Sunoco LP (SUN) 2017 Q1 法說會逐字稿

Greetings, and welcome to the Sunoco LP first quarter earnings call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Scott Grischow, Director of Investor Relations and Treasury. Thank you. Mr. Grischow, you may begin.

Thank you. Before we begin our prepared remarks, I have a few of the usual items to cover, a reminder that today's call will contain forward-looking statements. These statements are based on management's beliefs, expectations and assumptions. They may include comments regarding the company's objectives, targets, plans, strategies, costs, anticipated capital expenditures and anticipated timing for the completion of the announced and prospective retail divestment transactions. They are subject to the risks and uncertainties that could cause the actual results to differ materially, as described more fully in the company's filings with the SEC.

During today's call, we will also discuss non-GAAP financial measures, including adjusted EBITDA and distributable cash flow. Please refer to this quarter's news release for a reconciliation of each financial measure. Also, a reminder that the information reported on this call speaks only to the company's view as of today, May 4, 2017, so time-sensitive information may no longer be accurate at the time of any replay. You'll find information on the replay in this quarter's earnings release.

On the call with me this morning are Bob Owens, Sunoco LP's President and Chief Executive Officer; Tom Miller, Chief Financial Officer; and other members of the management team. I'd now like to turn the call over to Bob.

Thanks, Scott. Good morning, everyone, and thank you for joining us. This morning, we will review the financial and operating results for the first quarter along with other recent activities.

I'd like to begin my comments by highlighting 2 important events that transpired since our last earnings call, the first of which occurred at the end of the first quarter when Sunoco announced the completion of a private placement of $300 million in preferred equity to Energy Transfer Equity, ETE. This intra-family support provides additional time and flexibility for the partnership to delever. Tom will expand on the specifics of this offering a bit later during his comments.

Second, on April 6, Sunoco announced a definitive agreement with 7-Eleven to sell approximately 1,110 company-operated convenience stores as well as the trademarks and intellectual property of the Laredo Taco Company and Stripes for a purchase price of $3.3 billion. As part of this transaction, Sunoco and 7-Eleven also agreed to enter into a 15-year fixed-rate take-or-pay fuel supply agreement, under which Sunoco will provide base volumes of approximately 2.2 billion gallons per year with committed growth of 0.5 billion gallons over the first 4 years. This is a transformative first step in the decision to divest convenience stores in the Continental United States.

7-Eleven is a creditworthy, strategic partner, and with the 15-year fuel supply agreement, SUN will look to build on this partnership as we also build our partnerships with best-in-class dealers and distributors. Sunoco will continue to utilize its diverse channels of trade and fuel brands. This credit-enhancing transaction will allow SUN to recapitalize the balance sheet and sets the stage for strategic optionality targeting MLP-qualified income. We expect the deal to close by the fourth quarter of 2017, of course, subject to regulatory approvals.

Now simultaneously with the 7-Eleven announcement, SUN also announced that approximately 200 convenience stores across North and West Texas as well as into New Mexico and Oklahoma will be sold in a separate auction process. These stores are favorably positioned in the heart of the Permian basin with exposure to above-average economic growth in that region. While heavily exposed to the energy sector, this geography also contains diversified industries such as education and agriculture, which can help provide more consistent levels of sales and profitability through the cycles.

Average store -- the average store in this group is approximately 3,800 square feet and built on 1.5 acres per site. Now about 20% of these sites are new-to-industry stores, built since 2008. 70% of the locations have a fast casual restaurant, with the majority being Laredo Taco Company concept. We're encouraged by the initial response from bidders and also anticipate closing on this transaction by the first -- fourth quarter of 2017. Now that being said, this is an active process and, therefore, updates will be limited.

Finally, the sale of approximately 100 of SUN's real estate assets through NRC, which we've previously announced, is ongoing. 7-Eleven was involved in the bid process for a number of operating sites, and at this time, approximately 30% of the active retail sites from the initial NRC process have migrated over to the 7-Eleven transaction. Additionally, approximately 20% of the active retail sites have been awarded to outside bidders and approximately 10% have migrated to the marketing efforts underway by JPMorgan. The process of awarding the land bank, excess land and remaining active sites is ongoing.

In summary, we anticipate that Sunoco will have substantially exited the retail convenience store space in the Continental United States by the end of 2017.

