CVR Partners LP (UAN) 2012 Q4 法說會逐字稿

Greetings, and welcome to the CVR Partners fourth-quarter 2012 conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions)

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Wes Harris, Vice President of Investor Relations for CVR Partners. Thank you, Mr. Harris, you may begin.

Thanks, Manny. Good morning, everyone. We appreciate your participation in today's call. With me today are our CEO, Byron Kelley, our Chief Operating Officer, Stan Riemann, and our CFO, Susan Ball.

Before we start to discuss our 2012 fourth-quarter and full-year results, I'd like to make the following Safe Harbor statements. In accordance with federal security laws, statements in this earnings call relating to matters that are not historical facts are considered forward-looking statements. These forward-looking statements are based on management beliefs and assumptions using currently available information and expectations as of this date. These forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, including those noted in our filings with the SEC.

In addition, today's presentation includes various non-GAAP financial measures. The disclosures related to such non-GAAP measures, including reconciliations to the most directly comparable GAAP financial measures, are included in our 2012 fourth-quarter and full-year results press release that we filed yesterday after the market closed. With that I will turn the call over to Byron Kelley, our CEO. Byron?

Thank you, Wes, and good morning to everyone. Thank you for joining us today. This morning I'm going to begin with a high-level review of our 2012 fourth-quarter and full-year results. Susan will follow with a discussion of the detailed financials after that discussion. I will conclude later with comments regarding our business and some industry trends, as well as provide our outlook and formal guidance for 2013. Then after that we will be happy to answer questions that you may have related to the business.

The 2012 fourth-quarter closing marked another successful year for us for both our CVR Partners and for our unit holders. We began the fourth quarter with our scheduled plant turnaround, during which we perform maintenance activities designed to maximize the operating efficiency of the plant.

As a result of that turnaround, just as we expected, we saw ammonia production rates increase significantly, somewhere in the neighborhood of 8% or 9% once we finished the turnaround. During the turnaround we also installed some critical assets and tie-ins that related to our urea ammonia nitrate plant expansion, which I will touch more on as we go through the presentation.

As expected, with the turnaround our 2000 (sic) fourth-quarter results were impacted due to the downtime and the incremental repair and maintenance expenses associated with the time we were down. During the 2012 fourth quarter, we did post a net income of $15.3 million on $67.6 million of net sales. This is compared to net income of $41.2 million on net sales of $87.6 million in the fourth quarter of 2011.

Our 2012 fourth-quarter adjusted EBITDA, which represents net income adjusted for depreciation, amortization, interest expense and income tax expense, share-based compensation, and turnaround expenses, was $27.1 million, as compared to $48.4 million in the prior year. As a reminder, our plant turnarounds are scheduled every two years. Therefore, our next turnaround is not slated to occur until the fourth quarter of 2014.

In the 2012 fourth quarter, we produced 87,700 tons of ammonia. Of this amount, we converted 52,400 tons into 127,300 tons of UAN, leaving a balance of 35,300 net tons of ammonia available to sell. During the period, we also elected to sell a net of 400 ammonia-equivalent tons of hydrogen to CVR Energy's adjacent refinery, pursuant to our feedstock agreement.

With no turnaround during the fourth quarter of 2011, we produced 100,800 tons of ammonia, of which 73,400 tons were converted into 178,300 tons of UAN. This left a balance of 27,500 net tons available for ammonia sales. And during that period, we elected to sell a net of 3,500 ammonia-equivalent tons of hydrogen to the refinery.

During the 2012 fourth quarter, we realized an average netback price of ammonia for $676 per ton, as compared to $606 per ton netback in prior-year period. For UAN, the average netback price for 2012 fourth quarter was $274 per ton, versus $334 per ton netback recorded in the fourth quarter of '11. However, as I will discuss later, the UAN average price for the full year 2012 was actually up over 2011.

We were pleased with our achievements on multiple fronts during 2012. In addition to our successful plant turnaround, we made significant progress on our UAN plant expansion this past year. I'm happy to report that the construction of the expansion project is complete, and commissioning was concluded last week. We have been increasing production rates at the new facilities on an incremental basis over the past week. And we expect to reach full production of 3,000 UAN tons per day around mid-March.

