Star Group LP (SGU) 2003 Q3 法說會逐字稿

Ladies and gentlemen, please continue to stand by. Your conference call will begin shortly. Once again, please continue to stand by, and thank you for your patience. Ladies and gentlemen, thank you for standing by. Welcome to the Star Gas Partners fiscal 2003 third quarter results. If anyone wishes to access a copy of the press release, you may do that at the Star Gas web site at www.star-gas.com. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press the 1, followed by the 4, on your telephone. As a reminder, this conference is being recorded. Wednesday, August 6th, 2003. I would now like to turn the call over to Purdy Traun (ph), Starr Gas investor relation representative.

Today's conference call contains certain forward-looking information that is subject to certain risks and uncertainties as indicated from time to time in the partnership's 10-K, 10-Q, 8-K, and other filings with the Securities and Exchange Commission. Included risks and uncertainties are the effects of the weather on the partnership's financial results, competitive and propane heating oil pricing pressures, realized savings from the business process improvement program, and other factors impacting the propane, home heating oil, natural gas, and electricity distribution industries. I would now like to turn the call over to Mr. Irik Sevin,Chairman and Chief Executive Officer of Star Gas Partners.

Purdy, thank you very very, much. The third quarter normally is obviously a spring non-heating season, a quarter where our actual financial results are relatively highly predictable without very significant factors impacting their variability, and hence, it's, generally speaking, a relatively quiet period, at least from historic financial implications. However, this third quarter for us has been a very, very impactful and important quarter, in the sense that most of the planning and most of the development that's going to impact our performance going forward, both in '04 and there beyond, can be undertaken in the off season. So while it has not that meaningful of an impact in fiscal year '03's financial results, which are pretty much solidified by the end of the March quarter, is a very, very important period for the longer-term implications to the Company's and the Partnership's performance. This quarter has been a very, very good quarter for us in terms of the more substantive movement forward. Firstly, we did make six acquisitions totaling about 81 million-gallons, costing about $70 million dollars, and adding about 95,000 customers, which really suggested that our Company grew as a result of that 12% to 13%. The most meaningful acquisition of the six was our purchase of Laro Energy Corp.'s ultramar heating division up in the New England area which was a strategic move by Laro I believe to just focus in on their core competences, and where they are headed. They were spinning off their heating oil divison, heating and propane division . It consisted of about 42 million-gallons, and we think -- we love the business and we're also very pleased that they did select us as the buyer of that property. It was a very competitive process. We still were able to buy it within our disciplined acquisition program parameters, and I think our unique position as both a heating oil and as a propane distributor led to our ability to buy that. Just as an aside, when we at Star, combined with Petro back in '99, about four years ago, one of the strategic reasons was to put together a retail energy company that did both heating oil and propane. Not only did that give us a diversification and portfolio effect on our earnings, but I think positioned us uniquely to do exactly what we did with Valeros (ph) properties, which has put us in a unique position to buy any properties that had both heating oil and propane constituencies.

Secondly, this past quarter was very meaningful in terms of our movement forward, probably most importantly in terms of our organizational restructuring and our business process design improvement program that we began -- we've been talking about for about five years.

Last time we chatted, with the last quarterly results, we did announce on April 1 that we did reduce our administrative staff by 20%, or are intending to do that over the summer. One of the good things is that when you are in a seasonal business, you do have this operational down-time during the summer in which you're able to, relatively free from daily operational demands, implement, in a timely, disciplined, thoughtful manner, those strategic initiatives that you've identified, and we have been throughout April, May, June, July, and now August, in a deliberate, timely but sensitive manner, executing on our business process redesign program.

From a financial point of view, this quarter is a loss quarter, is generally and traditionally and historically a loss quarter, and it was this quarter.

Generally, as the Partnership grows, the operating loss and the net income loss and the EBITDA loss of the Partnership should grow as our size grows. Interestingly, however, this year's EBITDA loss did increase 6.4 million over the EBITDA loss of last year, but the reason for that, interestingly, wasn't so much our larger size in the sense that the acquisitions, the 14 acquisitions we've made since last April 1 of '02 actually were EBITDA positive in Integratable acquisitions and the only real reason that we were or had a larger EBITDA loss was due to what I would call unusual factors.

