Earnings Call Transcript - NMM Q2 2022

Operator, Operator

Thank you for joining us for Navios Maritime Partners Second Quarter 2022 Earnings Conference Call. With us today from the company are Chairwoman and CEO, Ms. Angeliki Frangou; Chief Operating Officer, Mr. Stratos Desypris; Chief Financial Officer, Ms. Eri Tsironi; and Executive Vice President of Business Development, Mr. George Achniotis. As a reminder, this conference call is being webcast. To access the webcast, please go to the Investors' section of the Navios Partners' website at www.navios-mlp.com. You can see the webcasting link in the middle of the page and a copy of the presentation referenced in today's earnings conference call will also be found there. Now, I will review the Safe Harbor statement. This conference call could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Partners. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Navios Partners Management and are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements. Such risks are more fully discussed in Navios Partners' filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Navios Partners does not assume any obligation to update the information contained in this conference call. The agenda for today's call is as follows: First, Ms. Frangou will offer opening remarks; next, Mr. Desypris will give an overview of Navios Partners segment data; next, Ms. Tsironi will give an overview of Navios Partners financial results; then Mr. Achniotis will provide an operational update and industry overview; and lastly, we'll open the call to take questions. Now, I'll turn the call over to Navios Partners Chairwoman and CEO, Ms. Angeliki Frangou. Angeliki?

Angeliki Frangou, CEO

Thank you, Daniela, and good morning to all of you joining us on today's call. We are pleased to report our results for the second quarter of 2022, in which we recorded $280.7 million of revenue and $118.2 million of net income. For the first six months of 2022, net income is equal to $6.62 per unit. We are also pleased to discuss the transaction we announced last night involving the acquisition of a 36 vessel dry bulk fleet for $835 million. Today, NMM is the second largest US listed maritime company and the third largest US listed dry bulk company. Well, really, we are just about tied for second, both by number of vessels. Before we dive into the details, I wanted to briefly review our business model that has allowed us to achieve much of this. Slide 3 shows the pro forma composition of our fleet by vessel type and segment. We have about 15% vessel types operating in three segments. The average age of our vessels in each segment is below the industry average, which contributes to the carbon efficiency of various fleets. Turning to slide 4, we continue to leverage diversification. We believe that diversification allows us to optimize charter rates by extending charters in well-performing segments and keeping charter durations short in less well-performing segments. In addition, we can make acquisitions that we hope will benefit from cyclical volatility such as the acquisition announced last night. Slide 5 takes a look at electric segment data pro forma for the acquisition. If you look at the asset and market value category, you will see the rebalancing of our portfolio as a result of this acquisition. On a pro forma basis, dry bulk shipping represents about $2 billion of exposure or 32.5% of total fleet value. This material increase should benefit us in the medium-term. You will also notice, and Stratos will address this in a moment, that although there has been some movement in the value of each sector, net NAV has moved up in 2022 year-to-date. In addition, I would like to mention that our LTV has moved up as a result of this transaction, but it is still reasonably low at 33.8%. We will continue to focus on our target leverage ratio of 20%, and while we may exceed this from time-to-time due to special market movements, acquisitions, and other factors, we will use this as a guide in managing our financial affairs. Please turn to slide 6 where we discuss some details of this transaction. We acquired a 36 vessel dry bulk fleet with 3.9 million deadweight tons capacity. The fleet has an average age of 9.6 years, comprising 26 owned vessels and 10 chartering vessels, all with price options. This was a non-cash transaction for a gross purchase price of $835 million. Of this purchase price, $441.6 million informed the assumption of various liabilities and obligations, and the remaining $393.4 million represents equity. The purchase price is subject to customary debt and working capital adjustments. We anticipate that the first closing covering 15 vessels will happen tomorrow, and the second and final closing for 21 vessels should occur at the end of August 2022. I note that this transaction was unanimously approved by the Conflicts Committee of Navios Partners and the full Board of Directors. The Conflicts Committee also retained its own legal and financial advisers. Slide 7 goes through the details of this transaction. We acquired a young, known, and balanced fleet of 36 vessels at an opportune time in the dry bulk market. We view the recent weakness in the market as a momentary pause while China deals with internal issues, but we believe that by the end of Q4, much of this will have been resolved, and China will return to the international purchasing table in a more robust manner, benefiting from diversification and low levels. This allowed this transaction to occur. Diversification provided the margin of safety as other sectors are performing well, and our relatively low leverage and strong balance sheet allows the acquisition with minimal impact on our cash flow and balance sheet. The acquisition itself provides scale and a migration path to a younger, more carbon-efficient fleet. We can opportunistically sell older, less carbon-efficient vessels. Post-transaction, the dry bulk and total fleet will increase by 67% and 24%, respectively. We also believe that the expected financial returns based on the assumptions we share in our deck contain metrics we’ve discussed, and the cash return on equity is expected to be 20% in 2023. Turning to Slide 8, we review our recent developments. During the quarter, we acquired two newbuilding LNG 7,700 TEU containerships for $241.2 million. Delivery is expected in Q4 2024. At the same time, we positioned ourselves by entering into 12-year charters that will generate about $370 million in revenue, with the average rate being $42,288 per day. Navios may extend existing charters to generate an additional $5 million to $10 million in total. In terms of the financing update, we entered into about $140 million of financing covering six vessels with a reasonably low LTV, and our commercial activities have $3 billion in contracted revenue, much of this in the container space. As a result, we have established an internal credit unit to monitor the credit quality of our counterparties to ensure we are prepared for any contingencies. For the second half of 2022, we have 13,997 open/index days. The good news is that contracted revenue exceeds total cash expenses by $18.7 million. So, our revenue book has significant upside. Finally, our Board authorized a unit repurchase program for $100 million. At current prices, this program would cover approximately 15% of common units outstanding and 17% of the public float. The timing of the purchases and the exact number of units to be repurchased will certainly be determined by the company based on market conditions and financial or other considerations, including working capital and planned or anticipated growth opportunities. We continue to believe that total return is the way to measure the success of our company, and we will use this tool as a means of achieving this goal for unitholders. At this point, I would like to turn the call over to Mr. Stratos Desypris, our Chief Operating Officer. Stratos?