Now turning to the partnership's results for the first quarter of 2017. The first quarter had some challenging aspects, including a less-than-ideal commodity environment backdrop, lackluster gasoline demand across the industry, the lapping of tough comparisons and the impact of winter storms in late January and late March. However, on the plus side, Sunoco saw much improved operating trends in its oil-producing store base, with particular strength in March that has continued into the second quarter. Remember, too, that 2016 was a leap year with 1 extra day.

Now for the first quarter of 2017, the partnership recorded a net income of $1 million during the first quarter compared to $62 million a year ago, largely driven by increased interest expenses from a higher debt profile and increased cost on our floating rate debt. Tom will cover this in more detail later in the call.

Total adjusted EBITDA decreased $4 million from last year to $155 million. Distributable cash flow attributable to partners was $77 million compared to $112 million 1 year ago. SUN's distribution for the first quarter remained unchanged from Q4 at $0.8255 per unit. This distribution was a 1% increase from Q1 of 2016 and resulted in a 0.74x coverage ratio for the first quarter and a 0.88x coverage ratio on a trailing 12-month basis. As a reminder, the first and fourth quarters are seasonally the weakest quarters of the year for our business year in, year out.

In the near term, we are comfortable keeping our coverage below the 1x. Long term, our goal is to manage to a 1.1 coverage ratio after the retail asset sales process is complete, aided by a combination of growing cash flow via acquisitions or reducing our distributable cash flow obligations through the repurchase of units, either in the open market or from Energy Transfer.

Now let's take a look at operational performance. Total fuel volumes increased 3.6% to 1.9 billion gallons. Retail gallons decreased 13 million gallons year-over-year or 2.1% to 595 million gallons due to the challenging operating environment in the first quarter and the strong first quarter of last year. Wholesale gallons increased 6.5% to approximately 1.3 billion gallons.

The total weighted average cents-per-gallon margin decreased to $0.145 compared to $0.147 a year ago due to significantly higher gasoline cost versus last year, aggressive pricing by competitors and weaker retail demand. Wholesale cents per gallon was $0.106 compared to $0.114 a year ago, while retail cents per gallon was $0.231 compared to $0.213 1 year ago.

Merchandise sales increased 3.1% year-over-year to $540 million, with continued market share gains in packaged, beverage and beer sales. SUN also experienced strength in food service, particularly in the East. Merchandise gross profit percentage decreased by 0.1% compared to last year, ending at 31.6%, which was consistent with our expectations for the beginning of the year. The margin improved 1.7% from Q4 on food service growth and less merchandising promotional activity.

Now let's turn to same-store results. Remember, as I mentioned, the first quarter of 2016 contained a leap day in February. We will discuss same-store results including this 2016 leap day, but I did want to emphasize that the extra day in 2016 negatively impacted first quarter 2017 and the year-over-year results, and that impact is approximately 1.1%.

With that, same-store gallons declined by 5.7% due to weakness across SUN's geography. Same-store merchandise sales declined 1.1% due to weakness in Texas, particularly in the restaurant business and the border regions, partially offset by gains in food service, packaged, beverage and beer.

Our 140 retail stores in the oil-producing regions of Texas are primarily located in the Permian basin, with the remainder in Eagle Ford. The market has improved notably over the last 6 to 12 months, with rig counts in the Permian up about 2.5x, ending at 342 as of last Friday. And WTI prices are currently hovering right around the $50 a barrel since early December.

After a lackluster 2016, the oil-producing regions reported solid results in the first quarter of 2017, with same-store merchandise sales up 1.6% and same-store fuels gallons up 1.1%. With the fourth quarter down only low single digits, that's 2 straight quarters now of improving year-over-year trends coming off of several quarters at double-digit declines. We believe this region has turned a corner. With March, the strongest month of Q1, with same-store merchandise sales up 6.1% and same-store fuel gallons up 7%. Preliminary numbers suggest April year-over-year growth was even stronger than in March.

Furthermore, our energy services business, which is a business that delivers fuel to skid tanks and rigs in the oil patch, has continued to show very healthy volume gains, up over 2.5x since mid-2016. We view this performance as a very positive leading indicator for the overall region.

