藍威斯頓 (LW) 2017 Q3 法說會逐字稿

Good day, everyone and welcome to the Lamb Weston third-quarter earnings call.

Today's conference is being recorded.

At this time, I would like to turn the conference over to Dexter Congbalay, Investor Relations of Lamb Weston.

Please go ahead.

Good morning and thank you for joining us for Lamb Weston's third-quarter 2017 earnings call.

This morning, we issued our earnings release, which is available on our website lambweston.com.

Please note that during our remarks, we will make some forward-looking statements about the Company's performance.

These statements are based on how we see things today.

Actual results may differ materially due to risks and uncertainties.

Please refer to the cautionary statements and risk factors contained in our filings with the SEC for more details on our forward-looking statements.

In addition, some of today's prepared remarks include non-GAAP financial measures.

These non-GAAP financial measures should not be considered a replacement for and should be read together with our GAAP results.

You can find the GAAP to non-GAAP reconciliations in our earnings release.

With me today are Tom Werner, our President and Chief Executive Officer and Rob McNutt, our Chief Financial Officer.

Tom will provide an overview of the operating environment and our overall performance, then hand it over to Rob to provide the details on our third-quarter and year-to-date results, as well as on our debt and cash flow.

Tom will then highlight our capital allocation priorities and provide some comments on our fiscal 2017 outlook before opening up the call for questions.

With that, let me now turn the call over to Tom.

Thank you, Dexter and good morning, everyone and thank you for joining Lamb Weston's Q3 earnings call today.

Let me start by saying that we are pleased with our third-quarter results and we remain on track to deliver on our full-year targets.

The operating environment in the quarter was largely a continuation of what we have been experiencing over the recent past with overall solid demand for our frozen potato products across our customer base in both domestic and export markets, high levels of capacity utilization across the industry and modest cost inflation in our manufacturing base in North America.

In this environment, we've continued to execute well across our organization with very close coordination between our supply chain and our commercial teams to ensure we provided our customers the products they need on time.

In the third quarter, as we have over the past year, we continue to operate our manufacturing plants at a very high utilization rate and our overall capacity across the industry has remained tight.

In the quarter, we also overcame the impact of some difficult winter weather in the Pacific Northwest where our factories and some of our finished good warehouses are located.

While we did experience some challenges, I want to thank our supply chain team for minimizing the impact on our customers.

This tight capacity environment has influenced our approach to the marketplace.

Our commercial teams have done a great job taking actions to improve both product and customer mix, as well as continued execution of the pricing actions we have taken earlier this year.

This, along with modest volume gains, drove our top line and profit growth in the quarter.

Specifically, while volumes grew just under 1% in the quarter, net sales were up 5% due to higher price/mix while gross profit was up 14%.

As you know, we've been running at full capacity this year and accordingly, we will have little incremental capacity to drive volume growth as we begin to lap some strong volume growth quarters in the near term.

I am pleased to report that all of our capacity expansion programs remain on track as we strategically continue to invest in our business to meet the growing demand of our customers.

First, our 50 million pound chopped and formed production line in Boardman, Oregon recently began operational startup.

Second, we are on target to have our 300 million pound french fry line in Richland, Washington operational by late calendar 2017.

As an aside, after recently visiting the new fry line facility, I can say that we are making great progress and there is a tremendous amount of enthusiasm at the factory and across the organization with both expansions and our continued investment for growth in Lamb Weston.

Third, in Europe, our Lamb Weston Meijer joint venture new fry line in Bergen op Zoom in the Netherlands became operational in November.

And finally, the joint ventures investment in the new factory in Russia remains on schedule to open in early 2018.

In addition to the contributions of our supply chain and commercial teams, our corporate and functional teams are making good progress against our post-spin transition services agreements and we are on track to be off these agreements as initially scheduled.

The Lamb Weston team is in place and I am confident in our ability to capitalize on the opportunities that lie ahead in this category that's growing globally, to operate with excellence and to create value for all our stakeholders.

With this solid foundation built across our supply chain, commercial and support teams, we are well-positioned to continue to grow by building on our strong relationships with our customers, our capacity investments, our innovation capabilities and our global footprint.

Now let me turn the call over to Rob to provide the details on our results.

Thanks, Tom.

Good morning, everyone.

Let me first say how excited I am about this opportunity to be a member of the Lamb Weston team.

In my short time here, I've been impressed with my colleagues' depth of knowledge of the industry and their passion for the Company.

