H2O America (HTO) 2021 Q3 法說會逐字稿

Good afternoon, everyone, and welcome to the SJW Group Q3 2021 financial results conference call. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Jim Lynch.

Thank you, operator. Welcome to the third quarter 2021 financial results conference call for SJW Group. I will be presenting today with Eric Thornburg, Chairman of the Board, President and Chief Executive Officer. For those who would like to follow along, slides accompanying our remarks are available on our website at www.sjwgroup.com.

Before we begin today's presentation, I would like to remind you that this presentation and related materials posted on our website may contain forward-looking statements. These statements are based on estimates and assumptions made by the company in light of its experience, historical trends, current conditions and expected future developments as well as other factors that the company believes are appropriate under the circumstances. Many factors would cause the company's actual results and performance to differ materially from those expressed or implied by the forward-looking statements.

For a description of some of the factors that could cause actual result to be different from statements in this presentation, we refer you to the financial results press release and too our most recent Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission, copies of which may be obtained on our website. All forward-looking statements are made as of today, and SJW Group disclaims any duty to update or revise such statements. You will have an opportunity to ask questions at the end of the presentation. With that, I will turn the call over to Eric.

Thank you, Jim. Welcome, everyone, and thank you for joining us. I'm Eric Thornburg, and it is my honor to serve as Chairman, President and CEO of SJW Group. As an essential service, we deliver life sustaining water to families and communities where we live, work and serve. Whether it be high-quality water in a glass, a robust supply at the nearby fire hydrant, or reliable infrastructure on main street to support economic development, water is at the heart of our communities. Delivering on our vital public mission requires our leaders and employees to maintain a laser focus on the present, plan decades into the future, and, and as the past 1.5 years has shown, adapt to unforeseen challenges along the way. SJW Group and its employees are committed to being a positive force for good in the community, protect and improve the environment, support water equity, have a diverse and inclusive workplace and engage vendors and suppliers that reflect the diversity of the communities we serve. We are able to build for the future because of our solid foundation.

Our employee teams are working across the country and leaning in to deliver on our commitment to be a leader across the environmental, social and governance landscape. ESG reflects our long-standing sense of purpose and our culture of service. To that end, we are finalizing our first enterprise-wide greenhouse gas inventory, which will be the benchmark for reducing our carbon footprint. We already have solar installations in California, Connecticut and Maine, and we're working toward more. One promising project would eventually allow us to meet all of the power needs of our new Saco River drinking water treatment facility in Maine. The grounds of the new Saco River facility will also feature more than 250 acres of protected open space and a pollinator garden.

Building on our 2020 human rights policy, every employee in our organization is required to complete training on the policy. Further, as an organization, we support water equity and believe that access to safe, affordable and reliable water service is a human right. We have financial assistance programs to assist customers facing hardships, and we are especially proud of our water rate assistance programs in California and Connecticut that provide a 15% reduction on water bills for income eligible residential customers. More than $1.1 billion in federal dollars is earmarked to states to pay water and wastewater bills in arrears on behalf of low-income residents through the low-income household water assistance program. We are actively engaged to make sure that our customers in all 4 states can benefit from the program.

Importantly, we believe our commitment to water equity includes investing in our systems so they can deliver reliable supply of high-quality water. Our subsidiaries are making consistent, incremental investments in infrastructure so that customers at all income levels will have access to the quality and reliable water service they deserve with the costs and rate impacts of those investments incurred gradually, so they can be more easily addressed by the utility and our customers. Artificially keeping rates low by deferring investment is shortsighted and not sustainable and does not really serve our customers who all deserve quality water and service for the long term.

Unfortunately, the water shortage emergency declared in June by Valley Water, our California water wholesaler, remains in place. San Jose Water continues to aggressively promote water conservation to its customers in order to reach Valley Water's stated goal of reducing water consumption by 15% compared to 2019. The California Public Utilities Commission, or CPUC, has approved our request to establish a water conservation memorandum account to track the revenue impact of authorized versus actual water consumption while we are promoting conservation. A water conservation expense memorandum account was also authorized to track the incremental expenses required to implement our mandatory water conservation program. Both memorandum accounts allow for the potential future recovery of the revenue and expense impacts.

