Radius Recycling Inc (RDUS) 2012 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Schnitzer Steel second-quarter 2012 earnings release. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference is being recorded.

I would now like to introduce our host today, Ms. Alexandra Deignan, Vice President of Investor Relations. Ma'am, please go ahead.

Thank you, Karen. Good morning. I'm Alexandra Deignan, the Company's Investor Relations contact. I'd like to thank everyone for taking the time to join us today. In addition to today's audio comments, we've prepared a set of slides that you can access on our website at www.schnitzersteel.com, or www.schn.com.

Before we get started, let me call your attention to the detailed Safe Harbor statements on slide 2, which are also included in our press release as of today and in the Company's most recent Form 10-K. These statements in summary say that, in spite of management's good faith, current opinions on various forward-looking matters, circumstances can change and not everything we think will happen always happens. Please note that we will be discussing some non-GAAP measures during our presentation today. We've included a reconciliation of those metrics to GAAP in the Appendix of our slide presentation.

Now let me turn the call over to Tamara Lundgren, our Chief Executive Officer. She will host the call today with Richard Peach, our Chief Financial Officer.

Thanks, Allie. Good morning, everyone, and welcome to our second-quarter earnings call for fiscal 2012. I'll start us off this morning by discussing some highlights from our Q2 results and our assessment of market trends, and I'll update you on our recent dividend announcement. Richard will then provide more detailed information on our segment performance and our financial metrics. I'll conclude with some remarks about current market conditions.

So if you'll join me by turning to slide 4, we can get started. As we noted in this morning's press release, we delivered $0.35 of EPS this quarter -- up nearly 40% from the first quarter, but clearly reflecting the headwinds of uncertainty and weakness in the global markets. Export demand for recycled metals improved in the second quarter, and we saw an increase in ferrous sales volumes of 10% and an increase in non-ferrous sales volumes of 23%.

We believe that the long-term demand for recycled metals remains strong, and we are optimistic about the prospects for our business; but in the near-term, our markets remain challenging. In particular, we continue to be impacted by tight supply conditions for raw materials, driven by the low US GDP growth rate and flat selling prices.

As expected, December shipments were the trough for the quarter, and reflected the lower-priced shipments that carried over from the weak markets we saw in October and November as a result of the European financial crisis. Prices rose more than $50 on early January shipments but then weakened. Softer selling prices in the latter part of the quarter reflected continued concerns over the global economy. The mild winter weather also contributed to the softer selling prices, as customer concerns eased regarding the availability of materials for sale during the quarter.

Our operating income grew by 20% and our operating income per ton increased approximately 40% versus Q1, primarily driven by higher volumes and lower SG&A. Our operating income in margins, however, were both down from last year. Although average selling prices didn't change much year-over-year, last year's second-quarter benefited from rising selling prices rather than the weakening that we saw this year.

During the past quarter, in order to better leverage our platform across geographies and across divisions, we undertook a comprehensive SG&A review. And as a result, our SG&A levels are now running approximately 10% below the average run rate for the last three quarters.

So now let's turn to slide 5 to take a deeper dive into our performance. Volumes improved in each of our segments during Q2, which is typically a seasonally weaker quarter due to winter weather conditions. In our Metals Recycling Business, operating income increased more than 50% versus Q1, due to higher sales volumes and lower SG&A. But margins were compressed versus last year, due to the weak market conditions and the supply issues we just discussed.

In our Auto Parts Business, we experienced strong year-over-year growth in revenues, mainly due to increased parts sales and admissions. However, we normally see a sequential decline in sales and admissions in our second quarter due to weather and holidays, and this second quarter was no different. APB's operating income and margins during the quarter were also impacted by softer commodity prices and higher legal expenses.

Our Steel Manufacturing Business continues to be negatively impacted by weak demand on the West Coast for construction-related materials like rebar and wire rods. During the quarter, our consolidated operating margins improved month-over-month, benefiting from higher volumes and lower variable costs, as we leveraged operating efficiencies across our expanded platform and reduced SG&A. We also generated strong operating cash flow, which, when coupled with our ability to access credit, provides us with ample room for capital investments, acquisitions, dividends and share repurchases.

