NiSource Inc (NI) 2011 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q1 2011 NiSource earnings conference call. My name is Laura, and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions)

I would now like to turn the conference over to your host for today, Mr. Glen Kettering, Senior Vice President of Corporate Affairs. Glen, please proceed.

Thank you, and good morning, everyone. On behalf of NiSource, I'd like to welcome you to our quarterly analyst call. Joining me this morning are Bob Skaggs, President and Chief Executive Officer; Steve Smith, Executive Vice President and Chief Financial Officer; and Randy Hulen, Managing Director of Investor Relations.

As you know, the focus of today's call is to review our financial performance for the first quarter of 2011, and provide a business update. We'll then open the call to your questions. At times during the call, we will refer to the supplemental slides available on our website at www.nisource.com.

I'd like to remind all of you that some of the statements made on this conference call will be forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the statements. Information concerning such risks and uncertainties is included in the MD&A and risk factors sections of our periodic SEC filings.

And now I'll turn the call over to Bob Skaggs.

Thanks, Glen, and good morning, and thanks for joining us today. This morning's agenda is brief, to provide us as much time as possible for questions and discussion. So, first I'll touch on a few key take-aways from our first-quarter performance. Next, I will note several key highlights for NiSource and each of our business units, and then we will open the line to your questions.

To kick off, a few key take-aways from the first quarter; if you'd turn to slide 3 in the supplemental materials, you'll see several headlines, but the core message is this -- we're on track. First and foremost, our numbers are on track, perhaps more so than immediately meets the eye, as I'll touch on in a moment. The strengths of this year's performance, if anything, is obscured a bit by a few items. So, again, the overriding take-away is that NiSource's regulatory, commercial, and operational fundamentals are quite strong, and our year-to-date performance is squarely in line with our 2011 earnings outlook.

Second, our Indiana strategy is on track. As you know, a key focus for our NIPSCO team is successful resolution of our 2010 electric rate case. That case is moving forward, and we still expect resolution at the end of the year or early next year. Third, we're also building on our track record of successful regulatory and infrastructure modernization programs at our gas utilities. These efforts are generating positive results this year, and will continue to build long-term shareholder and customer value going forward.

And finally, we remain on track with our growth investments at our gas pipeline and storage business, with a particular emphasis on those projects that leverage our very attractive footprint in the Marcellus Shale region. Underpinning all these efforts is our commitment to effective financial management, and a strong liquidity profile, as demonstrated by our new $1.5 billion 4-year revolving credit facility that we closed in early March. So the 10-second sound bite is this -- NiSource is on track to deliver on our robust agenda of infrastructure investments, paired with exceptional commercial and regulatory execution.

With that preface, let's now take a closer look at the quarter, starting with our overall financial highlights on slide 4. As you can see, we delivered first-quarter net operating earnings non-GAAP of about $202 million, or $0.72 per share. As I mentioned a moment ago, the year-over-year comparison is skewed a bit by 3 items. First, the quarter's revenues were reduced almost $20 million as a result of rate design changes under last year's favorable NIPSCO gas rate case settlement. Notably, those revenue impacts will be mitigated through the course of the year.

Second, during the quarter we recorded a nonrecurring $8 million accounting charge related to environmental costs at NIPSCO. And third, in last year's first quarter we recognized revenues of about $8 million associated with the sale of native storage gas. When you take these items into consideration, and consider the strong fundamentals posted for the quarter, you get a clearer picture of the ongoing earnings momentum we're building here at NiSource.

With that, let's dive into our individual business unit results, starting with Indiana and our electric business on slide 5. Our Indiana team continues to make significant progress on our efforts to improve performance, modernize services and rates, and restore NIPSCO's earnings to an appropriate level.

From a financial standpoint, NIPSCO Electric reported first-quarter operating earnings of about $42 million, compared to $46 million for the same period in 2010. Notably, NIPSCO saw an increase in its industrial margins and usage that helped drive a net revenue increase of about $9 million, excluding trackers. Operating expenses increased by about $13 million over last year's levels. However, that jump was due in large measure to the environmental charge that I mentioned a moment ago.

