CMS能源 (CMS) 2011 Q4 法說會逐字稿

Good morning, everyone, and welcome to the CMS Energy 2011 results and outlook call.

This call is being recorded.

Just a reminder, there will be a rebroadcast of this conference call today beginning at noon Eastern time running through March 1.

This presentation is also being webcast and is available on CMS Energy's website in the Investor Relations section.

At this time I would now like to turn the call over to Miss Laura Mountcastle, Vice President and Treasurer.

Please go ahead, ma'am.

Thank you.

Good morning and thank you for joining us today.

With me are John Russell, President and CEO, and Tom Web, Executive Vice President and Chief Financial Officer.

Our earnings press release issued earlier today and the presentation used in this webcast are available on our website.

This presentation contains forward-looking statements.

These statements are subject to risks and uncertainties and should be read in conjunction with our Form 10-Ks and 10-Qs.

The forward-looking statements and information and risk factors sections discuss important factors that could cause results to differ materially from those anticipated in such statements.

This presentation also includes non-GAAP measures.

A reconciliation of each of these measures to the most directly comparable GAAP measure is included in the appendix and posted in the Investor section of our website.

Reported earnings could vary because of several factors, such as legacy issues associated with prior asset sales.

Because of those uncertainties, the Company isn't providing reported earnings guidance.

Now I will turn the call over to John.

Thanks, Laura.

Let me welcome everyone for joining us today on our call.

Since I will see many see you next week, I will keep my comments brief and be available for questions after Tom covers the results.

2011 was another year of strong financial performance.

Our adjusted EPS was $1.45, slightly exceeding the guidance set back in February and up nearly 7% from $1.36 adjusted EPS reported in 2010.

This was the ninth consecutive year we achieved or exceeded our original EPS target.

Gross operating cash flow continues to grow primarily driven by our investments in the utility.

In 2011 this cash flow was $1.6 billion.

It is expected to continue to grow at about $100 million a year over the next five years.

Our shareholders experienced an attractive 24% TSR last year and nearly 150% TSR over the past three years.

It appears the market has recognized our consistent financial performance and significant dividend increases over this period.

Although we have made good progress increasing our P/E multiple, we still have more work to do to fully eliminate the peer discount.

Two weeks ago we raised the dividend 14% to a payout level of 62%, which is in line with our peers.

This is a sign of the Board's confidence with our progress and with our long-term business outlook.

Overall, I am very pleased with the results in 2011 and look forward to building on our success in 2012.

One of our top priorities in 2012 is to focus on our customers' needs.

As fundamental as this may seem, we can do a better job.

Last year we launched a customer value initiative which focuses on moving up the value chain.

We will talk more about this important initiative next week at our investor meeting.

We also want to firmly align with you, our shareholders.

We will continue to be transparent with our business model, clearly identifying the financial and operational metrics most important to you and delivering the results.

We are fortunate to have a good energy law in Michigan that provides the foundation for investment decisions and lays the groundwork for regulatory decisions.

However, I believe there is room for improvement in the process that would be in the best interest of all parties.

I believe the few process changes could make Michigan's regulatory model one of the best in the country.

Risk is one of the key elements of any investment or business decision.

We focus on identifying financial and business risk and evaluating the alternatives along with the cost of mitigation.

I am confident that we have mitigated as much risk as possible or have backup plans in place for the various risks we may encounter.

We are establishing our 2012 adjusted EPS guidance at $1.52 to $1.55 per share in a tight range of 5% to 7%.

This should support continued TSR performance in the 9% to 11% range.

Now I will turn the call over to Tom to share more insights about 2011 and 2012.

Thanks, John.

Let me add my welcome to everybody on the call today.

Nearly 10 years ago we established a course to rebuild the Company and grow EPS at what we called a mid single-digit pace.

That evolved into 6% to 8% a year.

We met that goal and we met it at the high end of the range.

We dipped once in 2007 to reflect the planned sale of international assets before the full-year benefits kicked in.

The full-year benefit of lowered debt and interest expense and higher utility, equity, and earnings occurred in 2008 as planned.

This major sale made possible our consistently strong earnings performance.

In 2010 we moved to increase certainty of our investor return.

We shifted a bit toward dividend yield by increasing our dividend 40% from a yield of about 3% to one at 4%.

We also aligned our EPS growth outlook at 5% to 7% and started from the high performance accomplished in 2010.

And as John just highlighted for you, we exceeded our EPS target last year, continuing to perform at the high end of our projected range.