These are non-GAAP unusual factors but they're unusual factors in the sense that there was about 4.2, $4.3 million dollars of expense associated with equity compensation that had been granted over the past four years, and ironically, as the Partnership's unit price went up, the value of that equity compensation -- it was a long-term plan -actually went up and did get expensed this quarter. Secondly, we had $2 million of reorganization expenses, as we discussed last time and as we announced to the public, we were going to have those expenses over this quarter. We in fact incurred them.

$800,000 of them are associated with severance. The other million two was associated with the consultants that developed the program with us and our off-site expenses associated with developing the program. And so those amounted to, you know, the $6.4 million that EBITDA is at variance or increased the EBITDA loss versus last year with a loss on a truly operational basis remaining relatively same as it was last year and as we expected it to be. Interestingly, despite the reorg which was almost about $3.5 million dollars last year for the nine months, our 9-month results were quite attractive. Sales are up 45%, both due to a combination of generally higher energy prices but our volume being up 24%. Volume increased associated both with colder temperatures as well as our acquisition program where, since October 1 of '01, we bought 19 companies, all of which contributed to the incremental difference as to why our volume was up about 24%, 25%, versus the nine months last year and sales are up 45% to about $1.2 billion, $1.3 billion dollars versus about & 800,080 million dollars last year.

More importantly than sales dollars is EBITDA, and EBITDA was up around $29 million dollarsfor the nine months of '03 versus the nine months of '02. And bringing it to around $138 million dollars of EBITDA this year versus $109 million last year.

Just so we have our numbers straight. When I talk about EBITDA, I do not include the effect of Rule 142 in accounting 4, goodwill and intangibles where we took a one-time, I think it was $3.5 million dollar write-down on our TG&E investment which is included in the nine month results, which is a non-cash item, and also I exclude from my analysis any effect of FAS B-133 which has expected for this nine months had no effect on our results but for last year's nine months contributed about $5 million dollars to the positive last year. So we were up, excluding those items, 133 and 142, almost $30 million dollars in EBITDA, around 27% higher than last year for the nine months. The primary drivers of that were weather -- it was colder, which impacted our volume by about 24%, 25%; our margins continued, gross profit margins at home heating oil and propane continued their historic trend of increasing about a penny three. Let me just talk about that for a second.

Very interestingly, with the warm weather we experienced last year, there was tremendous pressure on the Partnership, and we were able to push margins last year, with volumes being off, it being warm, we were able to help offset -- although clearly not entirely, it wasn't a good year last year -- our results last year with higher margins. Secondly, we had much higher energy prices this year during the nine-month period, we thought due to Iraq, we thought due to Venezuela, but energy prices have remained high. I mention that because our ability to continue to improve our gross profit margins by a penny three over what we experienced last year, which were relatively high, I think is quite interesting.

So in talking about why we're up $30 million, it had to do with weather, margins of a penny three, and the contribution from our acquisitions which contributed almost $6 million dollars of incremental EBITDA for this nine months versus the 9-month period last year.

The acquisition program relatively robust for the nine months, but last year, as we talked interestingly, with the warm weather, we just didn't see as high a level of activity as we've experienced this quarter.

So the impact of acquisitions on last year -- so this previous nine months -- while incremental to the prior year, was not as significant as it might be going forward, given the relatively high level of activity we've had in this particular quarter,which will demonstrate itself next heating season.

As a result of EBITDA being up 29.5, almost $30 million dollars, distributable cash flow was up about $26 million dollars versus last year's nine months, which all related to and resulted in an increase in distributable cash flow per unit of 42cents per unit, and with distributable cash flow increasing $26 million or 33%.

Look, the nine months was great on three fronts: weather, margin, acquisitions. Probably more importantly, going forward, is what we have done this past quarter. As I began my remarks, it has to do with, on the one hand, the continuation of our acquisition program, which again demonstrates, especially in the heating oil area, the unique position that we're in.

We've been able to buy $70 dollars million worth of properties. That consisted of six different properties, about $10 million on average a property. Nothing big, nothing unusual for us. Ultramar was a nice size, but again nothing usual, about $12 million of heating oil, about $12 million of propane.

What is quite pleasing is that we were able to buy these companies in a disciplined fashion, keeping in line with our 5.3 EBITDA -- or anticipated EBITDA multiple. Because of our unique position, because of the economies of scale we can get, because most of the properties we get are integratable, we are able to still grow but grow in, we believe, a very disciplined, accretive fashion by making acquisitions, still within the same framework that we've done for the past ten years, heating oil at 4.5, 4.7, propane, 5.5 to 6.0, weighted average 5.3 times.