On the regulatory front, NIPSCO remains on track to establish new electric base rates by late 2011 or early 2012. While the formal rate case process continues to move forward, NIPSCO is actively engaged in settlement discussions with all of its stakeholders. Once resolved, we are confident the case will position the Company for ongoing growth through continued customer-focused investments in service, reliability, and environmental infrastructure.

Speaking of investments, NIPSCO is moving ahead on installation of a new flue gas desulfurization, or FGD unit, at our Schahfer generating station. Preliminary engineering is complete, and crews have prepped the site and started construction. You'll recall that this is the first of a number of FGD units planned across NIPSCO's system. These investments, more than $600 million over 6 to 8 years, will strengthen earnings while creating hundreds of project-related jobs, and improving the environment and economic vitality of the region. Together, these new units will reduce SOx emissions by an additional 80% beyond current levels.

Let's now shift to our gas distribution group on slide 6. Our gas distribution operating earnings for the quarter were about $237 million, compared to about $235 million during the same period in 2010. As I noted earlier, there is a bit of noise. Net revenues, excluding trackers, were down due to the change in NIPSCO gas rate design, as were expenses.

On the investment front, Columbia Gas of Kentucky, Columbia Gas of Massachusetts, Columbia Gas of Ohio, and Columbia Gas of Pennsylvania all continued to advance their significant infrastructure modernization programs during the first quarter. These ongoing programs, which began more than 3 years ago, proactively and systematically replace portions of our system to ensure continued reliable and efficient service, at the same time growing earnings. As we continue to pair these programs with complementary regulatory activity, in fact, just last week we received approval from the Public Utilities Commission of Ohio on our most recent filing to recover costs associated with our infrastructure replacement and energy efficiency programs, which will increase yearly revenues by about $24 million, effective May 1.

And in Pennsylvania, our team is advancing a base rate case filed in January, seeking enhanced revenues of about $38 million. The rate case is paired with an improved rate design and new programs to help senior citizens and others better manage their energy costs. We expect to resolve that case by year's end. Without question, we believe the strong focus on infrastructure modernization at our utilities, along with appropriate regulatory treatment, will benefit our customers and communities, as well as NiSource's shareholders for decades to come.

Let's now take a look at our NiSource Gas Transmission and Storage Operations, highlighted on slide 7. Here, the team's focus continues to be on market-driven growth projects, with particular emphasis on our extensive opportunities in the Marcellus Shale region. From an earnings standpoint, the NGT&S team generated operating earnings of about $119 million in the first quarter, compared to about $126 million in 2010. Net revenues were relatively flat for the quarter, as a result of last year's native storage gas sale. Operating expenses were up only about $3 million.

Commercially, our NGT&S team continues to aggressively pursue an inventory of growth projects, ranging from traditional transportation and storage services, to power generation, supply aggregation, and other Marcellus production-related projects. Some of our other near-term Marcellus investment includes the Clendenin and Smithfield projects, Line WB, and the Southern Appalachian Project. Together, these projects will generate about 0.5 BCF per day of new firm transportation capacity.

Also driven by increased Marcellus production, Millennium Pipeline completed a binding open season for proposed main line expansion projects to provide incremental firm transportation capacity to Northeast markets. Notably, prior to the open season, the Company executed binding preceding agreements with 2 anchor shippers.

We're also advancing the new power generation project in the mid-Atlantic region. Although we can't share specific details at this time, it's clear the power generation market has real potential for us, given our strategic footprint between major generation hubs and the Marcellus Shale region. You'll soon see our FERC certification filing for this PowerGen project.

On the regulatory front, Columbia Gulf 2010 $50 million general rate case moved forward, with the Company placing new rates into effect subject to refund on May 1. Columbia Gulf and the parties to the case are actively engaged in discussions to resolve the case. As you can see, the NGT&S team continues to execute on its strategy of maximizing the value of its current asset base, and capturing disciplined, low-risk, high-value growth opportunities.

To wrap up, 2 key points. First, we're squarely in line with our expectations, and remain on track to meet the net operating earnings guidance of $1.25 to $1.35 per share non-GAAP for 2011. Second, we remain confident that NiSource will sustainably grow long-term earnings in the range of 3% to 5% annually, perhaps a bit more in the near term, as we execute on our Indiana business and regulatory agenda. As always, we will communicate with you and all our stakeholders in a transparent and timely manner regarding these and all of our efforts through our analyst calls and news releases posted on www.nisource.com.