Our dividend increase last month was the sixth in a row.

At $0.96 a share it represents a 62% payout, and that is about the average of our peers.

This combined with strong EPS growth should provide a healthy TSR and a good platform for continued growth.

Equally reflective of our past performance and outlook is our continued operating cash flow growth that is averaging about $100 million each year.

This investment-driven growth provides the capacity to enhance the dividend and the capacity to reduce parent debt when our investment needs ease.

As you can see here, our 2011 earnings growth compared with 2010 was driven by our core business, the utility.

The impact of soft energy prices on our IPPs was largely offset by refinancing in the attractive financial markets.

Now this performance isn't easily accomplished.

Our team works hard every day to deliver it and here is a sampling of the ebbs and flows during 2011.

As you can see in the green bulge on the left top of the slide, the cold winter a year ago provided financial capacity to accelerate reliability spending, specifically including more tree trimming than we originally had planned.

As you can see in the red dip, around the springtime we had to pull back a little when record storms occurred, including ice storms double the level of previous years.

The hot summer, along with good tax and better than planned operating performance, provided space for more customer reliability investment.

We pushed hard last year and in prior years to balance our work in a manner that accelerates customer performance improvements and delivers consistent earnings growth.

It's not easy but the model works well for our customers and you, our investors.

So here is our final report card for 2011 -- all A's.

But there is no rest; we have been working on 2012 plans for more than a year.

We are providing 2012 earnings guidance in a narrow range for the first time in many years at 5% to 7% resulting in earnings at $1.52 to $1.55 a share.

As usual, we are building this off our results last year where were already at the high end of our long-term growth range.

So here is a look at the work ahead.

We have already faced mild winter weather in January and February, and recall we do not have decoupling for weather in the gas business.

Although adverse weather has cost us about $0.05 a share so far this year, we are able to offset it.

We are taking action to address additional mild weather if it's necessary and this is fully consistent with our strategic model.

So how does it work in 2012?

It's the same investment-driven model we have used for several years, the same model that drives us for the next five years.

Our customer-driven investment continues at a pace that grows rate base, EPS, and operating cash flow at about 5% to 7%.

But why not invest less?

Because these are investments -- these are investments that are needed to meet laws, regulations, and responsible service levels for our customers.

Then why not invest more?

We work hard to prioritize the capital spending in a manner to keep our base rate increases at or below inflation.

Otherwise, we don't think we are serving our customers in a responsible manner and one that would be sustainable for you.

Importantly, many people across Michigan worked hard to establish the new state energy law in 2008 and we are fortunate to have fair regulation that supports that law.

For 2012 our electric and gas rate cases are primarily about new capital investment.

The investment represents 95% of the gas and 97% of the electric self-implementation levels.

The gas case may be at a size best settled, but we will learn more about that later today.

Staff positions on both cases reflect ROEs that are below the national average.

They also include sales and uncollectible account levels below existing experience.

As in our last three rounds of rate cases, the commission may choose to strike a balance that provides resources to continue needed investment and reflect existing conditions.

We are fortunate that they have seen these needs and our commitment to serve customers.

We are working diligently to keep our costs and customer rates low, but while incremental power prices are extraordinarily low, well below replacement costs, some customers seek to temporarily leave bundled service.

Some of those not within the 10% cap established in the 2008 energy law have pressed for a higher cap.

Key legislative and administrative leaders have reviewed the situation and chosen so far not to make any change during the period of artificially low prices.

When prices return to a level that reflects replacement costs, our base load generation cost will provide clear advantages to all our bundled customers.

Our model includes a strong customer focus and we are pushing hard, in fact very hard, to enhance service and minimize prices.

We continued to deliver base rate increases at or below the level of inflation.

To support this, we reduced O&M in our last two rate cases.

We expect to keep our base rate case increases below 2% through the next five years.

Our approach is to bring smaller, routine rate cases annually in order to simplify the process, avoid rate shocks, and permit timely recovery of investment -- the primary focus of each request.

In the gas business we expect that reductions in our GCR will result in savings to customers that more than offset increases over the next three years.

We don't expect to be as fortunate in the electric utility, but we are continuing to work to slow the growth of fuel and PSCR costs.

An important part of the plan to hold down rates includes reducing our O&M costs in a manner that enhances service while eliminating waste.

In the last two years we have reduced our headcount by 4%, and this is a big contributor to our plan that not only offsets inflation but reduces total O&M cost by 4%.

