Commercial Metals Co (CMC) 2016 Q3 法說會逐字稿

Hello and welcome, everyone, to today's Commercial Metals Company third quarter of FY16 earnings call.

Today's call is being recorded and after the Company's remarks, we will have a question-and-answer session.

We will have a few instructions at that time.

I would like to remind all participants that during the course of this conference call, the Company will make statements that provide information other than historical information and will include expectations regarding economic conditions, US steel import levels, US construction activity, demand for finished steel products, the Company's future operations, the Company's future results of operations, the commissioning of the Company's planned new steel micro-mill in Oklahoma, and capital spending.

These and other similar statements are considered forward-looking and may involve speculation and are subject to risk and uncertainties that could cause actual results to differ materially from these expectations.

These statements reflect the Company's beliefs based on current conditions but are subject to certain risk and uncertainties, including those that are described in the risk factors section of the Company's latest annual report on Form 10-K.

Although these statements are based on Management's current expectations and assumptions, CMC offers no assurance that events or facts will happen as expected.

All statements are made only as of this date, except as required by law.

CMC does not assume any obligation to update these statements in connection with future events, new information, or otherwise.

Some numbers discussed or presented will be non-GAAP financial measures and reconciliations for such numbers can be found in the Company's earnings release or on the Company's website.

And now, for opening remarks and introductions, I will turn the call over to the Chairman of the Board, President and Chief Executive Officer of Commercial Metals Company, Mr. Joe Alvarado.

Mr. Alvarado, the floor is yours, sir.

Thank you.

Good morning and welcome to everyone joining us to review the results of our third quarter of FY16.

I'll review highlights from the quarter and Mary Lindsey, Vice President and Chief Financial Officer, will cover the quarter in more detail.

Afterwards, I'll conclude our prepared remarks with a discussion on our outlook for the fourth quarter of FY16, after which we will open the call to questions.

As announced in our earnings release this morning, we reported net sales of $1.2 billion for the third quarter of FY16.

Earnings from continuing operations were $35.1 million or $0.30 per diluted share.

Also as noted in our press release on June 22, I'm pleased to report that the Board of Directors declared a regular quarterly cash dividend of $0.12 per share of CMC common stock for stockholders of record on July 7, 2016.

The dividend will be paid on July 21, 2016.

The cash dividend reflects CMC's 207th consecutive quarterly dividend.

Now turning to the current trends and conditions in the market in which we operate.

Overall, the third quarter of FY16 was a strong quarter for CMC.

Four of our five segments reported increased shipments compared to the third quarter of FY15.

Shipments were driven by increased rebar demand from the non-residential construction market.

Of particular note, our Americas Fabrication segment continued to be a significant contributor to CMC profitability by recording its best third-quarter adjusted operating profit since the third quarter of FY07.

This segment benefited from reduced raw material input costs, resulting in expanded metal margins compared to the third quarter of FY15.

In scrap markets, monthly average ferrous scrap prices for the third quarter of FY16 as reported by AMM increased approximately 39% compared to the second quarter of FY16.

As a result, average selling prices and metal margins for our recycling segment increased compared to the second quarter of FY16.

Additionally, the increase in ferrous scrap prices has driven an increase in finished goods pricing.

Regarding the passage of the Fix America's Surface Transportation Act, or FAST, we have yet to experience much additional demand as a result; however, we expect that we will see some improved demand tied to this act but not until our FY17 and beyond.

Our International Marketing and Distribution segment was adversely impacted by low demand for tubular products as well as US trade action related to flat rolled products.

With that as an overview, I'll now turn the discussion over to Mary Lindsey, Vice President and Chief Financial Officer.

Mary?

Thank you, Joe, and good morning to everyone joining on the call.

As Joe mentioned, for the third quarter of FY16, we reported earnings from continuing operations of $35.1 million, or $0.30 per diluted share, which compares to earnings from continuing operations of $39.2 million or $0.34 per diluted share for the third quarter of the prior year.

Last year's third-quarter results included an after-tax net benefit of $18.8 million in our International Marketing and Distribution segment associated with the favorable customer contract termination, partially offset by inventory write-downs.

During June 2016, we entered a definitive agreement to sell our wholly-owned Australian subsidiary, Gam Steel Proprietary Limited, which is classified as held for sale and presented as a discontinued operation.

