SkyWest Inc (SKYW) 2016 Q2 法說會逐字稿

Good afternoon and welcome to the SkyWest Airlines, Inc. second-quarter 2016 earnings call. (Operator Instructions). Please note, this conference call is being recorded. I would now like to turn the conference over to Rob Simmons. Mr. Simmons, please go ahead.

Thanks, everyone, for joining us on the call today. And as the operator indicated, this is Rob Simmons, SkyWest's Chief Financial Officer. On the call with me today are Chip Childs, President and Chief Executive Officer; Wade Steel, Chief Commercial Officer; Eric Woodward, Chief Accounting Officer; Mike Thompson, SkyWest Airlines' Chief Operating Officer; and Terry Vais, ExpressJet Airlines' Chief Operating Officer. I would like to start today by asking Eric to read the Safe Harbor, then I will turn the time over to Chip for some comments. Following Chip, I will take us through the financial results, then Wade will discuss the fleet and our flying partners. Following Wade, we will have the customary Q&A session with our sell-side analysts. Eric?

Today's discussion contains forward-looking statements that represent our current beliefs, expectations, and assumptions regarding future events and are subject to risks and uncertainties. We assume no obligation to update any forward-looking statement. Actual results will likely vary, and may vary materially from those anticipated, estimated or projected for a number of reasons. Some of the factors that may cause such differences are included in our 2015 Form 10-K and other reports and filings with the Securities and Exchange Commission. Chip?

Thanks, Eric and Rob, and thank you all for joining us on the call today. For the second quarter, we continued our progress on our overall business and fleet plans, as is demonstrated by the results outlined in the press release. As our industry evolves, we've worked hard to set our airlines apart from the competition, with a focus on operational excellence and solid economics.

Another item of significance for the quarter was our overall airline operations, which have been a key focus in the past 18 months. The industry, our partners and our passengers have come to expect top reliability, and our airlines are delivering just that. I want to start by giving our 20,000 people across the organization strong credit for their focus, teamwork and execution of consistent exceptional reliability and service as we proceed with our ongoing transitions and business plan.

Along those lines, second quarter produced some of the best operations our airlines have delivered. Both SkyWest and ExpressJet made strong operational improvements this quarter compared to the same quarter in 2015, and that continues to contribute to improved financial results. SkyWest Airlines continued to improve its adjusted completion, moving from 99.25% to 99.95% year-over-year. Notably, SkyWest Airlines completed 30 full consecutive days and just over 55,000 consecutive flights of zero controllable cancels during the quarter, and delivered the best maintenance performance in the Company's history.

ExpressJet maintained their leading status as the most reliable United Express carrier for 22 consecutive months, and delivered 99.91% adjusted completion for the quarter compared to 99.81% the same quarter the last year. Together, our two entities operating nearly 300,000 flights in the quarter and continued to deliver consistent exceptional reliability and service. Also notably outside of special items, ExpressJet essentially broke even in the seasonally strong second quarter. While we cannot overstate the significant progress this demonstrates for ExpressJet, we recognize that we clearly still have a lot of work to do within that entity.

As we discussed last quarter, we continue to see a lot of movement across our fleet as we work to mitigate tail risk, evolve to deliver on the different fleet needs of our four partners, and improve overall profitability. Over the next 18 months, we anticipate ongoing changes within our fleet mix, including scheduled new E175 aircraft deliveries, anticipated flying arrangement expirations, aircraft lease returns, and additional transition of aircraft between partners.

With all the anticipated changes to our fleet mix and transitions, we may have some noise in terms of cash or non-cash charges as we continue to work through our fleet transition plan. Wade will provide more detail on our fleet movement in a minute. As we continue our efforts for cost improvement, solid operating performance certainly delivers cost efficiencies. We also have secured competitive maintenance contracts and continue to refine our maintenance infrastructures to manage maintenance costs. We remain vigilant on cost control across both entities.

Looking ahead to the second half of this year, we expect our earnings growth rate in the low double digits, excluding special items, compared to the second half of 2015. This earnings growth is expected to come from additional E175 deliveries, net of a continued reduction in our single class aircraft as we keep executing our fleet transition plan. Today, our top priority remains to be the best at delivering what each of our core mainline partners need, and on maintaining a flexible and disciplined approach to meeting the strong demand for our product. Again, I want to extend my appreciation to the 20,000 professionals who make our operations happen every day. They continue to provide strong operating credibility with each partner and it remains essential to our success.