The approximate $130 million expansion project provides us the ability to convert all of our ammonia production into more highly-valued UAN. This expansion increases our capacity to more than 1 million tons of UAN annually, which is approximately 50% higher than previous levels.

Another highlight of 2012 was the completion of a $2 million storage distribution tank facility in Phillipsburg, Kansas. As we've discussed in the past, this strategically located facility allows us the optionality to store product and take advantage of the historical arbitrage between higher-priced planting season and the lower-priced fill season.

Supporting our strategy to expand our sales mix into higher-margin products, in 2012 we began to ramp up our production and sale of diesel exhaust fluid, or DEF. As you may recall, DEF is injected into catalytic converters of certain diesel engines to meet NOx standards that were introduced in 2010.

With the expansion complete, we plan to increase our DEF production. To be clear there, with expansion complete on the UAN plant, we plan to increase our DEF production capacity over the next 6 to 12 months, from approximately 7,300 tons per year to more than 84,000 tons per year.

We believe the market growth for DEF should absorb all of this capacity over the next few years. As a reminder, on a nitrogen content basis, UAN historically prices at a premium to ammonia. Thus, the expansion of the UAN plant. And DEF typically prices at a premium to UAN. Thus, the expansion of our DEF market as that market grows.

Looking at our financial results for 2012, we reported $302.3 million of net sales, which was essentially flat with 2011. Offsetting lower production and related sales in 2012 due to the turnaround was an approximate 6% increase in netback pricing for both ammonia and UAN. For the 2012 full year, we recorded average netback prices for ammonia of $613 per ton and $303 per ton for UAN. This is compared to 2011 where our average ammonia price was $579 a ton, and the average UAN price was $284 per ton.

Our adjusted EBITDA for the 2012 full-year was $148.2 million and net income was $112.2 million. During 2011, we recorded adjusted EBITDA of $162.6 million and $132.4 million of net income. Again, I remind you, the difference there has really been the turnaround in the fourth quarter.

The result of our many efforts and related strong financial performance was a distribution of $1.81 to our unit holders for 2012. This was higher than our most recent guidance of $1.70 to $1.80, and significantly better than our initial guidance for 2012 of $1.50 to $1.75. And, as I'll discuss in my closing comments, we enter into 2013 in a strong position to materially grow our business and our cash available for distribution. And I look forward to what is expected to be a record year for the Partnership.

I will now turn the presentation over to Susan Ball, our Chief Financial Officer, to discuss our financials in more detail. Susan?

Thank you, Byron. And good morning, everyone. Echoing Byron's comments, we are pleased to report another quarter and full year of solid financial results for the benefit of our unit holders. As previously mentioned, fourth-quarter 2012 net sales were $67.6 million, compared to $87.6 million in 2011. Again, this decrease was primarily attributable to the lower UAN sales volumes due to the turnaround as well as lower prices for UAN during the 2012 fourth quarter.

Partially offsetting the overall decrease was higher sales volumes of ammonia due to a UAN plant compressor issue in December. As a result, we did not convert as much ammonia to UAN on a relative basis. In addition, we did not sell as much hydrogen to the adjacent refinery of Coffeyville in the 2012 fourth quarter as in the prior-year period.

Cost of product sold for the 2012 fourth quarter was $11.5 million, compared to $14.4 million in the fourth quarter of 2011. Contributing to the decrease was lower consumption of pet coke tons, and freight, and distribution costs due to the turnaround. Also contributing to the quarter-over-quarter decrease was a lower blended price for the pet coke consumed. As we have discussed in the past, we typically purchase over 70% of our pet coke from the adjacent refinery.

The remaining 30% of our pet coke requirements are purchased from a third-party supplier under a contract that began in March of 2012, and runs through the end of 2013. During the 2012 fourth quarter, our average cost for consumed pet coke, including third-party purchases, shipping and handling was $30 per ton. This is compared to $40 per ton for the fourth quarter of 2011.

Direct operating expenses, excluding depreciation and amortization, was $29.2 million for the fourth quarter of 2012, as compared to $21.1 million in the prior-year period. The increase was primarily due to turnaround expenses of $4.6 million in the 2012 fourth quarter and higher repair and maintenance expense. Selling, general and administrative expenses were $6 million for the 2012 fourth quarter, as compared to $4.6 million in the fourth quarter of 2011. Contributing to the increase was higher non-cash share-based compensation expense, as well as increased cost for outside services.