Stratos Desypris, COO

Thank you, Angeliki, and good morning, all. Slide 9 details our strong operating free cash flow potential for the remaining six months of 2022. Pro forma for the acquisition of the 36 vessel fleet discussed by Angeliki, we have fixed 51.3% of an estimated 28,800 available days at an average rate of $28,966 per day. For the second half of 2022, contracted revenue exceeds total cash expenses by almost $19 million, and we have 13,997 available days with market exposure, providing additional operating opportunities. The majority of our market exposure comes from dry bulk vessels, where approximately 78% of our available days are open or contracted on index-linked charters. Slide 10 demonstrates the basic principles of our diversified platform in action. We benefit from the countercyclicality of segments. This creates the opportunity to redeploy cash flow from well-performing segments into asset purchases or other activities in underperforming segments. Asset values alone can be volatile, and a diversified asset base reduces volatility on the balance sheet. For the first half of 2022, while container values have dropped by 4%, dry bulk and tanker vessel values have increased by 11% and 18%, respectively. In sum, the net change to our fleet value is an increase of approximately 4%. Having multiple segments allows us to optimize our chartering activities. In segments with attractive returns, we can enter into period charters. In other segments, we can be more patient. As you can see from the chart on the bottom, the container segment is enjoying historically high demand. Not surprisingly, we have fixed our container vessels for long-term traffic, with almost 10% of our available containership days fixed for the remaining six months of 2022. This reduces market and residual risk. We manage the credit risk of the long-term charters independently to ensure that we are not simply trading on this quarter's performance. In our dry bulk segment, we benefited from a market where rates are recovering to their historical 20-year averages. We have fixed only 22% of available dry bulk days for the remaining six months of 2022, keeping 78% of our available days exposed to market fluctuations to capture any potential upside. Our goal will be to fix our dry bulk fleet on long-term charters when rates improve. Lastly, within tankers, current rates have recently surpassed the 20-year average levels. We have increased our fixing of available tanker days to 62%, taking advantage of an improving market. We expect our tanker fleet to generate strong returns as the market continues to recover. In Slide 11, you can see our fleet profile. We constantly renew our fleet to maintain a young profile, benefiting from newer technologies and more carbon-efficient vessels. Navios Partners made a €1.4 billion investment in 22 newbuilding vessels that will deliver to our core fleet in 2025. In containerships, we agreed to acquire 12 vessels. In the first deal, we agreed to acquire 5,300 TEU container ships for €620 million. We then bolstered our investment by entering into long-term charter agreements generating about $710 million in contracted revenue for the 5.2 years duration of the related charters, providing an expected unlevered yield of 17.5%. As Angeliki mentioned earlier, we agreed to acquire 27,700 LNG dual-fuel containerships for a purchase price of $241.2 million. The vessels have been chartered for 20 years at an average rate of $42,288 net per day, generating approximately $370 million in revenue. These vessels are expected to provide an unlevered yield of about 10.5%. We also leveraged the strength of the container market by selling two 16-year-old vessels for an aggregate price of $220 million. In the tanker space, we entered the Aframax subsector by ordering four vessels for a total price of €234 million. Two of the vessels are chartered out for five years at an average yield of $25,576 per day, generating revenues of approximately $93 million, providing expected unlevered return yield of about 10%. The transit has the option to charter the other two vessels on the same terms. Moving to Slide 12, we continue to secure long-term employment for our fleet. Our contracted revenue amounts to €3 billion and 81% of our contracted revenue comes from our containerships, with contracts extending through 2036 with a diverse group of quality counterparties. Around 50% of this contracted revenue will be realized in the next 2.5 years. I now pass the call to Eri Tsironi, our CFO, who will take you through the financial highlights. Eri?