We continue to have adequate water supply to meet the needs of our California customers. Just last week, some much-needed rain moved through the region. We're hopeful it is an early start to the traditional rainy season in the Bay Area. We are committed to strong partnerships with our communities. San Jose Water has been recognized by American Best in Business Awards for the company's response to COVID-19, which included donating and distributing PPE to other water utilities and community organizations.

The CPUC held their 19th Annual Supplier Diversity En Banc, titled Thriving and Surviving During a Pandemic, on October 14, a full day virtual event dedicated to supplier diversity. All CPUC commissioners were present and led a conversation on supplier diversity, including a recap of California regulated utility supplier diversity results for calendar year 2020. During the meeting, San Jose Water was recognized by the CPUC for increasing our results from 12.9% in 2019, to 30.1% of addressable spend in 2020. SJW was also recognized as one of only 10 California regulated utilities to meet the 3 Supplier Diversity subgoals, for women 5%, minority 15%, and disabled veteran owned 1.5% spend.

Supplier diversity is a focus of all SJW Group companies and another way we're having an impact for good in our communities, coast to coast. Building and retaining our workforce of water professionals is also critical. Earlier this month, Connecticut Water was recognized at the state level as a top workplace and also at the national level for culture excellence by top workplaces for our professional development program. Connecticut Water was one of about 250 companies its size to be recognized nationally.

Cybersecurity is critically important to our industry and the country. In August, I was honored to represent SJW Group at the White House's Cybersecurity Summit, along with 2 dozen respected academics and top executives from leading firms in banking, commerce, energy and water. It was gratifying to see that the importance of water to our national security is recognized at the highest levels of government, including President Biden. Attendees committed to sharing best practices, and in the water space, SJW Group pledged to be a resource to smaller organizations still developing their own cybersecurity resources.

I'll now turn the call over to Jim, who will review our third quarter and year-to-date financial results. And after Jim's remarks, I'll address other regulatory and business matters. Jim?

Thank you, Eric. Our quarterly operating results benefited from authorized rate increases in each of our 4 operating utilities. These increases were offset by a decrease in customer usage, most notably in our California utility as a result of the drought emergency declarations by the State Governor and Valley Water. And a decrease in the availability of surface water supplies in our California service area due to continued dry weather conditions. In addition, we experienced higher general and administrative expenses as we near the end of the third year of our 3-year California rate case cycle with new rates anticipated to go into effect in the second quarter of 2022.

Third quarter revenue was $166.9 million, a $1 million or 1% increase over reported third quarter 2020 revenue of $165.9 million. Net income for the third quarter was $19.1 million or $0.64 per diluted share. This compares with $26.1 million or $0.91 per diluted share for the third quarter of 2020. Diluted earnings per share for the quarter was primarily driven by cumulative rate increases of $0.29 per share and decreased production expense due to lower customer usage of $0.28 per share. These increases were offset by a decrease in customer usage of $0.48 per share, an increase in administrative and general expenses of $0.16 per share, and an increase in maintenance costs of $0.07 per share. In addition, the decrease in California surface water production resulted in a decrease of $0.05 per share.

Turning to our comparative analysis for the quarter, the $1 million increase in revenue was primarily due to $7.6 million in cumulative rate increases, $3.3 million in the net recognition of certain regulatory mechanisms in Connecticut and Maine, and $1.8 million in the recognition of California balancing and memorandum accounts. These increases were partially offset by $12.9 million in decreased customer usage. Water production expenses increased $2.4 million compared to the third quarter of 2020. The expense increase includes $7.8 million in higher average per unit cost for purchasing groundwater and $1.2 million for the purchase of additional water supply necessary to replace the low volume of California surface water. These increases were partially offset by $7.5 million in cost savings due to lower customer usage.

As stated on our previous earnings call, we anticipated producing approximately 2.5 billion gallons of surface water from our California watershed, which is representative of our 10-year average production and consistent with the volume authorized in our 2019 California General Rate Case. Through the first 9 months of 2021, we experienced minimal rainfall and produced less than 260 million gallons of surface water. We do not anticipate any significant additional surface water production in 2021. The incremental cost to supplement this shortfall is approximately $4.6 million per billion gallons.

