Delek US Holdings, Inc. Q1 FY2024 Earnings Call

Hello and thank you for joining us. My name is Regina and I will be your conference operator today. I would like to welcome everyone to the Delek U.S. First Quarter 2024 Earnings Conference Call. I will now turn the conference over to Rosy Zuklic, Vice President of Investor Relations. Please proceed.

Good morning and welcome to the Delek U.S. First Quarter Earnings Conference Call. Participants on today's call will include Avigal Soreq, President and CEO; Joseph Israel, EVP Operations; Reuven Spiegel, EVP and Chief Financial Officer; Mark Hobbs, EVP, Corporate Development. Today's presentation material can be found on the Investor Relations section of the Delek U.S. website. Slide 2 contains our Safe Harbor statement regarding forward-looking statements. We'll be making forward-looking statements during today's call. These statements involve risks and uncertainties that may cause actual results to differ materially from today's comments. Factors that could cause actual results to differ are included here as well as in our SEC filings. The company assumes no obligation to update any forward-looking statements. I will now turn the call over to Avigal for opening remarks.

Thank you, Rosy. Good morning and thank you for joining us today. During the first quarter, our adjusted EBITDA was at $159 million, an improvement over Q4. In Refining, our operation went well. I would like to congratulate Krotz Springs and El Dorado refineries for receiving the Elite Silver Safety Award from AFPM. Congratulations. Our Logistics segment delivered another strong quarter. DKL continues to have a strong contribution for Midland Gathering system. Operations in the Delaware Basin have started to consistently exceed expectations. DKL's continued solid performance in the Midland and Delaware Basin validates its strong position in the Permian Basin. The Retail segment operated as expected in line with the typical first-quarter seasonality. Turning to our strategic priorities. As I've outlined in our previous calls, focus areas are, first, safe and reliable operation; second, being shareholder friendly while having a strong balance sheet; and third, unlocking some of the power value inherent in our system. I will now discuss each of these key priorities in detail. Safe and reliable operation is the core of everything we are trying to achieve. We continue to make good progress this quarter in our safety performance. Big Spring is on track to achieve the throughput rates and operating cost levels we have shared with you in the past. Joseph will provide more details on our progress. We remain committed to shareholder returns and maintaining a strong balance sheet. During the quarter, we paid $60 million in dividends. In May, the Board approved another $0.05 per share increase to the regular dividend. Our quarterly dividend now stands at $0.25 per share. In addition, we made progress this quarter on the DKL balance sheet. We'll continue to look for ways to strengthen our balance sheet. Next, I would like to talk about our operational efforts, which has three components. First, highlighting the value of our midstream assets. Second, highlighting the value of our Retail segment. And third, creating value through internal improvements. Regarding midstream, during the quarter DKL made significant progress improving its financial position. Liquidity was increased from approximately $300 million to $800 million. The leverage ratio was reduced from 4.34 to 4.01, and additional units were added into the marketplace, increasing public float. I would like to provide more context around DKL's operation. DKL now has an annual run rate EBITDA of approximately $400 million. DKL started back in 2012 as a classic drop-down story and has evolved into something bigger. Today, DKL's EBITDA is around 50% third-party business, largely focused in the Midland and Delaware Basins. The Midland Gathering system is a premier asset in the heart of the Midland Basin. DKL built this system organically. It now gathers up to 230,000 barrels per day and has around 350,000 acres of dedicated contracted acreage until 2030. It is an attractive asset that remains the growth engine of the Midland midstream operations. Moving to the Delaware Gathering business, we are proud of the development that the DKL team has done since acquiring the system. The system provides complete crude, gas, and water gathering to customers. We have significant growth opportunities in the system. Lastly, we have interest in three joint ventures and fully-owned pipelines. These pipelines mainly focus on long-haul crude and long-term contracts. All these assets, the Midland and Delaware Gathering systems, as well as the pipeline, could be key parts of a bigger system. Our efforts for the midstream business are tied to ensuring the right ownership structure to maximize value for DK and DKL holders, evaluating tax implications of those options, and maintaining the right level of growth, liquidity, and leverage at DKL. Our intention to continue to highlight the value of our midstream operation is unwavering, and we intend to take more constructive steps in the near future. Moving on to highlighting the value of our Retail assets. We initiated a process during the quarter to unlock the value inherent in the Retail business. We engaged investment bankers to review strategic opportunities and are making good progress. We will provide more details in the near future. Lastly, I would like to conclude the discussion by highlighting our cost efficiency and process improvement efforts. There are two parts to it. First, optimization. We have shared in the past that we reduced our inventory carrying levels to free up working capital. We continue to look for further reductions in working capital. Today, I want to highlight that our commercial and refining groups are working together on several initiatives. We see opportunities in optimizing crude and product slates and being more efficient with our product placement. These efforts will require little to no capital, and we expect to see enhancements in the overall company EBITDA. Second, managing costs in our system. We have talked about our cost efficiency efforts before. As we exit 2024, we expect to achieve a run rate of $90 million to $100 million in cost savings, with potential for additional savings in 2025. Overall, the steps we are taking position us well for a strong 2024. We have plans in place to deliver long-term value. We will be focused and disciplined towards achieving these goals. In closing, I would like to thank our entire team of over 3,500 employees. Their hard work and dedication are driving our success. I would like to thank our investors and Board of Directors for their continued support. Now I will turn the call over to Joseph, who will provide additional color on our operations.