At this time, I will turn it back to Rob.

Thanks, Chip. Today we reported net income of $40 million or $0.77 per diluted share for the second quarter of 2016, up from net income of $31 million or $0.61 from Q2 2015. Pretax income for the second quarter was $66 million compared to $53 million last year, an improvement of 26%. This strong growth in year-over-year earnings continues to validate the fleet transition plan that we have been executing against over the last two years.

Our continued growth and profitability was driven by, one, the addition of new flying with eight new E175 planes placed under contract this quarter; two, redeployment of 10 CRJ700 aircraft into new contracts with multiple partners, further reducing our CRJ700 tail risk; three, the removal of seven 50-seat aircraft over that same period; and four, operating efficiencies realized through improved operating performance. Our expected growth in the second half of 2016 earnings compared to second half 2015 earnings that Chip referenced will continue to be partially driven by placing new E175s in service over the next several quarters.

Since Q2 2015, we have taken delivery of 18 additional E175s, with eight placed into service in Q2 of 2016. We expect to put 30 more into service in the second half of 2016, and an additional 18 in 2017. Our total E175 fleet is expected to be 104 by the end of 2017. Also, as we've been signaling for several quarters, we took a $10 million largely non-cash charge related to an early lease termination, and prepaid lease write-off on three CRJ700s during Q2. We expect to take a similar charge on 17 additional CRJ700 early lease returns in the neighborhood of $20 million to $27 million in the second half of 2016.

The $10 million charge this quarter will show up in the ExpressJet segment. Excluding this charge, ExpressJet broke even, up from a pretax loss of $3 million last year. We also had an $11 million favorable resolution with one of our flying agreements that was recorded in revenue during the quarter and will show up in the SkyWest Airlines segment. Our total fuel cost per gallon averaged $1.69 during the second quarter, down from $2.35 per gallon in Q2 of 2015, and up from $1.49 per gallon in Q1.

Let me say a couple of things about our balance sheet. We ended the quarter with cash of $513 million, an increase of $70 million from last quarter. We issued $181 million in new long-term debt during Q2 2016 to finance the eight new E175s delivered during the quarter, with total debt increasing by $101 million, net of scheduled debt service payments. Total debt as of June 30 was $2 million (sic - see press release, "$2 billion"), up from $1.9 billion as of December 31. Cash used for CapEx during the quarter was $43 million, including $32 million in cash to buy the eight E175s and $11 million in other equipment.

We expect to be able to fund the cash investment for the 48 remaining E175 deliveries out of internally generated cash flow while maintaining strong levels of liquidity as we enjoy now. We expect to end 2016 with cash in the high $400 million area. Once this delivery cycle winds down next year, we expect our cash position to grow rapidly, unless new positive NPV investment opportunities present themselves. As you can see from our Q2 results, SkyWest continues to operate at an improved trajectory and higher run rate. Wade?

Thanks, Rob. During Q2 2016, we continued to execute on our strategy to remove unprofitable flying and transition our fleet to larger, new aircraft. Execution on that strategy continues today. Although our fleet in service decreased only by one aircraft during the second quarter, from 656 aircraft to 655 aircraft, we had meaningful changes to our fleet mix in terms of aircraft additions, removals, and aircraft that transitioned between our major partners, as outlined in the release.

To provide a little color on the fleet changes during Q2 2016, we removed five ERJ145s from our United contract, two ERJ145s from our American contract, and three CRJ700s from our Delta operations. We took a $10 million charge during the quarter for early lease returns on the three Delta CRJ700s. We also transitioned nine CRJ700s from United to our other partners. This totaled 19 aircraft removals or transitions during Q2.

Also during the second quarter, we added the following aircraft to our fleet: six new E175s under our United agreement, two new E175s under an Alaska agreement; and 10 CRJ700s were transitioned to American and Delta from our United contract, with nine United removals from Q2 and one from Q1. We are currently working on potential redeployment opportunities for the remaining United CRJ700s with contract expiration scheduled in 2017. The transition of these CRJ700s meaningfully reduces the tail risk on our CRJ700 fleet.