I'm excited about building our future together.

As Tom noted, we are pleased with our third-quarter and year-to-date results.

Net sales were $769 million for the quarter, up 5% and in line with our single-digit growth target for the year.

Price/mix drove most of the growth contributing 4 of the 5 points and reflecting the current favorable industry environment.

This is in line with our expectation that price/mix would accelerate a bit from the 2% growth we posted in the first half as we continue to realize the impact of pricing actions taken earlier this year, along with continued improvement in customer and product mix.

Volume grew 1%.

Again, this is consistent with our expectation that volume growth would moderate from the 3% that we saw in the first half as we took some production lines down for routine maintenance.

Through the first nine months, sales increased 5%, which was a good balance of price/mix up 3% and volume up 2%.

With respect to earnings, as Tom mentioned, gross profit was up 14% for the quarter and gross margin expanded by 200 basis points to nearly 27%.

Similar to what we saw in the first half, the benefits of positive price/mix flowed through to the bottom line.

While potato costs on a per-pound basis were essentially flat, other manufacturing costs on a per-pound basis increased in the low single digits.

This was largely due to higher edible oil and transportation costs.

We anticipate this inflation trend to continue and expand a bit in the fourth quarter as costs continue to gradually climb.

Year-to-date, gross profit was up 21% from the prior year and gross margin was about 25%, up more than 300 basis points.

This improvement was largely driven by favorable price/mix, volume growth and supply chain productivity.

Given the limited availability of our historical quarterly data on a standalone basis, I'd like to take a moment to highlight the seasonality of our raw product cost and its impact on gross margin.

Our third quarter is typically our highest gross margin for the year.

We typically harvest potatoes in the Pacific Northwest in August through October, which is primarily in our second quarter.

During this period, we are able to take just-harvested potatoes directly from the field to be processed immediately in our manufacturing facilities.

As a result, costs incurred are generally lower for two reasons.

First, direct-from-field potatoes generally process better through our production lines as they are the best quality they will be all year.

Said another way, our recovery and production rates are typically higher with direct-from-the-field potatoes than those that have been held in storage for a while.

The second reason is that since potatoes processed right out of the field are not transported and then held in inventory, they are not subject to storage or secondary transport costs.

We typically hold about 60 days of finished goods inventory and cost on a first in, first out basis, so the relatively favorable costs incurred from the Q2 harvest going directly into the operations really flow to the income statement in Q3.

So Q3 tends to have the lowest cost of goods sold seasonally and therefore the highest gross margins.

From there, all other things being equal, cost of goods sold begins to increase as we add storage and transportation costs into the raw inventory valuation and as the aging of the crop in storage results in lower recovery rates over the storage period.

So based on these factors, we expect our fourth-quarter margin to be down sequentially from Q3; although we do anticipate it to expand on a year-over-year basis based on the higher price/mix.

So just to finish off the seasonality discussion, our first-quarter gross margin is typically the lowest of the year while our second-quarter margin is typically between our first and fourth-quarter levels.

Going further down the P&L, operating income was up 17% for the quarter and 30% year-to-date.

This was driven by the increase in gross profit.

As expected, reported SG&A expense increased in the third quarter as we continue to build capabilities to operate as a standalone public company.

SG&A also included about $5 million of costs related to the spin, as well as higher incentive compensation costs resulting from our strong year-to-date operating performance.

For the fourth quarter, we see SG&A, excluding the spin-related costs, growing sequentially as we continue to build our standalone company infrastructure.

We still look to end up with an additional $10 million to $15 million of standalone costs for all of fiscal 2017.

Also, as expected, equity earnings declined $23 million.

This was largely related to an $18 million non-cash gain related to the settlement of a Lamb Weston Meijer pension plan in Q3 of 2016, as well as an impact of higher potato costs in Europe this year.

As we noted last quarter, while the JV is taking actions to offset the higher potato costs, we continue to anticipate its results to be pressured in our fourth quarter.

So putting it all together, total adjusted EBITDA, including the proportional EBITDA from our two unconsolidated joint ventures, increased 11% in the quarter to $191 million.

Year-to-date, it's up 22% to $531 million.

Turning to earnings per share, adjusted diluted EPS declined 5% to $0.59 in the quarter.

This was primarily a result of the incremental $25 million of interest expense from debt incurred in connection with the spinoff from ConAgra.

We will continue to have this year-over-year headwind in the fourth quarter and through the first half of fiscal 2018.