Thank you, Avigal. Moving to Slide 6. In the first quarter, our teams operated well and within operations guidance despite freeze-related interruptions. We successfully navigated through that and proactively positioned our system for the driving season. In Tyler, total throughput in the first quarter was approximately 72,000 barrels per day. Production margin in the quarter was $15.72 per barrel, and operating expenses were $5.28 per barrel. In the second quarter, the estimated total throughput in Tyler is in the 72,000 to 76,000 barrels per day range. In El Dorado, total throughput in the quarter was approximately 84,000 barrels per day. Our production margin was $9.29 per barrel, and operating expenses were $4.72 per barrel. Estimated throughput for the second quarter is in the 80,000 to 83,000 barrels per day range. During the month of March and April, the rate percent of our crude slate in El Dorado was favorable, and we are expecting this optionality to serve us well in the future. In Big Spring, total throughput for the quarter was approximately 65,000 barrels per day. Our production margin was $12.87 per barrel, including an estimated unfavorable $3.50 per barrel impact from freeze-related events back in January. Operating expenses in Big Spring were $8.08 per barrel, including approximately $1.50 per barrel related to winterization and freeze-related maintenance. We continue to see good progress with our self-help initiatives in Big Spring around people, process, and equipment. We remain focused on achieving our throughput, capture, and cost targets as communicated in the past. Estimated throughput for the second quarter is in the 68,000 to 71,000 barrels per day range. In Krotz Springs, total throughput was approximately 76,000 barrels per day, driven by planned trades, cleaning, and work in the crude unit. Our production margin was $12.85 per barrel, including an estimated unfavorable $1.50 per barrel impact from the planned maintenance. Operating expenses in the quarter were $5.94 per barrel, including $0.35 per barrel related to the trade work. With regards to our entire refining system, implied throughput target is in the 299,000 to 312,000 barrels per day range. And to remind everyone, less operations noise does not only mean higher throughput barrels; it means a higher focus on business optimization as Avigal mentioned before. Crude oil selection in El Dorado and Tyler, and higher placements of premium products in premium markets, like leveraging our long octane position in Big Spring in the Arizona market, or maximizing high-octane aviation fuel supply from our Tyler refinery. Moving on to the commercial front. In the first quarter, we reported a $65 million loss for supply and marketing. Of that, approximately $60 million loss was generated by wholesale marketing and a $1 million loss was contributed by asphalt, leaving approximately a negative $4 million contribution for inventory and risk mitigation. Wholesale marketing faced a perfect storm in the first quarter. First, it was challenged by extreme weather conditions, mainly in the Midland market as well as East and West Texas. The weather kept demand and margins low, especially through the freeze in January. Second, flat prices increased approximately $14 per barrel in the quarter, and in a rising price environment, margins at the rack level are negatively impacted due to the lagging price nature of the business. And third, while a lower price environment supports refining economics, it has been a profitability headwind for blenders, including our wholesale marketing. Asphalt contribution was also negatively impacted by weather conditions and the rising flat price environment. In the month of April, demand and rack differentials improved for live products and asphalt, consistent with seasonal trends. In summary, we continue to make good progress with the fundamentals of our business. Our safety and environmental performance continued to trend in the right direction, reflecting good progress with operational excellence and mechanical integrity for the entire system. The business is well positioned for the driving season as reflected in our throughput guidance, and we expect capture and cost performance to follow. I will now turn the call over to Rosy for the financial variance.

