Good day, everyone and welcome to Eagle Materials Fourth Quarter and Fiscal 2023 Earnings Conference Call. Today's call is being recorded. At this time, I'd like to turn the call over to Eagle's President and Chief Executive Officer, Mr. Michael Haack. Mr. Haack, please go ahead..

Thank you, Jamie. Good morning. Welcome to Eagle Materials conference call for our fourth quarter and fiscal year 2023. This is Michael Haack, joining me today are Craig Kesler, our Chief Financial Officer; and Bob Stewart, Executive Vice President of Strategy, Corporate Development and Communications.

There will be a slide presentation made in connection with this call. To access it, please go to eaglematerials.com and click on the link to the webcast. While you're accessing the slides, please note that the first slide covers our cautionary disclosure regarding forward-looking statements made during this call.

These statements are subject to risks and uncertainties that could cause results to differ from those discussed during the call. For further information, please refer to this disclosure which is also included at the end of our press release.

Today, I am proud to announce record results for Eagle Materials across the board, safety, financial and operational. This is remarkable when you think about all the market uncertainties that have reared their head during these last 12 months. Eagle's success in these areas are simply from the fact that, first, we have the best people in the industry.

Many of our personnel put in long hours to achieve the safe record operational results that led to our financial success this past year. I want to thank each Eagle employee as you make Eagle what it is today. Second, at Eagle, we do not spend our time trying to control the uncontrollable, like the direction of the U.S. economy.

We remain focused on what we could affect and that is maintaining our low-cost producer position that serves us well in any financial cycle. Third, we remain steadfast in our capital allocation priorities which gives us the flexibility to react in any market condition. Now let me talk about a few details regarding our results, starting with safety.

We had the lowest recordable injury rate in the company history and the highest employee participation in our near miss reporting program. Simply put, at Eagle, we care about fellow employees and look out for each other. Financially, Eagle Materials set records across the board for the fourth quarter and for our full fiscal year.

To highlight a few of these records, Eagle generated annual revenue of $2.1 billion up 15% with $470 million of that coming in Q4. Eagle's annual EPS was up was $12.46, up 36%, with Q4 showing momentum at $2.79, up 47%.

During the fiscal year, we also expanded gross margins by 190 basis points, up to 29.8%, while generating operating cash flow of $542 million. These results reflect the culmination of decisions Eagle has been making for many decades, namely geography matters.

We remain well positioned to capitalize on the conditions of this past year given our geographic footprint across the U.S. Heartland and fast-growing Sunbelt region.

We control our raw materials with regards to proximity of our reserves to our plants, the quantity of the reserves and the quality of the reserves we own which helps insulate us from supply chain pressures. Operationally, the strength of our business was also reflected in our pricing and cost control initiatives this year.

In Wallboard, we were able to achieve a 260 basis point improvement in our operating margins. On the heavy side, we implemented 2 cement price increases in fiscal year 2023, including our recent January price increase. We continue to believe that we are in the early stages of a multiyear tailwind for our cement business.

Looking beyond our financial results, I also want to highlight how well we executed on our strategic initiatives and priorities this year. In fiscal year 2023, Eagle was able to strengthen its network through several acquisitions totaling almost $160 million.

While we are always looking for transformative acquisitions that meet our strategic and financial criteria, our acquisitions this year were bolt-on in nature extending our network of cement terminals, expanding our aggregate operations and improving our low-cost producer position.

Because of our robust cash flow generation, these acts of acquisitions [ph] were also executed alongside our flexible share buyback program. We returned $426 million to our shareholders, maintained our quarterly dividend and bought back 3.1 million shares while simultaneously keeping leverage below 1.4x.

Finally, I want to close out the review of our year with an update on another top strategic priority for Eagle, environmental sustainability in our transition to Portland Limestone Cement or PLC.

First, I'm happy to highlight that we updated our environmental and social disclosure report in February, highlighting the work we have done to date and the path forward for Eagle. We have made significant progress and we'll continue to work on the implementation of our strategy.

As for PLC, at the beginning of the year, less than 10% of our cement was PLC and I'm pleased to report that we were able to transition to over 30% by the end of the fiscal year 2023. We are on-track to achieve 100% conversion of all construction-grade cement by 2025 to PLC.

