Greetings. Welcome to the LSB Industries' Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded.

At this time, I'll turn the conference over to Fred Buonocore, Vice President of Investor Relations. Mr. Buonocore, you may now begin..

Good morning everyone. Joining me today are Mark Behrman, our Chief Executive Officer; and Cheryl Maguire, our Chief Financial Officer. Please note that today's call includes forward-looking statements. These statements are based on the company's current intent, expectations and projections.

They are not guarantees of future performance and a variety of factors could cause the actual results to differ materially.

On the call will include references to non-GAAP results, please see the press release in the Investors section of our website, lsbindustries.com for further information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results. As a reminder, we have a stockholder rights plan to protect certain tax attributes.

Please see the Investors section of our website at lsbindustries.com for further important details. At this time, I'd like to go ahead and turn the call over to Mark..

Thank you, Fred. As noted on Page 4 of our presentation, our trailing 12-month total recordable injury rate at the end of the third quarter was 0.34. That is a reflection of the focused efforts of our entire team, and I'd like to thank them for continuing to embrace this important core value of our company.

Turning to our financial results, we were disappointed with the results of the quarter versus our expectations heading into the quarter. our adjusted EBITDA was lower compared to the third quarter of 2022.

While this is largely due to a decline in market prices for nitrogen products relative to last year, the results were also impacted by lower-than-expected downstream production, primarily in nitric acid. That somewhat limited our ability to upgrade ammonia, impacting our margins for the quarter.

Although we stubbed our toe early in the quarter, our plants have run better since early September with the exception of one of our nitric acid plants at our prior facility that had an expander failure. We expect that plant to be back in service by the end of November after we receive and install the rebuild expander.

Cheryl will provide more color on the expected impact to our fourth quarter. We remain focused on our path to top quartile safety and reliability for all plants across our facilities. We also continued to progress on our growth initiatives.

In early October, we announced a major milestone in the emergence of our company as a leader in the global energy transition.

Our collaboration with INPEX, Air Liquide, and Vopak Moda, to develop a world-scale low carbon ammonia production and export facility on the Houston Ship Channel is potentially transformative to LSB's growth profile as demand for clean energy increases. We are proud to be partnering with a group of companies of this caliber. More on this later.

We submitted a project to expand our El Dorado facility with estimated costs of approximately $400 million. The USDA initially proposed to fund 25% of estimated project costs with $100 million maximum for an individual project.

We recently learned that our project has been selected to receive funding under the USDA Fertilizer Production Expansion Program.

However, the total amount of the funds requested by all the projects submitted to the USDA exceeded the total funds available under the program and the USDA elected to fund each project they selected at 80% of the requested amount.

Therefore, assuming our project costs remain at approximately $400 million, we would receive a grant of approximately $80 million. We continue to evaluate and refine the scope, costs, and timing for this project and look forward to providing a more detailed update on our fourth quarter conference call.

Please keep in mind that the final approval for the funding is subject to the successful completion of an environmental assessment, which is underway and expected to be completed in the first quarter of 2024 and our acceptance of the terms and conditions of the grant documents, which we have not seen yet.

On Page 5 of our presentation, we provide an overview of our end markets. Corn prices remain above multiyear averages, reflecting stable demand trends and ongoing dry conditions throughout many US corn-growing regions. We expect corn prices to remain at levels that would support strong fertilizer demand for the balance of 2023 and into 2024.

We believe that lower farm input costs over the next several months and the goal of maximizing yields should incentivize farmers to optimize fertilizer application in the fourth quarter of 2023 and in the first half of 2024. Demand for our industrial business remains steady, supported by the resilient US economy.

Nitric acid demand is stable as some global producers continue to shift production from international facilities to the US operations to capitalize on lower US input costs.

Demand for ammonium nitrate in mining applications is strong as the expansion of infrastructure projects increases the demand for coring and aggregate production and the growth in electric vehicles and other applications is raising the demand for metals in the US.

Now, I'll turn the call over to Cheryl to discuss our second quarter results and our outlook.

Cheryl?.

Thanks Mark and good morning. On Page 6, you'll see a summary of our third quarter financial results. We generated adjusted EBITDA of $9 million in the third quarter. As Mark mentioned, our results were impacted by lower-than-expected nitric acid production.

Although sales volumes of nitric acid and derivative products were somewhat lower, we were able to meet the majority of our customer commitments by purchasing nitric acid or transporting product from our other facilities.