For the remainder of 2016, we anticipate removing 11 ERJ145s from our United contract. Additionally, we have 12 CRJ200s under agreement with American at SkyWest Airlines, 11 CRJ200s with American at ExpressJet that are scheduled to expire between Q4 2016 and Q1 2017. We anticipate placing these CRJ aircraft with dual class aircraft from our existing fleet. Additionally, we anticipate expirations of nine CRJ200s under various contracts through the remainder of 2016. The majority of these CRJ200s are operated at SkyWest Airlines.

As we continue our fleet transition plan through the remainder of 2016, we are working to finalize specific aircraft transitions or removals date. Our current estimated 2016 fleet forecast by quarter is included at the end of today's release, and we anticipate our forecast will be modified as the year progresses and plans are finalized. As discussed in previous quarters, we anticipate returning 20 CRJ700s under an early lease arrangement. We removed the first three of the 20 CRJ700s during Q2 2016. We anticipate the remaining 17 CRJ700s will be removed during the next 12 months. As disclosed in the release, we anticipate additional lease return charges for these aircraft.

We also anticipate taking delivery of 30 E175s during the last six months of 2016, 11 of which we will receive in Q3 2016. Of those 11, we anticipate operating five under Delta's contract, four under Alaska's contract, and two under United's contract. We are scheduled to take delivery of 19 E175s during Q4 2016, and 18 E175s in 2017. With the completion of those deliveries, we anticipate 104 E175s in our fleet by the end of 2017. As demonstrated in Q2, execution of our fleet strategy continue to produce tangible results to our model and overall profitability.

As discussed, we expect fleet transitions to continue through 2016 and 2017 as we reduce unprofitable flying and place larger, new aircraft into service to deliver on our commercial agreements.

Okay, operator, we are ready now for Q&A.

(Operator Instructions). Mike Linenberg, Deutsche Bank.

It's actually Caty O'Brien filling in for Mike. One of my first questions is, one of your competitors has been currently going through a bankruptcy, and one of the last times a competitor of yours went through a bankruptcy, they ended up being absorbed by one of your major partners. And now can offer them a very competitively priced benchmark when negotiating contracts with other regionals. Are you concerned that we could see a similar scenario play out with the Republic? And if so, do you think you will still be able to effectively compete for business with that major airline partner in the future?

Caty, it's Chip. Thanks for your question. It's a very good question. We monitor a lot of things in the industry, and most of it has to do with some of the things that Wade pointed out in his script, of working with our partners to see how we can best add value in their various portfolios. I can't speak for everybody in the major partners that may be interested in your question, but from our perspective, we have not seen any information that goes along the lines of what you are speculating there. And our focus is certainly, one, it's unique, and we want to differentiate ourselves from our various competitors. But we believe, for the reasons that we've discussed on the call today, with making sure that we have outstanding performance at competitive costs and doing the right things with our fleet, that we will always remain in a very strong competitive position and work well with our partners to find ways to evolve and add value to them.

Okay, great. And then if I could just ask one more. On your last call, as you were seeing a lot of demand for short-term extensions on 50-seater aircraft, did you continue to see that as fuel prices moved up in the first six months of this year, before they started to climb again in the past month or so?

This is Wade. So yes, fuel prices have ticked up a little bit. The demand for our product is still very strong. As Chip outlined in the release, our operational performance has been exceptional. The demand is still very, very good. We work with our major partners on their short and long-term needs, and they are needs in both areas and we continue to work with the partners on both of those fronts.

And so, on those 50-seaters, the short-term extensions, you are seeing continue demand for that specific aircraft regardless of what's going on with fuel right now?

Yes, Caty, this is Chip. I still think even as of today we still see strong demand. But we have to take into account various other variables that we have going on within our fleet that have an impact on the duration and type of contracts we do at those 50-seaters. I will say with regard to 50-seaters, that 2017 will be a relatively pivotal year for 50-seat aircraft. But again, I will go back -- as you seen with Wade's script and the things we've outlined with the fleet changes, we are trying to evaluate with our partners what happens in 2017 with 50-seaters. And we would certainly anticipate that there would be a lot of mixed philosophies and strategies surrounding pilot availability, what our partners need, and these various potential contract extensions. We just don't have a significant amount of visibility of that right now. We probably will have more visibility on it in the next quarter.

Great, thanks so much for all the time.

Savi Syth, Raymond James.