Adjusted EPS was up 17% year-to-date driven by adjusted operating income growth.

Income tax expense increased in the first nine months as a result of our higher earnings.

Our effective tax rate for both the third quarter and the first nine months was about 33%.

Let's take a quick look at the results for our business segments.

Net sales for our global segment were up 3% in the quarter.

It was fairly balanced between price/mix and volume growth.

Price/mix was up 2% reflecting improvement in our customer and product mix, as well as price increases.

Volume increased 1% driven by growth in both domestic and international markets.

Product contribution margin, which is gross profit less advertising and promotional expense, increased 9% largely due to the flowthrough of price/mix to the bottom line.

Our foodservice segment's net sales increased 10%, reflecting pricing actions, as well as improvement in customer and product mix.

Volume increased modestly.

Product contribution margin increased 30%, again reflecting the flowthrough of favorable price/mix.

Our retail segment's net sales were up 1% driven by volume growth of our licensed brands and private label products.

Price/mix was essentially flat.

Product contribution margin was also flat with higher gross profit offset by increased advertising spending.

Moving to the balance sheet and cash flow.

Total debt at the end of the third quarter was a little more than $2.5 billion.

From a leverage standpoint at about 3.9 times the latest 12 months of adjusted EBITDA, we are within our target range of 3.5 to 4 times.

With respect to cash flow, year-to-date, we've generated more than $250 million of cash from operations.

As you can see on our balance sheet, our operating working capital, defined as accounts receivable plus inventory less accounts payable, was about 17% of sales at the end of the quarter, primarily due to seasonality as we carry a high amount of raw potato inventory.

In addition, our finished goods inventories were higher than this time last year to support the increased sales volumes, as well as to provide a buffer around planned maintenance downtimes for some production lines.

Our finished goods level should normalize as we progress through the year.

With respect to capital expenditures, we've invested more than $200 million year-to-date.

This is an elevated level in support of the capacity expansion efforts that Tom described earlier.

We continue to target about $300 million for this fiscal year.

The balance of the cash went to debt service and to pay a dividend to our shareholders.

Now let me turn the call back to Tom.

Thanks, Rob.

I wanted to touch briefly on our capital priorities and then our outlook for the balance of the year.

As we have stated previously, we believe our balance sheet and cash flow will support a balanced capital allocation policy based on returns and executed with discipline.

Our priorities remain, first, to invest in growth, both organic and through M&A and as you can see, our current capacity expansion projects attest to our commitment to invest in and support growth.

Second, we will continue to support our dividend.

We currently pay a $0.75 dividend on an annualized basis.

And third, given that we are making good progress towards the low end of our leverage target through EBITDA growth, as well as our elevated CapEx needs this year, we don't anticipate paying down debt beyond what is required in the near term.

We will evaluate alternative uses of excess cash as we continue to grow and return to a more normalized CapEx level and we will provide more thoughts on this down the road.

Finally, turning to our outlook.

With our solid third-quarter results, we are on track to deliver the targets that we provided on our last earnings call.

We continue to expect net sales to grow mid-single digits with a good balance between price/mix and volume for the year.

We also continue to anticipate adjusted EBITDA, including unconsolidated joint ventures, to increase at a mid-teens rate.

This reflects strong adjusted operating income growth partially offset by a lower contribution from our unconsolidated joint ventures.

In addition, we continue to see total interest expense of about $60 million, including a significant year-over-year increase in the fourth quarter.

For adjusted diluted EPS, we continue to expect it to be in the range of $2.20 to $2.28 per share.

As you can see, we've delivered a strong third quarter and year-to-date results.

The Lamb Weston team is executing with excellence in a favorable operating environment and we remain on track to deliver on our full-year commitments.

We are taking the appropriate actions to drive sales growth, improve mix and expand margins in the near term while continuing to invest in and strengthen our capabilities to support our growth and our advantaged cost position over the long term.

I want to thank you for your interest in Lamb Weston and now we are happy to take your questions.

Thank you.

(Operator Instructions).

Andrew Lazar, Barclays.

Two questions from me, if I could.

First, the full-year guidance based on what you've delivered in EBITDA thus far I guess would suggest lower EBITDA year-over-year in the fiscal fourth quarter.

I know you touched on maybe a few of the reasons that you would expect that, but maybe you can get into some of those -- if nothing else, help us bridge that year-over-year fourth-quarter EBITDA a little bit because it seems perhaps still a little bit conservative based on how things have been coming in.