The cost of purchasing and transporting nitric acid as compared to upgrading from ammonia, combined with higher maintenance and other costs, reduced our third quarter EBITDA by approximately $6 million. Page 7 bridges our $9 million of its third quarter adjusted EBITDA to our record $50 million EBITDA for the third quarter of 2022.

The impact of weaker selling prices for our products relative to last year is the major factor in the year-over-year change in EBITDA. Page 8 provides a summary of our key balance sheet and cash flow metrics.

We generated cash flow from operations of approximately $17 million and had capital expenditures of approximately $9 million, translating into more than $8 million free cash flow.

Despite the pricing headwinds, year-to-date, we generated approximately $120 million in cash flow from operations with $41 million in capital expenditures, translating into nearly $80 million of free cash flow and a free cash flow conversion rate of over 70%.

We expect capital expenditures for the fourth quarter to be approximately $15 million to $20 million with CapEx for the full year of approximately $60 million. Looking forward to the fourth quarter, nitrogen prices are firming up. Tampa ammonia currently sits at $625 per metric ton, up strongly from the low of $285 per metric ton in July.

This pricing recovery has been due in part to lower inventories throughout the global nitrogen distribution channel relative to several months ago. along with recent production outages at some large international ammonia plants. NOLA UAN is currently $260 per ton, up from approximately $190 per tonne in July.

While we are glad to see pricing rebound, keep in mind, that our realized pricing in the fourth quarter will largely reflect prices for products sold forward during Q3. And in addition to some products sold at spot pricing. As a result, fourth quarter pricing is expected to be approximately 60% to 70% lower than a year ago.

However, the recent rebound in pricing sets us up well for 2024. As Mark mentioned, one of our nitric acid plants at our prior facility will not be back in service until the end of November.

As a result, we intend to meet customer commitments with products transported from our other facilities and that additional cost is expected to be a headwind on EBITDA of approximately $3 million in the fourth quarter. Lastly, as a reminder, we are approximately 90% locked in on gas cost for the fourth quarter at approximately $4 per MMBtu.

And now, I'll turn it back over to Mark..

Thank you, Cheryl. Page 9 shows the downward trend in European and Asian natural gas prices that began in late 2022, resulting from a warm winter and heavy LNG imports. The drop in gas prices enabled European ammonia producers to restart idle plants in the first half of 2023, which increased the global nitrogen supply.

Over the past three months, European gas prices have reversed course and increased significantly from summer low levels, widening the spread against US gas prices. We believe this disconnect could represent a possible source of ammonia price support heading into the winter months.

On Page 10, you'll find a summary of the recently announced Houston Ship Channel Blue Ammonia project. We're currently in the pre-FEED phase of developing a world-scale ammonia plant that is expected to produce approximately 1.1 million metric tons of ammonia, while capturing and permanently sequestering approximately 1.6 million metric tons of CO2.

The plant is planned for construction on Vopak Moda Houston Ship Shuttle Ammonia Terminal. The terminal site is equipped with storage and handling infrastructure and multiple deepwater births.

LSB in partnership with INPEX, Japan's largest E&P company, plans to build and operate an ammonia loop using low-carbon hydrogen produced by Air Liquide, who will also be handling the carbon capture and sequestration. Additionally, Air Liquide will be supplying our nitrogen needs.

We selected the supplier of the technology license basic, engineering design, proprietary equipment, and catalyst, and we are in negotiations to finalize the related agreements. In addition to engineering and design activities, we are working to secure offtake customers for the anticipated ammonia production.

We expect initial offtakers to be Japanese and South Korean power companies. We're very excited both in the caliber of the companies we are partnering with and the potential to transform LSB into one of the only predominantly low carbon ammonia producers in our industry. Page 11 provides an overview of our other low-carbon initiatives.

We continue to be encouraged by our conversations with the EPA about our Class V permit application for the carbon capture and sequestration project at our El Dorado side.

We remain comfortable with the timeline that calls for us to commence production of blue ammonia in the second half of 2025, and we are in discussions with customers about their interest in buying low-carbon products.

With respect to our green ammonia project at our prior site, given the uncertainty around the 45 tax credits, combined with the project's current capital costs, this project is currently on hold.