Turning to capital expenditures, during the 2012 fourth quarter we spent $24.7 million on capital projects, including $4.5 million for maintenance CapEx. For the full year 2012, we invested $82.2 million in capital projects, including capitalized interest. This amount includes $7.7 million for maintenance CapEx, and $74.5 million for growth projects, which includes $67.7 million on the UAN expansion project.

As Byron mentioned, we expect total capital spending for the expansion project to approximate $130 million, excluding capitalized interest. With $106 million invested through the end of 2012, we estimate an additional $24 million of spending on the project this year. As we have discussed in the past, all of this planned spending will be fully financed by cash on hand that originated from our IPO in April of 2011.

As of December 31, we had $128 million in cash and cash equivalents, and $25 million available under our revolving credit facility. In addition, at the end of 2012 fourth quarter, our long-term debt was $125 million. As such, we remain in a very strong position to quickly capitalize on available growth opportunities. With that, I will turn the call back over to Byron.

Thank you, Susan. As we move forward into 2013, we certainly believe that we are in an enviable position to materially grow our business throughout the year. Supporting our outlook are strong industry fundamentals, including what is anticipated to be a robust planting of corn this spring. Driving this expectation is really the damaging effects on last year's crop due to the drought in the majority of the Midwest and other key growing regions.

The USDA estimates last year's yield was 122 bushels per acre and that the industry ended the year with a carry out of 647 million bushels. And this indicates a stock-to-use ratio of only 5.8%, which is the second-lowest in the last 50 years. Assuming normal weather, we expect that it will take several years to rebuild this inventory back to historical levels, which bodes well for us fertilizer manufacturers.

The USDA is estimating 96 million acres of corn will be planted this spring. And we agree with them on this level of planting. Some other areas we do not, and I will touch on that later. But we certainly agree that we expect 96 million of acres of corn to be planted this spring.

Again, this bodes well for the fertilizer producers, the nitrogen producers. And it's driving a strong pricing environment for fertilizer prices throughout this year, we believe.

Ammonia prices actually, over the past couple of months, they may have retreated a little bit from those abnormal highs we saw later last year. However, they were still very strong in January and February. And for UAN, if you look at current spot prices, current spot prices tend to be higher than they were last year.

We have UAN orders booked substantially for all of our anticipated production for the first quarter in 2013 and more than half of our production for the second quarter.

For ammonia, we have currently minimal tons in inventory. And we do anticipate taking orders against that inventory over the next several weeks. With the completion of our UAN expansion plants, we really do not expect to have any material production of ammonia throughout the rest of the year.

Given the backdrop of solid industry fundamentals, our recently completed expansion project, and the fact that we have no scheduled turnaround, we anticipate our cash available for distribution to our unit holders will significantly increase in 2013. We currently expect distributable cash flow to range between $2.15 and $2.45 per unit for the year. This indicates an increase somewhere between 19% and 35% over the full-year 2012 distribution of $1.81. So any way you want to look at it, we expect this to be a very good year ahead for our unit holders regarding our cash distributions.

Included in that guidance is the positive financial impact associated with the announcement that you may have seen on Tuesday, that we had reached a partial settlement with Montgomery County, Kansas, regarding our property tax that we have basically been paying under protest since 2008 for our facilities. Just as a quick reminder, in 2008, a reassessment by the county basically reclassified the majority of our plant's property from personal property to real property, resulting in a significantly higher property tax appraisal. We've been protesting that classification ever since tax year 2008.

Under the partial settlement agreement we just announced, the fertilizer plant will be appraised at a total value of $35 million for the tax years 2013 through 2016. This will lower our taxes that we've been paying by about $10.5 million per year based on current mill levy rates. In addition, the county will not oppose our application for a statutory 10-year property exemption for the approximate $130 million UAN plant expansions.

From a side of the county standpoint, what we agreed to do as part of this exchange, part of the settlement, is we will allow them to retain the higher level of taxes that we have already paid, or will be paying for the tax years 2009 through 2012. So, essentially, just looking at it, the cash already out the door, they are going to retain. And as we go through the forward years, our tax bill will be reduced $10.5 million per year. And that's approximately $0.14 per unit of additional cash available for distribution that we will have for the next four years.