Other operating expenses increased $6.7 million during the third quarter, primarily due to a $3.2 million increase in administrative and general expenses, $1.8 million in higher maintenance expenses, and depreciation expense of $1.4 million. The increase in administrative and general expenses was primarily due to regulatory proceedings in California, Connecticut and Maine, and compensation increases. In addition, in 2020, administrative and general expenses benefited $1.4 million from the adoption of a new accounting rule on the credit losses and maintenance expenses benefited from the cost recovery of a previously reserved capital project. No similar benefits occurred in 2021.

Other income in 2020 included a third quarter gain on the sale of real estate of $1.1 million and no similar transaction occurred in the third quarter of 2021. The effective income tax rate for the third quarter was 13% compared to 15% for the third quarter of 2020. The effective tax rate decrease was primarily related to flowthrough tax benefits.

Turning to our year-to-date results, 2021 revenue was $433.9 million, a 1% increase over the same period in 2020. Net income for the first 9 months was $42.5 million or $1.43 per diluted share compared to $48.2 million or $1.68 per diluted share for the same period a year ago. The change in year-to-date diluted earnings per share was primarily driven by rate increases that contributed $0.53 per share, decreased production costs due to a decrease in customer usage of $0.22 per share, and favorable changes in balancing and memorandum accounts and other regulatory mechanisms of $0.15 per share.

In addition, the TWA purchase price holdback contributed $0.11 per share, an increase in flowthrough tax benefits contributed $0.12 per share, and new customers contributed $0.08 per share. These increases were offset by a decrease in customer usage of $0.53 per share, an increase in general and administrative expenses of $0.29 per share, and an increase in average per unit water production cost of $0.24 per share. In addition, the decrease in California surface water production impacted earnings by $0.15 per share and depreciation expense increased $0.16 per share, while maintenance costs also increased at $0.12 per share.

Our 2021 year-to-date increase in revenue was primarily due to $14 million in cumulative rate increases, $2.4 million in the net recognition of certain regulatory mechanisms in Connecticut and Maine, and $2 million from new customers. These increases were partially offset by a decrease in customer usage of $14.2 million and winter storm credits in our Texas service area of $800,000.

Water production expense in the first 9 months of 2021 increased $5.1 million. The increase was primarily due to $6.3 million in higher average per unit cost for purchased water and groundwater, and $3.9 million from the California surface water decrease, partially offset by a $5.8 million savings due to lower customer usage.

Other operating expenses increased $13.9 million year-to-date, primarily due to $6 million in higher administrative and general expenses, $4.2 million as an increase in depreciation expense, and $3.3 million in higher maintenance expenses. The increase in general and administrative expense was primarily due to the same items noted in the discussion of our quarterly results. Other income for the first 9 months of 2021 included the TWA holdback amount, which I discussed during the second quarter earnings call.

Turning to our capital expenditure program, we added $69.1 million in company-funded utility plant in the third quarter of 2021, bringing total company-funded additions for the year to $169.2 million. We are on track to add approximately $239 million in utility plant in 2021, consistent with our 2021 construction budget. For the 9 months ended September 30, 2021, cash flows from operations increased approximately $29.7 million over the same period in 2020. The increase was primarily due to an increase in accounts receivable and accrued unbilled utility revenue collections of $14.8 million, payments of amounts previously invoiced and accrued of $7 million, an increase in net income adjusted for noncash items of $5.4 million that was due to deferred income taxes and general working capital items, which increased $3 million. In addition, in the prior year, we made an upfront payment of $5 million in connection with our city of Cupertino service concession agreement that did not recur in the current year. These increases were partially offset by a decrease in income tax receivable of $5.5 million.

At the end of the quarter, we had $137.9 million available on our bank lines of credit for short-term financing of utility plant operations and operating activities. The average borrowing rate on our line of credit advances during the first 9 months of the year was approximately 1.34%. With that, I will stop and turn the call back over to Eric.

Thank you, Jim. SJW Group continues to execute on our core growth strategy of investing in high-quality water systems to provide safe and reliable service to customers and communities and earning a fair return on those investments. We have invested 71% of our planned 2021 capital spending through the end of the third quarter. Our Board has authorized a $223 million capital spending plan for 2022. Nearly half is allocated to pipeline replacement projects, California's forward-looking capital spending authorization and the WICA and WISC infrastructure recovery mechanisms in Connecticut and Maine minimize regulatory lag on these infrastructure investments.

