Earnings Call Transcript - VMC Q3 2021

Operator, Operator

Please standby, your program is about to begin. Good morning, ladies and gentlemen, and welcome to the Vulcan Materials Company's Third Quarter Earnings Call. My name is Emma and I will be your conference call coordinator today. During the Q&A portion of this call, we may ask that you limit your participation to one question. This allows everyone who wishes the opportunity to participate. Now I will turn the call over to your host, Mr. Mark Warren, Vice President of Investor Relations for Vulcan Materials. Mr. Warren, you may begin.

Mark Warren, VP of Investor Relations

Good morning. And thank you for your interest in Vulcan Materials. With me today are Tom Hill, Chairman and CEO, and Suzanne Wood, Senior Vice President and Chief Financial Officer. Today's call is accompanied by a press release and the supplemental presentation posted to our website. A recording of this call will be available for replay later today at our website. Please be reminded that today's discussion may include forward-looking statements which are subject to risks and uncertainties. These risks, along with other legal disclaimers, are described in detail in the Company's earnings release and in other filings with the Securities and Exchange Commission. Reconciliations of any non-GAAP financial measures are defined and reconciled in our earnings release, our supplemental presentation, and other SEC filings. As the operator indicated, please limit your Q&A participation to one question. With that, I'll now turn the call over to Tom.