Our third-quarter results of discontinued operations primarily consists of a non-cash impairment charge of $15.8 million, including the impact of an approximate $13.5 million accumulated foreign currency translation loss.

Summarizing our results by segment, our Americas Recycling segment recorded adjusted operating loss of $2 million for the third quarter of FY16 compared to a loss of $3.7 million for the third quarter of FY15 and a loss of $7.6 million last quarter.

While a loss, FY16 third-quarter results improved due to a per-ton margin expansion of 12% on non-ferrous shipments and 6% on ferrous shipments.

Non-ferrous shipments decreased 11%, while ferrous shipments held steady compared to the third quarter of FY15.

Our Americas Mill segment recorded adjusted operating profit of $55 million for the third quarter of FY16 compared to adjusted operating profit of $63.3 million for the same period in 2015.

During the third quarter of FY16, metal margins compressed by 22% on an 8% increase in volume compared to the third quarter of FY15.

Offsetting the metal margin compression are improvements in overall conversion cost.

Our Americas Fabrication segment recorded adjusted operating profit of $22.8 million for the third quarter of FY16, which represents this segment's best third quarter since FY07.

This compares to adjusted operating profit of $13.7 million for the third quarter of FY15.

The $9.1 million, or 67%, improvement in adjusted operating profit was primarily due to a 4% per short ton increase in the average composite metal margin, coupled with a 5% increase in volume and a $3 million decrease in employee related expenses compared to the same period in 2015.

Our International Mill segment recorded adjusted operating profit of $5.5 million for the third quarter of FY16 compared to adjusted operating profit of $6.1 million for the same period in 2015.

Compared to the third quarter of FY15, adjusted operating profit decreased due to 3% margin compression, partially offset by a 9% increase in tons shipped.

Our International Marketing and Distribution segment recorded adjusted operating profit of $0.9 million for the third quarter of FY16 compared to adjusted operating profit of $25.6 million for the same period in the prior fiscal year.

In the third quarter of FY15, adjusted operating profit included a $28.9 million net pre-tax benefit discussed previously.

Additionally, employee related expenses decreased $9 million while volumes and average margins for raw materials and steel trading divisions headquartered in the US and our operations in Europe decreased compared to the third quarter of FY15.

Turning to our balance sheet and liquidity.

Our balance sheet remains healthy and is a key advantage for CMC.

As of May 31, 2016, cash and short-term investments totaled approximately $483.9 million and total liquidity was in excess of $1 billion.

Additionally, $49.5 million in restricted cash, primarily related to the construction of a new steel micro-mill in Durant, Oklahoma is included in other current assets.

During the third quarter of 2016, we had cash flows from operations of approximately $174.1 million.

Capital expenditures were $42 million for the third quarter of FY16 compared to $26.5 million in the prior-year third quarter.

We estimate that our capital spending for FY16 will be in the range of $185 million to $195 million, or an additional [$88.5 million] to $90.5 million, through the end of FY16, which includes expenditures related to the construction of our new Oklahoma micro-mill.

Thank you very much.

I'll now turn it back over to Joe for the outlook.

Thank you, Mary.

We expect the results of our fiscal fourth quarter to remain strong, consistent with the results of our fiscal third quarter.

Our key market indicators continue to indicate strong demand in the US and Polish construction markets.

Non-residential construction spending, which is our primary end use market in the US, was up 5% year-over-year in May 2016.

The Architecture Billings Index remained above 50 for 24 of the 27 months ended May 2016, which has historically been a leading indicator of improved non-residential construction.

We expect to begin realizing productivity and cost improvements in the fourth quarter of FY16 from key capital projects concluded in recent months.

Our balance sheet remains a key strength of our Company and we expect to finish FY16 well positioned to continue the positive momentum into FY17.

Thank you for your attention.

At this time, we will now open the call to questions.

Thank you, sir.

(Operator Instructions)

The first question we have will come from Evan Kurtz with Morgan Stanley.

Please go ahead.

Hello.

Good morning, Joe and Barbara.

Good morning, Evan.

I had a question for you on imports.

It seems like the spread between Turkish rebar and US rebar are starting to widen up a little bit here again.

Just wondering if you're seeing any import competition pressure selling into the market right now and maybe any updates you might have on some further trade action potential on the long product side?

Maybe we'll start with the end of that question.