Eri Tsironi, CFO

Thank you, Stratos, and good morning, everyone. I will briefly review our unaudited financial results for the second quarter and the first half that ended June 30, 2022. The financial information is included in the press release and is summarized in the slide presentation available on the company's website. I would like to highlight that the 2022 results are not comparable to 2021, as in 2021, NMM gradually acquired two companies, significantly expanding its on-the-water fleet to 130 vessels. Moving to the earnings highlights on Slide 13. Total revenue for the second quarter of 2022 increased by 85% to $280.7 million compared to $152 million for the same period in 2021. The increase in revenue was a result of a 56% increase in our available days to 11,269 compared to 7,242 for the same quarter last year, and a 17% increase in the average time charter equivalent rate to $25,823 per day compared to $20,296 per day for the same period in 2021. The average TCE achieved by sector was dry bulk $24,721 per day, container $31,616 per day, and tankers $16,391 per day. EBITDA for Q2 2022 increased by 81% to €163.5 million compared to $9.4 million for the same period last year. Net income for Q2 2022 increased by 18% to $118.2 million compared to $99.9 million for the same period in 2021. The net income per unit was $3.84. The increase in net income was due to the increase in EBITDA, partially mitigated by a $24.4 million decrease in the amortization of unfavorable lease terms mainly relating to the acquisition of the NMCI container vessels, and a $19.6 million increase in depreciation and amortization expense. Interest expense and finance costs increased by $7.2 million to $14.5 million, in line with the additional debt following the expansion of our fleet. Total revenue for the first half of 2022 increased by 138% to $517.3 million compared to $217.1 million for the same period in 2021. The increase in revenue was a result of a 96% increase in our available days to 22,497 compared to 11,494 for the same period in 2020, and a 21% increase in the fleet time charter equivalent to $22,100 per day compared to $18,276 per day for the same period in 2021. The average time charter equivalent rate achieved by sector was dry bulk $22,311 per day, containers $21,417 per day, and tankers $16,864 per day. The EBITDA of Navios Partners for the six-month period ended June 30, 2021 was adjusted by a $125 million gain from one-off non-cash items, while there were no such adjustments for the first six months of 2022. EBITDA for the first half of 2022 increased by 133% to $289.6 million compared to €124.1 million, adjusted EBITDA for the same period in 2021. Net income for the six-month period ended June 30, 2022, increased by 82% to $203.8 million compared to $111.7 million adjusted net income for the same period last year. Net income per unit was $6.62. The increase in net income was due to the rise in EBITDA, partially mitigated by a $49.4 million increase in depreciation and amortization expense, a $6 million increase in amortization of deferred dry dock special survey costs and other capitalized items, and a $2.6 million decrease in amortization of unfavorable lease terms primarily relating to the acquisition of the NMCI container basis. Interest expense and finance costs increased by $14.5 million to $27.7 million in line with the additional debt following the expansion of our fleet. Turning to slide 14, I will briefly discuss some key balance sheet items. As of June 30, 2022, cash and cash equivalents were $174.6 million. During the first half of 2022, we made $55.6 million of pre-delivery payments under our new building program. Long-term borrowings, including the current portion, net of deferred fees amounted to $1.29 billion. Net debt to book capitalization improved to 34%. Slide 15 highlights our debt profile. Pro forma for the acquisition of the fleet and the assumption of liabilities, our debt and lease liabilities are three times covered by the value of our fleet based on publicly available valuations. We continue to diversify our funding sources between bank debt and lease structures, while approximately 30% of our debt, including operating lease liabilities, have fixed interest rates providing a natural hedge against anticipated rate increases. We have already arranged refinancing of our 2022 debt maturities while our remaining maturity profile is targeted with no significant bylaws due in any single year. Slide 16 provides an update on our recent financing activities. In June 2022, we signed a $55 million credit facility with a European bank at SOFR plus 2.25%. We are making good progress financing our newbuilding program well ahead of the delivery of the vessels. We are currently in the documentation phase for an $86 million facility with a European bank, which finances two containers delivering in the second half of 2023 at an interest rate of SOFR plus 2%. Turning to slide 17, you can see our ESG initiatives. We aspire to have zero emissions by 2050. In this process, we have been pioneering and are adopting certain environmental regulations two years in advance, aiming to be one of the first fleets to achieve full compliance. Navios is a socially conscious group whose core values include diversity, inclusion, and safety. We have very strong corporate governance and a clear code of ethics. Our Board is composed of a majority of independent directors and independent committees that oversee our management and operations. Slide 18 details our company highlights. Navios Partners is a leading US publicly listed company. Our diversification strategy creates resiliency and enables us to mitigate individual segment volatility. Our diversification, scale, and financial strength should make NMM an attractive investment platform as we take advantage of global trade patterns. I now pass the call to George Achniotis, Executive Vice President of Navios Partners. George?