Tom Hill, CEO

Thank you, Mark. And thanks to everyone for joining the call this morning. We appreciate your interest in Vulcan Materials Company and hope that you and your families continue to be safe and healthy. This is our first Earnings Call since closing the U.S. Concrete acquisition in late August. Therefore, I'd like to begin by welcoming the former U.S. Concrete employees and customers to our Vulcan family. Also, I want to thank our team for its continued solid execution during a quarter that was challenging due to inflationary pressures and labor constraints. Despite these challenges, our team managed controllable costs. Moved pricing higher in all segments, and importantly, expanded our aggregates unit profitability for the 13th consecutive quarter. We generated $418 million of adjusted EBITDA this quarter, an increase of 4% as compared to last year. Profitability for the quarter was held back by factors I mentioned earlier. Energy inflation was a significant $30 million headwind. Unit diesel prices were up over 50%, leading to $14 million of additional expense. The cost of liquid asphalt was over $100 per ton higher than last year. This sharp increase impacted our results by $16 million. And finally, labor constraints, especially for truck drivers, have caused delays and inefficiencies in our operations, as well as those of our customers. Even with these headwinds, we improved our aggregate cash gross profit per ton by 3% to $7.74. This was achieved through the consistent execution of our four strategic disciplines, which helped to drive volume growth, higher pricing, and improved operating efficiencies. This strong performance and momentum it provides, sets us up well for '22, especially with respect to pricing. Total aggregates volume, including U.S. Concrete, increased by 8% versus last year's quarter. On a same-store basis, volume was up 5%. This reflects continued improvement in demand across all end markets. The pricing environment in aggregates continues to be very positive across our footprint. Same-store prices were up 3.1% this quarter. And mix-adjusted prices increased by 3.5%. We saw our early price increases gain traction, and as a result, year-over-year average selling prices improved sequentially each quarter this year. Although in-place straight pressures can create short to medium-term headwinds, the combination of inflation and improving visibility to demand has and will continue to create a favorable environment for price increases. Operating efficiencies and disciplined cost control help to offset some of the higher input costs we experienced. On a same-store basis, our aggregate's unit cost of sales in the quarter increased by only 1.7%, as compared to last year. Now, excluding the diesel effect, unit cost of sales actually decreased by 1%. While costs will be lumpy, we have delivered comparable results for the trailing 12-month period. This solid performance in aggregates helped to more than offset reduced profitability in the non-aggregate segment. Our asphalt business was negatively affected by both higher energy costs and wet weather. Quarterly gross profit in the segment fell from $30 million to $7 million. Higher liquid asphalt costs accounted for $60 million of this difference. We also experienced a rise in natural gas prices, which in turn impacted our plant production costs. Asphalt volume declined by 8% as volume growth in California was more than offset by lower Arizona volumes due to extremely wet weather. Average selling prices improved by almost 2% year-over-year and better than 2% sequentially. Evidence that pricing actions are beginning to ease some of the liquid asphalt inflation. I would expect continued price improvement as we pass along higher costs. In the concrete segment, gross profit increased by 18%, reflecting our ownership of U.S. Concrete for one month. Same-store volumes declined by 7% due to the completion of large projects in Virginia and the availability of drivers to make up for any lost shipping days. For the quarter, same-store prices increased by 2%. Turning now to the demand picture, the story is relatively unchanged from the second quarter. Demand has improved across all of our major end markets, as well as geographies. The residential end-use has shown continued strength with solid starts in single-family housing; multi-family starts have also performed well. With respect to the non-residential end market, improvement continues at a number of leading indicators we track. From its low point earlier this year, starts have consistently improved, returning to growth in recent months. The level of highway starts is up, as states have moved back to more normal funding levels. With Vulcan markets outpacing other markets, we look forward to the enactment of the bipartisan infrastructure bill and the significant impact on volumes for years to come. Now looking forward, I want to briefly touch on our growth strategy and give a very preliminary view of 2022. As we shared on past calls, we have three paths to growth. These three are organic growth, M&A, and greenfields. Earnings growth in the underlying business is at the core of our growth strategy because it provides the most attractive and compelling value proposition on a risk-adjusted basis. The benefits of this focus are clear as we expand our industry-leading unit profitability, despite the macro challenges we may face from time to time. Next is M&A. We look for strategic opportunities that naturally complement our principal aggregates business. Given our leading market position, we have visibility to all deals that come to the market. The key is for us to be disciplined as we consider which deals to pursue. Not all opportunities are created equal, and we want to do the deals that create the most value over time. And as the final pillar to our growth strategy is the development of greenfield sites. There are times when an acquisition target is not available in a particular growth quarter. If that is the case, we turn to new greenfield sites and we have a long successful history of developing them. During this quarter, we completed the U.S. Concrete acquisition and we're excited about the strategic fit and how it naturally complements our principal aggregate business in California, Texas, and Virginia, and gives us access to new platforms in New York and New Jersey. Already our teams are working together to identify strategic opportunities. As you would expect, we're taking a thoughtful approach to integration to ensure that we capture all available synergies. It's still early days on the integration. We intend to give you a more detailed briefing in February, but we're pleased with the wins we've seen so far. We are confident in our ability to generate at least $50 million of synergies on a 12-month run basis beginning mid-year next year, when most of the integration is complete, but more to come. Suzanne will cover some additional highlights of the quarter and share our latest financial view on how we expect to finish 2021. But before I turn the call over to her, I want to reiterate our confidence in our prospects for 2022, particularly with respect to pricing and our ability to control what we can control. The 2021 demand and inflationary environment sets us up well, as we head into 2022. A key to our pricing strategy is that we're starting early in the spring with announced price increases. In certain markets, we launched further increases. These increases are evident in our sequential quarterly pricing growth. Already we're discussing 2022 pricing expectations with customers. Clearly, we need to see where those conversations lead. But at this stage, I would be surprised if next year's price increases are not at least 5%. The demand picture also looks good leaning into 2022, although we are watching the labor situation closely. If labor constraints do continue, it's important to remember that the work is still there. It may just proceed at a slower pace, effectively extending the recovery and allowing us the opportunity to compound price, control costs, and still grow earnings. Now, I'll turn the call over to Suzanne for further comments.

Suzanne Wood, CFO

Thanks, Tom. And good morning to everyone. We've covered the key financial and operational highlights already, so I'd like to speak to the following topics: First, our balance sheet strength and capital allocation priorities. Second, our return on invested capital. And finally, our financial guidance for 2021. With respect to the balance sheet, we will continue to prioritize sensible leverage and financial flexibility in order to support our capital allocation strategy and maintain our investment-grade rating. The structure of our debt is sound, with long maturities that make sense for our business. Due to our strong cash generation, we were able to reduce our net debt to EBITDA leverage ratio to 2.7 times following the U.S. Concrete acquisition. This is just above our stated range of 2 to 2.5 times. And we will be focused on getting back within that range in the near term. Our capital allocation priorities remain unchanged, and the consistent application of those, while maintaining a sensible leverage range, has allowed us to improve our return on investment over the past three years. For Legacy Vulcan, the return was 14.7% up 240 basis points from three years ago. With the inclusion of one month of U.S. Concrete earnings and a quarter impact of the acquisition on average invested capital, our return was 14.2%. We'll continue to focus on the sequential improvement of returns. The final topic I want to share this morning is our updated view on 2021 guidance. Our guidance incorporates U.S. Concrete's expected EBITDA contribution since acquisition, as well as recent trends in demand, price, and costs. Our adjusted EBITDA guidance range for the full year is now $1.43 billion to $1.46 billion. This includes $50 million to $60 million EBITDA from the acquisition, but excludes a $115 million gain on a land sale completed in the first quarter. I'm sure there will be a number of questions on business trends and the outlook in the Q&A section. So, I'll turn the call back over to Tom for closing remarks.