I think the future of Star is very, very tied in, however, yes, with our acquisitions, but much more importantly with the fundamental operating excellence of our business. As we've discussed for a long time, a very major focus of our attention has been to take advantage of Petro's unique size in a highly fragmented heating oil industry. Where we believe in our propane business, we are uniquely qualified, having excellent performance in the regions in which we operate. Those have been expanding.

But the propane division does provide about $45 million, $50 million dollars of EBITDA to us. It is a very, very well-operated business. It has grown very, very nicely over the last four years, almost doubling in size. Probably the real opportunity for significant growth, however, probably is in the heating oil division because of its unique competitive position. In propane, we have a number of significant, very well-run competitors. In heating oil, while we have a large number of competitors, just by dint of size, with our being almost 200 times the size of our average competitor and probably three times the size of our closest competitor, we just have the ability, given the concentrated nature of our urban-suburban footprint, to access technology and to operate more efficiently. To do that, to reorganize ourselves, to develop new business processes, and to access technology, however, is very academic and intellectually interesting, but the real rubber meets the road is in the execution of that. Most of these programs, as we're advised, are fraught and can have very high opportunities to them, but have risks associated with them. We think that we have undertaken our business process redesign program over a long number of years, taking the last 18 months before we even commenced execution, and then commencing execution in a very diligent, phased process over the off-season this past summer.

To date, this past summer, we're on target. Things have gone well. Our call center is operating superbly. Our central dispatch has been commenced and has been cloned so that the central dispatch that has worked for the past three or four years, we've set up a second one in the Southern region. And our management is designed where we're going to a specialized program, it has also been implemented in a phased process. So at this stage, things are looking pretty good.

But the rubber will really meet the road in how much money we're going to save and that's really going to happen next year in '04. While we're optimistic and we think at least long-term that there are tremendous opportunities for us, once the processes is are refined to provide us with very significant opportunities long-term, next year we're looking for certain economies, which we hope to get, but we're going to find out.

Please don't take this to mean that I know of anything that suggests that we aren't going to get the benefits; I just want to make sure everybody realizes that while this is a very heady and exciting opportunity we have because of the competitive position that we're in, that it will take time. We're on target. But it is a major undertaking. We are, as I mentioned before, very pleased that the strategy developed four years ago, when we put Petro and Star together, we think are playing out. Last year, Star Propane was relatively insulated from weather. Heating oil got more impacted by it. This year, heating oil got the benefit of a very cold winter. There was this diversification portfolio effect, and it really has been excellent in terms of our ability to make dual fuel acquisitions. At this time, what I'd like to do is turn the conference call over to you all and answer any questions that you might have.

Thank you. Ladies and gentlemen, if you would like to register a question, please press the one, followed by the four, on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one, followed by the three. If you are using a speaker phone, please lift your handset before entering your request. One moment, please, before the first question.

)) OPERATOR: Ladies and gentlemen, as a reminder, to register for a question, press the one, four. Our first question comes from the line of Ron Londe with AG Edwards. Please proceed with your question.

Thank you. Irik, can we have more insight into the Valero Heating acquisition? Can you give us an idea of, number one, their size within the industry and as a competitor, it's not going to be knocking on doors next to you in the future? You know, how that will fit from the standpoint of blending in to our operation, and, again, what size Valero was within the industry? As I recall, Valero's refinery in Canada supplied them with heating oil. Did you have to get a contract to supply them, or are you going to use another source? And what was the date of the closing of that acquisition? Did it happen before June 30th or after?

Yeah, yeah. You know, in listening to all these different televised conferences, people tend to answer the last question first, so I'll do that. We closed it last Friday, and Friday was -- actually we closed it on Thursday, excuse me, July 31st, which has always been our targeted date for closing that transaction, is the end of the month. It facilitated accounting for both them and us. So we closed it July 31st. So none of their results are impacted or in the June 30 quarter. Second, size within industry, I don't know, and no offence to your question, but I don't -- we don't look at that as something that's meaningful to us. Their size is best described as they did $31 million of home heating oil, $12 million of propane. Their footprint is primarily in the Vermont, New Hampshire market, where they have a significant presence and a brand image. Just so you all understand it, it is a more rural business, and it will be operated by the management of our propane division, Bill Corbin and Joe Cavanagh. While it had 30 million of heating oil, the nature of that business, it being rural in nature, is much more akin to the operational imperatives there, both the benefits, detriments, and operational -- detriments, it's more similar to our propane division, and that's who's going to be operating it. In terms of supply, we're kind of anachronistic as a company. We still have supply agreements covering almost all of our needs , and we're very happy that we were offered a supply a contract by Ultramar-Valero out of their Quebec City refinery I think that's something that was strategically important to them, and actually strategically important to us. So, we have entered into a supply agreement with them, that they have assured outlets for supply, and we have an assured source of supply. Strategically, this, although large, it does fits with our normal pattern of buying acquisitions at the right price that fit with us. It puts us into New England. We had not had much activity in the Vermont-new hampshire markets before. This gives us a very strong foothold there. They have a very attractive presence there, they have a great name there, and it just is a fabulous acquisition for us.