George Achniotis, Executive Vice President

Thank you, Eri. Please turn to slide 20 for the review of the dry bulk industry. The BDI started Q2 on a softer note before a rise in Capesize earnings to just about $38,000 per day, which lifted the BDI to a year-to-date high of 3,369 by mid-May. The index fell back by the end of Q2 to close at around 2,200. The BDI averaged 2,530 in Q2, which was the second highest Q2 since 2010. Similar to last year's pattern, the World C1 dry bulk trade for the second half of 2022 is projected to exceed the first half by 7.6% as solid demand for natural resources continues. Besides demand, new longer coal trade routes emerge as worldwide demand increases due to high natural gas and oil prices. Additionally, an expansion of ton miles is projected as Brazilian iron ore exports seasonally increase, and Russian coal exports get redirected away from Europe to destinations further afield. Turning to slide 21. As previously mentioned, high gas and oil prices and the Ukraine crisis continued to support increased global coal imports. The surge in gas prices and reduced supply from Russia has led European countries to reactivate coal-fired power plants. European seaborne coal imports are expected to increase by 7% in 2022. Additionally, the ban on Russian coal will shift trading patterns towards longer-haul routes. Chinese coal imports are projected to decrease by 11%. This decrease in Chinese imports will be offset by an expected 9% increase in Indian imports. Overall, seaborne coal trade is expected to increase by 1.5% in 2022, further boosted by an estimated 2.4% growth in ton miles. Turning to slide 22. China's Zero-COVID policy significantly impacted steel production and iron ore demand in the first half of 2022. Chinese seaborne imports decreased by 4%, and steel production fell 7% through June 2022. As COVID restrictions are lifted and infrastructure spending increases in the second half, iron ore trade is expected to rebound compared to the first half of the year. The Chinese slowdown is expected to be offset by seaborne iron ore imports from the rest of the world, with Europe up 2% and Asia (excluding China) up 4%, leading the industry. Please turn to slide 23. The global grain trade continues to be driven by heightened food security issues initially caused by the pandemic and now exacerbated by war affecting the wheat and corn fields of Eastern Europe. Although global seaborne grain trade is expected to decrease in 2022 by 2.8% due to the Ukraine crisis, new trading patterns will result in a ton mile decrease of only 1.2%. The recent UN-backed deal to allow Black Sea grain exports should lead to increased trade in the second half of the year. Grain trade for 2023 is expected to increase by a healthy 4.2%. Please turn to slide 24. The current order book stands at 7.1% of the fleet, one of the lowest on record. Net fleet growth for 2022 is expected at 2.7% and only 0.7% in 2023, as owners remove tonnage that will be uneconomic as the IMO 2023 CO2 rules come into force. Vessels over 20 years old account for about 8.2% of the total fleet, which compares favorably with a historically low order book. In concluding our dry bulk sector review, the positive demand for natural resources, sanctions-related longer haul trades due to the war, and a slowing pace of newbuilding deliveries will support healthy freight rates moving forward. Please turn to slide 26, focusing on the container industry. While macroeconomic challenges have risen, the charter outlook remains positive as demand remains solid, and there is a persistent shortage of ships supporting container rates. Recently, rates have moderated from their highs earlier this year. However, rates are around five times the 10-year averages, and long-term rates continue at near-record levels, allowing owners to lock in contracts at profitable levels. As you can