Now moving to updates on some other operational items. We continue to be very happy with the performance of our fuel business that we acquired from Emerge, with the Dallas-area hydrotreater up and running and performing up to expectations for several months now. We expect the hydrotreater at the Birmingham facility to be operational by the end of the second quarter. As a reminder, these hydrotreaters enable SUN to produce ULSD, ultra-low sulfur diesel, which is a key attribute to stabilize and increase the earnings of this business over time.

Additionally, along the Indiana Toll Road, we've completed the rebuild of 2 stores 1 of the 4 plazas on which we have work planned. The first plaza, one of the busiest. That plaza opened in April. We expect the second plaza, where we're performing outfit work on those sites, to open mid-2017. After that, we expect the third plaza with outfit work to open by the end of 2017.

Before I turn the call over to Tom, who will discuss the financial highlights of the quarter, I want to leave you with a few thoughts on how we think about Sunoco after our exit from retail. This is a major step and a strategic shift toward MLP-qualifying businesses. Concentrating the Sunoco business model around simplified wholesale business provides significant scale and cost efficiencies. Retail divestments will immediately improve Sunoco's financial profile and sets the stage for strategic optionality to take advantage of consolidation opportunities in a fragmented wholesale market or to move into new markets and qualified businesses with stable cash flows.

We look forward to Sunoco being the finished-product company within the Energy Transfer family.

And with that, I'll now hand it off to Tom.

Thanks, Bob, and good morning, everyone. Before I get into the financial results for the first quarter, let me discuss a couple of items. First, the $300 million perpetual preferred offering allowed us to reduce near-term leverage concern. The initial annual distribution rate on this is 10%. After year 5, the annual distribution becomes floating rate equal to 3-month LIBOR plus 8%. We have the option to redeem the preferred units for the first 5 years at 101%. After that, we can redeem at par. Prior to repurchasing common units, we must redeem these preferred units.

Second, for the 7-Eleven transaction and the sale of our remaining Continental U.S. company-owned convenience stores, let me provide more information on our existing debt. The terms of the 7-Eleven agreement require us to either have the noteholders agree to modify various indenture covenants to permit the transaction. A consent requires a simple majority vote of each series holders; or we can retire the notes using the call feature or the make-whole feature if the notes cannot be called. Additionally, we will be required to obtain waivers under the credit facility and the term loan A to permit the transaction.

As for the use of proceeds, we will reduce debt to a level where our ongoing leverage is between 4.5x and 4.75x adjusted EBITDA. The remaining proceeds will be used in some combination of a reduction in the perpetual preferred securities in common units or to some -- to fund accretive acquisitions. We will target a 1.1x distribution coverage ratio.

We estimate the combined tax impact of the 2 deals to be around 20% of gross proceeds. The actual tax rate depends on the selling price of our remaining retail asset.

Finally, before we move to first quarter results, I'd like to review the leverage and coverage self-help measures we discussed on our year-end call. First, we talked about using our ATM program. In Q1, we issued $33 million in common units as well as perpetual preferred securities totaling $300 million. We do not intend to use any of the remaining $295 million left on the ATM program in the foreseeable future.

Second, we continue to see additional sales from our new-to-industry sites built over the last few years. We expect these stores to continue to increase EBITDA while we own them.

Third, with regard to our real estate auction, Bob provided insight into where that process stands. I want to reiterate that these tend to be lower-volume sites.

Fourth, on the capital expenditures side, we announced that 2017 growth capital would be roughly $200 million. With the divestment announcement, we will see spending additional retail growth capital other than what's contractually committed. Our agreement with 7-Eleven requires us to maintain our stores in a prudent manner. Therefore, we don't expect to see much run rate reduction. Obviously, our total reported 2017 growth and maintenance capital will depend on when we complete these transactions.

Finally, we talked about a $75 million G&A and operating cost reduction program. With the pending divestment, we will not be updating progress towards that goal. We view the $75 million cost reduction as our starting point. As we move forward with the divestment, we will focus on streamlining our cost structure and lowering G&A ahead of closing.

Now let's move to the partnership's liquidity position and cost of debt. SUN ended the quarter with total debt-to-adjusted EBITDA, calculated in accordance with our credit agreement, of 6.31x. Total debt at March 31 was $4.3 billion, which includes $761 million drawn under the revolving credit facility. We also had $21 million in standby letters of credit, leaving the unused availability on the credit facility of $718 million at the end of the quarter. SUN's weighted average cost of debt at March 31 was 5.1%.