So now let's turn to slide 6 and we can continue. Broader-based demand returned to the ferrous export markets in our second quarter. We exported to nine countries in Q2 versus six countries in Q1. Turkey, South Korea and China were our top export destinations. Steel production in the emerging markets has increased year-over-year. While there has been plenty of debate as to where growth rates in China and the rest of the emerging markets will end up in 2012 and beyond, we believe that it's more important to focus on the absolute level of demand, which remains high, rather than a change of 50 or 100 basis points in projected GDP growth rates.

We believe it's unlikely that absolute levels of steel production will move significantly lower on a sustainable basis, as it will take decades to complete the industrialization and the urbanization desired by the governments in the emerging markets. In addition, there has been a significant expansion of global EAF capacity, which will continue to accelerate demand for scrap. Most notably, Turkey intends to increase EAF capacity by 9 million tons by 2015, and they are already one of the largest importers of ferrous scrap in the world.

We also expect to see continued demand by blast furnaces in order to decrease their greenhouse gas emissions. And China's government, in particular, has announced its intention to increase the use of scrap in order to achieve reduced emissions targets.

There's one other point that I'd like to highlight, and that's currency. In the past, currency fluctuations between the dollar and the euro didn't have much of an impact on the US ferrous export markets; really marginal at best. During Q2, we saw a bit of a change here. The extreme weakness in Europe resulted in less European domestic demand and a bit of a supply push into the typical export markets. And the euro weakness drove some imports into the US in January and February.

Both of these activities may have contributed in Q2 to the tempering of export prices, notwithstanding both increased demand and increased sales volumes. We believe that this is balancing out in the short-term, and we remain focused on the inherent and long-term growth in demand that's expected to continue to outpace supply.

Now, much of this demand comes from the emerging markets where our competitive advantages are, first, in our strategic port access on both the East and West Coast, in Canada and in Puerto Rico, which enables us to ship product to wherever demand is greatest. And second, in our ability to maximize metals recovery from the raw materials we've processed through our state-of-the-art shredders and our non-ferrous extraction technology. All of this gives us the confidence to continue to invest in our growth businesses and to deliver enhanced value to our shareholders.

So now let's move to slide 7. This slide gives you a clear sense of the strength of our operating cash flow generation since September 2008, which was the beginning of our 2009 fiscal year, and when the impact of the global financial crisis hit the metals recycling and steel industry.

We generate strong operating cash flow in a variety of economic environments, and we're able to maintain a strong balance sheet while investing aggressively in acquisitions and CapEx to enhance our market position, expand our franchise, and improve our operating performance. In fiscal 2012, we anticipate spending approximately $100 million in CapEx, about half of which has been spent through the second quarter. We also anticipate making further acquisitions to continue our strategy of solidifying our supply chain in our Metals and our Auto Parts businesses.

Now let's turn to slide 8 for a look at our capital deployment. Over the last five years, we have significantly increased our operating platform in our two growth businesses -- Metals Recycling and Auto Parts. While pursuing our growth strategies, we've returned capital to shareholders through share repurchases and regular dividends.

Since 2006, we've repurchased 15% of our shares outstanding, and we have 3 million shares authorized to repurchase under our existing Board approvals. We intend to continue our practice of repurchasing shares. The Board's recent decision to increase the Company's annual dividend to $0.75 reflects our confidence in the long-term fundamentals of our business.

Our capital deployment strategy will continue to prioritize strategic growth initiatives to enable us to enhance our market positions and our operating performance, to maintain a healthy capital structure, and to deliver tangible shareholder returns through dividends and share repurchases. This marks the 72nd consecutive quarter that the Company has paid a dividend since it became a public company in 1993. And it's the Board's intention to maintain this dividend and to increase it, as the Company continues to grow and performance improves.

Now before I turn the call over to Richard, I'd like to discuss a recent addition to our executive leadership team. Pat Christopher, who many of you have met, has been promoted to President of our Metals Recycling Business. Pat has been the Chief Operating Officer of MRB for the past five years. He's been a terrific leader in driving our continuous improvement program, our No Excuses safety program, and of course, our technology investments.

Pat will lead a team a very strong operating executives who have significant experience in all aspects of our industry. This promotion, along with a number of others that we've recently made, is a reflection of the deep talent that we've developed over the years at Schnitzer.