Are you going to have to increase your weather insurance exposure given the acquisitions?

You know, that's a great question that nobody has brought up here, and we didn't do it. It's a meaningful acquisition, but the heating oil aspect of this business is not material as a stand-alone acquisition, and, no, we're not increasing the weather insurance for it. The variation there, even in the worst case, the most variation we'll get out of that is maybe $200,000, $300,000 dollars, plus or minus due to weather, and we're just not going out to bid for that amount of weather insurance.

Where are you on weather insurance right now, what amount?

$20 million. I'm sorry, we may not have announced this, and I apologize to the marketplace. We've always had the base level of $125 million that we announced to everybody that we contracted for last year, for the next four years, so we have that base level in, and we did contract for another $7.5 million of weather insurance. The premiums, I think this year, will be a little bit less than last year, so we have about a $3.4, $3.5 million dollar weather insurance premium, and we have the same $20 million dollars of coverage that we had last year. As I said last year, this is part of our business. The fact that it was very cold this winter doesn't change our philosophy, and our philosophy is, there is no predicting weather. We are here as an MLP.

We want to make sure our senior sub unit holders, our bond holders, are protected and know what they're going to get, so we spend about $3.4 million, $3.5 million dollars on weather insurance. That's a dime a share. We think that's a very wise expenditure of a dime a share, but we have the $20 million of coverage.

You look in the 10-Q, in the cash flow provided by operations section, there's a huge swing in the receivables, in the increase in receivables, versus last year. Can you talk about that?

There was a huge swing in sales --

It's purely from --

A huge swing in sales.

Ron Londe It's purely from the sales standpoint.

Oh, yeah, it's only from sales. What happened was it was a cold winter and energy prices were up. So sales were up, receivables should be up commensurately. We have no problem with receivables. Same bad debt rate to 2/10ths of 3/10%, so on 45% more sales. So, we have much higher level of receivables, but commensurate with a higher level of sales.

There's also an increase in deferred charges and other for $8 million dollars. Can you give us some insight into that?

I can't. Rich will. And Rich is just not in my office right now, but we'll give you some backup on that.

Okay. The other thing I wanted to maybe have you get into is, you just went through the proxy vote. There was some confusion concerning how you were going to use your ability to issue on an unlimited amount of units. Maybe you can -- you know, maybe you can kind of talk about that a little bit.

Sure, I'd love to. Idio sinsyncratically LLPs (sp) agreements historically allowed LLP's (sp) while insubordination to only to issue equity for accretive acquisitions. We think over the last four years, we really have performed very well. The stock has performed very well. Our unit holders have gotten, over the last four years, 168% total return, 28% compound annual return, and we did perform in the top 8% of all the New York Stock Exchange listed companies over the last four years. Part of that was the ability -- because we had a basket of units, as do all other LLPs (sp)-- to issue units to deleverage our company, issue units when we needed to pay debt down to deleverage our self, and to issue units to buy technology and invest in the heating oil redesign program. We used up our basket, about 2.5 million units, over the last four years to do those two things, which we think helped and contributed in large measure to why our units are up, our unit holders have, you know, done well. And all we were trying to do is, first, re-up the basket, so we don't have an unlimited amount.

We only have 3 million basket. We do have an unlimited amount to issue equity to repay debt as they come due. If we think that it's wiser to continue to deleverage and to issue equity rather than debt, if debt rates get crazy or debt is unattractive, we just want to give the Partnership and ourselves the flexibility to issue equity to repay debt. Second, we have the flexibility to issue equity to invest in technology. So to be very clear, we're fortunate to get the vote, but the vote gives us the right to issue equity to repay debt, invest in capital expenditures to improve our operations, or 3 million units are unlimited in use.

