning. In past presentations and conferences, what have you, you've talked about different commodities that you would like to expand into. Has any of that changed given the recent change in economic outlook? And if the Alpha deal fails to go through, where else might you look as far as different markets?

Nothing has changed. If nothing else, it strengthened our position. Really when we look at it, raw materials that go into making steel despite a recession haven't changed, Mark. So our basic premise is still very strong and like many of us, many of the companies out there are trading at just a small multiple of '09 and '10 multiples as they go forward. So we have not changed our view. We have not changed our view on the growth of the steel industry.

I think all of us are still very bullish that the super cycle is here. We are in a hiccup that wasn't caused by a supply/demand functions of the industry particularly on the supply-side overwhelming the demand side and we think we are just at a pause. But we would still continue to look at other steel making materials as well as met coal in the future.

Okay, can you comment on the decision to idle the pellet lines? Was that done in communication with customers based on their outlook or was it kind of a preemptive thing to make sure you didn't over build?

It is a little of both. This is a very seasoned management team that has seen the downside, as you know, Mark, in this business as well as the upside. When we saw the first signs of this thing starting to come off, we tried to react extremely quickly to move forward to preserve cash and not put it in working inventory that would have to be worked off. Even through our '09 planning session, we are certainly putting a very cautious plan together as well for '09, which again, can always be released if the world gets better.

But this is a seasoned group of people that have seen this before and they knew the right moves to make and we took them very quickly.

Okay, just finally you spent a fair amount of time, money, effort looking at the coal operations. Would you be able to take a guess on what you think trend costs might look like?

I think -- again I think once we get the equipment in, the longwall gets changed out down at Pinnacle, we will start getting back into the benchmarking of other current operations and similar operations with longwalls as they go in. Oak Grove does not have a longwall scheduled for another year, year and a half, and we may take a long, serious look given the capital expenditures of those longwalls and where the market is at that point in time. We may suffer right now with more operational costs versus the needs and supply of our product.

So I can see -- if you don't do anything, the costs can't react. We are certainly doing a lot at Pinnacle, got a great management team at Oak Grove, but we haven't put a lot of new equipment down there yet at this point in time.

So there is no reason to predict any substantial improvement to [cost] in the foreseeable future?

I don't see it in Oak Grove for the first half. Certainly like I say in Pinnacle, there are some new continuous miners coming in here. They should be arriving in the next week or so. And we should get some impacts out of that in the maintenance plans that we are putting in.

Thanks very much.

Operator, if we don't have any more questions, we'll go ahead and finish the call up.

Okay, there are further questions at this time.

Great, everyone, thanks for joining us today. I will be around for the rest of the day if you have follow-up questions and we thank you for taking the time to listen today. Thank you all.

This concludes today's conference. You may now disconnect.