Earnings Call Transcript - CMS Q1 2023

Operator, Operator

Good morning, everyone, and welcome to the CMS Energy's 2023 First Quarter Results. The earnings news release issued earlier today and the presentation used in this webcast are available on the CMS Energy's website in the Investor Relations section. This call is being recorded. Just a reminder, there will be a rebroadcast of this conference call today beginning at 12:00 p.m. Eastern Time running through May 4. This presentation is also being webcast and is available on CMS Energy's website in the Investor Relations section. At this time, I would like to turn the call over to Mr. Sri Maddipati, Treasurer and Vice President of Finance and Investor Relations.

Sri Maddipati, Treasurer & VP of Finance and Investor Relations

Thank you, Billy. Good morning, everyone, and thank you for joining us today. With me are Garrick Rochow, President and Chief Executive Officer; and Rejji Hayes, Executive Vice President and Chief Financial Officer. This presentation contains forward-looking statements, which are subject to risks and uncertainties. Please refer to our SEC filings for more information regarding the risks and other factors that could cause our actual results to differ materially. This presentation also includes non-GAAP measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in the appendix and posted on our website. Now I'll turn the call over to Garrick.

Garrick Rochow, President & Chief Executive Officer

Thank you, Sri, and thank you, everyone, for joining us today. Our commitment to industry-leading financial performance spans two decades, and it's this investment thesis that is foundational to our performance. Over that time, we've experienced changes in commissions, legislatures, and governors, unplanned weather and storms, recession, and a pandemic. In each and every year, we have delivered for our customers and for you, our investors. It’s the performance you have come to expect from a premium name like CMS Energy and this year is no different. We remain squarely focused on our mission at CMS Energy, making the needed investments in safety, reliability, and decarbonization of our system, balanced by customer affordability and our $15.5 billion five-year customer investment plan. These investments in our expansive and aging electric and gas systems are critical to enhance reliability and resiliency and are supported by Michigan's constructive legislation and regulatory framework. Our investments are coupled with our lean operating system, the CE Way, which helps us manage and lower costs. This ongoing drive to see and eliminate waste is evident from the field to the office and helps improve our efficiency, ensuring we deliver customer value while keeping bills affordable. We are committed to this, and I believe we do it better than almost any company in the industry. As we round out the first quarter of 2023, I want to share a few highlights. First, the Board's announcement of the Blue Oval Battery Park. This is another important win, which brings $3.5 billion, 2,500 jobs, and adds to the growing list of economic development projects in our service territory. We saw additional enrollments in our voluntary green pricing program, supporting the build-out of our first large tranche of owned solar representing 309 megawatts and a total of 1,000 megawatts approved. Preparations continue for the acquisition and transition of the Covert generating facility scheduled for June as approved by our IRP. And in our gas business, we began construction of our mid-Michigan pipeline, a $550 million, 56-mile pipeline to enhance deliverability and safety of our natural gas system. I want to be clear, at CMS Energy, year after year, regardless of conditions, we are positioned to deliver. Now let me address the extreme weather we faced in the first quarter. In late February and early March, we experienced the second largest storm event in our service territory. Our line crews are some of the most skilled and experienced in the business, and they showed up with able hands and parts of service and our customers were well served by their dedication. In addition to our crews in the field, there are hundreds of people behind the scenes to support our crews and our communities, including many of our coworkers who volunteered to serve customers throughout the restoration. I know many of my coworkers join our earnings call, and from my heart, I want to say thank you to each and every one of you for showing up for our customers and for each other. Because of our team working together to serve, 97% of our customers were with power within three days. In our 135-year history, eight of the most destructive storms have occurred in the last 20 years. That's a significant data point. The severity and frequency of storms we're seeing highlights the need to enhance critical investment and amplify our efforts on the reliability and resiliency of our electric distribution system. We need more undergrounding. This is an area where we are significantly behind some of our Midwest peers. We also need to do more sectionalizing, automated transfer reclosures, and looping, and overall system hardening. These important investments are critical to improve reliability and resiliency for our customers and will be outlined in our pending electric rate case, and in our updated 5-year electric distribution infrastructure investment plan. We also plan to include an investment recovery mechanism in our upcoming rate case to add certainty to our investment. I'm pleased that our commission has been supportive of reliability improvements, doubling our efforts around tree trimming since 2020. This, as well as other customer investments, has contributed to the 20% improvement in our reliability in 2022, but there is more work to be done and more needed investment. We will continue to work productively with the commission on the reliability and resiliency of our electric distribution system, so we prepare for increasingly severe weather. We expect further alignment and collaboration on the needed investments in the upcoming storm audit as we work on a common goal of improving our distribution system for all customers. I'm confident in our ability to work with all stakeholders because Michigan has the legislative and regulatory framework in place to enable these investments and to attract the capital needed to drive the changes we all want to see. We have a productive energy law that provides forward-looking test years, constructive ROEs, and supportive incentives. It is this environment which has earned Michigan a rank as a top-tier regulatory jurisdiction for the past decade. Now I know many of you will want to dive into the details of the back and forth in both the regulatory and legislative arenas, which we are happy to do in Q&A, but remember, it's all part of the process. Let me remind you, we have a track record of working with all stakeholders to drive successful outcomes. It's why we settled three cases in 2022. Now I want to be clear where we stand today. We saw both unseasonably warm weather in January and February as well as significant costs with the ice storm. As you would expect, we've taken actions early to counteract that impact. Therefore, we are reaffirming all our financial objectives. Most importantly, our full year guidance of $3.06 to $3.12 per share with continued confidence toward the high end. In the first quarter, we reported adjusted earnings per share of $0.70. We're also reaffirming our long-term adjusted earnings growth of 6% to 8% per year with continued confidence for the high end and remain committed to annual dividend per share growth of 6% to 8%. This isn't our first rodeo; whether it was the pandemic or weather-related, we managed the work to deliver for both customers and investors through the CE Way and other countermeasures already underway; we will offset the unplanned headwinds experienced early in the year. I have confidence in our team and in our plan for 2023 and beyond, given our long-standing commitment and performance. At CMS Energy, we deliver for customers while consistently delivering industry-leading growth. Now I'll hand it over to Rejji to provide some additional details and insights.