The process continues through the normal system with the Department of Commerce including appeals and we don't anticipate anything in the way of immediate remediation.

We've long asserted that those duties that were imposed convince us that we're going to be facing Turkish imports until Turkish markets become stronger themselves, home markets.

And so we deal with it and it is a factor.

Activity has ebbed and flowed a little bit out of Turkey over the last couple months, but they continue to ship significant quantities into North America.

It's a very attractive market and, as you know, a lot of those quantities come into the Gulf Coast which directly impacts our own market and marketing region.

Got it.

And then maybe just one other follow-up.

Maybe you can help me a little bit.

The metal service center in [Tetuta] has been showing some pretty weak shipment numbers for the bars and structurals and that kind of indicates there might be some issues in the non-res market, but then looking at your rebar numbers this month, it looks like the volumes were up pretty healthy year-on-year.

How do you account for the discrepancy?

Is there some other source outside of the MSCI that's been supplying more into the market this year versus last year that could be causing that?

Normally, Evan, we don't associate our merchant shipments with construction activity, certainly not directly as our rebar or fab shipments, and we've noticed the same numbers in terms of shipments being down.

However, I can't point to any one event or incident or activity that leads to the lower shipping activity.

I wish I could give you a better answer, but as most of what we ship to that market is then dispersed into a broad range of markets, it's probably better to look at that data.

Evan, just a little follow on to Joe's color, I was with some service centers recently and I think the service centers are really watching pricing and I think it's more a signal that they anticipate lower pricing and they are not willing to load up on inventory at this point in time as opposed to any sort of pull back in end market demand.

Great.

Thanks for the color, guys.

Next we have Phil Gibbs with KeyBanc Capital Markets.

Morning.

Good morning, Phil.

In terms of Durant, can you provide an update there if anything's changed with timing?

And I know you trimmed your CapEx budget a little bit this year, but should we expect that to be pushed out to next year?

Well, I think, Phil, as you and everyone have noted that May was a very rainy time of year in the central region in Texas, North Texas and on into Oklahoma, and that certainly had some impact on our ability to move dirt, but we're now into the hot part of the year and we've had a string of nice weather and so we're working hard to catch up, if you will, with the time we lost in May.

Certainly, we built some of that into our original schedule so we're not concerned at this point and we're still anticipating a fall to late 2017 start up in commissioning.

Now as far as the CapEx spending, naturally, that will shift some and some of that will spill over into 2017.

Okay, terrific.

And in terms of the guidance, Joe, I think you said results consistent with the third quarter.

Are you talking EBITDA on that mark?

And then also if any qualification or clarification you could give rather on the tax rate would be helpful, too, because I know third quarter was unusual.

Well, I'm going to have Mary talk a little bit about the tax rate and then we'll come back to expectations for the quarter.

Yes, actually, Phil, the third quarter looked much more consistent with a normal quarter.

The second quarter was quite an odd quarter as we had a very low profit before tax number.

As you know, the second quarter typically is relatively weak quarter, so the tax rate was in fact very strange in the second quarter.

The third quarter, there were a couple of items that were favorable items, all related to resolution of Internal Revenue Service audits and closing out of Internal Revenue Service audits, but the tax rate, the run rate remains 28.5%, 29% for the full year and we would expect it to come out that way.

So as far as looking into the fourth quarter, Phil, we see strong demand across the board but particularly in the construction markets that we serve.

I mentioned the Architectural Billing Index and the strength in that index as an indicator.

Our shipments are high, our order book is strong, so we're very optimistic and when we factor in the fact that our Polish mill has been going through a refurbishment of caster, the installation of a new caster, and we had to build inventories and that facility will be starting up in mid-July and we see strong demand in Poland and a good backlog there.

And we're optimistic about the quarter and that's why we present it as being consistent with the third quarter.

For the time being, there's definitely some upside in anything that we do but there's also some downside risk, so we prefer the view of the consistent quarter-to-quarter performance.

Terrific and if I could get one more in here just on the billet or semi-finished shipments, if you could give any color as to what those may have been this quarter versus last year.

Thanks so much.

Phil, we'll look up the billet number and we'll weave that in here as we take the next call.

Next we have Andrew Lane with Morningstar.

Hello, good morning.

Good morning, Andrew.

I think you just referenced it, but I was wondering if you could provide a little bit more color on the current demand environment for the Polish operation and really just what you expect to see over the next year or two?