Thanks, Joseph. Starting on Slide 7. For the first quarter, Delek U.S. had a net loss of $33 million or $0.51 per share. Adjusted net loss was $26 million or $0.41 per share, and adjusted EBITDA was $159 million. Cash flow from operations was $167 million. On Slide 8, the waterfall of adjusted EBITDA from the fourth quarter of 2023 to the first quarter of 2024 shows that the primary driver for higher results was from Refining. The $117 million improvement in Refining is primarily attributable to higher cracks and higher capture rates in the first quarter relative to the fourth quarter, partially offset by lower earnings from our wholesale marketing business. Logistics delivered $100 million this quarter, and the higher expenses in corporate are primarily due to the timing of employee-related costs. Moving to Slide 9 to discuss cash flow. We grew $69 million in cash during the quarter, ending the quarter with a balance of $753 million. Cash flow from operations was $167 million. Included in this is a positive $28 million of working capital, largely due to improvements in payables more than offsetting bills in receivables and inventories. Investing activities of $42 million are largely for capital expenditures. Financing activities of $194 million reflect timing of accruals. This also includes $16 million in dividend payments and $10 million in distribution payments. On Slide 10, we have the breakout of the first quarter of 2024 capital program and full year 2024 forecast. First quarter capital expenditures were $46 million. Half of the spend was in Refining, primarily addressing sustaining and regulatory projects. For 2024, we are still estimating capital expenditures to be approximately $330 million. With the cross refinery major turnaround taking place in the fourth quarter, we expect higher capital spend in the second half of the year. Net debt is broken out between Delek and Delek Logistics on Slide 11. During the quarter, we grew $69 million of cash and paid down $103 million of debt, ending the year with a net debt position of $152 million. Slide 12 covers outlook items. In addition to the guidance Joseph provided for the second quarter of 2024, we expect operating expenses to be between $215 million and $225 million, G&A to be between $60 million and $65 million, D&A to be between $90 million and $95 million, and net interest expense to be between $80 million and $90 million. We will now open the line for questions.

A couple of questions for you on the guidance. The first is just about the capital program. To Rosy's point, Q1 expenditures of $46 million versus the full year estimate of $330 million. Are you tracking inside of that $330 million? Is capital efficiency positively surprising, recognizing you've got the cross turnaround? And the related question to that is you've got a big turnaround of crops this year, later this year. How do you define success? Because I think that will be an important test for that asset.

Yes. Neil, first of all, thank you for the question. So it's still early in the year. We are not changing our guidance at this point. We are still with the $330 million we mentioned. And in terms of the success of the cross turnaround, I will give that three elements, right. First of all, is safety. We need to make sure that it is a safe turnaround and that everyone comes back home the same way they went to work. That's number one. Second is the scope of the work. We need to make sure that we are doing the work right and getting the uplift of the $30 million we stated before. And the third, obviously, is the cost. So those are the three components. We will demonstrate to ourselves during the entire turnaround that we can achieve all of those trades, and we aim to accomplish those in this turnaround as well.

And then you indicated you initiated a process to unlock the value of the Retail business. Can you talk about how you came to the decision that this makes sense to potentially monetize and where we are with the process? Are there any dis-synergies in your early look at this process?

Thank you, Neil. I will address the question in a broader context regarding our ongoing efforts. As you may have noted during the call, we have been working on developing third-party value over time, which is crucial for us. We are dedicated to ensuring that this value is consistently realized. We demonstrated in the last quarter that the financial strength of the DKL balance sheet supports this objective. Secondly, we want to ensure that value is created for both DK shareholders and DKL unit holders, ensuring both units reflect their full value. As we mentioned, we have initiated the formal process, and it is progressing as expected. Mark, would you like to add anything?