Thank you for participating today. And for your ongoing interest and support of NiSource. Laura, let's now open the call to questions.

(Operator Instructions)Your first question comes from the line of Paul Ridzon from KeyBanc. Paul, please proceed.

Good morning. How are you?

Hello, Paul. We are good.

Hello, Paul.

Can you just maybe give us some mile-posts or milestones to look for in a potential settlement in the Indiana electric case?

Sure, Paul. Maybe just a prefacing comment or two; as I mentioned in the prepared remarks, we are active in settlement discussions. We are in the midst of a round of one-on-one discussions, small-group discussions. The discussions have gone according to plan. As you have heard me comment on several occasions, this is going to require concerted, concentrated effort. But, so far, so good. Process wise, we believe we are still in that sweet spot or that window of time where we believe we can reach a resolution. There's another round of evidentiary hearings scheduled for mid-month. That will, again, involve NIPSCO witnesses talking about cost allocation, rate design and the like. The intervener stakeholders are then slated to present their testimony. I believe it's in August, give or take, Paul, so we believe between now and August, Labor Day, we have that window of opportunity to work with the stakeholders, and they continue to be responsive, constructive, and we're working hard at achieving that settlement.

I guess over the last couple months, would you think you've gotten more or less optimistic about the prospects of settling?

We stay very balanced about the prospects of settlement. Again, as I repeatedly said, this case is challenging because it involves cost allocation, which requires the shifting of dollars a month, customer classes. And, again, that's heavy lifting. So a realistic approach to this; we have a fair shot at getting the settlement. We're approaching it creatively, and I'm still relatively optimistic.

I've also said that the second track of this proceeding is litigation. And we feel very, very good about that track. We feel very, very good about our position. I would note that we've just seen the commission issue, a fairly significant rate decision in a vectoring case. We believe that decision is instructive, constructive, and, frankly, helpful to our litigation position. So we go down both tracks in a realistic and concerted effort, Paul.

And then just separately, the Columbia Gas $50 million revenue increase, how seasonal is that?

Paul, are you-- just for clarification, I'm just looking at the team here. I'm not sure I fully understood your question, but are you referring to the Columbia Gulf rate proceeding, rate case?

The FERC case.

Yes. As I mentioned, those rates went into effect subject to refund on May one. Like Columbia Gas Transmission, many of the interstate pipelines, it's primarily a fixed variable rate design, so once those rates are-- they have gone into effect, but once they are deemed just and reasonable, we collect those on a fixed variable basis, so they are spread fairly evenly throughout the year.

Perfect. That's exactly what I was looking for. Thank you.

Yes.

Your next question comes from the line of Jay Dobson from Wunderlich. Jay, please proceed.

Good morning, Bob.

Hello, Jay, how are you?

Very well, thanks. How are you?

Good. Doing well.

Great. A couple of questions; first, start off on industrial sales, particularly on the electric side. I you have a lot of concentration there, you know, 20.3% increase in the quarter is pretty healthy growth. Just give us an idea of sort of what you're seeing on the industrial side, and certainly after addressing electrical, I'd love to hear what you think on the gas side-- a little less concentration there?

Yes, let me start on the electric side .As you observed, the numbers are relatively strong. They are certainly being led by the steel manufacturers in the region. And, Jay, I'm sure using some of the announcements from US Steel, and a little about the relatively bullish outlook on demand through the first three quarters of the year, and again, those outlooks are being reflected in their production in this region.

You mentioned that we were up considerably quarter-to-quarter. We are also up fairly strongly first quarter compared to the fourth quarter of 2010. So, again, we are seeing a reasonably good amount of strength in that area. I just remind you and everybody that our plan assumes a very measured, relatively slow recovery of the economy. So our outlook is not premised on a spike in demand. So again, we are encouraged by this, but our plan is not predicated on this being sustained over the near term. Jay, you also mentioned gas volumes. And, again, you see some pretty good strength across the footprint on industrial manufacturing throughput. So, again, we're encouraged. The plan is not predicated on these sorts of increases continuing, but we feel pretty good about where we stand.