Although we have settled the years 2009 through 2016, the case that started this, the year 2008, remains on appeal with the Kansas Court of Appeals. And we will continue to aggressively pursue that appeal. Because, quite frankly, the final decision on that is what will impact tax appraisals post 2016.

So we are happy with this. We view the settlement as a step in the right direction, as it does establish a more reasonable property tax valuation for the next four years. And it certainly has an immediate positive impact on our unit holders.

Now let's turn our attention back to the base business. As I mentioned earlier, I am pleased with how our business is positioned for 2013. However, I want to assure you we also remain focused on growth beyond this year. And as Susan mentioned, we have a strong balance sheet that provides significant flexibility to quickly allow us to quickly capitalize on any opportunities that may present themselves.

As discussed previously, the offsite storage distribution facility at Phillipsburg was completed in 2012. We believe there are other key locations in the Corn Belt where the construction or the lease of distribution terminals could prove beneficial to our efforts to continue to optimize the prices we receive for our products and thus increase future cash flows. And we continue to pursue those. And I think you will see some additional additions, either through build or lease this year.

And just as we have increased, and expect to continue to increase, our growth presence in the DEF market, we are also looking for additional opportunities to expand our sales mix into additional higher-margin products. Currently, I'm not going to share a lot of detail. I'll tell you we have one potential project that falls into this category that is in very early stages of analysis. And we're going to continue to do work on that project throughout the year.

We are also evaluating several projects to increase the efficiency of our plant assets. Preliminary reviews currently indicate the potential to obtain a nice increase in production volume, with some modest capital outlays. And that's two separate projects, both of which we're pretty excited about. And we continue to do the full evaluation of those.

Collectively, all of these projects, the potential projects I just mentioned, could have a meaningful positive impact on distributable cash flow in future years, should we elect to move forward once our analysis is complete. And I will keep you further apprised as we go throughout the year and the progress we make through this analytical stage on these three potential projects.

Complementing our announced and pending initiatives, we continue to evaluate opportunities to expand our business through acquisitions or development of new assets. As I've discussed in the past, our senior management team does have extensive experience in growing businesses through these types of efforts.

Before I move into the question-and-answer section, I wanted to come back to some of the fundamentals and talk a little bit about the WASDE report that has recently come out. I mentioned earlier in my presentation that in that report the government had forecasted the planting of 96 million acres this year of corn and that we agreed with that. We probably agree with a projected harvest in the neighborhood of 92%.

The one place that we really have a disagreement with the WASDE is in terms of their projection on yields. In their report, they are projecting that the yields this year will be 163.5 million acres. Quite frankly, we just don't know how you get there.

An interesting fact I will share with you is a little history around yields. I want to talk about the period beginning in 2003 through 2011. The reason I'm excluding the period before 2003 is there seemed to be a step change in yields in 2003 that pushed yields up that wasn't there prior. So if I throw those numbers in, the averages are going to even go down on what yields would look like.

Using the period of '03 through '11 -- and, by the way, I'm skipping '12 because we all know that was an anomaly at 122 bushels an acre with the drought -- so, '03 through '11 seems to represent what I would call reasonably normal weather patterns and reasonable yields. In that period, and that's a nine-year period, there were seven years in which we planted less than 90 million acres. During those seven years when we planted less than 90 million acres, the yield was 153 bushels per acre. In the years that we planted more than 90 million acres, that yield went down to 149 bushels per acre. And, obviously, we are talking about planting 96 million bushels.

The bottom line is, as you increase the acreage, you bring in land that has lower and lower yields. And so logic says the yield rate goes down. History proves that's the case.

If you were to take all of the forecast out of the WASDE report, except use that average for yields, which, when we had less than 90 bushels, which is a higher average, instead of the government's 16% stock-to-use ratio at the end of this year, what you will see is a stock-to-use ratio down to 8.7%.

If, on the other hand, you use the 149 bushels per acre, which has been the average every time we've planted more than 90 million acres, that number will come further down to 6%. We see no way that we're going to produce 163.5 bushels per acre as we plant 96 million bushels. As a result, as I said earlier in my presentation, we really think, if you look at this from a practical and an honest standpoint, it is more likely going to take several years to rebuild inventory back into the low teens. And we will not move into the level that the government is projecting next year.