Yes. Yes. Sure, Avigal. And I'll touch on the sum of the parts initiatives as well. I'll just stress a few things here. As Avigal mentioned earlier on the call, our belief is that in order for us to highlight the hidden value that we have in the attractive midstream position that we built, particularly in the Permian Basin, we need to find the right ownership structure for those assets. And I think as we've discussed clearly on prior calls, we've evaluated all the options that are in front of us, including the governance and tax implications of each of those. And we still want to stress that in any action that we take on the midstream side, our focus is on ensuring that we make both Delek and Delek Logistics stronger entities from a cash flow and leverage standpoint. So we don't want to move away from that position, and that’s what we're focused on. On the Retail front, as Avigal mentioned, we have mandated an investment bank to work with us on evaluating those strategic options available for that business. Things are progressing well on that front. We don't have anything specific that we want to say today. But we will come back to you hopefully in the near future with some more color on that. But now to your point, the way that we're envisioning this process is that we don't see any significant or particular dis-synergies associated with anything we do on that front.

Yes. I guess maybe a little bit, I'm going to follow up on Neil's comments. What is the right way to think about the use of funds from Retail disposition or anything else? I mean I'm thinking even wider. You've got your ownership in Wink to Webster that's held inside of DK relative to probably belonging more in the midstream sort of operation. So maybe a little more of your thoughts as you rearrange some of the pieces here to achieve that upside value for both DK and DKL, where should we think about that working out?

Yes. Roger, first of all, thank you for joining us today. And I'll start the answer. So let's talk about capital allocation broader than just the Retail business. As we demonstrated in the last few quarters, we have a priority to have a consistent and growing dividend over time. We have demonstrated this over the past few quarters. The second priority, as outlined this quarter, is having a strong balance sheet. You can appreciate the significant improvement we have seen on the DKL balance sheet. The third point is the buyback. I want to be clear; we see a lot of value in our share price today. But we elected not to do buybacks due to developments in strategic initiative progress. This is where we stand on capital allocation. Obviously, you asked specifically about WTW. WTW always pays in our toolbox. That asset has developed very nicely in the last two years. We see the value of that asset increasing significantly. It’s a very premier asset.

Yes. No question about that. I guess, let me pivot a little bit just to the operational front. Big Spring has been doing a lot of work there. Where are we in this process? Are we halfway through, three-quarters of the way through? It will take a long time to do the last 10% of improvements there. But from a reliability and OpEx standpoint, just how is that setting up?

Yes, Roger. So we definitely see improvement. But Joseph is very close to that. So I will let him answer it.

Yes. We are executing our plans in Big Spring. And as a result, we see the improved reliability that we expected, which allows us to meet our targets as communicated in the past, one run around 70,000 barrels per day on a more consistent basis. It's not the first quarter, but it's starting to be real here with the guidance for the second quarter. Second is improved capture towards 70% on a mid-cycle basis. And last is to improve our cost structure. We promised a $1 per barrel per quarter reduction until we reach the mid-$5 per barrel target range by the end of the year. I’m very happy and proud of the team and the progress that we are making.

My question is more on the DKL side as it relates to DK. DKL continues to be a bigger part of the earnings in the last five years. And as DK looks at DKL, do you see with the Permian growth moving in a direction where the third-party EBITDA would just continue to grow and increase versus drop-downs or organic DK contribution to DKL? I’m just trying to understand from this point on, should we expect DKL to continue to grow with more and more third-party EBITDA in there?

Yes. First of all, Manav, thank you for joining us today. It's a great question. We are very proud of the progress we made. Our first priority is that both unit holders and shareholders see the value that we are creating. We demonstrated first to ourselves and then to the market that we can manage those assets and show abnormal returns on them. And if the opportunity presents itself and it is accretive for both DK and DKL, we'll take a good hard look at that and keep developing organically and inorganically. So to summarize, if a good opportunity presents itself that benefits both units and shareholders, we will evaluate it.

Again, quick question here. All three refineries showed pretty good improvement: Krotz, Big Spring, and even El Dorado. I’m trying to understand, is the kit getting to a point where you would like it to be? Obviously, there's still room for improvement. But when we look between fourth-quarter performance and first-quarter performance, what were some of the criteria that allowed these three assets to deliver much better earnings in Q1 versus just the last quarter?

Yes, absolutely. So some of that is our doing, and some of that is obviously the market, which was better. That reflects in the capture rate. We provided clear guidance on the OpEx that shows better even in Q2 versus Q1. But Joseph, please share more insights.