Over the next five years we expect to lower O&M costs by a further 1% each year, more than offsetting inflation cost and productivity.

We are in the third year of economic recovery in Michigan with, as shown here, weather-adjusted electric sales up 2% in 2012.

This helps all customers by spreading the impact of needed investment more broadly.

During 2011 Michigan added 80,000 private sector jobs.

Over at the last two years unemployment dropped five points from 14.1% to 9.3%.

While US unemployment dropped 1 point, Michigan ranked number one among all states in manufacturing growth, up 13%, and number two in construction growth, up 3%.

US auto production is up 17% so far this year compared to last year.

Used car prices are high and that is another signal of improving new car sales ahead.

Clearly the revisions to business taxes, the auto recovery, and the constructive approach to economic development are working.

For example, in the most recent State Business Tax Climate Index update that came from a nonpartisan tax research group, Michigan advanced from 49 to number seven among all 50 states.

Pretty good track record.

Although last on our list today, an important and unusual to most utilities element of our model includes the use of NOLs to provide -- to avoid the need for equity.

Not just for this year, not just for next year, but for the next five years.

We plan routine DRIP and other small equity programs but no new block equity offerings over the next five years.

Now, clearly, if an appropriate business case presented itself we wouldn't hesitate to bring it to you, but we are able to self-fund planned investments of about $6.5 billion over the next five years.

Cash flow is healthy with 2012 utility operating cash flow at $1.6 billion, up another $125 million.

Recall that we accelerated both parent debt funding and companywide pension contributions in 2011, eliminating the need for more pension funding this year or next year.

We lowered our discount rates at the end of the year to 4.9%, 50 basis points lower than the prior year.

We also lowered our expected return from 8% to 7.75%.

The adverse earnings impact of about $0.03 a share was more than offset by the affect of our cash contributions to the pension fund.

So, as we do with parent debt, prefunding the pension plan provides another strong measure of risk mitigation.

Here is our routine profit and cash flow sensitivity chart updated to address 2012.

You can use this to easily reach your own estimate of our outlook.

Now, please note that we expect electric decoupling for energy efficiency to continue, but we anticipate decoupling for economic and weather changes to end.

We have highlighted that here in our sensitivities.

Although we prefer to continue decoupling for economic increases or decreases, this probably provides an upside during the recovery.

Please don't forget, we will seek to reinvest any gains, should they occur, in more reliability.

Also, please note the ROE sensitivity.

We anticipate a reduction from existing authorized levels and you can see some possible impacts here.

So here is a recap of our targets for 2012 with important improvements over 2011.

And don't forget the investor meeting that is scheduled for the New York Stock Exchange on February 29.

You will have a chance to hear from our executive team and join us in celebrating our 65th year of listing on the New York Stock Exchange, as well as our 125th year of proudly serving the people and the businesses of the state of Michigan.

So John and I would be delighted now to take your questions.

Operator, if you would open the call.

(Operator Instructions) Kevin Cole, Credit Suisse.

Good morning, guys.

This is actually Dan.

I guess first question is just kind of on the O&M outlook.

Could you give a little more color into where you guys are finding the magnitude of reductions that you expect this year, and maybe just kind of help us get a little deeper into where you are going to pull that money out?

Let me just take that one.

What we have done is, as Tom mentioned, we reduced our headcount by 4% over the past two years.

We made a large investment in SAP, one of the largest in the country I think, a few years ago to automate many of our processes.

We are starting to see the benefits from that automation now.

We also reached an agreement with our union last year, so all employees at the Company we have eliminated the legacy costs going forward.

So we no longer, for new employees, have any defined benefits programs.

They are all defined contribution.

So between healthcare, legacy issues, productivity improvement which we are going to show you some of that in New York next week, reduction in headcount, and overall we continue to invest capital to reduce O&M and fuel costs, which on the O&M side is paying a dividend.

Got it.

Tom, just make sure I had this -- the guidance you guys gave today does that -- the ROE implied for electric, is that based off of the [ten seven] number or a different number?

That is a fair question, Dan, but for obvious reasons we are not actually naming the number.

The way I would ask everyone to think about the answer to that; if you look at the sensitivity chart that we provided you, we showed what would happen if there was a 20 basis point drop on electric and gas.

And I would encourage everyone to know that we can manage that kind of level.

Then I would just tell you, remember our plan, whether we have adverse weather, whatever happens, is to do our best to stick right to our guidance and get it.