And just one other editorial, and I know you recognize that. On the industrial side, particularly on the gas side of our business, the margins for throughput are relatively thin. Relatively thin. So you're not going to see huge pops in revenue associated with that. And, I'll also say on the electric side, we need to strengthen the economy. We certainly enjoy the strength of the production. But, again, a lot of the marginal revenues are not being driven by those industrial increases.

Right. No, no, no. I absolutely recognize, as you pointed out in the slides, $9 million revenue for a 20% growth in industrial sales. So, I absolutely appreciate that. That is great. And then on just the Marcellus infrastructure, just sort of your latest thoughts; obviously, that area continues to be hot, and I'd imagine from your perspective, you know, ripe with infrastructure investment opportunities. How do you see that developing over the next couple of years? Most of us would probably measure it in the form of capital spending and opportunities for you all to invest, and hence produce earnings and cash flow.

We think going forward over the next couple of years, our target, and we've been fairly clear on this, is to spend about $200 million a year in the Marcellus region, on, relatively speaking, small, bite-size projects that de-bottleneck, add capacity, and the like. This year, we are going to spend about $150 million in the region. We believe we're on track for that spend. The vast majority of the spend will continue be on those bite-size, smaller projects to enable the production to get to a liquid point as quickly as possible. Like you, we see the region continuing to be active, and we continue to work with the key players in the region. Range, Consol, Mark West, and others.

That's great. And, then lastly, don't think I quite followed you in your earlier comments, Bob, but you mentioned an accounting charge of about $8 million and you put it in the environmental category.

Yes.

I was wondering if you could give us a little insight there. I'm sure its in the queue.

Yes. This is NIPSCO electric, and during a routine scrub of our regulatory assets at NIPSCO, we discovered a relatively few old and relatively old deferral of NIPSCO environmental costs that we just didn't believe are recoverable. And, I just emphasize a couple of things. Nonrecurring; this is not a go-forward problem with environmental costs. This is not a go-forward problem with the environmental cost recovery tracker in Indiana.

So more just a cleanup of some of these older costs.

Yes, just a routine scrub.

Okay. Thanks a lot, Bob. I appreciate the time.

Thank you.

Your next question comes from the line of Stephen Maresca from Morgan Stanley. Stephen, please proceed.

Hey, good morning, everybody.

Steve, how are you?

I'm doing well, thank you. A couple questions if I may, on the gas transmission and storage. First, on the quarter, and just-- the earnings were down a little bit. But, and you mentioned decreased shorter term transportation and storage services. Help me think about what's the outlook for that for the remainder of this year over the next four quarters. And I'm actually think about the decrease in the quarter. I know there was a gain in the first quarter of 2010 that helped that.

I'd encourage you to take a close look at the numbers. But, let me give you the negative and the positives when I think about NGT&S for the quarter and for the year. You mentioned a couple of them. We had the storage gas sale first quarter of 2010. Our optimization business, park and loan business, continues to be flat or down a bit. And, then there's also an interest increase that occurred at Millennium as they firmed up their financing. So, again, those are unusual, out of the ordinary sorts of occurrences, I think, that do skew the quarter a bit. But, when you drill down and look on the NGT&S numbers, several notable pluses and take-away that continue for the balance of the year and going forward.

Number one, you'll see demand and commodity revenues are up in a very positive fashion; again, reflecting projects, re- contracting, and the like. You'll also see the volumes are up considerably. And, third, their underlying expense structure continues to be well managed, aggressively managed. And, then last, but not least, beginning of May, we had a lift from the Columbia Gulf rate case. We'll reserve a portion of that case, but nevertheless we will have a significant lift coming in. So, again, when you cut through a bit of the noise and look at the key fundamentals; demand commodity, volumes, expenses, regulatory activity, and then the projects that we are working on, we feel good about NGT&S and where it stands.

Okay. That was helpful. Switching; same segment, but in terms of the new growth outlook, you talked about $150 million this year, $200 million as a target annually, in the Marcellus region. What sort of needs are you seeing from producers right now? Is it more on the strict pipe side, or would you consider, think about getting into more of a, you know, a liquids opportunity if that arose, and how are contracts being-- are they still favorable? Is there still enough to get commitments?

Yes, on the last point, we believe that the market is still favorable to get commitments and structure arrangements that we feel meet our risk profile. In the way of what the producers are looking for, and you've touched on most of those, but it's gathering, quasi-gathering, de-bottle necking, getting gas to-- to liquid points where they can monetize as quickly and effectively as they can. We do believe that there will be opportunities for processing and the like, liquids handling and the like.