Now I'm going to turn it over to Richard, who will provide more information on our Company's financial results for the second quarter. Richard?

Thank you, Tamara, and good morning. I'll start my presentation on slide 9 with a review of our segment highlights for the second quarter.

MRB's operating income increased sequentially to $20 million, which was up by $7 million over the first quarter. The key drivers were benefits to gross margins from higher sales volumes and reductions in SG&A expense. Operating income per ton was $15, a sequential increase of $4. As a result of carryover effects from the market dip in the first quarter, December shipments were at low prices, which impacted MRB's overall performance for the second quarter.

APB's operating income was $9 million, slightly down on the first quarter. The key drivers were seasonally lower parts sales and higher SG&A legal expense. Absent the SG&A item, the operating margin would have been higher by approximately 200 basis points. APB's margins were compressed in both the first and the second quarters, due to the impact of lower commodity prices and the tight supply of end-of-life vehicles. SMB had a small operating loss of $1 million, which was impacted by costs of planned maintenance, which also restricted production volumes during the quarter.

Now turning to slide 10 for a discussion of market trends impacting MRB. The two graphs on this slide show market prices on a published market index and MRB's trend on average selling prices. The published market index shows market prices for both the East and West Coasts from December through February. Trends on both coasts were the same, with the lowest prices at the start of the quarter, which then rebounded in December to benefit January shipments. Market prices then retreated in the second half of January, which affected our shipments in February.

Moving to the chart on MRB's average selling prices, a consequence of the lower priced December shipments was that the second-quarter average was $11 lower than the first. Freight rates declined in the second quarter and were, on average, $31 per ton.

Now moving to slide 11 to review ferrous sales volumes. As a result of improved demand, ferrous sales volumes were 1.4 million tons, a sequential increase of 10%. MRB's year-to-date sales volumes of 2.6 million tons are also up 10% year-on-year. Of the increase of 254,000 tons, around half was attributable to incremental sales volumes from acquisitions in fiscal 2011. This contribution was in line with our expectations.

Turning to slide 12, I'll now cover non-ferrous. Non-ferrous sales volumes were up significantly to 169 million pounds, a sequential increase of 23%. The key driver was increased production using our sorting technologies, including benefits from processing an accumulated backlog of approximately 10 million pounds.

On a year-to-date basis, non-ferrous sales volumes are up by 32%. Of this increase of 74 million pounds, just less than two-thirds is incremental from our acquisitions in fiscal 2011. Average selling prices for non-ferrous declined sequentially by 9%, primarily due to a product mix shift, as we sold more mixed material arising from our higher production activity.

Now shifting to auto parts from slide 13. Car purchase volumes for the second quarter were flat sequentially, but up 4% year-on-year. On a year-to-date basis, purchase volumes were up by [6,000] cars, due mainly to the incremental impact of our fiscal 2011 acquisitions. Compared to last year's second quarter, parts sales and admissions were up by 16% through a combination of marketing initiatives, milder winter weather, and contributions from last year's acquisitions. The improved contribution from parts sales helped mitigate the adverse impact of softer commodity prices and a tighter car supply.

Moving to slide 14, we'll turn to the Steel Manufacturing Business. Sales prices were flat sequentially, but sales volumes increased by 5%. On a year-to-date basis, SMB's sales volumes are up by 11%. Rolling mill utilization was 54%, lower than the first quarter by 600 basis points, primarily due to the planned maintenance which took place in December.

Now turning to our cash flow and capital structure, let's move to slide 15. Second-quarter operating cash flow was positive $128 million. The primary driver was the higher sales volumes, which reduced inventories by [$88] million. Year-to-date operating cash flow is $41 million. This is double what we achieved by last year's second quarter. As a result of the second quarter's strong cash flow, our net debt was reduced to $362 million and our net debt leverage of 24% is less by 540 basis points on a sequential basis.

In summary, we continue to maintain a strong balance sheet, which gives us the ongoing flexibility to grow our business. Now I will turn the call back over to Tamara, who will provide her concluding remarks.

Thanks, Richard. As we mentioned in our press release issued earlier this morning, in order to provide our investors with increased visibility into quarterly results, going forward, we will be providing our outlook on expected pricing, volumes, and margins, later in the quarter. For our third quarter, we will provide specific guidance during the latter part of May; but today, we can provide some commentary on what we've seen so far.