Tom Hill, CEO

Thanks, Suzanne. Before we move to Q&A, I want to again thank the entire Vulcan team, including our newest team members from U.S. Concrete, for their hard work and their dedication to serving our customers. Our people are what makes Vulcan better every day. We have and will always operate Vulcan for the long term. This means a strong emphasis on keeping our people safe and continuously improving our already strong culture. Local execution is key to driving improvements in our business, particularly around our strategic disciplines. As we move forward, we will seek to maximize synergies with U.S. Concrete. As always, for Vulcan, we will maximize unit margin expansion through our four strategic disciplines. And remember, improving financial returns is of paramount importance. And now we'll be happy to take your questions.

Operator, Operator

At this time, if you would like to ask a question, please press star and then one on your telephone keypad. And as a reminder, we do ask that you limit your participation to one question to allow others the opportunity to participate. We will take our first question from Stanley Elliott with Stifel.

Stanley Elliott, Analyst

Good morning, everyone. Thank you all for taking the question. Tom, I wonder if I could start off talking a little bit more about the pricing expectations for '22. Your very positive commentary about conversations, and then the comment about at least 5%? Thanks so much.

Tom Hill, CEO

Yes, thanks. As I look forward, I think this is one of the most important themes. As we've said over the past couple of quarters, the combination of visibility to growing demand, coupled with inflationary pressures, this all bodes well for aggregate prices. Our teams recognize this wholly and started trying to move price in Q2. As we predicted, our third quarter price increases were 3.1%, mix adjusted 3.5%, which was up sequentially from 2.6% in Q2 and 1.3% in Q1. That sequential improvement is really important because it illustrates the improving pricing environment. Looking forward, I would expect that trend to continue in Q4, and then looking past that at 2022, I think we'll see bigger jumps in pricing in January and April as the 2022 fixed prices go into effect. So, as we said before, based on trends, backlogs, and customer conversations, I'd be very surprised if our 2022 price increases don't eclipse 5%.

Trey Grooms, Analyst

Good morning. And thank you, everyone. Well done in the quarter, given the headwind, especially on the unit profitability. Tom and Suzanne, my question is looking into next year as well. You mentioned solid fundamentals and positive demand trends. But you also noted labor constraints which have obviously been a challenge for everyone. Taking all those things into consideration as you look at the geographies and the end markets that you serve, could you dive in a little bit more around how you're thinking about the volume outlook for '22 and maybe some of the key drivers there? Thanks.

Tom Hill, CEO

Let's look present, and then we'll look backward into the quarter and then we'll look forward. On a same-store basis, volume was up north of 5%, which was strong. The vast majority of our markets experienced volume growth, which speaks to the market's underlying growing demand and how broad-based it is. We had a little bit of weather in Alabama, parts of Texas, Arizona really got washed out. A little bit of weather in Northern California. However, this was more than offset with really strong shipments in the Southeast and the Eastern Seaboard. As we look to 2022, it may be the first year in well over a decade where we'll see growth in all four end-users. It's just broad-based. Residential construction should continue to grow; non-residential is very important because we are continuing to cope through the pandemic and moving into growth in 2022. Non-power infrastructure is expected to grow following the big residential growth we've seen this year, and I think demand in 2022 will also see growth supported by improvements in state funding and some COVID relief funds. So, all that's really good news for '22. Demand, however, as we talked about, has some headwinds, supply chain issues, and labor shortages will have some impact on shipments. Those headwinds won't make demand go away; they only push it out and extend the cycle if that happens. The fundamentals for volume growth in 2022 are in place despite some headwinds. While it's early in our planning stages under these conditions, I'd be surprised if we see growth above 4%. At the same time, if we experience those headwinds, demand gets drawn out and extends the cycle, and with our ability to compound margins over time, that could be very helpful. So, the fundamentals are really strong, but there's some dampening effects with supply chain and labor.