As mentioned in last quarter's call, on July 28, the Connecticut Public Utilities Regulatory Authority, or PURA, approved an increase of $5.2 million in annual revenues, which is an increase of about 5.1%. On August 11, 2021, Connecticut Water filed a petition with PURA for reconsideration of the rate case decision related to the treatment of excess accumulated deferred income taxes. PURA issued a draft decision on October 25 that would allow the company to increase annual revenues by an additional $1.8 million from the amounts previously authorized in July. The company appreciates the time that PURA commissioners and staff invested in understanding this complex tax matter and in reaching a fair draft decision. A final decision on the matter is expected on November 10, with new rates effective as of that date.

If the final decision is unchanged from the draft, the result from the general rate case will be a total increase in authorized revenues of $7 million or a 6.8% increase in base rates. The water infrastructure and conservation adjustment was reset to zero as part of the July 28, 2021 general rate case decision. This week, Connecticut Water filed for a WICA increase for approximately $22 million in completed WICA eligible projects. Many of the projects were those that were not considered by PURA in the general rate case because of the deadline for capital additions. If approved as submitted, CWC expects a WICA surcharge of 2.5% to be added to customer bills in January 2022. That would generate $2.6 million in revenue.

Between the anticipated resolution of the general rate case reconsideration and the WICA filing, Connecticut Water is expected to generate revenue increases of $1.8 million and $2.6 million, respectively, by the first quarter of 2022. The total increase, including the $5.2 million addition from the general rate case final decision in July is $9.6 million in total. The combined outcome is near what was anticipated in the company's original rate case filing.

San Jose Water Company's 2021 general rate case application for new rates in 2022 through 2024 is pending before the CPUC. The application seeks an increase of nearly $88 million in the revenue requirement over the 3-year period, authorization for a $435 million capital budget, and request to recover $18.5 million from balancing and memorandum accounts. New rates are anticipated in the second quarter of 2022. However, the company will file for interim rates to be effective on January 1, 2022.

SJWC's advanced metering infrastructure application is also pending before the CPUC. An all-party settlement agreement was submitted to the CPUC for adoption that would authorize capital investments of approximately $100 million over the next 4 years for the development of AMI outside of the capital budget requested in the 2021 general rate case. A final decision on the settlement agreement is anticipated in first quarter of 2022.

The 2022 through 2024 cost of capital proceeding is also pending before the CPUC. The application requests increases in revenue and return on equity, an adjustment to the proposed capital structure, and a decrease in the cost of debt. If approved, new rates are expected to be effective in the second quarter of 2022. Taking into account these current developments, our forecasted earnings remain within our guidance of $1.85 to $2.05, but as stated last quarter, are toward the lower half of the range.

On September 8, 2021, Maine Water Company filed a supplemental application with the Maine Public Utilities Commission, or MPUC, for the second step in the rate plan for the Biddeford Saco division. Maine Water requested $6.9 million in new base revenues related to the construction of the new Saco River drinking water treatment facility. This is a $60 million generational investment to replace a vintage facility that has been in service since 1884. A decision is expected in the second quarter of 2022 in alignment with the completion of the new treatment facility.

Beginning July 1, Maine Water implemented an innovative rate smoothing mechanism authorized by the MPUC. The rates smoothing mechanism mitigates customer rate shock by providing a more gradual ramp to new rates driven by the completion of the Saco River facility. Customers will pay a surcharge until June 2022, with those payments funding a regulatory liability account which will later be used to provide credits to customer bills to mitigate the impacts of the full rate increase when the plant is completed and in service in 2022. A third and final step filing associated with the new treatment facility is expected to be filed in the second half of 2022 after the plant is in service and operating costs are documented.

Before the end of this year, Maine Water will file for $2.4 million of investment recoverable through the water infrastructure surcharge. The company also expects that by March 1, 2022, that it will have filed rate increase applications in 4 of its divisions. The rate filings are a condition of settlement in the 2019 Tax Cuts and Jobs Act order.

We continue to see a pipeline of growth opportunities at SJWTX, our Texas water and wastewater utility. On July 23, SJWTX filed for authorization with the Public Utilities Commission of Texas to serve Canyon Lakes Estates, which is next to its existing service area. On August 8, the company filed a change in ownership application with the PUCT to acquire Texas Country Water. A decision on that application is expected in the first quarter of 2022. Decisions on the previously filed applications to acquire the Kendall West and Bandera East Water Utilities are anticipated in the fourth quarter of 2021. Combined, these pending applications would add more than 1,500 service connections.