Just if I look at 1Q to 2Q, I was hoping -- when I think of the improvements, I think -- other than the seasonality -- you had more 175s, maybe fewer low profit, unprofitable 50-seaters. Just wondering if there was anything else that was different 1Q to 2Q. Were there any more rate adjustments? Are the CRJ700s being placed at better rates or how should we think about incremental improvement from a sequential basis?

Thanks, Savi. Thanks for the question. As you look at it from the perspective from Q1 to Q2, I think you have to look a little bit about what Wade has disclosed about the significant fleet transition. We will say that the rates that we were getting on 700s when we pulled them out and put them back to a market rate compared to where they've been, comes into it with improvement. But I think that we've proven that model over the last couple of years how that works. The other thing is, I am not going to let go how well our performance was even from -- Q2 from Q1. Q1 was an exceptional quarter. Q2, you have significant block hour increases with the seasonality of flying. And when you deliver as strong as our entities did on that scheduled block hour assumption, really good things happen within the business model.

That's a good point. And then finally, to follow up on that Republic question, they've kind of gone through bankruptcy. It seems like their post-bankruptcy plans are starting to take shape with the partners. And now that the partners know what flying with Republic might be, have you seen any kind of change in what your partners are looking for from you over the last 3 to 6 months?

Yes, I don't know. It's certainly within the last 3 to 6 months. I would say even before Republic went into bankruptcy, we had good, strong dialogue about the entire fleets and opportunity to grow the fleet. If it were up to me, would I say that the bankruptcy had any type of effect on that? To be honest with you, I really couldn't say so today. But I will say that we continue to have a good, strong dialogue with all of our partners relative to their fleet needs. And we don't necessarily get into as to the why. We are mostly concerned with the what and how to best execute on those opportunities.

All right, great. And just one last question. Just on the pilot side, I was wondering if you could provide an update on hiring and attrition. What -- any incremental change in trend? And if you were given the opportunity to -- or had the opportunity to pick up more E175 flying, would you be able to meet that? Or due to maybe some of the contracts that come off -- or the aircraft coming off contract, maybe those decisions will play into -- if you have more E175 opportunity?

Let me start with the first part and that is just a high-level feel for our pilot situation. And we do update that for you guys quite often. I will say that where we are sitting today -- and understand, I think that we're being very clear -- we are not immune to this pilot situation. I would say that the other thing is, is that things can change very quickly, specifically when you are sitting here at the end of July and you have a fall drop off in the schedules and there tends to be a lot of hiring.

But all that considered, as of today, we are very comfortable with our short to extended range scenario of pilots at both entities. Recruiting remains I would say strong at both of them, and we watch the attrition models very, very carefully. And we are comfortable where we are today with pilots. Transitioning that into incremental growth for 175s, I would say that, taking our pilot situation and also looking at, as we've said in the past, fleet flexibility and some transition opportunities, would we have the capacity to take more 175 in the future? I would say yes we would. We have enough flexibility with these variables that we could take more 175s in the future.

All right, great. Appreciate the updates. Thanks.

Steve O'Hara, Sidoti.

Just curious on the EPS growth slowdown, seeing -- sequentially from 2Q to 3Q. And I guess you are still guiding to low double-digit increase. And I know you'd mentioned the charges. Is that primarily due to the expectation that you will have either cash or non-cash charges in one or both quarters?

Well, what we said about EPS growth for the second half of the year is that we expect it to be in the low double-digit range, when you look at the second half of 2016 compared to the second half of 2015. And that would be excluding any of those unusual items. So, we do expect somewhere in the neighborhood of $10 million a quarter in the second half, roughly, of these special charges related to the early lease returns of the 700s that Wade spoke about the moment ago.

But other than that, obviously we've got -- our growth is going to come from the delivery schedule. We've got eight E175s that we put into service during Q2. They will have a full quarter of service for the first time in the third quarter. In addition, there will be 30 new E175s come into service during the second half. So, the growth engines remain the same I think as we go into the second half, and that was the root of Chip's comments.

Okay. And then just -- I think you said you had the charge in this quarter, but I wasn't sure where it was and it didn't seem to be excluded. Maybe I am wrong. And then the $11 million settlement was in the quarter as well. And that is just sitting in revenue?

Yes, that's right. Both of those items are included in the $0.77 we reported.