Moving on to key financial results. Gross profit decreased by $8 million or 1.6% to $503 million. Lower gross profits reflect lower wholesale motor fuels profits per gallon, which fell from $0.114 to $0.106, somewhat mitigated by increases in retail motor fuel and merchandise profits. Other operating expenses increased by $14 million from last year to $263 million. This primarily reflects increases in maintenance expense, property tax and other costs associated with retail stores built or acquired over the last 12 months. Other operating expenses decreased by $4 million from the fourth quarter. G&A increased by $6 million year-over-year to $64 million, reflecting higher advertising cost as well as salaries and wages. G&A cost declined $3 million from the fourth quarter. Combined, other operating expenses and G&A cost declined $7 million from the fourth quarter of 2016.

Net income for the quarter was $1 million versus $62 million a year ago. In addition to higher cost, lower net income was driven by higher interest expense associated with increased debt due to the final drop-down at the end of the first quarter last year. Adjusted EBITDA for the first quarter decreased $4 million from a year ago to $155 million, primarily related to higher operating cost and lower wholesale gross profit.

Turning to retail. Adjusted EBITDA from our retail segment was $60 million, an increase of $4 million from a year ago. This increase primarily reflects higher margins. Retail margins averaged $0.231 per gallon compared to $0.213 per gallon a year ago. Over the long term, we expect retail margins to be in the $0.23 to $0.25 range even though we will have quarters outside this range. SUN's retail merchandise gross profit was $170 million, a $4 million increase from a year ago. As Bob mentioned earlier, merchandise gross profit percentage decreased by 0.1% compared to last year's 31.6%. The margin improved 1.7% from the fourth quarter on food service growth and less merchandising promotional activity.

Now turning to the wholesale business. Adjusted EBITDA for the quarter was $95 million, down $8 million from a year ago, primarily due to gross profits per gallon.

Finally, in the first quarter, SUN invested $66 million in capital expenditures, consisting of $48 million of growth capital and $18 million of maintenance capital. SUN completed construction on 10 new-to-industry sites in the first quarter, for which the majority of the capital was spent last year.

Operator, that concludes our prepared remarks. You may now open the line for questions.

(Operator Instructions) Our first question comes from the line of Andrew Burd from JPMorgan.

So assuming that all of the asset sales are closed by the year-end target, do you anticipate that the distribution coverage shortfall will be solved concurrently? And if not, how long will you be comfortable maintaining potentially stretched coverage while you pursue either M&A or share repurchases?

Yes, Andy, I think, concurrently may be a bit strong, but almost concurrently is the way I would answer it. And I think, in the prepared remarks, we said that with this inflow of cash, we will look at alternatives that would be both M&A type or, from a financial restructuring standpoint, obviously, unit buyback, and we will do what is most prudent at that point in time.

Great. And Tom, I appreciate your comments and additional color on the kind of ballpark tax rate for the assets that are being sold. What are the -- and this may be better for ETP, but what are -- would they have tax consequences as well for the equity they own in Sunoco, should they divest that? Is that a similar -- are the mechanics similar to what you're facing with the asset sale?

I'm really not in a position to answer that. Sorry, Andy.

Okay. Last question. Bob, if I remember correctly, Sunoco is a pretty big ship around Colonial, and other industry participants have noted some pretty tough economics, certainly in the first quarter, but Sunoco posted pretty strong fuel margins or -- certainly, on a relative basis. Did you see something different on Colonial? Or was it just the advantage of the diversified asset base and being able to offset the weakness by strengths elsewhere?

Yes. Andy, I -- it's the latter. We saw the same market conditions. The -- Q1 was a combination of interesting phenomenons. Big squeeze in the Great Lakes area with some issues there. The New York Harbor Gulf arb that you mentioned. I think our results speak to the benefit of our diversification and our scale within the 3 different big refining centers, and that worked to our advantage in Q1.

So there -- was there one particular market that offset the New York Harbor to Gulf Coast arb? Or was it a confluence of factors?

I think a confluence of factors.

Our next question comes from the line of Theresa Chen with Barclays.

Going back to the strength in the wholesale margin in first quarter, that $0.106 per gallon metric, is that at all benefited from the portion of the Emerge business, that transmix processing, that I imagine the gross margin there will be lumped in with wholesale but there are no associated gallons?