Yes, so the Polish environment has struggled over the last few years for a host of different reasons and it doesn't matter that they're different, they all had an impact on volume and pricing in the market.

Some of that noise has been taken out of the system with recent trade actions and we've been beefing up our operations to continue to improve our cost efficiency, and the cast, the single caster operation, single furnace operation get us to where our Polish operations are identical to any of our North American operations.

The market itself is strong and has been strong.

There's good funding from the eurozone to support construction activity in the Polish market.

And without the distraction of imports or VAT circumvention, which are two of the major problems that we faced over the last couple years, we see strong order demand and a good order book and continued strong construction activity.

The only downside in Poland is, as it always has been in our second fiscal quarter when we go through a real winter there as compared to a winter in Texas, the construction activity was slow, but that's not abnormal, so we're encouraged by the strength of the market and we're also encouraged by the mix of the products that we're selling.

We upgraded facilities there to be able to sell more merchant product and that's an important part of our mix going forward.

Thanks for the color.

I'll get back in the queue.

Sure.

And if I may, the billet shipments for the third quarter in the US were 41,000 tons and that compares to 33,000 in the same quarter 2015.

(Operator Instructions)

Next we have John Tumazos of Very Independent Research.

Thank you very much.

As scrap prices rebounded about $100 in recent months, how much have flows or availability of scrap steel or non-ferrous flows with base metals prices improved?

Well the second quarter, there was a higher percentage of our total scrap consumed that came from our own yards because flows were more challenged.

Those flows are more normalized.

And as is normally the case, John, when prices go up, there's a lot of people who will sit on inventories and move them only when they feel prices are warranted.

And so flows have been good, not challenged at all, certainly not like it was in the second quarter.

Have scrap prices risen enough to make steel scrap flows similar to what they were in 2013 or 2014 before the downturn?

You know, thinking back to that period of time, there was significant exports, which would have contributed to flows in pricing as well and exports have ebbed and flowed here more recently, and certainly in the last calendar year those exports were down.

I'm not sure that those prices are up high enough and can still be mitigated by international trade of billets that have, in some cases, supplanted purchases of scrap iron units.

So I wouldn't characterize it as being similar to 2014 because the phenomena of Chinese billets moving throughout the globe is more pronounced today than it was back then.

Do you think in the future there's potential for above-normal scrap flows because the scrap kind of backs up and needs to go somewhere?

John, I'd say no and the reason I say no is there's always industrial scrap and that is what it is.

I think back-ups occur when prices are high enough to start generating more demolition in obsolete scrap and I don't think prices are high enough for that to become a factor to fill the channel, if you will, particularly in light of iron ore prices and, again, availability of substitution of billets in cases where they can be shipped from China or from Russia to replace scrap based production.

The next question we have comes from Roresa Mojo of D.A. Davidson.

Hello, this is Mojo in for Brent.

Kind of sticking with scrap prices, what was the big drag in the quarter given positive movement in ferrous scrap?

Sorry, could you repeat your question, Mojo?

What was the big drag in the quarter given that you had a positive move in ferrous scrap prices?

I'm not sure what you're referencing in terms of big drag.

If you're referencing our recycling segment, we saw a significant improvement in the results; still a challenged market, so unfortunately, we had a slight loss in that segment.

So I guess I'm really struggling with what your reference to a big drag?

Referencing the recycling segment.

Okay.

Answer the question.

So I think that answered it.

We did see the advantage of higher scrap price in the quarter and the results of the recycling segment and the improvement is pretty substantial quarter-over-quarter.

But again, that part of the market continues to be quite challenging and so we continue to work on all efforts to manage our cost structure and get that to a breakeven position.

We were positive on the EBITDA line in the recycling segment, just not yet on the operating profit line.

All right.

And also, where do you see steel prices or rebar prices headed near-term and what coating activity looks like in the fabrication segment?

Mojo, we don't comment on prices.

We never have and that's just not -- we feel we would be ill-advised to comment on pricing and direction.

All right, then.

Thank you.

The next question we have comes from Aldo Mazzaferro of Macquarie.

Good morning, Joe.

Good morning.

I'm sorry, I've got a weak cell phone connection, but I'm interested in two things.

I notice that, despite the really major move in the scrap market, your average selling price in the scrap market didn't move up much and I'm just wondering why that would be.