Trey Grooms, Analyst

Understood, thanks for the clarification there and thanks for taking my question.

Jeff Stevenson, Analyst

Hi, this is Jeff Stevenson, on for Garik. Thanks for taking my questions.

Suzanne Wood, CFO

Good morning.

Tom Hill, CEO

Sure.

Jeff Stevenson, Analyst

In the press release, you mentioned that concrete same-store sales volumes were negatively impacted by fewer larger projects. I'm just wondering if you could provide any more color on this and how does the U.S. Concrete look from a comp standpoint? Are they running the risk of fewer larger projects unless lumpy volumes? Any more color would be helpful.

Tom Hill, CEO

Sure. The large projects we have finished up were in Northern Virginia, in the DC area, and it's just a little bit of a low in our backlog as we move into 2022. I think the underlying piece of concrete improvement with the non-res piece. We see non-res growing in 2022, which is very important for ready-mix. The other thing I was encouraged by in the quarter is on the same-store basis, and also with U.S. Concrete, you're starting to see unit margin expansion. Earlier in the year, both our concrete business and U.S. Concrete's concrete business were impacted by diesel and inefficiencies. Last year, we just didn't have any traffic on the road, so we were able to deliver concrete effectively and efficiently. This year, not so much, and so it added some costs. While those were headwinds for '21, pricing at this point has jumped past that. It jumped past raw materials, and we're seeing margin growth. So, as we move into '22 with the combined businesses, I predict that you will see volume growth driven by non-residential construction growth, but also unit margin growth because prices have caught up to prior cost changes. I'm very encouraged for our outlook in 2022 in this product line.

Jeff Stevenson, Analyst

Great. Thank you.

Analyst, Analyst

Yes, hi, good morning, everyone.

Tom Hill, CEO

Good morning.

Suzanne Wood, CFO

Good morning.

Analyst, Analyst

Tom, I am wondering if you'd be willing to expand on the M&A pipeline? How significant is it in terms of number of opportunities or magnitude of opportunities? And is there a timeframe by which if we don't have meaningful M&A, we'd be looking to step up stock buyback? How are you, Suzanne, and the Board thinking about that?

Tom Hill, CEO

The pipeline is substantial, though not all opportunities are equal. We remain disciplined regarding our mergers and acquisitions, focusing on the markets we want to enter and the unique synergies that Vulcan offers. We are also cautious about the multiples we are prepared to pay. After successful integration, we are indeed interested in pursuing opportunities similar in size to U.S. Concrete, as well as more traditional bolt-on deals that we are currently exploring.

Analyst, Analyst

Perfect. Thanks.

Anthony Pettinari, Analyst

Good morning. I'm just wondering how the margin profile of the U.S. Concrete aggregates assets compares versus the company average, as well as maybe the same question on concrete. And then is there a possibility or timeline for normalizing that difference, if any? If you could just talk about the margin profile.

Tom Hill, CEO

If you examine their overall unit margins, they are quite respectable and likely about a quarter lower than ours, so they are comparable. I believe they have managed this well. Their market position and structure are solid and appealing. While they have performed admirably, I think our four strategic disciplines can significantly benefit their aggregates business, and we have already begun this process. The teams have collaborated, and that effort is progressing. As we move into 2022, this approach will similarly apply to pricing, demand, and unit margin growth. We believe we can assist them in making advances, similar to how they can help us with concrete. In terms of ready-mix, they are more efficient than we are and possess impressive technology that our teams have already started integrating into our ready-mixed operations. This collaboration is beneficial for both product lines.

Anthony Pettinari, Analyst

Okay. That's very helpful. I'll turn it over.

Courtney Yakavonis, Analyst

Hi, thanks for the question, guys. If we could just maybe follow up on the comments on U.S. Concrete. I think you have laid out a $50 million run-rate synergy by mid-year next year with more details to come in February. But can you just help us understand, are you thinking about that being primarily revenue-driven from additional aggregate sales, or is this more going to come from some of those operational cost-focused measures that you talked about? But just when we're thinking about integrating that in, help us think about that if that's more on the top line or the cost.