So, with that, I will tell you that we think that the market has reacted a little negatively to those high numbers the government put out about yield. And that once the market -- and, by the way, we are not the only ones that believe this. Independent reports have been coming out recently that also talk about yields really being down in the low 50s.

So I think as that is absorbed in the market, people will get a little more practical about where the yields are going to be and recognize that we have several years of very strong planting ahead of us before we even get back to normal stock-to-use ratios and year-end inventories. And we can discuss more of that if you've got questions.

Again, just before going to question, I do want -- we've had a lot going on this year, with our turnaround, with our expansion. I have to thank our employees for their hard work that they've done for us in 2012. Both the turnaround and expansions required some abnormally long hours for our operations team. And I appreciate their extraordinary level of commitment to get us through this period.

And I have got to thank our marketing and transportation, and our staff across the organization, because I think we've had a great year. When you get down to it, we're only as good as our people. And so I always have to take the chance to thank them.

I also want to thank you, our shareholders, our unit holders, for your faith that you have in us, and for continuing to invest in us. We do appreciate that faith. And we continue -- we also appreciate the positive feedback we've received recently from a number of shareholders. It has been very much appreciated.

And I want everybody to rest assured that we remain focused on capitalizing on all of the opportunities I've talked about for the benefit of our unit holders. With that, we will stop now and be entertaining any questions that you've got. Thank you.

(Operator Instructions) Ted Drangula of Morgan Stanley.

It was a very good year and a pretty good outlook. I had a couple questions on the nitrogen market in general. It seems like the UAN prices have been really doing well here since the beginning of the year, whereas urea has been going the opposite direction. I know you guys don't really sell any urea.

But do you see any interrelationships there between the two markets? And is there any concern that urea may drag UAN down? Or you think it might go the other way? And I guess, in the end, what's your outlook for UAN here as we move through the year?

Ted, I'd say generally, maybe it's me showing up here, there was this long-term historical relationship between urea and UAN, it seemed like. And then the beginning of last year we started seeing some disconnects, some things you couldn't always explain. So it is hard to know. Obviously there's a tie there.

But I think what you are going to see right now, one reason you are seeing strong UAN, we have gotten some moisture in some of the dry regions. Certainly enough to have a positive impact on the spring wheat crop. So we expect that's driving a lot of the UAN.

Where they are now, they are going to need to get fertilizer and herbicides into the ground pretty quick. Probably not ideal moisture content for putting ammonia into the ground, but certainly UAN will work well for that. And we think that's been driving some of the stronger prices you see on UAN. And obviously UAN as a liquid has that advantage over urea.

Going through the year, the real question mark for all of us, when you start talking about pricing, is nobody ever at this time of the year has any idea what's going to happen in the fill season. But I would say that we've had certainly good indications on a very good UAN market in the first two quarters of this year.

Great. And then I guess a follow-up would be, on the pricing side, some of the things I read out there show these really good prices in the Corn Belt. And I know you generally realize, whatever it is, like $30 to $40 below that oftentimes.

Are you able to, in the business you've booked so far, can you give us a little color on how you are doing against that? Is there really product trading at $390 in the Corn Belt? Those are some pretty amazing prices.

I think there are a couple things to consider. First, obviously I don't want to release any prices of what we've been getting. I think there are things you have to think through when you see that price in terms of, a lot of the product sales that we recognize in the first quarter, and everybody else recognizes in the first quarter, were actually sales made last year in a different pricing environment.

But certainly the spot prices that you are seeing for prompt shipments are high, and we are glad to see that. And it's good for our business. But I'm really not going to, until we finish the first quarter, I'm not going to talk about first-quarter pricing in any detail.

All right. Thanks.

Matthew Korn of Barclays.

Congratulations on a great 2012. Could you talk maybe a little bit about the current grower sentiment in your regions coming out of the USDA outlook, and seeing conditions in states like Nebraska where they're still very challenging? Is there concern about lingering moisture issues that we on our side are overlooking? And is that adding any uncertainty about maybe what to plant or how much to plant?