We remain excited about this project and our opportunity to be an early entrant into the production of green ammonia and we continue to have discussions with potential off-takers for green ammonia supply, but we need clarity and finalization of the 45G tax credits before we can make a decision to move forward.

The US has the lowest cost natural gas globally, and this drives a considerable amount of its electricity generation capacity. However, US electricity prices have increased relative to natural gas prices, which works in favor of natural gas and products produced from it compared to alternatives.

That then is a considerable headwind for the build-out of industry based on sourcing power from the grid, which includes green ammonia production. This development is also why we believe the path to blue ammonia is much easier than the path of green ammonia today, especially considering the lack of a green premium favoring production economics.

Therefore, our current focus is on making sure we execute effectively on our El Dorado blue ammonia project and our Houston Ship Channel blue ammonia project as they both set us up well for the future.

Despite facing the pricing challenges of 2023 we've made significant progress on several fronts that we expect to drive bottom-line growth and shareholder value. We continue to generate positive free cash flow, enabling us to maintain a strong balance sheet.

We continue to make progress in advancing a number of core growth projects that I discussed earlier, and we expect to have greater clarity on these in the first quarter of 2024. And we expanded our portfolio of low-carbon ammonia projects positioning us to be a meaningful contributor to the energy transition.

I'm excited by the advancements that we are making and about our future. Before we open it up for questions, I'd like to mention that we will be participating in the Granite Research Management Conference series on November 14th and in the New York Stock Exchange Industrial Day on November 15th.

We look forward to speaking with many of you at those events. That concludes our prepared remarks, and we will now be happy to take any questions. Thank you..

At this time, we'll be conducting a question-and-answer session. [Operator Instructions] Thank you. And our first question is from the line of Josh Spector with UBS. Please proceed with your question..

Hi good morning everyone. It's Chris Perrella on for Josh.

I was -- as I look at the Houston Ship Channel projects, could you give some more granularity on what the potential cost would be for you as you work out this project and what the value capture would be?.

Yes, sure. Good morning. So right now, based on our feasibility study, we think that the cost of the project is somewhere between $500 million and $750 million for the loop.

So, the way we're structuring this project and we intend to structure it is really to buy hydrogen-based on natural gas and maybe electricity it's indexed to that the pricing of that and then to sell to our end customer with the same index. So, we'll back to back that.

So, based on that and the ability -- we believe the ability to have firm contracts -- take-or-pay contracts -- we will project finance that. So, generally speaking, project finance is non-recourse debt, we'll probably be able to get in the range of 60% to 70% project financing debt.

But if we're conservative and say 60%, then we used the $750 million, that would be $450 million of project financing debt, leaving about $300 million of equity or cash that needs to go into that.

And for simplicity purposes, we haven't worked out the ownership structure quite yet, but assume that LSB and INPEX impact is 50/50 ownership of the loop that would be $150 million of cash from LSB over a three-year period..

All right.

So, $150 million over a three-year conservatively depending on what the final ownership structure of the loop would be?.

Correct. And from a -- what do we get out of its standpoint, it's 1.2 metric tons of production. And if we own TAF, that would be 600,000 tons for us of blue ammonia production on an annual basis..

All right.

And you would try to structure that as a take or pay and then the cost structure is indexed, so that would all kind of be INPEX through?.

Yes. So, we would only move forward if we had take-or-pay contracts. And our thoughts now are we should be able to, again, derisk the volatility within the project by indexing both our hydrogen supply and our ammonia offtake with the same -- based on the same indexes..

All right. And then one-- I'm sorry..

I was just going to say, so in essence, what we're really doing is creating a stable -- we intend to create a stable stream of cash flow, almost like an annuity. And then the risk really for us is just the operation of a brand-new plant..

All right. No, that makes sense. And then a follow-up question.

With the Mississippi River at Lowe's, and I know this is the season where we're trying to move ammonia around and I know not necessarily direct impacts, but have you seen impact -- what is the market implying or seeing the impact of the lower water levels on the Mississippi as we gear up for the fall application season..

I think anyone who's going to use the Mississippi -- the Lower Mississippi, in particular, as a method of transportation is going to have some issues. Generally speaking, we're at almost half the normalized levels of vessels moving around. So, that becomes a real issue for people that need to barge ammonia..

All right.

And then I guess, has that impacted the spot market and your spot sales in the fourth quarter here? Or is that going to more set up for a 2024 impact?.

