智利化工礦業 (SQM) 2020 Q2 法說會逐字稿

Good day, and welcome to the SQM Second Quarter 2020 Earnings Conference Call. (Operator Instructions) Please note that this event is being recorded.

I would now like to turn the conference over to Kelly O'Brien. Please go ahead, ma'am.

Good morning. Thank you for joining our second quarter 2020 earnings conference call. This conference call will be recorded and is being webcast live. Following this call, you will be able to access the webcast at our website, www.sqm.com. Our earnings press release and a presentation with a summary of the results have been uploaded to our website where you can also find a link to the webcast.

Joining our call today as speakers are Ricardo Ramos, CEO; Gerardo Illanes, CFO; and Pablo Altimiras, Vice President of Lithium and Iodine businesses.

Before we begin, we would like to remind you that statements in this conference concerning the company's business outlook, future economic performances, anticipated profitability, revenues, expenses or other financial items, anticipated cost synergies and product or service line growth, together with other statements that are not historical facts, are forward-looking statements as the term is defined under federal securities laws. Any forward-looking statements are estimates reflecting the best judgment of SQM based on currently available information and involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. Risks, uncertainties and factors that could affect the accuracy of forward-looking statements are identified in our public filings made with the U.S. Securities and Exchange Commission and in our earnings release issued last night, and these forward-looking statements should be considered in light of those factors. We assume no obligation to update such statements, whether as a result of new information, future development or otherwise, except as required by law.

I now leave you with our CEO, Ricardo Ramos.

Thank you, Kelly, and good morning. Thank you for joining our earnings call today.

Our second quarter net income, as you know, reached approximately $50 million. While uncertainty continue in the markets in which we sell, there were also many positive things that I would like to comment on before we speak more specifically about the market.

First, we published our annual statements -- our sustainability report, which compiles a significant amount of useful information related to the sustainability of our business. This year was the first time that this report was audited and certified by the third party. As a global company, we are aware of our responsibility to protect the environment and communities. We understand that sustainability means continuous improvement. And for that reason, we are finalizing an ambitious plan related to sustainability, and we will release our goals in the coming months.

Our team in Chile and around the world does not cease to impress me. I credit their dedication, hard work and attention to safety and health measures to the reason why we have been able to safely continue operating with no material disruptions. Furthermore, we have not only been able to meet our production goals so far in 2020. In some products, we have been able to exceed them.

As we mentioned in the earnings release last night, our lithium production levels are at all-time high, and we are currently producing at a rate of higher than 70,000 metric tons per year. While we keep on working on our lithium carbonate and lithium hydroxide expansions, this production will allow us to increase our market share as planned during 2020, even as market demand is expected to be similar to levels seen last year.

Looking at the numbers published last night. Our net income for the second quarter reached about $50 million, lower than the $70 million reported during the same period last year. But revenues, gross profit and net income during the second quarter were all higher than what we reported during the first quarter of the year. In line with our expectations, we saw significantly higher sales volumes in our SPN, lithium and industrial chemical business lines when we compare to the first quarter.

In the fertilizer market, we saw lower potassium chloride prices in the second quarter and may continue to see price volatility during the remainder of the year. These lower prices in the potassium chloride market and the uncertainty in the short term have indirectly and negatively impacted the price trend in the specialty fertilizer market. On the other hand, higher prices in iodine in the first half of the year had a positive impact in our results.

I'm going to let Pablo comment in more detail about what we are currently seeing in the iodine and lithium market.

Thank you, Ricardo. As you saw in our earnings release, our revenue related to lithium fell significantly compared to the second quarter of 2019. This was related to lower prices in the lithium market. Our average price in the business line were lower during the second quarter and as a result of weak demand seen during the first half of this year. The lower prices were partially offset by higher sales volumes reported during the second quarter of 2020, which were approximately 50% higher than our sales volumes reported during the first quarter. We are producing at record rates, accumulating inventories giving us the flexibility to continue growing our market share in the coming quarters. At the same time, the quality of our lithium products keeps on improving, while our production costs keep on decreasing.