Rejji Hayes, Executive Vice President & Chief Financial Officer

Thank you, Garrick, and good morning, everyone. For the first quarter of 2023, we delivered adjusted net income of $204 million or $0.70 per share, largely driven by unfavorable weather and costs related to service restoration as a result of the significant storm activity that Garrick noted earlier. To elaborate on the impact of weather on sales, given the well-publicized warm winter experienced in the Midwest, the number of heating degree days in our service territory during the quarter were approximately 18% below normal weather pattern. The atypically warm weather, coupled with a strong comp in the first quarter of 2022 resulted in $0.27 per share of negative variance versus the comparable period in 2022, as noted on Slide 7. Rate relief, net of investment-related expenses, resulted in $0.03 per share of negative variance as last year's constructive electric and gas rate case settlements were offset primarily by the roll-off of tax benefits realized in the first quarter of 2022 associated with the prior gas rate case settlement as expected. From a cost perspective, as mentioned, our financial performance in the first quarter was significantly impacted by higher operating and maintenance or O&M expenses attributable to storm restoration costs, which resulted in $0.20 per share of negative variance versus the first quarter of 2022. It is worth noting, however, that given the elevated storm costs we've seen over the last few years, we have incorporated fairly conservative assumptions for this cost category in our full year forecast. Looking ahead, as always, we plan for normal weather, which equates to $0.14 per share of negative variance versus the comparable period in 2022 due to the absence of strong sales at the electric utility driven by last year's warm summer. We anticipate that the estimated negative variance attributable to weather will be more than offset by rate relief net of investment-related costs, which we have quantified at $0.17 per share versus the comparable period in 2022. Our underlying assumptions for rate relief are largely driven by last year's successful gas and electric rate case settlements, and we have assumed a constructive outcome in our pending gas rate case. Closing out the glide path for the remainder of the year, as noted during our Q4 call, we anticipate lower overall O&M expense to the utility driven by the usual cost performance fueled by the CE Way. And in light of the weather-related headwinds in the first quarter, we have supplemented our planned productivity for the year by limiting hiring, reducing our use of consultants and contractors, accelerating longer-term IT cost reduction initiatives, and eliminating other discretionary spending among other activities. These cost performance measures will support the $0.28 per share of positive variance versus the comparable period in 2022. And I'd be remiss if I didn't mention that none of these actions will impact the safety and reliability of our electric and gas business. Lastly, as we discussed during our fourth quarter call, we're assuming modest growth at NorthStar and the benefits associated with the roughly $0.12 per share of pull-aheads achieved in the fourth quarter of 2022 as per our original guidance. And to offer further risk mitigation of the financial headwinds encountered in the first quarter and provide additional contingency should we need it, we have supplemented these opportunities with anticipated cost savings at the parent largely in the form of opportunistic financings and tax planning, which in aggregate, we estimate will drive $0.36 to $0.42 per share positive variance versus the comparable period in 2022. Before moving on, I'll just note that though our track record of delivering on our financial objectives over the last two decades speaks for itself, we remain perpetually vigilant in our financial planning process. More bluntly, we always do the worrying so you don’t have to. And to that end, I'm pleased to report that we've already begun to see the benefits of the numerous countermeasures implemented in the first quarter. As such, I'm highly confident that we will realize the balance of expected savings over the course of the year. Moving on to the financing plan. Slide 8 offers more specificity on the balance of our planned funding needs in 2023, which are largely limited to debt issuances at the utility, a good portion of which has already been priced and/or funded over the past several months. As we have noted in the past, the parent's contribution to the funding needs of the Covert acquisition is in place with roughly $440 million of forward equity contract. This equity will be issued in connection with the acquisition of the facility and we have assumed the associated EPS dilution in our full year guidance. While we don't have any further required financing needs at the parent this year, we will continue to evaluate opportunistic financings to derisk our future funding needs if market conditions are accommodating. Our approach to our financing plan is similar to how we run the rest of the business. We plan conservatively and capitalize on opportunities as they arise. This approach has been tried and true year in and year out and has enabled us to deliver on our operational and financial objectives, irrespective of the circumstances, to the benefit of our customers and investors, and this year is no different. And with that, I'll hand it back to Garrick for his final remarks before the Q&A session.