In summary, while there is more work ahead, environmentally, operationally and strategically, I could not be prouder of what we were able to achieve this year. That leads me into the next topic I'd like to spend some time on today, looking at our year ahead. I'll start with the demand picture for the heavy side.

Public support for infrastructure improvements remains high as seen through the large percentage of infrastructure-related bill that passed following last November's midterm elections. We are beginning to see a meaningful increase in funding from the Infrastructure Investment and Jobs Act which should last multiple years.

This is in addition to the spending done at the state and local level which continues to benefit from healthy budgets and tax receipts, especially in the states Eagle operates in. As a case in point, infrastructure contract awards for highways, bridges and tunnels in states across Eagle's cement footprint have grown by over 35% in the last 12 months.

Now, let's talk about the supply side for heavy. As I've discussed in the past, even with the multiyear demand tailwinds for cement, supply capacity is unlikely to material increase due to permitting timelines, if you can get one and investment requirements.

In fact, even as cement consumption has increased over the last several years, clinker production has dropped. These supply-demand dynamics reinforce our outlook in the mid- and long term for our heavy side businesses.

To that end, as we previously announced, we recently closed on a cement import terminal acquisition in Northern California as part of our strategy to expand and strengthen the distribution reach of our cement network across our U.S. Heartland manufacturing system.

This acquisition allows Eagle to participate in a robust market fulfilling customer needs in an area where cement manufacturing supply is challenged while increasing the optionality of our Nevada Cement Plant. Next, let me say a few words about the demand picture for Wallboard. There is no question that continued uncertainty around the U.S.

economy strength or the Federal Reserve's policy setting makes next year's demand picture unclear. What does remain clear, however, is that certain areas of the U.S. housing construction activity have proven incredibly resilient.

For example, data shows having units under construction to still be at near record levels with multifamily units under construction at the highest level since 1973. Southern states at the core of Eagle's footprint are seeing a continued rebound in housing starts hitting a 9-month high through March.

Home inventory levels and months of supply are also still historically low sustaining homebuilding activity. Furthermore, the repair and remodel outlook seems stable with primary modeling years of home stock expected to grow over the next few years and homeowners sitting at all-time high levels of home equity.

On the Gypsum Wallboard supply side, it is crucial to note that like cement, wallboard supply remains structurally challenged, albeit for different reasons. The difficulty in accessing natural gypsum as a raw material in the East and the reduction in synthetic gypsum is significantly impacting the cost curve and capacity utilization for the industry.

As a result, nameplate capacity has remained essentially flat since 2017. This lack of new supply is unlike any prior cycle. It means that a dip in demand does not necessarily -- the same pricing pressure we've seen in past cycles.

With the supply-demand picture, we have reason to be cautiously optimistic as we have proven we can handle some volatility in the market if it were to materialize. Given the variable cost nature of the Gypsum Wallboard business, we have proven that we can flex production up and down appropriately.

On the cost side, the stabilization in our input costs namely OCC recycle paper and natural gas should continue to provide a buffer. As our quarter and our year showed demand is strong today and there are many reasons to be optimistic about the future.

In summary, in the year ahead, we will continue to focus on executing well and preparing for things within our control. For Eagle, that means, first, we'll keep investing in our core. Our core businesses are well positioned and well prepared to capitalize on opportunities ahead.

We will continue to invest in maintaining our plants in like new condition, investing in our operational and technology capabilities and improving our sustainability for the long term. Secondly, we will be prepared for any eventuality.

This includes keeping a healthy balance sheet with leverage currently at 1.4x, allowing us to manage cycles, while ensuring we can capitalize on any organic or inorganic opportunities. And third, we will stay relentlessly focused on our priorities.

Operationally, that means keeping our employees safe, executing at the highest levels and meeting the needs of our customers. Strategically, we will continue to seek to grow our businesses with an emphasis on heavy-side acquisitions that meet our strategic and financial criteria.

It also means sticking to our capital allocation priorities, including prudently returning cash to our shareholders. And environmentally, we will drive our sustainability initiatives, important limestone cement and more broadly. With that, let me turn it over to Craig for the financial review of our quarter..

Thank you, Michael. Fiscal year 2023 revenue was a record $2.1 billion, up 15% from the prior year. Excluding the acquired aggregates business in Northern Colorado, revenue was up 13%. The increase reflects higher cement and wallboard sales prices as well as increased wallboard sales volume.