Yes. That -- those gallons are in there. So remember, wholesale includes our dealer business, our unbranded and branded distributor business, the contracted gallons that we sell to our own retail as well as the Emerge business and our race fuels business. So it's a blended margin that we report.

Okay. So that $0.106 is apples-to-apples compared with the $0.114 from the previous year?

Emerge would be the only difference but those are -- that's not a lot of barrels. I would say what you're seeing there delta-wise is more reflective of market conditions than change in asset mix.

Okay. And if you stripped out the portion of Emerge that's not included, do you know what that $0.106 would have been?

Not off the top of my head. Scott, do you know?

Theresa, I can follow up with you on that. We can get that data.

Yes.

Okay, got it. So looking towards the future following the exit of the retail business, how do you view your competitive positioning at that point when you're in the market for M&A? Does having less real assets affect how you compete for assets? And would you be focusing more on wholesale businesses with no retail? Or would you be following your kind of traditional or historical performance there?

I guess what I would tell you is, relative to where we've been in recent history, I think the completion of this transaction and resulting improvement in balance sheet positions us much better, with a better cost of capital for competing for M&A assets. With respect to the type of assets, look, this is an exit of company-operated convenience stores in the Continental United States. And that will make sense for us as we remove all the cost associated with running those types of businesses. So as we look at M&A activity in the future, it will be around, on the fuel side, dealer, distributor-type assets. Might there be company [opps] that we would purchase with the intent of converting over to other classes of trade? Sure, if it made economic sense. And in addition to that, as has been mentioned both in our prepared remarks and was talked about in the Energy Transfer session earlier this morning, more midstream assets have eye appeal to us as well.

Our next question comes from the line of John Edwards from Credit Suisse.

Yes, just can you give us an idea of what you think the transaction-related expenses will come out to be associated with the pending divestitures?

This is Tom. I would -- there's going to be changes in personnel, so there'll be cost associated with that. There will be perhaps fees to receive consents, to move things and, certainly, the bonds that I talked about. We don't have a firm estimate on that, but it's going to be maybe $25 million to $50 million is what we see right now.

Okay, that's helpful. And then, on the prepared remarks, I think you indicated there was about a 20% expected tax drag on the proceeds. That would be -- that's just -- so we should think about that as the sort of the tax on the overall proceeds? We were just trying to figure out, given what the base investment you had in the retail gas stations, we were trying to figure out how much of that might be capital gains versus ordinary income. So just any color you can give on that or how you came to that 20% tax number. Because we were actually thinking it might be a little bit less, because we thought a lot of it would be capital gains-related, so if you can comment, that would be great.

We think that most of this will be taxed at the 35% rate. So it's above the -- whatever we have above the tax bases, whatever we receive. And as I said, what that rate is, is going to be dependent on what we receive for the Texas package, if you will, and the NRC package in addition. So that's about where we are on the tax rate.

Okay, great. And then on the outlook for the wholesale margins, any revision to the $0.06 to $0.08 per gallon number that you've been guiding to?

Not at this point in time, John. We are working hard to pro forma for the balance of the year, and Scott will get back to people, but as of now, no.

Our next question comes from the line of Robert Balsamo with FBR.

Thanks for the color. That helps on something like wholesale and Emerge impact. You mentioned the SG&A, and I know you said you're not going to be updating on progress moving forward, but is there any color you can give us on just maybe what of that $75 million would have been allocated to retail versus wholesale businesses?

Well, first of all, it's G&A and OpEx. And given that OpEx at the retail is much higher, it would've been -- that would've been roughly 50-50 between the G&A and operating expenditures. We think that the vast majority of that would've been on the retail side of the operating expenditures.

Our next question comes from the line of [Michelle Kennel] from UBS.

It's actually Shneur Gershuni with UBS. I just wanted to follow up on some of the discussions about Colonial in terms of its impacts. Do you feel that this is going to be something that continues longer term? Is it a function of pad 2 volumes coming into pad 1? I was just wondering if you can sort of talk about the dynamics of some of the capital that's put in place that seems to be moving around inventory balances. And will it compress spreads in one area but potentially improve spreads in other areas? I was wondering if you can talk about that a little bit.