Garrick Rochow, President & Chief Executive Officer

Thank you, Rejji. As you look at Slide 9, I'll remind you again, our track record spans two decades of consistent industry-leading results despite changing commissioners, legislatures, and governors, recessions, severe weather and storm activity, or a pandemic. We're here for the long haul. We have powered Michigan's progress for nearly a century-and-a-half. And as we look ahead, we see great opportunities to support the state's growth through critical infrastructure as we help power Michigan through the next century. With that, Bailey, please open the lines for Q&A.

Operator, Operator

Our first question today comes from Jeremy Tonet from JPMorgan. Please go ahead, Jeremy, your line is now open.

Jeremy Tonet, Analyst

Hi, good morning. And I just wanted to come back to the key focus, I think, in the market at this point, just with the adverse weather and storm headwinds in the first quarter. Great to see that you're still targeting the high end of the guide there. And just wondering, as you think about contingency flex this year, I guess, if there is anything else that moves against you, do you have more contingency that could offset that if weather shapes up less than expected or anything else moves against plan?

Garrick Rochow, President & Chief Executive Officer

I have confidence in our ability to deliver. That's the first point, Jeremy. And we know there's a lot of year remaining. And so really in all our efforts, we look to build contingency out throughout the year. And so maybe if I just take a step back because I know this is a popular question today and just talk about our playbook. Rejji alluded to it, but let me offer a little more specifics. I'd break it into really five areas. The first one is we plan conservatively. And you know this, Jeremy. We've done this year after year after year. That's what leads to our consistency, one of the reasons we had consistent financial performance. And also, we talked about this in Q4. What we did in 2022 to derisk the year. And then just adding to Rejji's points, we budget for storms, and we budget conservatively for storms because we know they occur throughout the year. And so in many cases, this is just a weather story. So the first piece is just we plan conservatively. The second piece of the plan is the CE Way. And you know this is another strong suit for us. And I'll remind everybody, it's industrial engineering, and it's a lean operating system. It's science, it is proven throughout the years for many different companies. And I see a great opportunity that we continue to deliver on year after year. Scheduling optimization is one example underway right now. We're making capital IT investments to get other efficiency improvements. It improves customer satisfaction while reducing costs. Our run rate has typically been around $50 million a year, as you know, and there's a lot more muscle we have there. The third piece is really around the labor piece. And that is what you would expect. We released some consultants. Our contractors are flexible, so we dialed that down a bit. We pinched back on overtime, and then we hold on hiring. And so those things help as well. The fourth area is really discretionary spending. It's limiting conferences and travel and some of the training. And you think that's small, but it's actually big when you apply it across the entire company. And then the fifth piece, and Rejji hit on it, was good tax planning and just opportunistic financing. And so that's the recipe. And as I said, this isn't our first rodeo. If you go back to the pandemic, we had to find $100 million. Fifty percent of it came through the CE Way, fifty percent through other actions very similar to what we're doing right now. And so we're going to clear this bar, and we're going to add some contingency throughout the year. So I feel very confident in our ability to deliver and to weather whatever Mother Nature throws at us throughout the year.