Revenue for the fourth quarter was up 14% to $470 million, primarily reflecting increased wallboard and cement pricing. The strong fundamentals in both Cement and Wallboard contributed to record EPS during the year. Diluted earnings per share for the full year increased 36% to $12.46.

This increase also reflects the reduced share count resulting from our share repurchase program. Fully diluted shares were down 9.5% from the prior year and are down nearly 30% from their peak in fiscal 2015. Fourth quarter EPS was up 47%. Turning now to segment performance highlighted on the next slide.

In our heavy materials sector which includes our Cement and Concrete and Aggregates segments, annual revenue increased 11% to $1.3 billion. The increase reflects higher cement sales pricing and the contribution from the aggregates business we acquired early in the year, partially offset by lower sales volumes -- cement sales volume.

Cement sales volume was depressed because of record-setting snowfall in our Northern Nevada and Northern California markets in the fourth quarter. Operating earnings increased 7% to $297 million again, reflecting higher cement sales prices, partially offset by lower sales volume and higher operating costs.

Our fourth quarter cement price increased 16%, reflecting the price increase we implemented recently in January which demonstrates the very strong demand environment in the sold-out position in the U.S. cement industry. Moving to the Light Materials sector on the next slide.

Annual revenue in our Light Materials sector increased 22% to $981 million, reflecting increased Wallboard sales volume and prices. Annual operating earnings increased 38% to $378 million, reflecting increased net sales prices, partially offset by higher input prices, namely recycled fiber and energy. However, both of these have recently declined.

Looking now at our cash flow. We continue to generate very strong cash flow and allocate capital in a disciplined way. During fiscal 2023, operating cash flow improved 5% to $542 million, while capital spending increased to $110 million as we continue to invest in and improve our operations.

And as Michael described, we also completed multiple acquisitions during the year, with total acquisition spending of approximately $158 million. In fiscal 2023, we paid $38 million in dividends and repurchased approximately 3.1 million shares of our common stock for $388 million, returning nearly $426 million to shareholders.

We have 7.7 million shares remaining under our current repurchase authorization. In fiscal 2024, we expect capital spending to increase to a range of $145 million to $165 million, as we ramp up several projects to expand the production of Portland Limestone Cement and to improve our low-cost assets. And finally, a look at our capital structure.

At March 31, 2023, our net debt-to-cap ratio was 48% and our net debt-to-EBITDA ratio leverage was 1.4x. Total liquidity at the end of the fiscal year was approximately $602 million and we have no meaningful near-term debt maturities, giving us substantial financial flexibility. Thank you for attending today's call.

We'll now move to the question-and-answer session..

[Operator Instructions] Our first question today comes from Trey Grooms from Stephens..

Morning Michael, Craig and Bob and nice work in fiscal '23. So first off, Wallboard volume held in pretty well here in the quarter and you seem pretty constructive on the longer-term outlook there. And understanding the outlook for the year is tough to call, as you mentioned, Michael.

But it seems that once the backlog of homes under construction is absorbed, we could see a volume dip here at some point.

Can you talk a little bit more specifically about what you're seeing on the demand front for Wallboard as we've kind of moved a little bit further into the spring building season in your markets?.

Yes. Thanks, Trey. It's a good question. Look, I think, as Michael mentioned in his comments, look, I think we've been very pleasantly happy with the resiliency of our wallboard sales volume as we've entered the spring season. It looks like and again, some of that is based on our geography, where we sit generally in the southern part of the U.S.

where demographic growth has continued to remain strong and construction activity has followed in kind. So again, Brazilian volumes and it looks like housing starts have stabilized at this level with rates coming down here early in the first part of this year. So we've been, again, pleasantly surprised with our volumes in the first part of the year..

Great. And then strong cement pricing in the quarter, so hats off there.

And there's some mid-year increases out in some markets for cement, can you talk about maybe your overall cement pricing environment and maybe your outlook there for cement price?.

Yes. Trey, when we look across the network and everything, cement is as we've said in the past before, we're really sold out in a lot of areas with it. We've looked at different markets. We are coming out in certain markets with some cement price increases that will be mid-year and we're evaluating the other markets.

As this year goes forward and we look at the supply-demand picture, we'll determine what we do in all those markets so we should be able to give you an update, hopefully, by the next quarter..

Great. Have a good rest of the day. Good luck in the quarter and I'll pass it on..