That hasn't necessarily been our sweet spot where we consider opportunities to enable, or to leverage our ongoing investments in the area, sure. But, they're going to have to meet our risk return profile, and again, how we do believe there are opportunities in that region. We've said this consistently. We don't see production levels at-- at levels that would support large-scale, long line expansion projects. We do believe, though, as production grows, and we do have more critical mass, the gas will go further down stream. We'll seek markets that will require larger scale investments. But for the time being, bite-size access-providing sorts of projects, that's where we will continue to focus.

Okay. That's helpful. Thanks a lot, everybody.

Thank you.

Your next question comes from the line of Carl Kirst from BMO capital. Carl, please proceed.

Thanks. Good morning, everybody.

Good morning, Carl.

Actually, Bob, if I could just key off the last comment you made, most of my questions have been answered here. But, in recognizing that you guys are speaking at LDC forums and trade group meetings all the time, but there was one media article that ran about perhaps you guys looking at a mid Atlantic pipeline, which if I kind of go into memory, I don't know if I remember the member name right, but it was like the old Patriot Proposal from way back when. How serious is that? I mean, at this stage, is this something where we could, in fact, be looking at a new pipeline to serve mid-Atlantic generation, I guess, feeding mid-continent shale gas? Or is that something we should be putting more in the three, four, five-year kind of bucket?

It would be the latter sort of consideration. But, Carl, if I could, maybe I can just give you a bit of an overview and a perspective from management on growth projects at NGT&S. Without a doubt, without a question, the primary focus is going to be leveraging this Marcellus opportunity that we have. That's job one, two, and three. And, as you recognize, that's a supply push, a producer push sort of opportunity. We are not going to predicate our entire growth on supply push. So, we are looking for demand opportunities on system, adjacent to the system. So, we are going to continue to look at demand opportunities. I mentioned the one power generation project that we are actively advancing. That's a good example of continuing to focus on the demand side of the market.

The opportunity that you mentioned is called Kennesaw. And, again, it represents a demand-focused opportunity for us. It's a potential opportunity to provide an outlet or another market for Marcellus gas. As you suggested, this project is in the early, early stage of development. So, that's one of the reasons it's not reflected in our formal comments today, because we're actively working the market to determine whether this has a real potential for us. So that's the overview on where we stand. This project is a long-term sort of look, and I just close out by saying that our tenets for growth remain the same. And, anything we do is going to be focused, going to be disciplined. Project, or projects will be 100% contracted for, and as you know, we try to actively risk manage projects through the use of structured arrangements, joint venture partners, or whatever. So a little bit of an overview, and a little bit of color around how we regard demand projects.

I appreciate that. Thank you for the color. Maybe one other question on the pipes, and this kind of speaks to Millennium. I know you guys are kind of going through the binding results of the open season. But, if that were to move forward, what would be the timing of potential, you know, capacity expansion at Millennium? And, I guess I'm also trying to just brainstorm and think about this in terms of the PENNSTAR pipeline, which, you know goes into Millennium. Because, our understanding is that the wells coming out in northeast Pennsylvania are so large that even Millennium is kind of getting backed up per your opening season. So is PENNSTAR partly predicated on the fact of getting more capacity on Millennium?

We certainly believe that would be a help, but maybe I could just go to the Millennium point. The timing of the expansion; 12 to 24 months is the window for this expansion. We believe there are additional opportunities to effectuate very economic expansions of Millennium. So, we believe down the road there could be additional phases, and so consider this maybe phase one of that expansion. To PENNSTAR, we've been consistent in saying we believe this is a 2014 project. Part of the softening of gas prices has moved that back a year or so. Clearly, opportunities for additional capacity on Millennium, I think, enhance the position of the PENNSTAR.

Great. I appreciate the color. Thanks, guys.

Thank you.

Thanks, Carl.

Your question comes from the line of Faisel Khan from Citi. Faisel, please proceed.

Thank you. That's Faisel, from Citi.

Hello, Faisel, how are you?

Great. How's it going?

Good

Hello, Faisel.