Jeremy Tonet, Analyst

Got it. That's very helpful. Could you elaborate a bit on the gas case? I understand it may not receive as much attention as the electric side. What are the key focus areas for stakeholders regarding the gas case at this time? Additionally, I would like your thoughts on the potential for a settlement without getting ahead of ourselves.

Garrick Rochow, President & Chief Executive Officer

First and foremost, this is a solid and constructive starting point. If I break it down a bit, the information we received from staff regarding ROE was better than previous evaluations from staff and AG positions. This is promising for ROE and some financial metrics. Another crucial element is that we developed our case during Q3 and Q4 last year. Gas prices were increasing at that time, and we noticed some expenses related to pension and OPEB. However, fast forward to now, and those conditions have transformed. Gas prices are lower, and we adjusted our pension and OPEB expenses. We have a request for $212 million, but that effectively reduces the impact since the circumstances have changed compared to when we established our case. The major topic of discussion involves the sales forecast, which sees a difference of about $10 million to $12 million. Let me elaborate on that. Since 2010, we have utilized a consistent method to project sales; it's a 15-year regression model that has remained unchanged, proven reliable and accurate. Importantly, back in 2010, the commission mandated us to use this method, as specified in case U15986. We are adhering strictly to what the commission instructed us, which gives us confidence in our position. While there are various factors at play, the key takeaway is that this is a strong and constructive starting point. Regarding the settlement, we will continuously seek opportunities for resolution, but we are in a very favorable jurisdiction. Therefore, I am quite comfortable moving forward and bringing it to the commission for a decision.

Operator, Operator

The next question today comes from the line of Shar Pourreza from Guggenheim Partners. Please go ahead. Your line is now open.

Shar Pourreza, Analyst

I apologize if I overlooked this, but I wanted to enhance the discussion about the storms. Will the storms lead to increased spending on resiliency? Is it going to affect capital expenditures, or do you anticipate offsets to those expenses? Are you considering any new strategies? Some elements are already in rider-like categories. Will resiliency receive similar consideration? Overall, how do these storms influence your perspective on the 5-year plan?

Garrick Rochow, President & Chief Executive Officer

We want to be very clear that additional capital investment is necessary to enhance reliability and resiliency due to an aging system and increasingly severe weather. I mentioned some of this in my prepared remarks, but in the upcoming electric rate case, we are proposing an investment recovery mechanism as a tracker to provide more clarity regarding our capital investments. This is our intent. We recognize the need to invest more, and there are several methods to achieve this. One is our ongoing efforts to gain alignment with the commission. Another is through the rate case, and a third is our five-year electric distribution investment plan. All these different filings and discussions will lead to better alignment and support for our electric distribution investments. In the long term, we are committed to this approach. We believe the investment recovery mechanism will enhance accountability with the commission. Chair Scripps has addressed ring-fencing, which should ultimately facilitate a greater recovery of these capital investments. Is this clear, Shar? We have significant potential for growth and we update our plan annually. The current five-year plan includes around $6 billion in investments in the electric distribution system, which has increased in this latest iteration of the plan. As we continue to analyze the system, we will seek opportunities for additional investments. There are numerous opportunities available due to the nature of our system.

Rejji Hayes, Executive Vice President & Chief Financial Officer

Yes, Julien, I would like to add that when we consider the planning year, especially in years where we have some upside or contingency, vegetation management is typically one of the first priorities on the Flex list. Last year, driven by weather-related factors, we had some upside and managed about $5 million in Flex related to vegetation management. Although we had budgeted around $100 million for last year, our actual spending was closer to $105 million, certainly over $100 million. Therefore, Flex presents us with the chance to undertake additional vegetation management.