Our next question comes from Brent Thielman from D.A. Davidson..

Congrats on a great quarter, great year. I guess first question, just wondering if you could comment on the benefits of lower OCC and I guess, ultimately, paperboard costs on the wallboard profit margins this quarter or whether more of those benefits are still to come as higher average costs are kind of still flowing through.

And I guess a similar question on lower natural gas prices and I guess how or when that might be more impactful to the cost profile of the Wallboard business..

Yes. Thanks. So the OCC prices, as you mentioned, have significantly declined from where we were a year ago. They really stabilized here over the last several months, almost flat during the March quarter which benefits the paper mill pretty quickly.

And as you've seen the profitability there, in the December quarter and here again in the March quarter recover very nicely. It takes a little bit of a lag, a quarter or 2 lag for that to flow through into the Wallboard business.

So we saw a little bit of it here in the March quarter but there will be a little bit more of a tailwind as we head into the June quarter as well, assuming prices remain at this level. And then from a natural gas perspective, yes, we've seen a significant decline as well there in that input cost.

We were -- for the full fiscal year -- little over $6.5 million [ph] and gas is down at least the forward curve is around $3 million [ph]. We've hedged a good amount of that almost half of our needs for the year at around $4. So yes, we've seen a nice tailwind change there, too..

Okay. And then on Wallboard, I'm just wondering if the strong pricing you're continuing to report is consistent across the platform.

Just curious if some of the markets are seeing a bigger impact from a shortage in synthetic gypsum over other markets where maybe more natural gas, natural gypsum available, maybe what you're seeing in terms of consistency in pricing across the platform..

Yes. Look, there's no doubt and we've talked about it for quite some time now. The issues and the lack and diminishing supply of synthetic gypsum in the Eastern half of the U.S. has tightened utilization rates there.

But I would tell you that even the strong construction activity across the rest of our footprint, pricing has been pretty consistent throughout our network..

Okay. Just one last one. Just curious, the strategic rationale of the acquiring the Northern California cement terminal. I know you had recently divested the California Concrete and Aggregates operations. Just wondered how much overlap this would have with your Nevada operations, any more comments around that rationale..

Yes. When we look at that acquisition, it fit in well. And in my prepared comments, I had a little note in there about -- it's in a market that's fundamentally challenged on manufacturing of cement right now. So that market is heavily dependent on an import structure. We have our Nevada cement facility that does participate in that market.

And so we saw this as a great opportunity to be able to maximize the value of our Nevada cement through the utilization of this asset and then support our customers in that market..

Our next question comes from Anthony Pettinari from Citigroup..

This is Asher Sohnen on for Anthony. So it sounds like you're still pretty much sold out in cement. So I was just wondering if that's the case, wholly-owned cement volumes were down 5% for the year on a combination of weather, inventories, maybe some other headwinds.

So just looking forward to fiscal 2024, should we think about maybe the potential for mid-single-digit organic vol growth as you sort of recover from those headwinds or maybe fiscal '23 is more the baseline of what you can produce?.

No, it's a great point. The end of the fiscal year, especially in the Northern Nevada, Northern California area was dramatically impacted by their weather patterns. I think you've seen that across multiple industries here in the last several weeks.

And so as we move into fiscal '24, the other opportunity for us to move the needle on volume, as Michael mentioned, is Portland-limestone cement which should give us some incremental output from our facilities.

So we do actually have a little bit of volume growth that is potential as we head into fiscal '24 and the demand environment certainly is calling for it as we do remain sold out..

Okay. That's really helpful. And then just as a follow-up, you saw something like 600 basis points of EBIT margin expansion in 4Q for cement. Driven in large part by pricing.

So just thinking about the margin trajectory in cadence into the next fiscal year, I mean, do you expect similar year-over-year gains or maybe that kind of slows down?.

No. Look, we've seen strong price realization here in January. As Michael mentioned, we have price increases announced in half of our markets for midyear in July. Considering the other markets.

And look, some of the cost pressures that we faced this year, especially around energy which are fuel and the electricity have seemed to also be a reduced headwind this coming year. And so we would expect to see margins continue to improve for our Cement business..

Our next question comes from Jerry Revich from Goldman Sachs..