And then I've just got a follow-up.

Sure.

In Q4, we are expecting to see year-over-year gross profit growth and gross margin expansion and solid year-over-year sales growth.

I would say we are seeing a bit of inflation in the fourth quarter.

We will have increased SG&A.

We are going to have a full quarter of interest expense that is certainly impacting the quarter.

I would say the business fundamentals remain strong as they have.

We expect a continuation of some good pricing in the quarter, but we do -- so our year-over-year will be -- in the quarter, we will see growth both top and bottom line.

Okay.

And then as you talked about, you've got some new capacity coming online in the next few quarters.

And obviously, this is not filled, if you will, day one, but trying to get a sense of how we should think about the ramp and maybe when volume can start to accelerate a bit due to that capacity, and when volume does ramp, how does that typically play out in terms of pricing and when that could potentially decelerate a bit, although maybe still positive just given the overall tight industry supply/demand dynamic?

Sure.

Andrew, just to reset, our expansion on the big fry line is set to come online towards the end of this calendar year.

Obviously, there's always a startup curve when you are turning on a new production line and so our anticipation is, as we ramp up and become operational, we will have volume opportunities slanted towards the back half of our fiscal 2018.

And certainly, Andrew, as we think about selling out the line, I fully expect the incremental volume, depending upon what segment we sell that production line to, to be at current gross margins and/or better and we are certainly going to look at opportunities to improve our customer mix and our product mix as we start running that line here at the end of the calendar year.

Got it.

Thanks very much.

Akshay Jagdale, Jefferies.

Good morning and congrats on a solid quarter.

I have two questions.

The first one is, obviously, a lot of your business is contracted and I know you don't want to get into specifics of any of that.

So at a very high level, it would be great if you can help us understand what percent roughly of your total volumes have already renewed to reflect the pricing actions that you took in 2016.

So I believe there were some pricing actions in May and then in November that we are aware of that happened in 2016.

So what percent roughly of your volumes are actually reflecting that and do you expect additional pricing actions in calendar 2017?

So that's my first question.

I just have a follow-up.

Sure, I would say I'm not going to get into specifics on our volume and percent.

I will tell you the pricing actions we've executed this past year we are seeing flow through the P&L, obviously and the other thing is, like I previously stated, we contract with our customers every year.

There is a lot of variability in terms of timing and so I will tell you that the teams are doing a great job managing all the dynamics within our customer and what's going on in the industry.

So that typically -- as we do every year, we work through the process and the timing of that and we've got a great plan to execute against our pricing actions.

Not 100% of your volumes have reflected the price increase?

Is that a fair assumption?

Yes, Akshay, that's a fair assumption.

Okay.

And then just regarding margins, obviously, 3Q is typically seasonally your best margin, so there might be a fear that this might be peak margin.

So my second question is really about long-term margins peaking from where they are in this quarter.

You've talked about incremental gross margins being higher for the new capacity that comes online, etc.

We heard recently that the Cavendish plant, your competitor, has now been delayed by a year.

Is it your expectation that this favorable environment, as it relates to tight capacity, is going to continue and for how long?

And then these conversion costs, non-potato conversion costs, that have gone up pretty significantly recently, how long do you expect that to last?

Thank you.

Sure, I will try and answer all your questions there.

Yes, I do expect this environment to continue.

Certainly we have anticipated the tightness in the industry and have invested in our business ahead of our competition.

I would say in terms of continued margin expansion, we are working extremely hard on evaluating our product mix and our customer mix and looking for opportunities to execute in those two areas to continue to drive our margin expansion.

Like I said earlier, we expect continued year-over-year margin expansion for the balance of this year and we are always going to look at opportunities to drive more profitable growth in the business.

In terms of our competition's announcement of capacity, we certainly have an eye and an ear on what's happening with our competition.

We can't control what they're doing and the management team, we are focused on executing our business priorities and as we have opportunities in the marketplace, we are going to pursue them.

Thank you.

The non-potato stuff.

(inaudible) inflation.

Yes.

Akshay, the other question you asked was inflation on non-potato conversion costs.

What we have seen is low single digit in bits and pieces there.

And as you see the economy generally starting to tighten up, you see it in things like freight up a bit; packaging, if you look at the forecast there, are up a bit.

And so, again, we are looking at low single digit kind of inflation where things have been flat in more recent quarters.

Thanks.

Matt Granger, Morgan Stanley.