Garrick Rochow, President & Chief Executive Officer

So just to give you some real numbers on this, so about in 2020, it was around $50 million on an annual basis. And with the support of the Commission through different cases, we requested more to address this important aspect of reliability, we were up around $100 million on an annual basis. And there's a couple of components of it. And we're continuing to look at other opportunities to invest more in that. But we're also looking at the efficiency of that and so this is an area where we're using technology and artificial intelligence and analytics to be able to better predict where to utilize those dollars. And so our tree trimming per mile has actually improved over the time period as well. And so that's helpful in the conversations we have with the Commission, and then we'll continue to look for opportunities to look at other areas to invest and improve reliability, much like I said during my comments around the capital investments. I know Rejji wants to add to it as well.

Rejji Hayes, Executive Vice President & Chief Financial Officer

Yes, absolutely. Just to clarify the mechanics of how the IRM functions. It's designed really to protect customers when it comes to service reliability and accountability on those dollars. So we will have a mechanism in our filings that allows for flexibility for these investments. It provides transparency into how they’re tracked, the spend, and makes sure that we have the alignment with the commission around those spend items before the dollars are deployed.

Operator, Operator

Next question today comes from the line of David Arcaro from Morgan Stanley. Please go ahead. Your line is now open.

David Arcaro, Analyst

Good morning. Thank you so much for taking my questions. Let's see, there's been some legislative bills drafted in the state with some more aggressive net zero targets. I was wondering if that might impact any of your thinking around the next time you address the IRP?

Garrick Rochow, President & Chief Executive Officer

Great question. It’s important to have some perspective because in Lansing, things can often get complicated with a lot of back and forth, media releases, and the need to clarify. I want to remind everyone that during the governor's first term, she introduced a healthy climate plan, and one of my direct staff was among the stakeholders involved in reviewing it. I also participated with a group of about eight to ten CEOs and the governor during the review process. The governor's climate plan aligns well with our direction as a state and is consistent with our current Integrated Resource Plan. Recently, the Senate has introduced new bills with more aggressive targets, but it's essential to understand that this is part of the typical legislative process in Lansing. We will continue to navigate this and manage it. If it requires us to act sooner, we will, resulting in more capital investment opportunities. I want to assure everyone that it's manageable and aligns with our existing plans.

Rejji Hayes, Executive Vice President & Chief Financial Officer

Yes, David, this is Rejji. Thank you for the question. Yes, when considering weather-normalized trends, we were somewhat puzzled by what we observed. For clarification, residential rates were down a bit over 2.5% compared to Q1 of 2022. Commercial rates dropped by just over 3.5% compared to Q1 of 2022. Industrial remained flat when excluding one large low-margin customer. Overall, we saw a decline of just over 2.5% compared to Q1 of last year. It’s still early, and we are delving deeper into the data. I want to emphasize that despite the efforts of our sales forecasting team, weather-normalized calculations are both an art and a science. Dramatic weather events like the extreme cold last year and the unusually warm winter this year can lead to inaccuracies in those estimates. With that in mind, we're approaching this data with some skepticism, as we still observe strong economic indicators in our service areas. Specifically, our commercial customer count has increased by over 0.5% across both electric and gas sectors. Residential customer counts are also rising. While we've incorporated a gradual return to the workplace in our forecasts, many companies in Michigan do not yet have four or five days in the office. As we approach summer, we anticipate a potential favorable mix like we've seen in the past. It's still early, and there may be some distortion in the data. On the industrial front, we were flat compared to last year, but we have a strong economic development pipeline fueled by recent federal legislation. When we compare our trends to pre-pandemic levels, our performance across all customer segments is as good as or better than it was before the pandemic, especially considering our energy efficiency programs, which have effectively reduced our load year-over-year by 2%. Therefore, I do not think the data from Q1 accurately reflects the economic situation in Michigan; it's more about the challenges of weather-normalized calculations than anything else.

Operator, Operator

Next question today comes from the line of Michael Sullivan from Wolfe Research. Please go ahead. Your line is now open.

Michael Sullivan, Analyst

You guys answered a lot here. I just had a couple of small follow-ups on what's already been discussed. So just on the undergrounding, can you maybe just give us a sense on what the long-term target is there? How much of the system you are looking to underground and over what period of time would you like to get there?