I'm wondering if you could just talk about the cadence of demand that you've seen over the course of the quarter out of homebuilders, what we're hearing from the public builders is just really sharp earlier-than-expected inflection to essentially building their development pipeline.

I'm wondering if is that consistent with what you're hearing and how we should be thinking about potential for wallboard volumes to accelerate versus normal seasonality if that plays out over the next couple of quarters?.

Yes. Look, Jerry, I think all of the homebuilders are very surprised -- pleasantly surprised with the start of the construction season and the spring selling season as rates tick down. And look, it's been well chronicled, the lack of existing homes for sale in the U.S.

And the only way to create an inventory of homes is to build new, a lot of facets to why there's a lack of existing homes, whether that's extremely low mortgage rates for a very long period of time and work remotely, those type of things. But you're -- I think you're spot on.

The builders have inflected much sooner than I think people had anticipated..

Very interesting. And then can we just talk about -- shift gears a little bit in cement, really good margin performance as you just spoke about a moment ago.

When we look at the company's margin profile 15 years ago, you folks got a really healthy margin in cement and I'm wondering based on the momentum that you're seeing in pricing actions could we return to the margin profile that the business delivered 15 years ago, recognizing that Obviously, the footprint is very different and the mix is different but I'm wondering, given the momentum in price cost and pretty good demand.

Are we potentially going to revisit the margin profile that we had in that business 15 years ago, Craig?.

Yes, Jerry.

Look, I would echo that sentiment that not only are we in a different environment from a demand and supply perspective in terms of, as Michael mentioned, the inability for supply to respond to these demand improvements, domestic manufacturing but you look at Eagle just in total and we're a different cement company than we were 15 years ago.

We owned 4 cement plants that were operated somewhat individually given the geography of where they were located today, we have a system of plants.

And as Michael mentioned, this Northern California import terminal is just a further extension of that and a further strengthening of that network that we stretched from Northern California to Ohio and South Texas.

But that overall network is stronger today than where we were 15 years ago was the plants we've acquired are generally lower cost plants than what our average was 15 years ago..

Super. And then lastly, cement seasonality given your footprint, the June quarter tends to be about 70% to 80% sequentially for you folks. And if we apply that normal seasonality that gets us back to cement year-over-year volume growth in the June quarter.

So I just want to make sure we're thinking about it consistent with the trends that you're seeing in April and there has been no seasonality shifts that we should keep in mind?.

I'm not aware of any seasonality shifts that are out there. Look, the June and September quarters are always the strongest quarters and I would expect that to continue as those are the major construction months..

Outstanding. I appreciate the discussion..

Our next question comes from Stanley Elliott from Stifel..

Congratulations. A quick question. You guys mentioned preparing for any eventuality leverage of 1.4x.

Does that mean kind of maintaining leverage in a similar fashion into next year? Do you all think you want to be a little more opportunistic on either M&A or repurchases? Because the way it looks like things are going to set up 2024 fiscal year should be another very good year of free cash flow even with the higher CapEx?.

Yes. And I'll point back to my opening comments with it. We're always looking for transformational opportunities for this company, whether it be that through an acquisition. But at the same time, we're going to keep to our strategic priorities.

And that's where we've been very patient buyers and we're going to invest in the right properties at the right time that fit in the right network for us. If one of those were to materialize, that would be a priority for us.

We're always going to keep our plants in like new conditions and have those operating the most efficiently in the low-cost producer position and then after then, our priority is to return cash to shareholders. That's where we're in the business for with it.

We want to leave that financial flexibility that if it does a -- acquisition does come available, that fits our criteria we'd be participants in that. And if not, we'll return that cash to shareholders..

And how does the M&A market look like, especially for some of these transformation or larger sorts of assets that you guys are mentioning. I mean, just curious on that, if you could, please..

Yes. So I won't comment specifically on what's out there with it. But when you look at in the past, cement plants do not come to the market very often and that meet our strategic criteria do not come to the market very often.

I think we were able to have a very successful year with expanding our network this past year with some of the acquisitions we did. Some of the capacity additions we were able to achieve through the PLC side and some of the aggregate growth we were able to get.

So it's -- if we don't have those transformational acquisitions, we're consistently in the market looking for value-added acquisitions that makes sense for Eagle. And so if those don't materialize, we'll be actively in the market looking at items that are smaller of size that fit into our network and strengthen Eagle..

Our next question comes from Adam Thalhimer from Thompson, Davis..