And then, related to that, the metal spreads on your Americas mills actually narrowed, and I'm wondering whether that was despite the fact that your scrap prices -- I think I just heard you say you moved more scrap than usual into your own mills.

So I guess I'm wondering what you think about your metal spread potential going forward in the mills and on the scrap price whether you've got catching up to do on the market relative to the market in the scrap market division.

Thanks.

So first off, Aldo, the higher percentage of scrap into our own mills from recycling, that was the second quarter phenomenon, not third.

Oh, sorry.

Yes, and I'm not quite sure we're capturing the exact spirit of your question beyond that, if maybe you can just kind of rephrase that for us?

I guess I was just surprised that your average selling price in the recycling division didn't rise as much as I thought, and despite that, the metal spreads narrowed in the mills.

So it looked like scrap may have not been up as much, and yet the mills metal spread narrowed more than I thought.

I'm just wondering if there was more catching up to do going the next couple quarters in terms of your pricing on scrap.

Yes, you know what, Aldo, what you might be reading into it is the regional differences that we see ourselves from time to time.

Particularly, timing can be a significant factor.

For example, the closer we get to the summer and with higher operating rates, particularly in the integrated mills in the Midwest, that starts affecting prices in a way that might be inconsistent with what we're seeing in some of the other regions.

So that differential in region might be some of what you're seeing as well as whatever lead or lag time there might be with inventory.

So I wouldn't read too much into that.

We don't.

Okay.

On a separate note, in terms of your International Market and Distribution, the IMD division, if we stay in this slow global environment with commodity prices more or less stable at low levels, are you looking at slightly better or slightly worse than breakeven or kind of in that range for this division or what do you think the outlook is for some kind of an earnings recovery there?

Yes, Aldo, this is Barbara.

I'll try to take a crack at it.

We were slightly positive in this quarter and that's, I think, a result of many different factors.

It seems that the markets have started to stabilize a bit in terms of energy products and so I think we've been bouncing around on the bottom and hopefully things are stabilizing from here.

Our raw material trading business tends to be fairly consistent and we would anticipate that going forward, although at lower levels than if you go back four or five years.

And we've been working on a number of actions to, cost actions, to adjust to the just lack of activity level on the steel trading side and I think all of those things combined, we would anticipate the segment to stay in the positive range unless there's some significant shift.

Thank you.

The next question we have will come from Paul Luther, Bank of America Merrill Lynch.

Hello, Joe, Barbara, Mary.

Thanks for taking my questions here.

Good morning.

Good morning.

I had a question about, if we could talk a bit about the big nice free cash flow number that you have this quarter.

There was another working capital release.

Wondering if you could just provide a little bit more color on what's happening there with another release and if some of that is just from the continued shrinkage you've been executing on the M&D side.

And then what the outlook might be for working capital maybe in Q4 and in Q1 of FY17?

We have been seeing a significant working capital release really on both sides of the business, some of that driven by falling prices.

And so that's naturally going to create some release in working capital.

On the M&D side, as I said earlier, the activity levels are much lower than what they've been historically and so naturally, we're cycling through the working capital and that's coming through in cash.

I don't anticipate a lot of change on the M&D side in terms of the amount of working capital that we have deployed there.

There could be some additional release, but at this point, I think we're more at a stable level.

On the mill side, with stronger shipments, we've actually seen our inventory levels fall below target levels, and in some cases, in some areas where we may need to build back a little bit of inventory, but most of the change on the mill side is a result of whatever's going on with pricing.

And moving into the first quarter of FY17, generally our low point of working capital is, I'll call it, in the October/November time frame and then we see a build of working capital as we move into the busier part of the year after the first of the calendar year.

Got it.

Thanks, that's helpful.

And I'm wondering if you can give us some help too on the CapEx outlook, maybe in 2017, if you can make comments or give us a sense of what it may look like relative to 2016 as construction ramps up at the Durant mill?

Yes, we're in the beginning stages of our 2017 planning and so I think the best way I can describe it is we'll have a normal amount of sustaining maintenance type of capital in that $100 million to $125 million range and then clearly, there will be some carryover capital from Durant into 2017.

We're still working through what the number will be and a lot will depend on how much progress there is over the next three months to the end of this fiscal year, but clearly, there's going to be north of $100 million associated with Durant in FY17.