Despite limited visibility and ongoing challenges expected in the short term across all of markets, we remain optimistic about lithium. During the second quarter, demand in China was slightly better than our original prediction. We also saw a significant increase in the sales of electric vehicles in Europe in recent months. And every day, we see new announcements related to the new developments in electric vehicles and lithium battery markets, which could boost demand in the coming years. The enthusiasm for electric vehicles on a regulatory level and on consumer level remain strong. This give us confidence in the long-term prospects on the lithium market, and we will continue to invest in the development of projects to ensure that maintains our leading position.

In the iodine market, we saw second quarter price remain at levels similar to those reported during the first quarter of the year. We expect to that market demand this year will lower than last year. We believe that our sales volumes during the second half of the year will be lower than those reported during the first half, reaching under 11,000 metric tons in 2020. We have seen consumption impacted in the end uses related to nylon, biocide and x-ray contrast media. However, other areas like human and animal nutrition has not been impacted.

Finally, we see interesting growth opportunities related to antiseptics and sanitizers. However, the size of these segments are relatively small to compensate the decline in other areas. We are hopeful we could see robust iodine demand growth in 2021.

I will now pass the call to Gerardo, who will say a few words about our financial situation.

Thank you, Pablo, and thank you, everyone, for joining the call today. We have a diverse portfolio and a strong balance sheet. And this, coupled with our high-quality assets, have been key, giving us operational flexibility and resilience. We are always diligent in working to maintain our high competitive cost position. In fact, the second quarter, our cost per ton decreased in almost all of our business lines compared to the first quarter. These savings can be reflected in our EBITDA margin, which was approximately 34% during the first 6 months of the year, slightly higher than margins reported during the same period last year.

We ended the second quarter with over $1 billion in cash and cash equivalents, which will allow us to continue to invest in projects as we see fit.

Our CapEx plan remains unchanged since March. We expect to spend approximately $350 million this year related to maintenance and growth CapEx. We believe that we should be able to accelerate our CapEx plans in 2021 and make up for any delays we have seen during 2020.

Thank you, and operator, we may now go to Q&A session.

(Operator Instructions) And our first question will come from Isabella Simonato with Bank of America.

My question, I have 2. One of them, if you could provide an update about the environmental situation and discussion with the regulator in Chile. We saw recent news about this matter. If you just could give us an update about that.

And second is on lithium. I mean, you guys are prioritizing market share and volumes this quarter -- or this year while prices remain pressured, right? I mean, what is the rationale behind that? And how do you see this balance between market share recovery and prices beyond 2020?

Isabella, Ricardo Ramos speaking now. As you know, we are fully committed to the protection of the environment in the Salar de Atacama. Now we are working on modifications to the compliance plan according to the comments of the environmental court. And we hope and we are sure we are going to obtain all the necessary approvals of the new plan in the coming months. That's all the detail regarding the environmental issues of the company are fully reflected in our financial statements. You can review it on the documents we filed yesterday.

The second question, I think, is for Pablo regarding lithium. Pablo, please?

Yes. Okay. Well, as you know, this year, the demand is very affected because of the COVID situation. However, we are here because we believe in the lithium business in the long term, so that means that we are really committed to reach the goal that we have by 2025, which is reach sales of more than about 150,000 metric tons at that year. So that means that our plans are not changing because of the situation, so that means that we want to increase our market share. We are fully committed on that, that we are producing a high record in the plant. We are accumulating inventories, improving quality, so that is the part of the strategy that we are trying to do in order to gain market share. Regarding -- and this is something that we are starting applying right now during this year, and we will continue doing in the next years.

Regarding to the second, price, well, yes, I mean, the demand this year is good. So at the end, what will happen with the price will be the consequence between the supply and demand. So we will see more pressure maybe during this year. Yes, we will see more pressure. But at the end, our target is to increase the market share. We are fully committed on that.

Our next question will come from Joel Jackson with BMO Capital.

I have 3 questions, so I thought I would ask them one by one. So my first question is, Ricardo, in your prepared remarks, you talked about, I believe, or maybe it's Pablo, but your lithium quality is getting better and your production costs are going lower. So we see that your production cost drops about $1,000 a ton in the second quarter. Can you give us some examples or some idea of exactly how the quality is improving? Where is it improving? And what led to the lower production cost in the second quarter?

Okay. So Pablo speaking. It is important to say that when we are saying that our quality is improving, well, it is something that we are doing every time. So that means that we are continually improving the quality because well, that is -- that the customers start requesting. So it's something that is ongoing. And I can say that today, we are producing better products, but it's not in particular we have. We used to have any issue on that. It's because the demand of our customers, it is not direction, so it's a must that we need to do.