I don't think there's any question that the fact that we know we started with some low moisture content in some of those regions, has had people, some of the farmers holding back a little bit. Certainly with some of the moisture that we've seen in north Texas, and a few areas of Kansas, and some in Nebraska, it has gotten, as I mentioned earlier, a little more optimistic about wheat. We are seeing movement there.

I think we would still like to see more moisture related to the corn crop. It is really just going to be a little wait and see, to see where that develops. Obviously you've got some areas in the US where it is not dry, and you're going to see a lot of corn.

But that is just something we've got to watch as we go through it. I would say a little more optimism over the last few weeks than maybe the first month of the year. Certainly more optimism on wheat. But a little early to make the call on the corn as to how much impact it is going to have in some of those regions.

All right. And maybe a follow-up, a small one. Could you talk maybe a little bit more about the property tax situation that you are looking at beyond 2016? And maybe what may be the potential outcomes you are looking at today for the 2008 case. And, to the extent you can, what that would mean as far as your tax bill?

The case is filed. Basically, again, it is a determination of classification. If we win that case, then on an appraisal value, you would see appraisal pretty much what I talked about that we see in the settlement period for '13 through '16. Essentially that would stay in place.

If we don't win that case, then the appraiser would go back and we would not have the $10.5 million savings that we are seeing now. Whether or not the court finds some way to split it in the middle, I don't know.

So that effort will be ongoing. We will continue to pursue that and we think it is important to win that.

We are also, just so you know, we are also pursuing, with other industries in Kansas, a legislative effort to get some clarification around how the assets are classified. The end result of this has ramifications far in excess of just us. It is pretty much all of the industry, anybody that's in the industry in Kansas. So there's a lot of concern about all the other industries that, all of a sudden, they start seeing some reclassifications.

The general feeling is, this is not what the legislative intended when they set up the original tax laws. So we're hoping to get some help there. We are battling this basically on two fronts.

Thank you very much.

(Operator Instructions) [Kenneth Cramer], Citigroup.

Do you see any increase in demand through overseas buyers?

At this point not really. Nothing abnormal in regard to -- if you're talking about buyers of corn, the answer is not a lot. Not at $7 corn. We are utilizing essentially all that corn pretty much domestically. You can look at the levels of exports we've had in the last year or two. And that really isn't going to change a lot at $7 corn.

So our product, though, is all sold domestically. All of our UAN product is sold for domestic utilization. The US is a net importer of both nitrogen and UAN. And so, in general, I don't think you are going to see any increases of exports of those products, either. There's seasonal exports sometimes, not by us; we sell all of our product domestically.

Thank you.

Gerald LeVan of Morgan Stanley.

You get 70% of your pet coke from the refinery next door. And the refinery next door is 59% unionized. And there are contracts coming due with the Metal Trades union and the United Steelworkers union that expire March of this year, which is in 30 days. If those negotiations are not settled, could they stop production at CVR Partners because you don't get any pet coke?

Byron, do you want me to handle this?

Yes, Stan, go ahead. This is Stan Riemann. He is our Chief Operating Officer.

The answer to your question is no. We finished our labor contract in December. So our labor contract is not subject to what happens in March. So there will be no shutdown of the refinery over labor issues. And it's a four-year contract we signed in December.

When you said -- we -- don't you mean CVR Partners? I'm talking about CVR Refining who supplies your --.

So am I. I'm the Chief Operating Officer for CVR Refining, as well.

Because when CVR became public -- and what I was discussing to you was reading the prospectus, and the prospectus, of course, is dated in January, and you are talking about a settlement in December.

We're confusing the two. There's two labor agreements. There's one at Wynnewood, and there's one at Coffeyville. The one at Wynnewood was entered into last summer, and the one at Coffeyville was entered into this winter.

Whether the actual signing date was December or not, I don't know, but it is completed. And we do not have a union negotiation in March. It is behind us.

Okay, good. Thank you very much.

Thank you. We have no further questions in queue at this time. I would like to turn the floor back over to management for any additional remarks.

We thank you. Again, we thank you for your participation today. Always glad to answer your questions. If you have any follow-up questions, you can call either me or Wes Harris, and we'll be glad to get you some answers.

Again, we appreciate everybody's support of our business. We are excited about 2013. We think it is going to be a great year. And we are glad to have you as our partners as we move through that year. So again, thank you very much and have a good day.

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