So there's nothing on our minds today. It really is really looking forward. It was the Board's suggestion to do this. We have some people on the Board who were very strategic, and I think it's the right thing to do to position ourselves. Because the one thing I really do know is I don't know what's going to happen over the next five years. It just gives the Company more flexibility.

How do you expect to finance the $68.5 million in acquisitions that you've made since April?

Same way we've financed all our acquisitions. You know, we have had a history -- we've told everybody that we finance our acquisition programs 50% debt, 50% equity. We want to maintain a balanced capital structure, and that's our strategy and that's what we'll do here.

Okay. Thank you.

Ladies and gentlemen, as a reminder, to register for a question, press the one, four. One moment, please, for the next question. Once again, ladies and gentlemen, to register for a question, press the one, followed by the four, on your telephone. Our next question comes from the line of Len Edelson with UBS Financial Services. Please proceed with your question.

Would you mind speaking to the SG&A units and the hurdles that need to be overcome in order to get the stock dividends and continue the full payout?

Okay. The stock dividend -- can you hear me?

Yes, I can.

The stock dividend is based on the heating oil division's performance, the heating oil division I believe needs to earn $2.90 per unit -- units associated with the heating oil division. We did do that in fiscal year '01. We did not do that in fiscal year '02. And it is for any 12-month period that the heating oil division earns $2.90, we did not earn $2.90 for the 12 months ended June, but the calculation is a cash calculation, not an accrual calculation; and therefore, we will not know, until after the receivables that Ron suggested are higher than had been historic levels are fully collected, and then we will be able to determine, probably next September, next December, whether or not that stock dividend was, in fact, earned or not. As I said, we earned it in '01, we didn't earn it last year, and the hurdle is $2.90 per unit associated with the heating oil division.

Len Edelson How are you doing year-to-date on that?

It's year-to-date, we didn't earn it on a cash basis, or else we would have paid it. I'm not suggesting your question's a silly one. Let me explain. Since receivables are so much higher than last year --

No, I understand. I'm sorry. Go ahead.

We are nowhere near it.

Okay.

Don't -- please. But don't misunderstand, that when those receivables come in, that we're nowhere near it.

I understand.

Because we may have, Jesus, $60 million dollars of extra receivables which are considered a use of cash, we may even be negative. That's how meaningless, for the latest 12 months, the calculation is. So don't take, by the fact that the latest 12 months aren't there, as an indication as to whether we will or will not be there. It is obviously close.

Thank you.

Our next question comes from the line of Clarence Rule, a Private Investor. Please proceed with your question.

Yes, sir. Good morning from Montana again. My wife and I are retired and own common stocks for income reasons. We've had the experience with a couple of companies that have issued new stock, thereby diluting the price of the stock. Then to add insult to injury, exorbitant salary increases were given to CEOs and their other officers and dividends were cut in half. What effect will SGU's new issue of units have on stock dilution, if any, and the dividends.

: Sure.

First of all, we don't have a new issue of stock. What we have is a proxy vote that allows us, over the long term, the right to issue equity for purposes I described.

We have had a history -- and I think it's a very interesting question about dilution -- is ownership dilution and is earnings dilution? If you raise equity, as we have eight times in the past, to buy companies that provide more earnings than the distributions that we have to make to our new shareholders, in fact it's not earnings dilutive, it's earnings accretive, and we have always issued equity, not to be earnings dilutive but to be accretive, even from an ownership point of view, it's dilutive. In regards to CEO increases.

Last year, I got no bonus. Last year, nobody here got bonuses. Last year, nobody got any raises.

The reason is we didn't perform last year. The fact that it was because the weather, so be it. We are in this with you. We have not cut our dividends while paying CEOs higher amounts of money.

Maybe other companies do. We did not. Last year we maintained our distribution of $2.30 when not only did I, as a CEO, did not get a bonus, but I reduced my salary by 20%, taking my salary in units in lieu of cash last year. So I'm not trying to be holier t than thou. I believe that my comp and everybody else's comp here should be based on our, and the Company's performance. I think it has. I think the units have performed exceptionally well.

And I hope they continue to be. And we do not intend to issue units that are dilutive to your earnings or will cut into your dividends. We intend to issue equity, either reduce our leverage, increase our earnings through better technology or buying companies that will increase the amount of dividends that we will eventually be able to pay you.

: Thank you very much.