see in the graph on the lower right, US inventory-to-sales ratio is very low, yet still well below the long-term average. Continued demand keeps volumes well above port takeaway capacity, and record port congestion persists. This, together with restocking during the pre-Christmas season, should continue to support containership demand with projected growth of 0.7% in 2022 and 2.7% in 2023. Turning to slide 27. Net fleet growth is expected to be 3.4% in 2022. It should be noted that about 64% of the order book is for 13,000 TEU vessels or larger. In addition, 10.2% of the fleet is currently over 20 years old. In conclusion, the container trade remains robust. Supply and demand fundamentals remain balanced due to the ongoing demand for consumables, stockpiling, and supply chain bottlenecks. Along with continued fleet efficiencies, these factors should continue to support the containerized shipping industry in 2022. Please turn now to slide 29 for the review of the tanker industry. In spite of economic headwinds and the Ukrainian crisis, the IEA projects an 1.8% increase in world oil demand for 2022. The expectation is that oil demand will grow by 2.2% in 2023, exceeding pre-pandemic levels in 2019. Refining margins have increased significantly, as strong demand for clean products continues to expand during the summer travel season. Both crude and clean products should benefit from a boost in ton miles as Russian oil exports are redirected to new longer trade routes following a phased-in European ban. In fact, product ton-miles are expected to increase by 10% in 2022 and 6.1% in 2023. Turning to slide 30. VLCC net fleet growth is projected at 3.7% for 2022 and only 1.3% for 2023. This decline can be partially attributed to owners' hesitance to order expensive, long-lived assets given macroeconomic uncertainty and emerging technology concerns due to upcoming CO2 restrictions. The current order book is only 4.6% of the fleet. Vessels over 20 years old account for 10.5% of the total fleet, which compares favorably with the low order book. Finally, turning to Slide 31. Product tanker net fleet growth is projected at only 1.3% for 2022 and only 1.5% for 2023. The current product tanker order book is 5.1% of the fleet, one of the lowest on record, favorably comparing to 7.2% of the fleet being over 20 years in age overall. We believe that the overall tanker order book and fleet are well balanced, as the IMO 2023 regulations will lead to some vessel retirements in the coming months. In conclusion, product tanker rates remain strong, leading the way for crude tanker recovery. The combination of global oil demand returning to pre-pandemic levels, OPEC+ increasing production, new longer trading routes for both crude and products, along with the lowest order book in three decades, should provide for healthy tanker earnings going forward. This concludes our presentation. I would now like to turn the call over to Angeliki for her final comments. Angeliki?

Angeliki Frangou, CEO

Thank you, George. This completes our formal presentation, and we'll open the call to questions.

Operator, Operator

Thank you. I will take our first question from Omar Nokta with Jefferies. Please go ahead, sir.

Omar Nokta, Analyst

Thank you. Hi, guys. Good morning, good afternoon. Thanks for the thorough overview of the company in the different markets. You're obviously now close to completing the reorganization of the Navios Group's shipping assets under this one umbrella. It's been, I guess, maybe two years in the making, but I'm sure from your side, it's been going on a bit longer. But I wanted to ask, now that you've gotten to this point with NMM, does this now kind of change how you think about strategy in the near term? And what I mean by that is there anything that you've been waiting to do that you can now do now that you finally rolled everything up into NMM?