Okay, and -- okay. I appreciate it. I will jump back in queue.

Helane Becker, Cowen.

Just a couple of questions. One, there -- huge operations at SkyWest, well done. Is there a cost associated with that, or how did you manage to do it so well? Is it the maintenance line, that's just not as much maintenance on the aircraft? What's behind that improvement?

I think that this call would probably not be long enough, Helane -- I'm sorry, this is Chip -- to go through all the hundreds of things that we had to do to make sure that we developed the model the right way to get here at both entities. Admittedly, as you go back in history, ExpressJet has been an entity that has been really engineered for very top level performance. SkyWest has also done a very good job. If there's one big thing that I would say at both entities, it has certainly started within the maintenance programs, and that's the first thing.

The second thing, to be candid, is working very closely with our partners and giving them some credit for this as well, because of how they helped us within the scheduling time frames and the things of how we've operated this. It has been a very good journey for us to work that closely with our partners to understand the value that they see in this, and the value that we see in this.

So when it comes to an investment of capital in this, it did take some investment in capital, but the returns -- when you have a quarter like this, and you have an engagement in an employee group -- with the employee groups that we have, and strong performance, it just has a huge, huge return on it. It's also -- when you have 99.9% controllable ops, it does provide a very strong, efficient system whereby you can be cheaper. But there is certainly a price to pay in the beginning, and we feel like we are continuing to evolve.

I'm not going to say that we are done in our process of improvement, but we certainly have seen some good benefits of it, and we are going to continue to evolve with our groups and with our partners to make sure that this is something that is just the expectation.

Great. Thank you. That's terrific, Chip, thank you. The other part of that maintenance is -- your maintenance costs were down 9% year on year, and obviously some of it is the reduction in block hours and departures. But is some of it also the mix -- how much of it is the mix? And is this kind of -- what is it, $140 million-ish? Is that the number we should be thinking about? $140 million

Helane, this is Wade. So there's a couple of things going on in the maintenance line item. Some of our maintenance costs, as you know, are pass-throughs. And there has been a reduction in pass-throughs year-over-year. And once you get the 10-Q, you will be able to see the detail. But there still is a reduction even after you eliminate some of the pass-throughs. And some of that is just very hard work from our maintenance group getting the efficiencies they need, working with some of our third-party suppliers, getting the efficiencies that we need out of some of those contracts.

So it has been a very good and collaborative effort between our labor groups and our third-party vendors and our major partners as well. So it has been a very good process that we are going through and we continue to go and try to execute on that. But all of that benefit, some of it is pass-through costs going down, but then some of it is just real controllable costs that have also been out of the system.

Okay. And on ground handling, that was down a lot, too, 17%. Is that a different run rate? Again, is that part of what you just said, just in terms of working with the partners to get the costs down?

Yes, some of it is the same thing. We've been working with our partners. Some of it is also lower volume of ground handling that we are doing. We are optimizing some of our portfolio a little bit on the ground handling side. So it is a combination of both effects, both working with our third parties, working with our major partners, and then there is a lower volume of ground handling as well.

Okay. And then my last question is just on leverage. Can you just say when the peak will be for CapEx and leverage? And how comfortable you are with these numbers?

Helane, this is Rob. So we've got at this point, with another 30 planes in the second half of this year and then another 18 on top of that, that's about another $1.1 billion, roughly, of debt that we will be putting on our balance sheet. We are extremely comfortable with that, again, given the nature of these -- the long-term nature of these contracts matched against long-term debt at very attractive rates. So I think from a leverage standpoint, based on our view right now of 140 175s in the pipeline, that our debt needs should peak by sometime in the middle of 2017.

Perfect. Thank you. Thanks very much, everybody, for your answers.

Duane Pfennigwerth, Evercore ISI.

This is actually Raymond Wong on for Duane. So, I was wondering, how do you -- how do the margins on the new American CRJ700 flying compare with the prior United contracts?

Yes, Raymond, thanks for the question. We obviously have been working with our partners on transferring some of our United aircraft into the American and also Delta portfolios. We are not going to get into the specific numbers on each one of those, but we've been working with our partners, making sure we are helping them out with their fleet needs. And then also making sure the economics work for both them and for us. So it has been a very good partnership with our major partners, and we will continue to work with them on their fleet needs and making sure the economics match their needs and then also our needs as well.