SJWTX has more than tripled its customer base over the past 15 years and now has approximately 22,000 connections, providing service to about 65,000 people. Within the company's existing service area are Comal and Hays Counties, which are 2 of the 4 fastest-growing counties in the nation. The addition of Kendall West would add Kendall County, another fast-growing county. SJWTX has been successful at securing water supplies and building economies of scale that enable organic growth and acquisitions. We are bullish on SJWTX and its increasing contribution to consolidated earnings.

On behalf of SJW Group, I want to thank all of our employees in all of our states for their commitment to protect public health, protect each other, and deliver life sustaining water service to families and communities. With that, I would like to turn the call back to the Operator for your questions.

(Operator Instructions) And first question comes from the line of Angie Storozynski from Seaport.

Thank you. I wanted to ask about the pending rate case in California. I heard in your prepared remarks comments about how important upgrades of water systems are, which I infer from that, that there is pushback to the CapEx plan that you've published. We're hearing some opposition to the fixed charges that you guys proposed in the filing. Also, there seems to be some pressure on allowed ROEs or we're about to see in the allowed ROEs and the pending cost of capital proceeding. So talk to us about what's the -- what are your expectations for the earnings power of your -- of San Jose Water in California?

Yes. Thank you, Angie. I appreciate your question. I'll provide my perspective and then, of course, if Jim has anything to add, he'll jump right in. We're in the midst of actually settlement discussions with the Office of Public Advocate. We think those discussions have been very productive, and we're progressing through those I think really well. I think we are optimistic that we'll have the majority of issues settled. And as you know, in California, the items that you don't settle then are open and subject to litigation and the actual hearing process. And so we should know fairly shortly just how many issues would proceed on to litigation, if any. And I'm actually optimistic that we're going to achieve a real fair resolution for our customers and for the company, so stay tuned. Hopefully, we'll have some news in the next quarter or so.

Yes. And Eric, the only thing I would add is on the cost of capital proceedings, there have been some procedural delays on that. So we've not yet started in earnest down the path of processing that proceeding. But we'll certainly keep folks updated on that as we embark on that.

Okay. And now you mentioned the Connecticut rate case and the 2020 eventual increase of $9.6 million. Can you remind us what's the level of which this $9.6 million, to which the $9.6 million will be added to? So what's the revenue level for Connecticut Water in 2021?

Jim, do you have that off the top of your head?

I believe the authorized is thereabouts around $29 million -- I'm sorry, in revenue note. Let me get that for you, Angie, and then I can intervene while we're answering questions.

Okay. I'm trying to -- remember when you guys were merging with Connecticut Water, there was this expectation in the long-term growth, or earnings growth, of about 5%. And granted, the weather has interfered with this trajectory, but given the settlement discussion in California and the outcome of the Connecticut rate case, do you see, do you continue to see this 5% earnings trajectory? I mean, I'm talking about basically normalized CAGR.

Yes. That has continued to remain our guidance overall, that over time that's what we'll achieve. And if you think about this year, the value of having the combined company has really been evident because of the water supply challenges we've had in California. The contributions of our New England companies to earnings this year have really been important.

So our goal, main goal, was to provide the diversity of regulatory exposure and utilities across the country, and we feel really great about having achieved that. That's been hugely helpful to us here in 2021. And to a great extent last year as well as we navigated through the water supply challenges in California. There's nothing like a drought to sharpen the focus of all people on the importance of adequate water supply. And that's true of our company employees and regulators as well. So I remain cautiously optimistic that we're going to be in a much better place next year.

Okay. And the last point, so I understand it's the last year of the current rate cycle in California, hence, some inflation in operating expenses. But we are seeing actually the opposite trend with some other utilities given that we're in the COVID environment and there's at least corporate overheads are lower, interest expense is lower, again, at the corporate level. So are you not seeing similar offsets to those inflationary pressures that you see for the rest of the business?