Okay.

Great.

That's really helpful.

And then if I could sneak in just one more quick one.

Joe, in the outlook, you talked about in Q4 some cost saving efforts that have been made, it sounds like incrementally for Q4 versus Q3, if I understood that correctly.

So I'm wondering if you could just give us a little bit more sense or color on cost savings and how significant they may be going forward versus recent.

Gladly.

Well, there are several different fronts on which we are operating and to reduce costs, always on the personnel front and an operational perspective, reducing and getting out of activities that are not generating profits for the business, who don't have good long term prospects for us.

But in addition, we've had a fairly heavy capital budget this year and installed some projects, or completed some projects, that will start having benefit in the fourth quarter and beyond, so we've been busy on the capital front.

Among them are the caster that I already mentioned, the caster project I mentioned in Poland.

We installed a new reheat furnace in our Saguin operation, which is the replacement of a 20-year-old furnace with the attendant improvements in cost and productivity that are related to a new furnace.

We've also, working through the benefits of the continuous billet welder that we've installed in South Carolina, which gives us some cost advantages and improves productivity there as well, and other projects.

And certainly, for the future, the Durant mill is another yet one of those important cost benefits; that's for the future.

But the others all weigh into improved productivity in the fourth quarter and beyond.

In addition to that, P.T., we've also been quite open in discussing with you our initiative to reduce our costs through supply chain and logistics consolidation activities and those two will yield significant results.

But in every way, shape and form, including SG&A, we work and continue to work very, very hard on reducing our overall cost structure and as those efforts continue, we'll continue to harvest the benefits.

Great.

All right, thanks a lot, Joe.

Barbara, appreciate it.

(Operator Instructions)

Next we have Charles Bradford of Bradford Research.

Good morning.

Good morning, Chuck.

Hello, how are you?

Good.

How are you?

Question for you from what you're seeing on the trade side.

Since you deal so much with moving products from Asia to the US, are you seeing any changes in the pattern as some of the Asian producers get cut back by the US trade restrictions?

More Vietnam instead of China, that kind of thing.

Especially as compared to a year ago, Chuck, when product was flowing much more freely into North America.

There's no doubt that the trade actions that have taken and preliminary rulings have set trade back and there's a much more wait-and-see attitude.

And certainly those without trade restrictions, using Vietnam as an example, have more of an open field in North America as some of that capacity comes on-stream and with recently added capacity.

So there's definitely been a shift in sourcing, but more importantly, there's been a slowing, if you will, of activity in North America, somewhat a wait-and-see attitude because there's some, from the preliminary ruling, that still could conceivably ship into North America, but there's a great deal of caution that's being exercised on the part of exporters to the United States.

What are you hearing as far as the billet exports out of places like China going to Turkey in place of the Turks buying scrap?

Is that still going full bore or has it slowed down at all?

Well, after the Chinese New Year when prices spiked across the board for all products including billets, there was a dramatic slowing of trade from China in billets to places like Turkey.

The Russians didn't have any such price rise as the Chinese were seeing in Southeast Asia, or implementing, so that was always an available source, but it's really I think pretty much up to the Turks to decide what their cheapest sourcing of raw material is and it will ebb and flow.

Following the dramatic rise in billet prices in China, there's a subsequent drop as capacity continued to come on stream and I think those billets certainly are readily available to the Turks.

It's more a timing issue and timing related to pricing and the Turkish export markets as well.

So you should expect to see that continue, Chuck, until the overall capacity issue is addressed in China.

What is that doing to the demand for scrap from the US?

It looks like Turks aren't buying very much.

Yes, as I pointed out earlier, if you look at last year's shipments from North America on export and compare that to prior years, there's been a steady decline and that pressure will continue as long as scrap prices can be undercut by imported semi-finished prices in this case.

In our case, it would be billets.

Thank you.

All right.

Thanks, Chuck.

At this time, there appear to be no further questions.

Mr. Alvarado, I'll turn the conference back over to you, sir, for closing remarks.

I'll be very brief and I want to say thank you to everyone for joining us on today's conference call and we certainly look forward to speaking with many of you during our investor visits in the coming weeks.

Thanks and have a good day.

And we thank you, sir, and to the rest of the Management Team for your time also today.

The conference call has now concluded.

At this time, you may disconnect your lines.

Thank you, take care and have a great day, everyone.