And it goes the other way.

If we get some windfalls, some good news, some favorable weather, whatever may happen, we will turn around and reinvest that.

So we are expecting a drop in the ROE.

We don't want to forecast what we think it will be because we don't know, but we will go after doing the things we can control to live within that guidance we have provided.

Nicely evaded, thank you.

And then --

Thanks, Dan.

That will do it.

Thanks, guys.

Mark Barnett, Morningstar.

Good morning, guys.

The ROE notwithstanding, can you talk a little bit about the discrepancy between the staff positions and where you plan or will self-implement?

Maybe especially on the investment side since that is not really something that has proved any kind of sticking point so much in the past.

What I would ask you to do, which is the easy thing for everyone to do, is think about our slide 19 which gives you the difference in the gas case where we have proposed self-implementing at $23 million compared to the staff at $22 million.

I think the focus ought to be look at the big items.

There is a difference in ROE, which I know Dan credits us for evading that a little bit, but there is a difference there and I have a funny feeling there will be some good analysts who can figure out our number from these.

Uncollectibles, it's simply recognizing a three-year history rather than the present experience.

So we are hopeful on that particular one that folks will acknowledge where we are today and maybe do something creative, whether it's a tracker or whatever it may be, as a way of ensuring that we don't over recover on UAs because that is not our intent.

We just want to recover whatever the experience is.

On investment there is some very small pipeline things that are in discussion right now.

Generally it's hard to find an example where we have never been turned down on investment, so as long as there is confidence we are doing the right thing I think we will get proper recovery on the investment.

So there is not a really big, terrible issue there.

On revenue it's a little bit -- this isn't really the mainstream revenue.

This is short sort of the buy-sells that we do, that kind of thing in the gas business.

And this is, again, the staff taking a look at a three-year history rather than our most recent experience.

If you look at what is actually happening today, I think that we can find common ground on that one as well.

And O&M is sort of a little bag of a variety of different things.

So the impression that you might get there is that we may not be as far apart as it appears, and when you think of the size of where we are it's probably something that could move toward settlement.

Those things take a little bit of time though and we will see.

That will be up to the staff and the commission and all the other parties too.

Okay, thanks a lot for that detail.

I guess one more question, might be a little hard, but when you look at the -- obviously the mild weather; you have commented a little bit on the earnings impact already and you mentioned some of the flexibility you have to offset maybe some continued weakness.

Is there a limit to how much flexibility you have or is it a little hard to quantify?

There is absolutely a limit but we would never quantify it because we surprise ourselves.

And I will give you an example that kind of relates to that.

We work hard to bring the O&M costs down because we don't benefit from that except in the short term.

That is a way of creating headroom and helping our customers and offset the recovery that we get from the capital investments that we are putting in place for them.

This year we are able to take our O&M costs down by about 4%.

That may be one of the best that we have ever done.

When I look through modern history our track record has always been up more closer to inflation levels, but we are blowing the inflation away.

We are going to zero and we are not stopping, we are going down.

We told you here that we were looking for the forward years to be flat to 1% down, but as we get closer to each year that is when we work harder to do the things that provide the productivity that make a lot of sense.

And I will give you one example.

Hardening the system is something that we have been doing for some time.

We put investment in place to put better poles, better wires, better pipes in place, and by doing that when storms and problems like that that are O&M related occur we don't have as much problem.

We don't have as much damage.

I think that a team that is focused on improving all the time finds and surprises itself with how much it can do.

So is there a limit?

Of course.

There is a point where we can't go much further and, therefore, do actions that jeopardize the service that our customers would get.

Do we put a number and a cap on it?

No.

And so we will -- I can tell you this.

This will give you a little help.

We didn't anticipate $0.05 of bad news in the weather in January and February where we don't have any decoupling on the weather side for the gas business.

So that wasn't easy, but we have gone off and we already have all the plans in place to fully accommodate that.

We expect that the weather is pretty mild.

You don't have the benefit of this, but I am looking out the window here in Jackson, Michigan.

I would say put your baiting suit on, but it's a little more pleasant than what we might normally see this time of year.

So we are putting some more work together to figure out what we can do.

Great, thanks a lot.

You are welcome.

Ali Agha, SunTrust.

Thank you.

Good morning.

Tom or John, just to be clear, Tom, you alluded a couple of times to the potential for settlements on the rate cases.

Were you just talking about the gas case or is that possible for the electric as well?