Shneur, I would tell you that we're watching it carefully. Clearly, you've heard the plans from a number of players to find opportunities to extend logistics equipment deeper in the pad 1 from pad 2. I -- our view is that we are best served with optionality, and that there will -- have been in the past and will likely be in the future, incidents that occur where arbs are created amongst the 3 supply areas, and our objective has been to be as flexible as we can be. That flexibility includes line space; it includes tankage; it includes our own transportation fleet and the flexibility that comes with that and relationships with suppliers in all 3 centers. So I -- that's not an exact answer to your question in terms of a prediction between the delta and historic deltas, pad 1 to pad 3, but I think it remains to be seen. And our view is we're best served maintaining maximum flexibility.

When you say maintaining maximum flexibility with more assets in place, do you try and develop shipping histories on some of these newer assets?

We -- that is among the things that we are considering right now.

Our next question comes from the line of Sharon Lui from Wells Fargo.

Just thinking about the properties being sold through NRC, I think, in your prepared remarks, you indicated that 20% has gone to other third parties. Does that -- are you implying that it was sold to third parties already?

Yes.

And I guess, do you have...

Not closed but under contract.

Under contract. And what is the estimated proceeds?

We've not disclosed that, Sharon. We're still working through the balance. We're early in the program. We're negotiating with parties on the balance of the assets. We have active processes underway with other assets, so we're just not disclosing numbers right now.

Okay. All right. And I think you also mentioned with regards to use of proceeds, is the thought that you would need to the redeem the preferred before buying back any of the common units?

Yes. Yes, that's a requirement in the indenture of that.

Our next question comes from the line of Chris Sighinolfi from Jefferies.

Bob, I was just curious, and this is sort of an effort to try and figure out a pro forma look. You had provided same-store sales figures on the fuel side in last night's release. I was wondering if it was possible to get a breakdown of that figure, retail versus wholesale.

The same-store sales were all retail.

Oh, that figure last -- in last night's release was all retail?

Yes. We only report retail same-store sales.

Right.

Got it. Okay. Understood. And then, just the earlier dialogue on wholesale margins sort of raised something for me, and I was wondering if you could clarify. The -- since -- I guess, since Emerge is captured in the wholesale margin per gallon that you report, is it to assume that, that's consistent with the $0.06 to $0.08 that you guide? Meaning, it's included in that $0.06 to $0.08 expectation as well?

Well, yes. The...

Or are you just talking about fuel margins?

We're -- it is blended margin, so it is included in that.

Our next question comes from the line of Ben Brownlow from Raymond James.

You talked about the same-store sales -- just a follow-up on the last question, about same-store sales improvement. And I think, if I heard you correctly, in March, merchandise and fuel up in the 6% to 7% range. Was that just Texas? And can you speak to the rest of the chain? And did you also see a similar type of demand trend at wholesale volume?

Yes. So let me be clear, the -- those statistics were just in the Permian basin -- or the oil patch, 75% of which are in the Permian. Since we'd called those sales out previously, that was the highlight that we gave in terms of how they are doing. We're seeing continued weakness, however, in -- particularly in South Texas, in the border areas, consistent with numbers that we've talked about in the past, and the release, and the information contained same-store sales across the entire chain.

Okay. And that quarter-end kind of improvement there, was that a broad-based improvement you saw across the chain as well there?

Well, not to the degree that we've -- what we're seeing is an accelerating improvement in just activity in the Permian basin and the resulting benefit of that in terms of more people being employed, more people traveling as the rig counts increase. And I talked about the -- our Sunoco Energy services is kind of a leading indicator that's now approaching 3x the business volume that it had done in the past. While -- as we're getting into the summer driving season, we're seeing demand pick up in other parts of the chain, but the real strength that was highlighted was unique to the oil patch.

That's helpful. And one last one for me, on the fuel margin, the retail side, any color you can give on Aloha?

Margins were about on budget and consistent with historical kind of levels there. Hawaii is a unique market. We have a very unique position there with the combination of assets that we've got, retail, wholesale and logistics assets. So that continues to be very ratable in terms of cash flow for us.

And that long-term target of $0.23 to $0.25, that is pro forma after the asset divestiture?

No, that is a blended margin across our entire chain, and Hawaii is a positive contributor to that, not in small measure low gallons but strong margins, and the number would be different post divestment.

(Operator Instructions) There are no further questions in queue. I'd like to hand the call back over to Mr. Owens for closing comments.

Okay. Well, thanks, everybody, once again for taking time to join us this morning, and this concludes our call.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.