Angeliki Frangou, CEO

I think you have seen that over the past couple of years, we have accomplished a significant amount of work. We established a diversified portfolio, which has provided us with more flexibility. In our latest transaction, we essentially rebalanced our portfolio. We have approximately $6.5 billion in assets, and the last acquisition was an opportunistic move that allowed us to adjust our holdings, bringing containers below 50% and increasing dry bulk to just over 30%, while tankers remain around 23%. This is a straightforward balancing act. With our asset portfolio valued at $6.5 billion, we are in a good position and believe this company is strategically sound. Going forward, we may reassess the various sectors or consider renewing our fleet, but overall, we are satisfied with our current size. By the way, I want to congratulate everyone on the union job.

Omar Nokta, Analyst

Thanks, Angeliki. Thank you very much. I appreciate that. Yeah, so I mean, obviously, you guys have been very busy. You've done a lot. And I guess you've been very active across all the sectors. You've now announced a $100 million buyback, which obviously, I think, will be well received. How do you think about that utilizing it to the extent you can give some color, given as you show in the slide deck, there is a compelling equity value story? Do you see yourselves putting that buyback to work fairly quickly?

Angeliki Frangou, CEO

Investing in Navios is fundamentally about total returns, which is our top priority. The performance influences our stock price, and we've shown solid results with a net income of $6.62 per share for the quarter and the past six months. We're focused on aligning our stock price with our net asset value. It's important to note that we're aiming to establish a more sustainable net asset value. Despite a decline in container values this year, which constitute over 50% of our assets, we have managed to improve our net asset value due to the strong tanker market and, to a lesser extent, the dry bulk sector. Our goal is to enhance both the dry bulk stock price and the durability of our asset value, which will offer greater visibility. The buyback program serves as a mechanism to support this strategy.

Omar Nokta, Analyst

Thank you for the information. I have one final follow-up regarding the transaction. The acquisition price is $835 million, with $441 million in liabilities, leaving $394 million in cash. How do you plan to utilize that $394 million? Are you considering drawing from a facility or selling ships to raise this capital? I'm curious about your strategy for obtaining that $394 million.

Angeliki Frangou, CEO

Basically, Stratos will take you through the details. I want to remind you that we have shown container vessels at an attractive price; we took that money out, and we are reinvesting this amount, which is part of the diversification strategy we're using. This acquisition of 36 dry bulk vessels consists mainly of quality vessels, and we knew we could afford this because of our diversified platform. Don't forget that containers provide this visibility of cash flows. Tankers are strengthening, and they're coming back. With respect to dry bulk, I note that China, as a significant commodity buyer, experienced lockdowns during the first half of the year, with the peak occurring in Q2. We anticipate that after the national congress, China will return strong in terms of commodity transportation. This gives you insight into why we executed this acquisition, and I think Stratos will elaborate further.

Stratos Desypris, COO

Good morning, Omar. I think Angeliki covered the funding well. If you see our balance sheet, we already have around $175 million of cash at the end of the quarter. And we also sold the two containership vessels for an expected price of $220 million. That is not bad for two ships, and we aim to use those proceeds to finance the acquisition of the 36 dry bulkers. Additionally, we anticipate strong cash generation during the quarter, as we have seen in the last couple of quarters; it is a very robust cash generation that we expect. So the cash is available, and we expect that will fund our internal considerations.

Omar Nokta, Analyst

Okay. Great. That's helpful. Yes, that $220 million is obviously substantial—not bad for two ships to use to help bring in those 36 dry bulkers. Great. Well, I appreciate the color here. And congrats on getting obvious to this point, looking forward to seeing how things develop here going forward. I'll turn it over.

Angeliki Frangou, CEO

Thank you.

Operator, Operator

Thank you. And that does conclude our question-and-answer session. I will turn it back over to the presenters for any additional or closing remarks.

Angeliki Frangou, CEO

Thank you. This completes our second quarter earnings call.

Operator, Operator

Thank you. That does conclude today's presentation. We thank you for your participation, and you may disconnect at any time.