But the good thing, and as we explained in the release, is that despite we are able to produce the product that the customer needs, we're -- also, we are doing that remaining the low cost of production. So -- but my point here is that this is a continued effort that we need to do because the lithium quality and the lithium products will change with the pass of the years because of the technologies that our customers will use in the different cases and applications.

My second question would be, so you have the new volume and you're pushing out your share, and that's fine. Can you elaborate where you're gaining share this year? In a flat market, you're gaining volume. So is this across different grades? Is this in different regions? Is this just you being very aggressive on price to win business? Where -- give us examples of where you're winning share as granular as possible, please?

Yes. Well, as you know, we are well diversified because we supply lithium to the battery segment, to the industrial sector, so that means that we sell our lithiums globally in different regions. Today, of course, because of what's going on with electric vehicles, close to the 80% is allocated in Asia. And today, China is very important for us, and we figured out that it will be more than 1/3 of our sales during this year. So we are increasing a lot in China, but in Asia, in general, which is where the demand from electric vehicles is. And we plan to be there and continue growing where the demand is.

That's helpful. And then my last question is, I think it's been 8 quarters in a row where we've seen EBITDA contraction, so EBITDA contraction year-over-year. Consensus is expecting you to deliver flat EBITDA in 2020. You're behind on that expectation of consensus in the first half of the year. And based on your guidance, it seems like you would expect lower earnings in the second half of 2020 versus first -- second half -- or like lower earnings in the second half versus second half of last year. So is it reasonable you have a chance to get to flat EBITDA this year? Or will you probably be lower?

Joel, this is Gerardo. Well, you know that we have -- we are a special company in the sense that we have 5 business lines that behave in completely different ways. While one business line may be going up because of supply-demand or particular issues in that particular business, another one may be going down. So I think it's better to go one by one if you want to assess how much our EBITDA is going to be for the full year.

Of course, 2020 has been affected by COVID-19, not for something in particular, but the impact that it has had over the economy is having an impact on the demand of iodine, is having an impact on the demand of lithium, is having an impact also in potassium chloride, and the lower cost of potassium chloride is having an impact on the prices of potassium nitrate. So answering your question on how much the EBITDA is going to be for the year, it's a function of how each of the business lines will behave with the particular situations of each one.

Our next question will come from Javier Martinez with Morgan Stanley.

I have a question, I don't know if it is for Pablo probably or for Ricardo. Really -- we will really appreciate if you can share with us some of your intelligence and give us some color on where lithium inventories are today in the value chain, in general. I'm not talking about SQM inventories. I'm talking about industry inventories in different stage of the production process. Can you give us some -- the big picture, at least, of where are we. When do you think that those inventories may peak?

Okay. Thanks, Javier. Well, you know that at the beginning of the year, nearly after the first quarter, we saw some inventories in the whole chain, so that means in lithium chemicals -- sorry, spodumene, lithium chemicals and also cathodes was not the same case on EVs because the EVs companies can react quickly to the demand and cut their production, so -- but we used to see that. However, as we said before, the demand in the second quarter started getting some recovery, so that means that the companies started selling cathodes and using more lithium chemicals. So we have been seeing some sort of reduction. Anyhow, I would say that, today, we still have a lot of inventory in spodumene, where, actually, the higher cost producers are deciding not to compare the whole spodumene because of the high cost that they have. And I would say that in that regard, the pressure is -- on inventories is coming from there.

Today, I would say that we saw that we are getting more orders in terms of selling lithium chemicals, lithium carbonate, lithium hydroxide, so that means that I would say that the demand is coming regarding to the cathodes, and I could say that levels of inventories in terms of cathodes have been adjusted to more normal values, same with lithium chemicals. In spodumene, still I would -- I think that is -- we have high inventories.

Our next question will come from P.J. Juvekar with Citigroup.

Our next question will come from Ben Isaacson with Scotiabank.

This is Ziad on for Ben. I apologize if this was asked. I got disconnected for a moment there. But I just wanted to ask a little bit more detail on those lower costs and just the sustainability of them, like by segment, if you can and the extent with which we can see that either improving moving forward or whether it should remain at the levels we saw in the second quarter.