All right, sure. Great. And what do the margins look like for prorate flying? How many aircraft do you guys dedicate to that?

The number of aircraft that we have dedicated to it, we are somewhere in the range of around 50 aircraft that we operate today in that model. You don't get into specifics on what the margin is in that model, either. Rob did outline a couple of things on the fuel. Fuel, there was -- we were at $2.35 last year; we are at $1.69 this year. Year-over-year and then quarter-over-quarter it actually was a little bit of a headwind Q1 to Q2. We were at $1.49 in Q1, and then it has ticked up a little bit to the $1.69 range. So, there has been some headwinds on the fuel in the Q2 area.

Okay, great. Thanks a lot, guys. Have a good night.

Savi Syth, Raymond James.

Just two quick ones, I think. With ExpressJet -- so, without this charge, ExpressJet -- you mentioned it was breakeven. Have you gotten ExpressJet on a breakeven level here? Is that where we are?

Well, I think if you look at it from a seasonal perspective in Q2, we are optimistic that we will do probably the same thing in Q3. And look, to be honest with you, we are very, very impressed and we are very excited about the progress and the movement that the entity is making. As we continue to go forward, we love that momentum. As we go into 2017 I would say we have to have a strong look at our 50-seat strategies with our partners.

As you know, there is a fair amount of opportunities in even 2017 to continue to do some fleet transitions with 50-seaters. And as we evaluate that and evaluate it with these other variables of pilot availability, extension opportunities, and what the partners want in 2017, we will probably be able to provide more color next quarter, if this is a trend. But I think that we are not certainly sitting here thinking that breakeven is where this thing needs to be. We want it to be a long-term, stable, solid entity and we still have quite a bit of work to do on that.

Got it. But I think a year ago, breakeven was a long target, so it's interesting that we've gotten there here. (multiple speakers).

Honestly our folks in Atlanta, the leadership and the employees have done a great job of doing some tough work to get us to this point, and I think they are excited about continuing to do what we need to do to provide value for our partners and keep some momentum here.

Got it. And then my second question is a follow-up on the prorate. So when you have these CRJ200s that are coming off lease, I know a lot of it is coming off -- or coming off contract, so some of it is aligned with the leases coming due. Are you balancing out the rest by maybe moving some into prorate and then retiring the prorate? Are you able to grow the prorate?

That's a great question, Savi, because we have a lot of these coming off. Most of them are -- or almost all of them are coming off out of contract flying. So, certainly when the extensions come due and the partner does not want the 50-seaters anymore, we certainly evaluate if that is a possibility. But again, it has to be balanced with the pilot availability. It has to be balanced with a lot of these other variables if that model is going to work. So it's not necessarily our intention to really jump out and start growing prorate. Our focus is to continue to execute on a larger fleet transition plan, and it's not necessarily prorate, or increasing prorate or dramatically changing prorate. It's not one of the variables that we are looking at executing over the next little while.

All right, great. Thanks so much.

Mike Linenberg, Deutsche Bank.

It's still Caty O'Brien. Thanks for letting me have a follow-up here. Last quarter you gave us some color on the percentage of the fleet that was not profitable, noting that in the first quarter of 2015, 52% of the fleet was not profitable. And you said that number was cut in half for the first quarter of this year. Could you give us any color on that just for how that shaped up in the second quarter?

Sure. It's actually pretty similar in the second quarter. I think the numbers were about 45% of our fleet were unprofitable a year ago, and that number still is about 25%. And that 21% is just largely one contract at ExpressJet that's still out there. So again, it's not a lot of change from Q1.

Okay, great. Just if I could -- sorry, I just missed a little bit of what you said. So you said 25% now is unprofitable, and 21% of that is one contract at ExpressJet? Is that right?

Really, the bulk of that is one contract at ExpressJet.

Okay, thank you -- and that's 25% total? (laughter)

Correct.

Thanks so much, Rob.

Thank you. And as there are no more questions, I would like to return the call to management for any closing comments.

Okay. Thank you, Keith. This is Chip and I want to thank everyone for their continued interest in SkyWest. As you can see, we are still pleased with our progress and we recognize there is still a lot of work ahead of us as we continue to differentiate SkyWest from the rest of the industry, and we look forward to updating you again next quarter. Thank you.

Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.