I have two as well.

The first is just on the global business, I'm just curious if you could give us a sense for what you are seeing in terms of demand on the international portion of the business?

I know you said you were seeing growth both domestic and international, but just how that is skewing geographically, whether you are seeing any volatility in places like China or the Middle East that in any way would change your expectations for international growth over the next few years.

I will tell you, as we have seen in our -- I will just characterize it -- Asia markets, we've seen pretty solid growth throughout the whole year and even in the quarter, so I feel really comfortable about the opportunities in the Asia markets.

They've been growing at a pretty good rate over the past four or five years as I communicated I think on Investor Day.

So we've seen a continuation of that growth and I expect that to continue going forward.

Okay.

Thanks, Tom.

And then the other question I had is just on the foodservice segment.

In the quarter here, this is not necessarily different from what we've seen over the past few quarters, but you had 10% price/mix, 30% growth in divisional operating income, very strong.

Could you comment more broadly I guess on how that level of growth compares to the profitability across the value chain during the past several quarters, whether you are the principal beneficiary of this capacity-constrained environment, or is there evidence that that's also flowing through in a way that's benefiting your major foodservice customers and distributors as well?

Well, Matt, I think we are seeing the full effect in that segment of all the actions we've taken over the past 10 months now, I would say and so I think it is a condition of the industry and what's happening right now.

But we certainly are benefiting from it; there is no question about it.

And we are being prudent and some of that we are focusing on mix and customer mix as well.

So pricing is a big element of it, but the industry in general is benefiting from it as well.

Okay.

And just a quick follow-up.

So it is probably fair to assume that when we are trying to wrap our heads around that 10% price/mix that the mix contribution you are seeing in the foodservice business is going to be more pronounced than anywhere else in the business at the moment?

No, I wouldn't necessarily come to that conclusion.

Okay.

That's -- you don't have to elaborate too much further if you don't want to do; that's fine.

Just curious.

Thanks.

Chris Growe, Stifel.

I just had two questions for you as well.

I wanted to ask first of all, I think in last quarter and this quarter as well, you talked about finished goods inventory building.

It sounds like that starts to come down in the fourth quarter.

Does that implicitly just create more capacity for you if you look at it that way?

And maybe related to that, you talked also about building inventory around some manufacturing downtime.

Did that occur already or is that still to occur and is that a factor that we should include or incorporate around your volume growth in the fourth quarter?

In terms of building inventory, we are going to take some normal maintenance downtime as we do really every year later in our crop year.

And so some of that is to come and so some of that will be replacing that inventory or that downtime and so not necessarily incremental sales growth off of that as much.

The other piece is we are building some inventory related to some capital downtime that we will have later in the year.

Okay.

(multiple speakers).

You will see that in the finished goods inventory number in the queue when you see the detail of it.

Okay.

Got you.

And then I just had a question in relation to SG&A, which was up less than I expected in the quarter.

I know you've got the public company costs.

You've got incentive comp up.

What are the other factors that are offsetting that?

You talk about some efficiencies, for example.

Can you quantify any of that or maybe the degree to which those other costs were up in the quarter in SG&A?

Yes, in terms of SG&A, Q2 to Q3, I think you are looking at sequentially and recognize in Q2, we took a bit of a catch-up adjustment on incentive comp, so it really included Q1 and Q2 catchup on the incentive comp as we had better insight into how the year was going to turn out and so not as much of the incentive comp flowing through in Q3.

That's one component of it.

The other significant component that's down a little bit sequentially is A&P down a couple million dollars as it's really more just timing issues than anything else.

We still see that flowing out for the year.

Key point is that year-over-year standalone costs increase is still in that $10 million to $15 million range and we still have line of sight consistent with what the Company communicated at Investor Day in terms of SG&A.

Are you at the full run rate of those public company costs yet, or is that still to happen?

We are not quite there yet, but we are getting a lot closer and really we anticipate by year-end, we will be pretty much there although probably not fully reflected in Q4.

Okay.

Thanks for your time.

(Operator Instructions).

Adam Samuelson, Goldman Sachs.

Maybe a question on potato costs.

We've seen some reports that potato contracting for the 2017 crop is actually down slightly year-on-year.

That's probably a base pricing number and there's adjustments that come with that, not to mention changes in potential crop quality or size.

Can you talk about expectations on potato costs as you look later into calendar 2017 and into 2018 and if that outlook has gotten more or less constructive in year-end?