In the ferrous export market, we've seen some incremental improvement in sales prices since the beginning of March, and we characterize it as relatively steady, still reflecting some cautious buying from customers and quicker delivery times. Supply flows into our facilities are steady. The surge in pent-up supply that we often see after the end of winter is not expected, due to the mild weather we experienced in January and February.

In our Metals Recycling Business, we are seeing operating income per ton margins trending higher than the second quarter. In our Auto Parts Business, we are seeing rising admissions and parts sales, as we would expect in the third quarter. Commodity prices are improving and demand for end-of-life vehicles continues. We're also seeing improved margins in our Auto Parts Business versus Q2.

In our Steel Manufacturing Business, however, we're not seeing any change in demand, as sales prices and utilization remain flat. While volatile pricing resulted in margin compression during the last six months, long-term global demand for recycled steel continues to be strong, evidenced by the growth in US export activity, capacity expansion of electric arc furnaces, and increasing use of scrap metal.

We've expanded our operating platforms to take advantage of these positive long-term trends. While the global economy continues to face headwinds that have impacted our performance in the short-term, we're confident in our ability to continue to positively grow our business and to deliver enhanced value to our shareholders.

So, Operator, let's open up the call for questions.

(Operator Instructions). Luke Folta, Jefferies.

First, I had a question, it was kind of more of a longer-term question. Now the bare case on Schnitzer right now, and I guess the recycling space as a whole, has been that there's been a lot of shredder capacity added, and there is sort of an intensifying competitive environment for input scrap. And that because of these, there has been some structural shift in the industry that will result in margins being structurally lower this cycle than they were last cycle.

I just want to understand what your view on this is looking forward. And to the extent that you do expect to see margins come up from current levels, what kind of gives you the confidence that that's going to happen over time?

Sure. Well, let's put the quarter in perspective. And remember that we absorbed some big externalities. The industry absorbs some big externalities, which was really the European financial crisis, which, for us, hit us both in Q1 and Q2. And that was a big driver, obviously, to supply flows, to demand, and to prices.

And so when we look at this, we look back at fiscal year '11 and we look at what happened in January, February and March, and probably look -- if we'd had a calendar quarter, you would have seen our margins clearly, while below the average for fiscal year '11, clearly within the high/low range of fiscal year '11.

So the European financial crisis was a big shock to the markets, but we don't believe that the last two quarters signal a permanent shift in the business. And what we're commenting on in March and the like is we're seeing steady supply flows into our facilities, and we're seeing improving demand and increasing prices.

Okay. And Richard, maybe you could -- can you give us some sense of what the monthly trend in margins were in the recycling business? And just looking forward into the third quarter, to the extent that we get a flat scrap price in May, I guess, it would be -- April looks like it's down a bit -- do you think your operating profit starts with a [2] on a per ton basis?

Well, we're not actually giving any guidance today, as you know. But what I can say about the second quarter is that most of our process came in the last two months of the quarter. And I think you could perhaps do the arithmetic yourself there. That's a good way of looking at it.

So December was kind of at -- around a breakeven number?

I wouldn't like to comment on one single month, but I'll reiterate my comment that most of the profit in the second quarter came in the last two months of the quarter.

Okay. And just another one. On the Auto Parts Business, you incurred, I think, about $2 million in legal expenses in the quarter. Is that something you think persists into the second-half?

No, we don't. Those were a variety of legal expenses that randomly hit all of the second quarter.

Okay. All right, guys. Thank you, and I'll get back in line.

Timna Tanners, Bank of America Merrill Lynch.

I wanted to maybe take a different tack to Luke's question on the margin per ton. As you point out on slide 10, which is super-helpful, a year ago, you had a sharp increase in scrap prices. So if we look at the second quarter of 2011, probably not representative at $36 a ton.

But this quarter, things drifted a bit, but a little bit more sideways and we had $14 a ton. So we'd have to assume, I think -- and correct me if I'm wrong -- that something in the middle is normal for the current environment, at least? And I just wanted your thoughts on that. Because I think $36 a ton represented a massive increase in scrap prices from, like you say, your [353 to 419]. But if you have a flat scrap price environment, it seems to me like is it somewhere in the middle? How do we think about that? What other factors might I be missing?