Thank you, Ziad, for your question. Well, there are several factors that, of course, affect our cost. One that is quite relevant is the exchange rate with the Chilean peso. The Chilean peso has depreciated when compared to last year is, of course, helping us on our cost. To give you an idea, approximately $400 million or $500 million of our total expenses per year are in Chilean pesos, so that is quite a relevant part of the savings.

Also energy this year has been lower than how it was last year. But also, we have been improving in all our business lines to make sure that we can keep on producing, as Pablo was saying before, with higher qualities, but also with lower costs. Remember that the current lithium carbonate plant was under a ramp-up over the beginning of last year, while now is at a significantly more mature stage. And of course, that is helping us to not only improve quality, but also be able to reduce cost.

And there is another variable that you have to keep in mind, which is the fact that we produce the 5 products -- or the 5 business lines come from 2 different natural resources, so there are several common expenses that are allocated based on IFRS rules in different business lines that may have certain changes in the cost in one business line that are somewhat compensated in another one. So that's basically the situation about cost in the company.

Excellent. And if I can just add one follow-up just on the iodine business. Just if you have any visibility on how the third quarter has gone. I believe the last public comments from you guys that there was weakness specifically because of the medical applications. So if there's any -- if you have any visibility on Q3 so far.

Gerardo?

Yes. Sure. Well, as we said in the release, we expect that our sales in the third quarter and second -- and fourth quarter will be less than the first semester. And that's why we believe that, finally, this year, the demand will be lower. So we expect less sales. And as you said, it is because all this impact with the virus, corona, COVID-19, we believe that is a temporary shock for the demand. Today, for example, in x-ray contrast media, people is not going to the hospital to take the preemptive exams, so they are postponing the use. We have some inventories in that applications. But as we said so, we believe that the demand will be lower in the second semester. Anyhow, in next year, because we don't see any fundamental change in the supply and the demand of this market, we believe that, finally, the market will recover in 2021.

Our next question will come from P.J. Juvekar with Citigroup.

Can you hear me?

All clear.

My question is you talked about sort of pursuing this inventory and volume or price strategy. How much inventory of lithium carbonate do you have on hand? Maybe you can describe that in number of months. And one of your competitors who reported recently was complaining about high levels of inventory in China and Australia. So I was wondering if you can sort of give us an idea about where the inventories are globally.

Okay. So as we explained before, we are producing at record levels this year, so that means that we were increased our inventories. We figure out that inventories will grow approximately 20,000 metric tons of LCE this year, so we will have more inventory by the end of the year.

Regarding to the high levels of inventory in China and Asia, well, I explained before, we need to define clearly what do we mean with inventories because one thing is to have inventories regarding to lithium chemicals and the other thing is raw materials to produce the lithium chemical, for example, spodumene. So as I've told you before, because of the pressure on prices, what we have been seeing right now is that high-cost producers that compare spodumene to lithium chemicals are postponing the decision to produce. So -- which is well, I would say, an opportunity for lithium chemical producers that have low cost, but that is a little bit the situation.

Okay. And my second question is about your market share. You gained market share partly also because your competitors turned down their mines. So if you assume that demand comes back next year and competitors also bring their plants back on, what do you expect will happen to market share?

Well, as I explained before, we have a clear goal for 2025, so that means that no matter what happened with the supply, we need to grow more than the demand, and we are so aligned to that goal that, okay, if our competitor decides to take some decisions, well, we have the product, we have the quality. Also we have the advantage that we are a very low-cost producer. So we will use our competitive advantage in order to accomplish the goal that we have by 2025.

Our next question will come from Chris Terry with Deutsche Bank.

A couple of questions from me. I just wondered, in terms of 2020, specifically, you've done 21,000 tons of product year-to-date. Last year, you did 45,000. Should we expect to just beat last year? Or could you be quite a bit above that? I'm just trying to get a sense of your latest thoughts on sales.

Well, yes, as you said, last year, our sales were 45,000 metric tons per year. And this year, we expect to sell more than that, and we will increase our market share.

Okay. And then just in terms of the 70,000 tons you have today, can you comment on the amount of hydroxide you expect for the year?