Ali, I will take that one.

I think if we do -- if we could reach a settlement it would be likely in the gas business because the amount that we are asking for is relatively small.

And that is going to be more than offset by the reduction of gas prices to our customers.

So regardless of the amount that we get in that case, customers will benefit from a pretty significant reduction in gas costs.

Okay.

Then, secondly, going back to the discussion on retail open access.

There has been some talk or press that the governor may ultimately take a closer look on his end and then decide if anything needs to be changed, etc.

Is that still true?

Can you just give us an update on where the governor's thinking is currently on this?

Yes, I was with him yesterday and there is no interest on his part from what he shared with me and others on moving, taking on energy legislation.

So just a for the record for everyone, the governor has make it made it clear he likes the energy legislation, the head of the Senate Energy Committee likes it, the head of the House Energy Committee likes it.

This isn't to say that somebody may not introduce a bill to increase the cap or do something different.

But I think the governor's interest is more in infrastructure investment, finding a way to make investment in infrastructure which creates jobs and benefits the state in a long-term basis.

It also would help the infrastructure that I think he is worried about, which is the road infrastructure.

I think that you know as we go in and replace pipes and mains and services it does cause havoc in the roads, but after it's completed the roads are replaced.

So it might be a nice combination in the future to be able to replace the infrastructure where you have gas mains at the same time have the infrastructure of the roads replaced at the same time.

Okay.

Last question, Tom, the enterprise results tend to move around somewhat year to year.

Should we take the 2011 results as kind of a good base to think about in the future, or what could be the big variances there to be thinking about?

Yes, on enterprises, in fact I will give you a value-add on this.

I will give you enterprise and one other little piece that is outside the utility.

Enterprises came in at around $0.02 of our earnings and that is the low side.

You can figure out why.

IPP markets are awful and we had two-thirds of the dig operations exposed on contracts because we are waiting for the turn to put some more favorable contracts in place.

So a couple pennies and I would tell you that is closer to the floor, so there may be a little bit of upside in that.

But the way to measure that is use your own judgment on when you think the power prices and the IPP market will actually improve a little bit.

So it could be this year, it could be next year.

Then the other little one, just to take it out, is interbank because that is the only other piece that is outside of the utility.

And that is worth about $0.03 of earnings; pretty stable, pretty reliable little business.

Thank you.

You are welcome.

Jonathan Arnold, Deutsche Bank.

Good morning.

Tom, you mentioned one thing I wanted to ask about just then so I will start with that.

On interbank were you highlighting that as something that has been an unusual help in Q4?

Does it help to offset or was that -- I am just not quite sure why you called it out on the slide.

Only reason I called it out was so that you would see everything that is outside of the utility.

Between our enterprise business, which is the little renewable plants, and our Dearborn industrial generation IPP the only other thing that exists is the interbank.

We are big on transparency, so I wanted you know to know for your own planning purposes when you are modeling the utility what is left.

No, I am not trying to tell you that interbank was any particularly strong contributor in any unusual way to our business last year or this year, but rather to tell you that it's -- inside of that little small organization it has grown very well and it has got its risk measures well under control.

So we are very comfortable with where they are, but put the two together we are only looking at about a $0.05 contribution to our earnings -- enterprises and interbank.

Okay.

So the slide seemed to imply that it had somehow kind of closed the gap in Q4 or something.

No.

You could see some movements up and down but, no, nothing.

They did well.

I am sure one of them may be listening and I want to compliment them on the excellent work they do, but, no, it was within the scale of the Company not a giant change.

Okay.

Secondly, I am guessing there is no real changes to the broad annual year-by-year CapEx plan that you laid out to [EI] in November.

Is that correct?

No, we have had a little bit of change as the EPA has been trying to put new rules in place and the courts have been moving them around.

But what I would tell you, and our folks that work very hard on this probably won't appreciate my comment, but it's a lot of hard work but a lot of noise when it comes to looking at our total capital expenditures of $6.6 billion.

So we have had to move the spending around a wee bit inside of the five-year period but not in total.

So there will be lots of other things we will be looking at, but I would tell you what you have seen in our spending pattern is pretty similar to what we have in as we move one year out and give you a fresh five-year look.

But keep in mind we are deep into those spending plans, particularly on the EPA work, so you see this year at $1.4 billion but that is not news from what we had been telling you in the past.

We are well into that spending program.

So is the makeup of the $1.4 billion more or less unchanged?