Yes. So far, it has been mainly playing defense, right? In the first quarter, if you account for the $3.50 per barrel losses in Big Spring and the $1.50 per barrel headwind on the OpEx, that amounts to $30 million that was left on the table related to the freeze events. To answer your question, as we have encountered less and less surprises and headwinds, we are focusing more on transitioning to offense and optimizing our business, thinking more about process optimization, selecting the right tools, and producing the right products for the right markets. At the end of the day, it will translate to a much better capture rate and allow the market to see the true profitability potential of this system.

Joseph, just curious, you mentioned that you were hit, as earlier stated, by the winter storm, estimating close to a $5 impact on profit margins as well as cost. Krotz Spring also faced an impact of about $1.50. What lessons have we learned from this? Is there something you can do to prevent it? The winter storm was well anticipated, so is there anything operationally that can be done to minimize such impacts?

Yes. Thank you for the question. First, I will correct one thing. The $1.50 per barrel in Krotz Springs was related to planned trading and cleaning in the crude unit, which we were aware of coming into the quarter. It has been a long cycle and making it all the way to the turnaround to maximize throughput through the driving season, we executed the scope in a low-margin environment, and I’m very glad we did it. In Big Spring, it was really the typical challenges of freezing, faced with frozen lines and instrumentation, as our peers deal with. What are we doing? It all boils down to risk mitigation. We think about people, processes, and equipment. Our primary focus is to mitigate risk each and every day and to position the asset better to deal with any possible challenges. I'm very proud of the team. Looking at the second quarter, we are ready to run, and I think good things are coming our way.

Second question on the supply and marketing. You mentioned wholesale lost $60 million in the quarter and asphalt was $1 million. Previously, you indicated guidance for wholesale would be roughly $30 million a quarter, and asphalt would be lower in Q1 and Q4, maybe at $5 million. And for Q2 and Q3, would be around $15 million, making a full year about $40 million. Based on recent performance, are those targets still valid, or have perspectives changed internally?

Yes. So I will start, Paul, with your permission, and then we'll allow Joseph to elaborate. First of all, wholesale is a strategic key part of the downstream integrated business unit. So we see the value in that. We recognize our ability to place products in different market conditions. So we need to bear that in mind when evaluating wholesale. That's the first part. The second part is that it's somewhat tricky to model wholesale due to the dynamic nature of the business. This business changes every day. Hence, it's not as straightforward to model, which is why we don’t always provide clear guidance on that. However, I know Joseph has put a lot of thought into that topic, so please.

Yes, Paul, to address your question: the answer is, no. That range isn’t a good estimate. Looking at the full year for 2023, supply and marketing still made a positive contribution of $50 million, averaging slightly over $10 million positive per quarter. However, it’s quite challenging to model. As Avigal mentioned, it’s crucial to remember we are an integrated downstream company, and wholesale marketing plays a strategic role in connecting our refineries to the customers. We move around 210,000 barrels per day of right products through that wholesale marketing, which is approximately 800 million gallons per quarter. Thus, it takes a negative $0.075 per gallon margin to reach a $60 million loss type of figure. I'm sure you and others will follow the screen and recall the negative $0.30, $0.35 per gallon back in January due to the Mid-Con freeze. Our team is doing an excellent job in mitigating this risk going forward, diversifying our pricing exposure and footprint. Hopefully, we can improve in this type of situation in the future.

I just had a follow-up on capital allocation. I guess it’s a two-parter. One is you've hiked your dividend now, I think, seven quarters in a row, up 25% over that time. Should we expect that to continue with more frequent but smaller hikes? Or will you shift to a more once-a-year cadence? The second part is just on the buyback. You mentioned reasoning for pausing in 1Q. What’s a reasonable expectation for when you might re-enter the market for buybacks?

Yes. I will address both of those questions more broadly, but I wouldn’t be as specific. As I’ve said all along, being a shareholder-friendly company is key for us, provided we maintain a strong balance sheet. So we will certainly uphold that. And as I’ve mentioned before, having a consistent and growing dividend over time is something we value, and we believe our investors also value that. So both of these are key priorities for us. Regarding the buyback, I want to clarify we see significant value in our share price. Still, we chose not to execute buybacks due to our progress on the strategic initiatives.

Can you talk about the timing of separating Retail? I know these processes don’t just kick off overnight, but conditions are a little tougher fundamentally over the short term on fuel margins and also on merchandise sales. Do you think enthusiasm for this business in the asset sale market has declined compared to 6 or 12 months ago? Or have buyer expectations adjusted?