Yes, sure. Well, I mean, the 70,000 is the capacity that we have for the lithium carbonate production. In terms of the lithium hydroxide, today, our capacity is 13,500 metric tons per year. And as Ricardo explained in the release, we are investing in a new line of hydroxide. So next year, we will reach 20,000.

Just to clarify, it's important to remember that to produce our lithium hydroxide, we use lithium carbonate as a raw material, so that's something that you need to consider when you figure out the calculation for the capacity for both products.

Okay. And my last one, just on Mt. Holland. When can we expect the next update on the project?

Yes. No, we are working hard with our partner, Wesfarmers, in the Mt. Holland project. I would say that we have been progressing very well and according to the plan. But as we have anticipated before, we expect to release more news next year in Q1.

Our next question will come from Cesar Perez-Novoa with BTG Pactual.

And congratulations for your second quarter results. This comes back essentially to an earlier question. You just mentioned that your carbonate production for 2020 will be roughly 70,000 metric tons, implying that you will hold over 20,000 metric ton of inventory as we go into 2021. I mean, this shows a high confidence in industry demand in the years ahead, fueled by car maker demand and industry recovery, of course. And my question here relates on what demand growth parameters are you using and what this may mean for lithium prices next year. I believe that you mentioned lower prices in the second half and growing market share. But is this something that may exert pressures in the medium term as -- or are you seeing actually supply dips in lithium chemicals as competition step backs and projects globally get postponed?

Yes. Okay. Well, first of all, I mean, as we said before, we are fully committed with the lithium business in the long term. We believe in the fundamentals. We still believe that by 2025, the demand will be more than 800,000 metric tons of LCE per year. So we believe in the long-term growth. That's for sure. We are so committed that, as you said, we are producing more volumes. And also, we are investing also in our capacity, and we intend to reach more capacity by the end of next year. So that means that we are really committed and any change regarding to the fundamentals of the business.

Of course that, in this year, demand was very affected because of the COVID situation. So that means that next year, the demand will be subject to what happened with that situation. But anyhow, we expect a recovery on that. Today, it's so early to say how will be the growth for the next year. I think that we need more information to make a more clear number. However, as I said before, we are committed with the role and long-term growth, so that means that we need to increase our market share, and that means also that -- sorry, that means that we need to increase our sales, and we need to grow our sales more than the demand, and that's what we are trying to do. If that will put some pressure on prices, could be. Everything will depend on the demand and supply. You know that the price will be the result of the supply and demand, but it will not change the plans that we have in order to increase our market share.

All right. No. Very clear. And just finally, if I may, on necessary expansion. What level of progress has been attained, construction wise, for the hydroxide and carbonate plant? And any decision between the new carbon and expansion and the existing 70,000 metric ton line in terms of product segmentation?

Cesar, Ricardo speaking. We are working on the project, as you know. We have some issues regarding the COVID situation in terms that we reduced some of the nonessential workers at facilities that was a requirement from the health authorities. That's why some of the project was, in some way, delayed and that's why the CapEx for this year is going to be lower than originally expected. But we expect that we will recover the time and we will recover some activities during next year. That's why we maintain to have some start-up of the new facility at the end of next year. But we are working fine. We have everything ready, and we're working. Yes, the only situation, as I explained to you before, is that we need to reduce nonessential activities at our facilities in order to be according to our internal protocols regarding the COVID situation. But we are working fine on the project.

Our next question will come from Sebastian Ramirez with Banchile.

Guys, congrats on the results. Two things from my side will be the first in relation to cash cost. You were referring to that earlier in the call, but it's very impressive what you did in lithium on the second quarter. So you can point us to what should be -- if this level should be the normalized level going forward. And the second question is regarding iodine that you are now delivering products under your nameplate capacity. So should we think that you're building inventories there as well? And how do you think that replenishing should go within the year? That's from my side.

Well, regarding the -- this is Gerardo speaking. Regarding the cost that you asked, well, we were projecting that the current cost situation that we have should continue going forward. And of course, we continue working on improving our cost position in every single business line. Now of course, keep in mind that within our cost structure in the lithium business line, we include the lease payments that we make to CORFO, which are a fraction of the price, the lower price -- the lower -- the lease payments, as is described in the tables of the contract that are disclosed on our financial statement.

Now regarding your other question, Pablo, please?