Tom Hill, CEO

I think the short answer is all of the above. You put it well, but remember it's only been 70 days. That said, I'm very impressed at how fast our leaders are putting the businesses together. The teams in California, Texas, and Virginia worked together before the end of the first week after we closed and have already made more progress on market sales, operating procurement strategies, and tactics, which will really pay off for us.

Suzanne Wood, CFO

I mean, it's still early days, as Tom said, and some of these synergies take time to develop and realize. But as we said in the prepared remarks, we are very confident in our ability to generate at least $50 million of synergies, and that is on the 12-month run rate basis beginning mid-year next year when most of the integration efforts will be complete. I think it's important to note that this $50 million that we're referring to are identifiable cost and efficiency synergies. We believe there are more synergies, as Tom has talked about, and we're in the process of working on those.

Tom Hill, CEO

Yeah. We will be back in February with more details, but the synergy between the two companies from my perspective is appearing better than we originally thought. I had the opportunity a few weeks ago to sit down with the combined Texas team, and was really impressed and pleased with their focused, creative, and insightful combination of plans to leverage commercial opportunities, improve price and volume, and enhance operational execution. We're seeing the same thing with the California and Virginia teams. So, in all markets, stronger market presence, pricing, and logistics capabilities. We have a much better opportunity to leverage procurement opportunities. As I said earlier, we have the ability now to use our technology and theirs to improve both the ready-mix concrete and the aggregate product lines for the two companies. So, it's exciting to watch.

Courtney Yakavonis, Analyst

Great. Thank you.

Brian Biros, Analyst

Hey, good morning. This is actually Brian Biros on for Katherine. Thank you for taking my question.

Suzanne Wood, CFO

Good morning.

Tom Hill, CEO

Sure.

Brian Biros, Analyst

Good morning. It appears that you are implementing effective cost controls, at least for the expenses you can manage, not including diesel. Could you clarify the factors influencing cost controls in the quarter? Thank you.

Tom Hill, CEO

Yeah. I think this is one of the things in the quarter that I'm most proud of. It was an excellent performance by our operators. First and foremost, they kept their people safe. Cash costs were up 2.6% in the quarter. Without diesel, it was down 1%. The increase was all diesel, partially offset by some efficiency savings. Year-to-date, that cash costs were up only 1.2%, and without diesel again, down 1%. This is a really strong performance because while diesel is the most dramatic change, all our inputs were up. Steel is up almost 65%. And what that tells me is that our Vulcan way of operating strategic disciplines is working. And our operators are making those efficiencies and those disciplines pay off. While this is hard to do, particularly in inflationary pressures, it's working. As you've seen over the last two years with our performance, it's sticky. That kind of cost performance allows us to capture pricing, to maximize unit margin growth, which is our cash unit margin now at $7.74 a ton. And if you look back, this is a compounded annual growth rate of 7% in unit margin growth over eight years, including diesel. I'm very proud of our operators and they know they're not done.

Suzanne Wood, CFO

I just want to add one point of clarification on the unit cost of sales increase on the same-store basis. They were up 1.7% as compared to last year's third quarter, but excluding diesel, they decreased almost 1%. Those numbers are in the press release.

Brian Biros, Analyst

Thank you.

Adam Thalhimer, Analyst

Hey, good morning, guys. Nice quarter.

Tom Hill, CEO

Thank you.

Suzanne Wood, CFO

Thanks.

Adam Thalhimer, Analyst

Comment a little bit on the outlook for downstream margins.

Tom Hill, CEO

If you look at asphalt first, we took a big hit this year with liquid. It's kind of a perfect storm because last year, liquid prices plummeted and margins went up. This year, they spiked and it took a bite out of margins. As we said in the prepared remarks, 2022 should see strong demand from improved highway work, and asphalt prices are moving to catch liquid, which you saw start to move in the quarter. But there is a lag. So we expect to see gross profit improvements in asphalt in 2022, but I would not expect them to return to 2020 levels because we had that big decrease in liquid in 2022. However, I would expect profitability in this product line to improve based on volume improvements and unit margin improvements because prices are going up to catch liquid costs. Moving into ready-mix, I think 2022 is set up very nicely for the combined Vulcan and U.S. Concrete ready-mix businesses. Again, the non-residential demand turning to growth in 2022 is very healthy for concrete demand. Northern California saw some headwinds in '21, mainly as a hangover from the pandemic. It was the most severe shelter-in-place, and government offices shut down so nobody could get building permits. We're past that. The permits are out there. Our backlogs are very good and growing, the same can be applied to New York. And in Texas, it was good and will continue to grow. Coupling all that with healthy pricing, price increases, which have now translated into margin growth, I really look forward to the 2022 concrete business.