Yes. We are not going to be specific around the process. However, we have great assets with a unique market position, and we are making good progress.

If we consider your refining EBITDA over the last four quarters, I believe you've generated around $580 million of EBITDA in an environment generally above historical mid-cycle margins. As you think about your refining business going forward, what do you believe is the mid-cycle EBITDA or earnings power of the business as it is currently structured? How should we understand the bridge between where it is versus where you want it to be, regarding cost reductions, reliability improvements, or the ability to repatriate EBITDA out of DKL back into DK?

Thank you for the great question. As we stated in the past, we believe that our earnings power in refining is improving as we speak. We have observed better capture rates reflected in all refineries, and we have demonstrated lower levels of losses to be offset. Joseph has dedicated significant time to this, so Joseph, why don't you take it?

Yes. We believe that on a mid-cycle basis, our mid-cycle EBITDA is between $750 million to $800 million.

At the refining level?

No, this is for the entire company, and this assumes a stable refining statement with minimum surprises as we position it.

Can you provide an update on the progress to date regarding the cost-reduction target? I know you mentioned the $90 million to $100 million run rate for 2024. Are you on track? Where are you seeing the most considerable improvements? What has worked well, and what remains to be done? An update on that process would be appreciated.

Absolutely. We focus on being at around $90 million to $100 million by the end of 2024. We have identified additional opportunities heading into 2025, and things are progressing well. Reuven and his team are doing an excellent job.

We have executed most of the steps that were planned thus far. We have two more steps in the second quarter and third quarter that will put us on track for the $90 million to $100 million target. We have identified opportunities between $15 million to $20 million that will be executed in 2025.

There are some reports that Wink to Webster will be offline in January for up to two weeks. Is that correct? What kind of market impact would you anticipate? And if that did widen the Midland spread, do you think Delek would be in a position to benefit?

Yes. So Matthew, thank you for the question. We are not the operator of the line, and I cannot comment on rumors or news. Regarding the spread, I think it is clear that the long-horn spread, between Midland and MEH, is widening nicely. We see it in June widening all the way back to the second half of the year, Q4. I think it’s like $0.75 now demonstrating an increase in production. We see the production in Midland, around 65-66 million barrels per day, and it’s likely to increase this year with an additional 250,000 to 300,000 barrels a day. So that will widen the differential slightly. This is a very positive development for us.

And then circling back to your supply and marketing commentary. You mentioned you’re seeing some seasonal demand improvement, rolling off very negative figures in January, but we also see RINs down about 10% to 15%. Taking all that into account, do you think supply and marketing could contribute positive EBITDA in Q2 after the $65 million loss in Q1?

Yes, Matthew. It’s still early in the quarter. We believe in the business, but I'm not going to provide guidance on that. We offered sufficient guidance to aid your modeling. The dynamic in the market is challenging to predict at this time, so I prefer to refrain from providing projections.

I wanted to go back to the marketing business and how you're evaluating unlocking value there. I think when you started this value unlock process a little over a year ago, marketing was a core part of the business and wasn’t something you were looking to monetize extensively. Why has that perspective changed over the past year?

Jason, thank you for the question. Our commitment, as I have emphasized many times, is to ensure that our investors perceive the value in both the unit price and the share price. Therefore, we are thoroughly examining every opportunity, and that is a prudent management approach.

Okay. Regarding the supply and trading line, do you foresee any headwinds when your assets aren't operating at 100% and you need to buy products in the market to meet contractual obligations? Was that a factor in Q1, and is this something we should expect to see recurring?

Yes. I’d prefer not to delve too deeply into the technical details. However, having a safe and reliable operation has broad benefits. This is why I am very focused on ensuring safe and reliable operations, which remains a clear priority. Ultimately, we are applying a tremendous amount of energy to this commitment.

There are no further questions at this time. I will now hand the call back to Avigal for any closing remarks.

Yes. Thank you. I want to thank our employees for their hard work contributing to our success. I want to thank our shareholders for trusting us and the interest they show in our business. I want to thank all our customers and our Board of Directors for their support, valuable advice, and commitment. Lastly, I want to thank my colleagues at the table who are working tirelessly to make this company what it is. Thank you.

That will conclude today's conference. Thank you all for joining. You may now disconnect.