Yes. Sure. Well, regarding to the iodine production and the inventories, well, today, we are producing in a normal rate. And as you know, we are coming from low level of inventories. So today, of course, that the demand will be reduced during the year, so that means that we will use that situation in order to recover our inventories, which is something that we want because, in the past, we used to have low levels. And this is not the way how we have -- we would like to work. For us, it's important to have inventories to be there for our customers, so we will use this situation to recover inventories and to be ready once the demand will be there again.

That's perfect. Very clear. And if I may add something very quickly in regards to the solar salt. You said during the quarter, you delivered 60,000 tons of that and the remainder of the 150,000 that are planned for the year should be assigned in equal parts during the rest of the year. Or will it be more held towards the third Q? And any news -- new projects on that side? That would be helpful to hear from that.

Ricardo Ramos speaking. We expect to, as you may -- as you know, we expect to sell this year in a solar salt business close to 160,000 metric tons, and most of the sales will be in the third quarter and some remaining sales in the fourth quarter, but third quarter will be higher than fourth quarter.

As you know, this is a long-term agreement in order to supply solar salt. It means we will continue to sell during next year to the same client, 2021, '22, and we are really close to new agreements in the solar salt business in the short term. I expect to have some news during the next 2 quarters in order to inform you that we closed new deals in the long-term agreements of the solar salt. There's a lot of activity in the -- in this business sector in Europe and in different areas of the world. That's why we are very positive about having some new agreements in the near future.

Our next question will come from Leopoldo Silva with LarrainVial.

I have several questions, and I would like them -- to make them one at a time. So my first question is regarding iodine. I would like to ask you, could you tell us what is special about this business that despite having a weak demand, as you have said, a weak demand for the second half of the year, are you able to sustain a fairly good $35 per kilo price? Does it have to do with the product mix? And also what could make it correct downwards?

Also I would appreciate if you could help us understand why are you taking so much iodine abroad as your customs -- Chilean customs data shows you shipped 50% more than what you produced -- I mean, you sold during the quarter.

Okay. Sure. Well, as I said before, we see that price level for the second semester of the year will be similar to the first semester. And what is behind of there is what I already said that we are not seeing any fundamental change in this business. I mean, we don't have new supply, and the demand is being affected because of the specific situation of the virus. But as I said before, we expect that the demand will be recovered there. You see any important new supply in the industry. Actually, if you see the supply of the iodine from 2014, it has not increased. So that's why. So finally, the prices equilibrium between supply and demand. So that's why we see and that's what's going on regarding to the price.

Regarding to your second question, well, the strategy that we have is to remain inventories close to our customers is what we do normally. Well, this year, because of COVID situation, we increased a little bit the freight of product in order to be there just in case. But any other thing that's behind is normally what we do. We -- it's part of our strategy to build inventories close to our customers.

Okay. Second question is regarding lithium. So correct me if I'm wrong, but I understand that among the products that you sell from the Salar to your cost are allocated on a revenue basis, that means lithium, potassium, industrial chemicals and part of SPN. So my question is given that you've started shipping stronger industrial chemical volumes and will continue to do so, as you just said, should we expect to see reduced cash cost as we -- as the like we saw this quarter for the coming -- and for the coming years?

And also here, I would like to -- if you could give some color on how much of the cost reduction on this quarter it can be attributed to this, what I just said. Or -- and maybe what can be attributed to higher run rate efficiencies -- organic efficiencies of your -- this -- of the overhaul of the plant. And also if you could just give a glimpse of the depreciation per ton that was quite high this quarter.

Yes, that was quite a long question. Let me try to help you on this. Well, yes, we're selling solar salt. And these higher solar salts, of course, are positive news, but they have no relation with the cost of lithium. The lower cost of lithium, as explained before, are a function of improvements in the plant. Remember that this was a plant that started production at the end of 2018. It was basically getting fine-tuned in 2019. And now it's at full production with higher quality and better cost, so that is what is happening there.

On top of that, we have a weaker Chilean peso. We have a lower cost of energy. And on top of that, we have a lower royalty to CORFO because of the lower prices that we're seeing. Those are the main factors of the lower costs that we are currently reporting in lithium.

This concludes our question-and-answer session. I would like to turn the conference back over to Kelly O'Brien for any closing remarks. Please go ahead.

Thank you for joining, everyone. We hope to see you again in our earnings call in November.

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