Well, clearly, that's sort of the high/low range that you saw in fiscal '11. And a couple things that we need to keep our eye on, is still the overall economic environment. And that is probably the biggest driver, Timna, with respect to improvement in supply flows.

And you can really see that in today's world, in terms of looking at the supply flows for prime scrap, for example, and P&S, which is driven by improved manufacturing activity and some improved demolition. And you still see tighter supply on shreddables, which is driven by underlying GDP growth demand. So I think the other thing for you to keep your eye on is the improving economic environment.

Okay. I mean, we are hearing like really good demand from the auto side, machinery side, so demolition is definitely a piece that's missing. What about that pig iron price coming down as well? Can you talk about how that's affected your business?

Well, the pig iron imports affected prime, really, more than obsolete scrap. And we saw that a bit towards the end of the first quarter, really, and some deliveries into the beginning of the second quarter. But it affects prime more than it affects the shreddables.

Okay. And then, lastly, I mean, is there anything else that you're signaling with the dividend increase? Because it seems like you're getting back more in line with peers, and it's a good signal. But, I mean, does it say anything about where you expect growth to come from going forward? You're still talking about other source uses of cash. But is there anything else that you would be signaling here with the dividend increase at this time?

What we are signaling with the dividend increase is that we've been through a variety of economic cycles over the past five years. And we have shown that we can consistently generate cash while growing significantly and maintaining a healthy balance sheet. So the increased dividend, just as you point out, makes us more competitive in the market. But it does not hamper or handicap at all our commitment to continuing to grow. And as I said in my formal remarks, we anticipate continuing to make acquisitions, continuing to invest in technology, and continuing to buy back shares, as well as to maintain and to increase this dividend as we continue to grow and performance improves.

Okay, thank you.

Dave Lipschitz, CLSA.

(multiple speakers) A question again on the -- your growth strategy and things like that. Are you happy with your acquisitions that you've done over the last year or two? Because -- do they add to earnings this year? Would earnings have been that much worse so far if you hadn't made those acquisitions?

Well, I think what you can see in the acquisitions is that we have grown our market share and expanded our volumes. Obviously, the market externalities that I mentioned, the European financial crisis, very specifically has impacted the performance in the entire industry and business. But yes, we're very pleased with the acquisitions that we've made, and the volumes and market share improvements are on track.

And then not to beat a dead horse in the last two questions, but just a quick question. Has the Internet increasing technology information flows, has that hurt your margins, do you think, going forward, in terms of people know what real-time data, what scrap prices are and things like that?

Well, I think that as the industry has basically gained more visibility because of globalization, because of the expansion of steelmaking capacity in the emerging markets, more information, more focus, is very natural. But at the end of the day, just as a physical market, and where we sit and where we buy and sell scrap, continues to be the basis -- the basic source of information. And the supply flows and margin implications are much more driven by underlying economic activity than they are about Internet and media.

Thank you.

Brent Thielman, D.A. Davidson.

(multiple speakers) Also going to ask just a question on the margins per ton. But coming out of the first quarter, and I guess initially looking at the second quarter, you guys were thinking MRB (technical difficulty) margin per ton in the low 20s. And I guess my question is, if you hadn't seen the market turn the way it did in late January and in February, would that still have been achievable? I mean, I know December was tough, but did you see enough evidence in January in your business to sort of suggest you were at those types of margins or better?

Yes, we did.

Okay. And then on the auto parts side, I guess, just taken from your comments, but has the availability of sort of end-of-life vehicles gotten worse, from your perspectives, compared to where you stood a year ago? And do these sort of -- I guess these are the sort of the type of margins we should get used to in a flat pricing environment?

Well, remember, the margins that we posted for this quarter did have that 200 basis point impact. So you need to keep that in mind. But there are -- you know, there have been fewer cars available for purchase on sort of a holistic basis, because we're in this lower GDP environment. So people are holding onto their cars longer.

The recent statistics that I saw, the average age of vehicles is about 11 years, and average miles per vehicle on the road is about 130,000 miles. So these are high numbers. These are high numbers historically. So I think that there are fewer cars available today because of the GDP low growth environment. But end-of-life vehicles have a natural end-of-life, so we anticipate that that will strengthen over time.