Well, minor changes, but from the scale of what we look at when we break it out in distribution and the environmental work and in generation it's pretty much what you have seen.

We will talk to you more about that when we come out to New York.

I hope you are able to be a part of that because we will have the executives there who will tell you about where that investment goes on the environmental side and what it does for us.

And we will talk to you about where it's going on the distribution side and why it's so important to our customers.

So you will get to connect some dots and I think will be real helpful, and you will get to ask the experts.

They may tell you it's slightly more than noise, but I have got the big picture look.

Okay.

Tom, if I may on one other thing, you have talked about closing your smaller coal plants in 2015.

I was just wondering, at the current low nat gas prices can you conceive of a situation where that might potentially be accelerated?

And if that was to happen, what would be the recommendations for other parts of the plan, maybe transmission or other offsets?

Jonathan, this is John.

No, we would not accelerate it.

Even with the low gas prices what is unique about our smaller coal plants is they are cost-effective.

They burn Western coal.

They are almost -- not fully depreciated but close to fully depreciated -- so their dispatch cost is still very competitive in the market.

So despite the natural gas prices they are today these units are still running.

What causes them to be mothballed is the fact that the EPA rules will likely require additional equipment to be put on which will cause them to be dispatched at a higher cost.

Thank you.

Thank you.

Thanks, Jonathan.

Brian Russo, Ladenburg Thalmann.

Good morning.

Tom, you mentioned earlier of possibly addressing parent debt once the capital budget eases.

Just wondering if you could maybe elaborate on that a little bit.

Yes, that is a great question.

We have a goal inside the Company to try to keep that dead flat or bring it down.

I would like to make two points about it.

One is that with all the bonus depreciation that we have been getting each of the last few years, including 100% last year, it has been wonderful.

But it all happens in the utility and creates a bubble at the parent debt because we aren't able to use our NOLs to shelter taxes because they are already sheltered down at the utility.

So for that reason you see a little bubble up.

We don't like it but we know it's very temporary.

We are still on our trajectory to bring that down as we go through time, so that is our plan.

But the second point is the reason we are not bringing it down at an even faster clip is simply because when we invest in the utility we get that 10% to 11% after-tax return and when we take out the parent debt we only get a 4% to 5% after-tax return.

So the comparison on the economics is real simple.

But we will talk to you more -- hope you will be with us too.

We will talk to you more in New York to remind you about the things we do to ensure that we are well-protected, like thick liquidity and prefunding and all that, so the parent debt won't be an issue.

And as we keep growing the utility the cash flow grows through time.

It gets to a very high level, which was the point in the slide, so that when your spending comes off a little bit you can put to use in more dividend or you can put it in use to parent debt reduction.

There will be a lot of wonderful choices that we are creating for ourselves, but it's a few years away.

Okay.

Just embedded in the 2012 guidance, what is the assumption on the parent debt costs on a per-share basis?

I will get that for you.

Our interest expense you mean?

Yes, the corporate expense drag.

Yes.

We would -- the total number -- well, this is corporate and other.

Let's see if we can get that answer on the debt part alone, but it's $0.39 negative to cover interest expense as well as all our corporate costs.

So if you go ahead, we will have somebody quickly look up the interest only.

We have that handy for you.

That is fine, the $0.39 is fine.

Thank you very much.

You have got it.

Thank you for asking.

(Operator Instructions) That will conclude the question-and-answer portion of our call.

I would now like to turn the presentation back over to Mr.

John Russell for closing remarks.

Just before John wraps up, because we don't like to leave anything open, the interest expense is $0.35.

Sorry we didn't have that at our fingertips.

Then, again, follow up in New York; we can give you more detail of the split of that, how that is done.

So I will turn back to John.

Thank you.

Thanks, Tom.

Just let me wrap it up and I will wrap it up briefly.

Tom and I are looking forward to seeing all of you in New York next week.

I just want to give you a heads up for New York, there probably won't be anything revolutionary there or big strategic announcements.

What we really want you to do is meet the executive management team.

We are going to talk about the customer value initiative, we are going to talk about our environmental compliance plan, and we are going to talk about our regulatory strategy.

We will have the experts there for you to talk to and I am proud to have them there.

I want you to get a chance to meet the people that make this company successful.

So with that I am glad you joined us today and we look forward to seeing you next week in New York.

Thank you.

This concludes today's conference.

We thank everyone for your participation.

You may now disconnect.

Have a wonderful day.