Garrick Rochow, President & Chief Executive Officer

Great question. And it's important to recognize we're not trying to underground the entire system, and it's really about selective or sometimes I've used the word strategic undergrounding. And again, we know from EPRI research across a number of utilities, you're in a 50% to 90% improvement, whether it's three phase or a single phase. And so ideally, we're trying to get to a point where we can do 400 miles a year. And then really over a 10-year period, increment that up. So I would say the range of around 10,000 miles is really what we're trying to get to overall. It's not going to occur overnight, but that does provide a nice opportunity to enhance the reliability and resilience of our system and provide a nice opportunity from a capital investment standpoint.

Rejji Hayes, Executive Vice President & Chief Financial Officer

When you think about the cost benefit and the potential opportunity, if you look at the last few years of our vegetation management plus our service restoration, we're spending on average based on actual is about $200-plus million per year across those two cost categories. And so the opportunity would be over time with those investments in underground and to potentially reduce that overall cost bucket. And so that's how we would think about the cost benefit in addition to some of the points Garrick raised earlier. We do know that we have multiple planned funding needs for both accumulated storm restoration costs, so the regulatory mechanism is helpful as we seek recovery of those costs, pacing of our investments, and then the timing will always depend on market conditions. But prospects remain strong for 2023 as we see favorable trends work in our favor.

Operator, Operator

Next question today comes from the line of Ross Fowler from UBS. Please go ahead. Your line is now open.

Ross Fowler, Analyst

So just a couple for me here. One, the first part is just any commentary on commissioner resignation and timeline for replacement cost replacement. And then not to beat the dead horse here, but you came into the year on my quick math is about $75 million of cost contingency to offset the sort of weather normalization you knew you were going to have to deal with? Now Garrick, as you went through those five things, you've priced that up to about $200 million and around numbers. So there's another $125 million or so coming in. And clearly, you thought about wanting that bucket is onetime and what's sort of more permanent. Maybe can you contextualize for us how conversations with the Commission have gone around what onetime cost improvement, what's permitting improvement in the past? And kind of look to the future as to how those negotiations go because clearly, there can be some conversation around that as you look at the cost reduction?

Garrick Rochow, President & Chief Executive Officer

Let me start with Germain Phillips. I have great respect for Germain. He was an excellent commissioner, and we witnessed positive outcomes during his tenure. He left a legacy at the Commission that I can summarize in three areas. First, he significantly advanced electric vehicles in the state with forward-thinking and progressive initiatives. Secondly, he contributed a lot to grid monetization and optimization efforts within the Commission. Thirdly, and this has become evident during the pandemic, he was highly focused on low-income and vulnerable customers. I commend both him and the Commission for their efforts, as we currently have the lowest bad debt levels in the industry. We have supported our low-income customers during challenging times in the pandemic, much of which is credited to Germain Phillips. He has a public statement available, and I also want to recognize his wife's new opportunities. Many thanks to both Germain, his wife, and their family as they pursue new career paths. This Commission has operated effectively with two commissioners in the past, and we currently have two capable and experienced commissioners in place, so I am not concerned about the interim situation. Historically, Governor Whitmer has been thoughtful about appointing well-suited commissioners to maintain a constructive regulatory environment in Michigan. The governor's staff is currently searching for a new commissioner, though we do not have a timeline for when that will be completed. I have confidence that our governor will continue the jurisdiction's tradition of constructive governance.

Rejji Hayes, Executive Vice President & Chief Financial Officer

And just to build on what Garrick said, we are still expecting a constructive regulatory environment through and have those opportunities to incorporate constructive views in our upcoming filings. We are well aware and manage those discussions thoughtfully.

Garrick Rochow, President & Chief Executive Officer

And yes, as Rejji said, we're aware that we have those ongoing discussions. There may be some back and forth, but we have built a reputable relationship with the commission, and that should bode well for our upcoming filings.

Operator, Operator

There are no additional questions noted at this time. So I'd like to pass the call back over to Mr. Garrick Rochow for any closing remarks.

Garrick Rochow, President & Chief Executive Officer

Thanks, Bailey. I'd like to thank you for joining us today. We'll see you on the road soon. Take care, and stay safe.

Operator, Operator

This concludes today's conference. We thank everyone for your participation.