: Thank you.

Ladies and gentlemen, as a reminder, to register for a question, press the one, four.

One moment, please, for the next question.

Our next question comes from the line of Leana Casitelli with Pearlman & Associates.

Please proceed with your question.

This is Marty Pearlman. I think as of March 30th, the latest distribute cash flow for 12 months was $2.34, or $2.35 a unit. I wonder what that is at the end of June.

: At the end of June, if you, and which is what we do, adjust for the equity comp that got expensed and the reorg, it's going to approximate that same number.

: Okay.

And the reason, just as you can see, was EBITDA was generally the same as it was last year, excluding the accrual for the equity comp and for the reorg, which we consider to be one-time items.

Okay.

I had a couple of other questions, if I may?

The acquisitions that were made, you've paid 5.3 times anticipated EBITDA.

I'm not sure what "anticipated" means. Does it mean based on last winter?

Does it mean after you cut certain costs? Or does it count in either of them?

It is not last winter because that was not a normal winter.

What we do whenever we make an acquisition, and we've made over 260 of them, because almost all of them are integratable, what we take a look at in almost all of them -- not Ultramar if I may because it's a stand a lone, and it's relatively sizeable. But most of the aquisitions are really buying customers not buying companies, and we don't take over the infrastructure or the cost structure or the profit structure of the companies that we buy. So in almost every acquisition we make, rather than looking at the seller's financials, what we take a look at is under normal weather conditions, given our cost structure and our profit, gross profit structure, what will we earn on the customer lists and the number of customers that we're getting.

Mm-hmm, mm-hmm.

: Interestingly, because of the All Ultramar size, and because it's not getting integrated, that one we did look at historics. But in looking at historics, and saying to you on a projected or normalize or anticipated what that really means is adjusting for normal weather so, you know, we ain't stupid, we ain't buying off the cold year, and so we're normalizing everything for weather, for our own margins and our own cost structure.

Okay. I had two more questions, if I may? Seasonally, would the fourth quarter be the Company's weakest quarter or be about the same as the third quarter?

Yeah -- no, it's much weaker.

Much weaker, the fourth quarter.

In the third quarter, you still have a little April and a little May, and just to put it in perspective so that everybody can understand it the way we look at it is that in May -- April we sell around 7% of the product for the year, May is around 5, and June is around 3. Those are approximations. That's about 15% of the year there. In the summer, July's around 3, August is around 2, and September's around 3.

So that's around 11%.

Just to give you, you know, the ballparks. So the fourth quarter is a weaker quarter than the third. We anticipate it. And the way I look at things, if I may, I can have a great fourth quarter if we're better than budget, if we're better than last year, and we can have a very weak second quarter, December, if we make a lot of money, but it's a lot less than we expect.

Right, right. By the way, you said 3, 2, and 3.

That's 8%.

3, 3, and 2 -- excuse me, 8%.

I'm not very good with numbers. [ Laughter ]

One last question. Why is depreciation and amortization down so far this year?

Yeah, that's a great question. I had the same question yesterday. It's because of Rule 142 which we no longer can or do amortize for goodwill.

That's what 142 does.

It says companies can no longer amortize goodwill. In my case it's a very interesting Freudian slip when I say "Can." Historicallywe like amortizing for good will -- because we always drive our company for cash flow and not earnings, and historically the right to or the ability to amortize goodwill always underscore our ability to subtract that for tax purposes. Now, all intangibles are deductible over 15 years and we just can't amortize for book purposes goodwill.

But that's why it's down.

: Okay. Thank you very much.

Mr. Sevin, there are no further questions at this time. I will now turn the call back to you. Please continue with your presentation or closing remarks.

I just want to thank everybody and I reel really do for being shareholders.

When we went out for the proxy, we did get a letter out, indicating that we do appreciate your being shareholders. We're really pleased with the performance of the Company over the last four years. We're lucky enough to be an MLP. One of the detractions to that is all our cash goes out.

But the other is that we can run this for a long-term process, and that while we're concerned about every quarter, we have the ability to be much more concerned about looking forward. That is not to suggest we've had poor performance in the past.

I think we've had some really pretty good years over the past four years. But we are really looking at this over the long term, which is why the process redesign has taken so long. We think we'll start seeing some results this year, but probably much more so in the years thereafter. Thank you very much.

Ladies and gentlemen, that does conclude your conference call for today. We thank you for your participation and ask that you please disconnect your line.