Adam Thalhimer, Analyst

Great. Thank you, Tom.

Keith Hughes, Analyst

Thank you. Just a quick question on asphalt; you've highlighted some of the issues in the quarter. I guess my question is on pricing. It seems like it would've been slated to improve, given the whole market. Is there anything that you can talk about the path through in asphalt and any endurance there? Any details would be very helpful.

Tom Hill, CEO

Yeah, there is always a lag. When you have spikes in asphalt, you take a hit for a little bit of time until prices catch up. Again, like we saw last year when it falls, the opposite happens, and you're able to put those margins in your pocket for a while. I think prices will settle down, and we'll be able to catch it with pricing increases that go up $2 in the quarter and which will continue to accelerate. But it just takes time to catch up, and I don't think we will catch it all from '20 to 2022, but 2022 should be an improvement.

Keith Hughes, Analyst

Okay, thank you.

David MacGregor, Analyst

Yes, good morning, everyone. Congrats on the good quarter.

Suzanne Wood, CFO

Good morning.

David MacGregor, Analyst

Yeah. Good morning. I guess you've made repeated reference here to the same-store freight-adjusted unit cost of sales excluding diesel being down 1%. I'm guessing most of that would be volume leverage. So, just how should we think about the margin benefit of the improved legacy operating efficiencies and productivity you achieved through the pandemic period? And do you expect to cover next year's cost inflation with pricing, or are you expecting productivity to play a more significant role in the '22 margin progression story? Thank you.

Tom Hill, CEO

Looking ahead to 2022, we expect prices to exceed 5%, which is positive and will certainly enhance unit margins. Each year, we strive to use efficiencies and discipline to counter any pricing challenges we face. Our team has performed well this year; while we couldn't fully mitigate the impact of diesel costs, pricing has helped. I don't foresee the large spikes in diesel costs that we experienced previously, so pricing will definitely contribute to margin growth in 2022. However, it will be a mix of price increases and operating efficiencies, as it's crucial to keep improving those to manage costs. Focusing on metrics like tons per man-hour and the performance of our top 50 plants, which account for the majority of production, it's clear that both volume and improved efficiencies are essential. This success is a testament to the dedicated efforts of our operators.

David MacGregor, Analyst

Thanks very much.

Timna Tanners, Analyst

Good morning, everyone.

Tom Hill, CEO

Good morning.

Suzanne Wood, CFO

Good morning.

Timna Tanners, Analyst

I wanted to follow up on the fourth quarter guidance in particular. If I take the midpoint of the new guidance compared to the old guidance, it's effectively a $25 million increase as I understand it. However, you also mentioned a $50 million contribution from U.S. Concrete. If I've misunderstood that, please clarify. I just want to ensure I grasp what is driving that change and what is happening in the fourth quarter regarding possibly recovering some of the lost volume due to the weather. Additionally, if you can provide any insights on the trend in October, that would be great. Thank you.

Suzanne Wood, CFO

Regarding your question about guidance, you are correct. There was a $25 million net change from the previous midpoint to the current midpoint. If we consider the middle of the U.S. Concrete guidance range we provided, it stands at 55, which indicates a $30 million reduction otherwise. Our current expectation is that we will experience the rollover of energy costs and the headwinds from energy into the fourth quarter.

Timna Tanners, Analyst

Anything on October you can share?

Suzanne Wood, CFO

I mean, we typically don't comment on October on the call. It's pretty early days here in terms of closing, but I would say as we normally would at this point, if we had anything materially different to say we'd say it in a press release or otherwise. So really no commentary.

Timna Tanners, Analyst

Okay. Thanks, guys.

Tom Hill, CEO

Thank you for your interest in Vulcan. We look forward to talking to you throughout the quarter. Obviously, we're looking forward to 2022. In the meantime, please stay safe and healthy and keep your family safe and healthy. Thank you.

Suzanne Wood, CFO

Thanks.

Operator, Operator

This does conclude today's program. Thank you for your participation. You may disconnect at any time.