Yes. We don't tend to barge ammonia at all. So, we're not really impacted. And quite frankly, if it became a real issue and ammonia couldn't move from the south up to the Corn Belt, those who have ammonia capacity available for sale would benefit by it because it should then increase spot pricing..

All right. And then just one final question.

How much of the volume is locked in or was pre-sold into the fourth quarter?.

Well, we don't generally give out a percentage, but suffice it to say that a good portion of our fourth quarter sales are pre-sold..

All right, thank you very much. I appreciate the time this morning..

Sure. Great to talk to you..

Our next question is from the line of Andrew Wong with RBC Capital Markets. Pleased to see you with your question..

Hey, good morning. It's Harrison Reynolds on for Andrew Wong.

I was just wondering if you could provide some thoughts on the hedging position and maybe any comments on the strategy for next year?.

Yeah, so going, I think we've talked about this on a couple of earlier calls, but I think Late last year, we were able to, we had the ability to lock in gas at certainly less than $4, and I'd say between $3 and $4 for the full year of 2023. And given where gas prices were and where people, at least the futures were, we thought that was prudent.

Clearly it turned out to be not prudent as gas dropped down to almost $2 in MMBTU. So we have, as Cheryl said, gas hedged about 90% for the fourth quarter at around $4. So we're still suffering with that hedge for the fourth quarter. Going forward, you will not see us hedge at all.

We will -- buy first of the month gas for most of our gas, leaving a little bit as daily gas due to just fluctuations within the plant. But we will basically be spot on first of the month starting in January..

Great. Thanks so much..

Our next question is from the line of Laurence Alexander with Jefferies. Please proceed with your question..

Good morning. Two questions. One is on the off-take agreement. Actually, three questions.

One is on the off-take agreement, can you just characterize when you think you may reasonably have off-take agreements for the blue ammonia in place? And secondly, can you give a little bit more detail on how you're thinking about the nitric acid trends into year-end or possibly into early next year? And then just lastly, on the marine fuel, can you just give an update on your thinking about what needs to fall into place for that to become material and when you think you'll start to see sort of a significant chunk of end market demand for marine fuel applications?.

Sure. Hopefully I remember the questions. So on off-take for the new ammonia plant, right now our schedule is, you know, we're currently in discussions with many off-takers, as are a lot of our competitors who are looking to build facilities as well.

Right now, we've entered pre-feed, so that will last until the second quarter of 2024 and then we'll certainly evaluate where we are from a cost perspective, and then hopefully move into feed, which will take one year. So we'll finish in the second quarter of 2025.

Within the time of us executing on a feed study, we would expect that we would have negotiated take or pay contracts with the federal government. Japanese and Korean and potentially European and U.S. off-takers for the ammonia that we would produce.

At the end of feed, we would have to make a decision on whether we're moving forward, so FID, and we would not move forward without take-or-pay contracts. As far as -- I'm sorry, I forgot the second question..

Nitric acid..

Yes as far as nitric acid casted I mean, we've got really healthy markets here is -- as we mentioned earlier and we see the demand continuing to be pretty strong nitric acid sales we've been in that market for you know the last 30-plus years And then I would say nitric acid obviously is upgraded to other products.

On the non-fertilizer side would be ammonium nitrate, both solution and prill today. And we're seeing really strong trends there as well. So we hope that we believe that will continue. .

And then just lastly on the marine fuel..

Yeah, I mean, that's a really great question. I know that there is -- significant activity in developing new ammonia powered engines and whether that's a 100% ammonia or partial ammonia as a fuel source. That's expected.

The number of engine manufacturers are working on that and they're testing and they talk about how there's going to be a -- actual engine to purchase or vessel to purchase with that engine, in 2025. Whether that happens or not, I don't know that we're close enough to it.

But the other thing I'd say is, there's going to be an additional cost to using either blue ammonia or green ammonia. On green ammonia, as I mentioned earlier, I don't think we're seeing yet people willing to pay a premium. And so that actually, I think, is going to put a cap on that.

There are niche applications much smaller applications that are less price sensitive that I think will be focused on zero carbon.

But by and large, the large volumes of green ammonia that we're talking about, whether it's for power generation or the marine fuel or the marine industry, I think we're going to need to see them be willing to pay a premium before there's a lot of big off-take contracts for that.