There certainly is, as you point out, some synchronizing with our current rate cases, that's part of the process. We're very proud of our expense control over time. Connecticut Water hadn't been in for rates for over a decade. And so -- but when we do go in, we needed to synchronize expenses with what we would expect to see going forward. And same is true in California. We've had an uptick in maintenance costs in California with the drought. That's kind of a natural situation you experience, Angie, when you get the drought and the ground gets hard and dry and starts to move a bit. We've had more main breaks than typical, and that's contributed to some of the higher maintenance expenses we've seen. But overall, we're really pleased with our overall cost efficiency, and what we presented to the commissions, we think we compare very favorably when you look at our total O&M costs across on a per customer basis. So that's been our experience. Jim, would you have anything to add to that?

Yes, I think that's exactly right, Eric. We have started to see a little bit of price increases in some of our CapEx spend, especially in the area of pipe and other areas where there's a little more short supply out there right now. But as it relates to our O&M expense, Eric is spot on. And Angie, that revenue number is $110 million.

Okay. And just last one, so as you negotiate the settlement in California, and I know that we're not yet in the rainy season, even though it seems like it is, we have started it. I mean, do you have, again, it's a guessing game probably at this point, but any sense of how your water procurement will differ in 2022, will differ from what will be reflected in your rates from the GRC? I mean do you already feel like you haven't been sufficiently conservative in your ask in the pending rate case?

Angie, I'm going to defer that answer until we complete the settlement process out of respect to it. But like I mentioned earlier, there's nothing like a drought to really focus everybody's attention on it. And so we're pleased that the Public Advocates Office and the regulatory staff at CPC recognize the issue, so we're all working together to make sure we do our best to address it. So I hope we'll have some updates here in the next quarter.

Next question comes from the line of Jonathan Reeder of Wells Fargo.

Just to build on Angie's question there maybe a little bit, in the GRC process, is there a statutory requirement that the 10-year average for your surface water production be embedded in the case? Or is that very much a negotiable item?

Yes, there's no statutory requirement. It is -- but the evidence is supremely important, of course, that experience. And so -- but there is the opportunity to as well negotiate that in a settlement agreement process just as part of the overall settlement. So there's puts and takes in any settlement negotiation, of course.

Okay. And I guess, maybe asked slightly different or again a little insight, what would the 10-year average look like basically rolling forward the 3 years, including this year's extremely low production? Do you know how that compares to that $2.5 billion?

Jonathan, I don't have that just at my fingertips here. But candidly, what had been previously in rates of $2.5 billion was pretty close to that average as I recall, but subject to check. Of course, the last 2 years will have pulled that number down, but over time, the $2.5 million has been a pretty good average. But if you look at the trend, it's well above the trend.

Yes. 2019, if I recall, was a really good surface water year for you guys. And then obviously, 2020, 2021, those were very bad. So I didn't know how that affected the early years that would be rolling off of that 10-year average. On the Q3 results, just to be clear, they didn't include any benefit from the WCMA or the WEMA memo accounts approved by the CPUC, is that right?

Yes, that's right, Jonathan. We have not yet met some of the accounting requirements in that regard, and so we have not reflected any of the benefits of the 2 mechanisms. And recall that the WCMA was really effective as of August 1. I think it was passed in July, mid-July, July 17, but the true impact would have been measured from August 1 going forward.

Yes, so based on that August 1 effective date, is there like a retroactive -- once you meet those accounting requirements, are you able to ostensibly in Q4 book it retroactively to that August 1 effective date then?

Yes, we would be.

Okay. And so that's in part factored into, I guess, the reiteration of the guidance range, the lower half of it or whatever?

Yes, it is.

Okay. No, that was key to me, because I saw that $0.20 delta, and I was kind of wondering about that. So okay, I think that's all the questions that I have. Angie asked a few of the other ones I had. So I appreciate that and good luck with the California settlement discussions.

Thank you, Jonathan, appreciate it.

(Operator Instructions) There are no further questions at this time. Presenters, you may continue.

Very good. Well, thank you, Operator, and thank you, everyone, for joining our call today. We really appreciate your interest in and support of our company. We're really proud of our people. I want to once again thank them for really delivering excellence in the last quarter under really challenging circumstances, both COVID and droughts and hurricanes and the like, and we just couldn't be prouder of our people, and we look forward to keeping you posted on our progress in the fourth quarter. Thank you, all.

Thank you so much to our presenters and to everyone who participated. This concludes today's conference call. You may now disconnect. Have a great day.