One other thing I'd just add, Brent, is that the second quarter was seasonally affected by lower car sales. And as we come out of the winter period, we always expect our parts sales to increase and the revenues from parts to increase, and we don't expect this year to be any different. And that's one of the reasons why we expect our third quarter in APB to improve over our second quarter.

Okay, appreciate that. And then on the steel side -- and I do appreciate that's a tough business right now -- but I've heard from some others that activities are picking up a little bit on the construction side. Can you talk a little bit about your backlog there? Do you have any better visibility than you did a year ago? Just a little more commentary on the market there would be helpful.

Well, the West Coast market is still weak and performance is contingent on an economic recovery in the West. While either a slight improvement year-over-year, but the short-term extension from the Highway bill and just general top budget issues going on up and down the West Coast in governments still makes that a flat environment.

Okay, thank you.

Bridget Freas, Morningstar.

(multiple speakers) Thank you for taking my question. Just a follow-up on the Auto Parts Business. The second quarter tends to be the weakest perhaps from a revenue perspective, but usually much stronger on a margin basis, even without the legal expenses. So I'm just trying to get a better understanding of this tighter supply of end-of-life vehicles.

Because I think in the past, you've talked about warm weather in the summer tends to cause a tighter supply with fewer admissions. So are we facing a greater structural challenge? Or are these last couple of quarters just a temporary phenomenon? What's it going to take to get the Auto Parts Business back into that 20% margin range?

Well, let me clarify one thing. We're talking admissions and parts sales versus supply vehicles. So, Richard can comment quarter-to-quarter in terms of our admissions and parts sales trends.

But regarding the supply of vehicles, we see that expanding as the market -- as the general economy improves. And that's really the main driver for us being higher supply. As I mentioned, average miles driven are at an all-time high and average ages as well. So we do expect that supply to loosen up. And you can see new car sales are increasing and we'll get the trickle-down effect of that, as you see more of that new supply go into the market.

Yes, hi, Bridget. It's Richard. I'd add a couple of things. When you look at last year's Q2 in auto parts, which had a 22% operating margin, about 4% of that came from average inventory accounting benefit because we were in a rising market [by brands Sotiva and Socone].

And then, secondly, I'd just reiterate the point from earlier that parts sales admissions are off almost 16% year-on-year. We really got strong focus on our retail marketing and APB as well as the commodity side. And that means really maximizing the yield that we get, the cars that we bring in there. And a really strong focus on marketing initiatives on new products, bringing people into the yards. And we see that as a strong initiative that is being resourceful as evidenced by the year-on-year improvement in these areas.

Okay. That's helpful. Thanks a lot.

Dan Whalen, Auriga USA.

Yes, just another question on the acquisition front. Just looking at the difficult operating environment over the past couple of quarters, some of your competitors possibly being less well-capitalized as you. Does that really generate a catalyst for further acquisitions? Or what's the landscape looking like now?

Well, we've got an active acquisition pipeline. And, as you know, the acquisitions that we look at are privately-held companies. And their motivations for sales really vary, and they range from succession planning to economic environment.

But we're seeing a continued active pipeline. We did 10 acquisitions last year. And I think you can expect to see us do some acquisitions toward the second half of the year. (multiple speakers) But, clearly, the operating environment lends itself to, right now, to technology investments, capital investments. And those are investments that some of the smaller capitalized companies don't have the appetite for.

Would you say, incrementally, has your acquisition pipelines increased over the last quarter? Or not, not really significantly changed?

Well, these are transactions that take multiple months (multiple speakers), and in some cases, multiple years, because they tend to be family-owned businesses. So we don't really -- you don't typically see noticeable change quarter-over-quarter. And so it continues to be active.

Okay. I appreciate the color.

Okay.

This concludes our question-and-answer session. I will now turn the conference back to Schnitzer Steel for any final remarks.

Thank you. Before we close the call today, I'd like to make one final announcement regarding our management team.

Gary Schnitzer, after 47 years of tremendous service to the Company and to the Metals Recycling industry, has announced his retirement. Gary's contributions to this Company are too broad and too deep to fully recount here. But we expect to continue to seek his very wise counsel and advice, and thank him for everything that he has done for the Company.

And thanks, everyone, for joining us today. We look forward to speaking to you again when we report our third-quarter results. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone have a good day.