And maybe a corollary to that is how should we think about the flowthrough of what has been fairly healthy price realizations on the processing end back upstream to the farm level and how you can get commodity cost deflation on potatoes in an environment where you are actually realizing very healthy net pricing?

I will tell you we are right smack in the middle of our potato contracting negotiations and I'm not going to get into where all that has played out because we have not completed it across our growing networks.

So as we do every year, once we have all of our grower contracts negotiating and in pricing across our growing areas locked down, we step back and assess the impact of that from a cost perspective and that is one component of it and it's a big component of our overall cost structure, but, as Rob alluded to, we have a number of different other inputs that we are seeing inflation year-over-year and as we put all the pieces together over the balance of the next coming months, we will step back, take a look and take the appropriate action that we need to do to continue to drive our business.

Okay, that's helpful.

And then maybe on the foodservice component, thinking about the new capacity that comes on late in calendar 2017, can you elaborate a little bit on how the ramp of that capacity comes onstream, how long you think it will take to actually run that plant full and fill it up and along with that, the mix today of your business in foodservice that you would call the branded Lamb Weston product versus private label and if that mix has shifted in a meaningful way in the last 12 months.

Sure.

Again, our capacity will be online at the end of the calendar year.

There is a certain startup timeframe and it does take some time to fill that capacity up.

So it will ramp up over the balance of the back half of next fiscal year and as I stated earlier, we are going to look at the best opportunities in terms of meeting our customer demands.

We've got some international growth coming that we still see happening, so it really depends on the opportunities to fill that line up, but it is a process and it does take some time to ramp that capacity up.

The other thing -- your other question in terms of --.

Branded versus private label.

Yes, we haven't seen a significant change in foodservice in terms of our Lamb Weston brands versus private label.

From a percentage standpoint, it's been pretty flattish.

Okay.

That's very helpful.

I will pass it on.

Bryan Spillane, BofA.

Just two questions from me.

First one, appreciate the comments you made about capital allocation earlier.

Can you give us a sense, once this production capacity comes online, maybe just update us on your thinking about either adding more capacity or making acquisitions to take on capacity?

Has anything changed in the industry since you went public, which might affect the way you're thinking about that portion of capital allocation over the next couple years?

And underneath that, really just trying to understand when we get to the point where we can start to see maybe some increase in free cash flow.

I would tell you generally how I'm thinking about the industry and capital.

It has not changed in my mind.

There has certainly been some competitive announcements that we are keeping a close eye on, but as we get to what I will call a more normalized capital expenditure level, we will continue -- we will evaluate our cash and determine what's in the best interest to return that to the shareholders going forward, but that will be happening over the coming months as we work through some of our strategic initiatives.

Okay.

Thank you.

Just one last one from me.

With the industry capacity being as tight as it is, I guess it implies for your customers, so for the end markets, is there anything they are doing differently?

Are they raising prices on their menus or on french fries in general?

Just anything they are doing differently given the supply constraints?

Bryan, I will tell you, generally, if you look at the restaurant industry, there is an increase in menu costs.

There is no question about it based on the data that we analyze.

I don't know specifically from customer to customer what their actions are, but, overall, you can see it in the industry data that there is inflation in the restaurant industry.

So I guess it kind of goes back to I think it was Matt Granger's question earlier is you're seeing -- the inflation is going through the system, if you will?

Yes.

You certainly can see it in the data that we look at.

Okay, great.

All right, thanks, guys.

Carla Casella, JPMorgan.

Thanks for taking the question.

On CapEx, can you give us any sense for next year front-end versus back-end-loaded and where is maintenance CapEx when you finish your projects; where could it come back down to and when could we see that?

We will have some carryover from the Richland project into next year and it's going to be fairly front-end-loaded.

I think at Investor Day the Company talked about $150 million to $200 million range for next year and we are still within that range, maybe in the middle of that range, frankly, as we refine it.

In terms of maintenance levels of CapEx, the steady-state CapEx for the investor base that we've got today is in the $100 million, $110 million range.

Great.

Thank you.

That's all I had.

And that concludes our Q&A session today.

Gentlemen, I will turn the conference back to you for additional or closing remarks.

Hi, everyone.

Thank you for joining us for the call today.

Happy to take any questions.

Pop me an email, we can schedule some time if you have any follow-up.

Otherwise, we will see many of you in New York and Boston next week.

Thanks again.

And that does conclude our conference today.

Thank you all for your participation.

You may now disconnect.