Nice quarter.

Just for modeling purposes, what tonnage should we be assuming from the California import terminal?.

Yes. Look, I think it's a little too early. We've owned the asset. I think we closed May 3. So we've owned it for just a couple of weeks now, again, unique weather pattern in that market through the winter months.

So I think we'll have better visibility for you as we own it for a little bit longer and can give you a little more guidance there down the road..

Okay. And the annual cement price increase.

Do you think this becomes the norm January versus April?.

Look, I think the pricing cadence and magnitude will evolve as the cycle evolves. That's kind of what we've seen across multiple industries. And given the environment and the high utilization rates, that's made sense but it will continue to evolve.

And look, a second round of price increases has been unusual until you get to these type of demand levels. So I think it's too hard to predict exactly when and magnitude..

Okay.

And then lastly, on the M&A front, how high does aggregates acquisitions rank for your priorities?.

Yes. So when we look at acquisitions, we've been pretty transparent that the heavy side of the business is something we want to invest in. If you look through this past year with it, we've done aggregate acquisitions this past year with our Northern Colorado acquisition we did.

We've also done some things internally that increases our acquisition portfolio for our owned assets that we have today. We're constantly looking at that. We own aggregate operations in Texas, in Nevada and in Northern Colorado. So it's 1 of the key investment areas for us..

Our next question comes from Phil Ng from Jefferies..

Congrats on another strong quarter. I was just curious, in terms of your ability to capitalize on some of these mega trends, certainly the infrastructure build is coming through. We got some momentum on the heavy commercial side on IRA on the Centex [ph] help us think through that potential left.

When should we expect that kind of flowing through from a volume standpoint? And have you started seeing some uptick in bidding and quoting activity?.

Yes. The -- it's interesting you've hit on a lot of the areas that we commented on as well, where we're seeing strength and the federal transportation bill monies are starting to impact the business and benefit projects. So that's been nice to see. We expected to see it here in calendar '23 and it's starting to flow into the business.

And as you mentioned, there's very large manufacturing facilities, especially in our markets that are underway. So the demand environment is very strong.

As I mentioned, we are starting to roll out and over the past 12 months, rolled out our PLC product, you'll continue to see that ramp up here in fiscal '24 which should give us some opportunities for some incremental volume and we're poised to do that as the market continues to grow..

Got you. And then perhaps, when we look out to 2024, certainly a lot of momentum on your heavy side with the pricing and some of these tailwinds on the heavy side of things. On the soft side, light materials side of things, some risk on housing.

Craig, do you have a view whether or not you have enough levers to kind of offset potentially some weakness on light materials whether your earnings are going to be up in 2024? How should we think about that?.

Yes. Lots of opportunities across that business. We mentioned OCC prices are down, natural gas prices are down. So those are certainly items that have been cost headwinds in the prior year. And as we mentioned, the wallboard volumes have been more resilient than expected. I think, look, there'll be some tests this year. I don't think we're blind to that.

Certainly, we sit in a good geography but there will be some testing. But so far, the business has continued to remain very strong..

Our next question comes from Keith Hughes from Truist..

You mentioned the weakness in California and the West, everyone has seen.

Has that now cleared up or you back to regular shipping in the kind of Nevada, California area?.

Yes. The California area, we're back to regular production. We got a little bit of impact with some of the melt water and stuff but pretty much it's business as normal out in those markets now..

Okay. And I assume with that investment, you're open to cement type investments on the West Coast that would be an attractive market at the right price.

Is that correct?.

Keith, I think we heard your question but we thought this was a pretty smart way to play the California construction market. And again, I can't reiterate the fact that this is very intertwined with our Northern Nevada cement operation. And so again, just a nice network expansion there..

And I guess, final question, you made some positive comments on [indiscernible]; can you give us any clues on which states or faster moving into this right now?.

Look, we're seeing it across our footprint with a really good, strong profile and projects are starting to bid. It's pretty widespread..

And ladies and gentlemen, with that, we'll be concluding today's question-and-answer session. I'd like to turn the floor back over to management for any closing remarks..

Thanks, Jamie. Thanks, everybody, for calling in today to this call and we look forward to talking to you at our next call in a couple of months..

And ladies and gentlemen, with that, we'll conclude today's conference call and presentation. Thank you for joining. You may now disconnect your lines..