A few questions. The projects you guys outlined, your gas transition storage, [like] the mid-Atlantic power generation project, the other two projects below, what would be the aggregate costs of these projects?

I didn't hear your first point. I heard something about the Power Gen project. The size of that project is roughly $40 million, give or take.

Okay. And the same thing for these other projects, too, or are they smaller than that?

In aggregate, they approach $40 million to $50 million.

Okay. Got you. And if I'm looking at the -- I think you addressed this a little bit in some of your comments earlier, but if I'm looking at the throughput volumes at Gas Transmission and Storage year-over-year, was that mostly driven by weather or was there something else that was driving those volumes?

Let me check. I believe these are all weather-normalized that you're looking at on NGT&S and in fact for the other units. And, so from my perspective, it's been increased demand and utilization of our facilities.

Okay. So these throughput growth numbers you are seeing on Columbia Gas Transmission, year-over-year, is really increased customer use of your pipeline? It's not weather driven?

Yes. That's right. It's basic usage. Now, again, I would remind you that the margins are very thin because the pipeline, both Columbia Gas Transmission and Columbia Gulf are fixed variable pipelines. So, the contribution from that throughput is nominal.

Sure. And, then on the electric generation side, the industrial volumes that you guys reported this quarter versus the fourth quarter of last year, so fourth quarter 2010, seem to be up somewhat significantly, too. I just wanted to make sure was that weather driven or demand driven?

It was demand driven. It's about 14%, and it was production from manufacturing steel producers and the like in the region.

Okay. As we stand here today, do you see that level of demand kind of sustaining into the rest of this year?

We believe it will be flattish. There are suggestions that the fourth quarter we are going to see a drop off as the production cycle begins to wind down. So, again, we're just very conservative on the outlook for continued growth in that area. We've been pleasantly surprised, but again, the plan is not really predicated on sustaining these sorts of growth rates, or these levels.

Got you. Okay. And then just a last question, on the flue gas de-sulfurization unit, what's the cost of that one unit for that plant?

The first one, unit 14, is in the ballpark of $200 million.

Okay. And that will be spent over the course of this year?

This year and next year. We need to have that unit in service roughly by the end of 2013.

Okay. Got you.

So '11, '12, '13.

Okay, perfect. Okay, thank you guys. I appreciate your time.

Thanks, Faisel.

(Operator Instructions)Our next question comes from the line of Elvira Scotto from Credit Suisse. Elvira, please proceed.

Hello, good morning.

Good morning, Elvira. How are you?

I'm well, thank you. I just had a couple of follow-up questions. Following up on one question where you indicated that if there are some opportunities within processing and handing, in the Marcellus area, you would look at it, but it has to meet your risk reward profile. Does that mean that you may consider some fee-based processing, or would you actually take on some commodity price exposure?

Fee-based. Fee-based. We've been religious about our approach to the business and about maintaining appropriate risk profile. So, our center of gravity, our bias, is fee-based activities.

Okay, perfect. And just to follow-up on the Mid-Atlantic Power generation project, a couple of questions there. Is that part of, you know, the $200 million spend in the Marcellus, or is that an incremental project?

We consider that incremental. Again, the objective is in the Marsalis region, on an annual basis, to deploy $200 million.

So that $40 million would be incremental to that $200 million?

Correct. Okay, great. And then if -- is there a is there a projected in-service date of 2014, at what point would you have to move forward with-- what is the timeline? As I suggested in my prepared remarks, keep your eyes peeled for a FERC filing, a FERC certificate filing for that project.

Okay.

Within a relatively short period of time.

Okay. And then just to confirm, on the demand, if you start building more pipe, demand pull, but from Marcellus gas, is that also considered incremental to the $200 million of Marcellus spend, or is that, you know, longer-term part of that spend?

What we've been saying is over the next one to four years, we'd like to spend $200 million a year in Marcellus on these smaller de-bottle necking aggregation sorts of projects. That's what the $2 million is about. When we get further downstream, power, LDC markets, and other demand areas, that would be outside of the $200 million.

Thank you.

There are no further questions at this time. I'll now turn the call back over to Bob Skaggs for closing remarks.

Thank you Laura. And thanks to everyone participating this morning. We appreciate your engagement and your ongoing support of NiSource. We'll see you soon. Thank you.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect and have a great day.