So, moving over to blue ammonia, look, I think that it'll depend on how stringent the regulation some of the regulations are on really forcing ship owners to reduce their CO2 emissions, but there'll be a cost to that. And so I think that's really yet to play out..

Okay. Thank you..

Our next question is from the line of Charles Neivert with Piper Sandler. Please just share with your questions..

Good morning One question, on the ammonia pricing, obviously pricing today is a lot higher than what you guys had sold into 4Q. So I'm assuming there's not much, like you said, there's not much of an impact 3Q to 4Q on ammonia price. But when you get into 1Q, will you be able to basically, you haven't sold anything forward there.

So assuming price flat, we should see a fairly significant increase in ammonia price for you guys in 1Q?.

Yes, Charles, that would be the expectation. I agree..

Okay. And then in terms of the carbon capture deal. Let's assume everything goes forward, it's online when it's supposed to. I know it's sort of, I'm not sure what to call it, the sharing arrangement, whatever.

Are they paying on a per ton basis or is there a flat fee that you guys are going to be getting each year under the assumption that the El Dorado plant is running at some operating level? Will it vary at all or is it just going to be, for lack of a better term, a locked in number every year going forward?.

Yes, so there's a minimum amount of CO2 that we have to sell them per year, but there is no ceiling on that. So the better that we can run that plant, the higher the fee that we would get since it's on a per ton basis..

Okay.

And then, I guess looking at that, is there anything in the contract, let's say they think it goes swimmingly well, these subsidies continue, is there a buyout where you can basically buy any equipment, pay them out, become the player yourself instead of just the share?.

There is the ability to negotiate something, but no, there is no price for a buyout..

Okay. And last question is, as of now, forgetting whether, you know, you can get the product up and down the Mississippi, what do conditions look like for fall ammonia application? Are we getting, well, we just started to see some cold weather starting to come in.

When do you guys expect ammonia application or, you know, does it look, or is there snow already and that's becoming a problem?.

No, I think we're going to have a good fall ammonia run. I think we're just starting to hear rumblings of it. I wouldn't suggest that it's taken off or really started. So I think the weather, I mean, weather around the country looks like we had a cold spell, but now we're warming up again. And here in Oklahoma City, I know we've warmed up significantly.

So we still expect a lot of tons to move. And we're kind of anxiously awaiting that..

I assume that the preference is by end of year or into early year, once the application is over, the tanks are empty and you can start refilling for the spring. I assume that is the objective at this point..

Yes..

Thanks very much..

Thanks, Charlie..

Thank you. The next question is from the liner for Rob McGuire with Granite Research. Please proceed with your question..

Good morning, Mark.

Has the UAW strike had an impact on your nitric acid volumes? And if so, can you kind of give us an idea if that's going to continue into the fourth quarter?.

We haven't seen any impact in nitric acid volumes. Some of the UAW strikes have been settled, so they've been somewhat short-lived. So, I don't see that as being an issue..

Great. And then shifting over, your green ammonia offtake agreements, do you think -- there's a lot of projects out there, both in the U.S. and around the world.

Do you anticipate a number of those other projects being put on hold as well, just due to lack of offtake agreements? And in other words, do you think there's a bigger shift towards blue ammonia versus green ammonia in terms of worldwide demand going forward for low carbon ammonia? Thank you. Thank you..

Yes, so, you know, the U.S. government has put out really good incentives in their IRA, but unfortunately what they haven't done is they haven't given details.

So, if you're basing a project today on, receiving the full $3 per kilogram hydrogen credit, the 45V credit, I know we're concerned because they've now kicked the can down the road several times, and now I hear possibly in January, but really early in 2024, is when they'll finalize that.

I think the problem is you just don't know what you really need to do to qualify to get that. And so I think it makes moving forward on projects really difficult until there's a lot of clarity there, right, and that's really clear.

On the blue ammonia side, or blue hydrogen, I think while it's not been finalized, it's clearly a lot clearer because tax credits for carbon capture have been in place for many years, just at lower levels. So at least there's some framework there and understanding of it. So I can't comment on other people's projects and what they're thinking.

I would note, and I think I said this earlier, if we can't get take-or-pay offtake, then we won't move forward on a project, but we believe that we can. So we're encouraged based on our, ours and our partner impacts as conversations with potential offtakers, that we will have a really good opportunity to secure take-or-pay contracts..

Thank you. And then, shifting topics again, would you briefly bring us up to date on the margin enhancement projects that you're working on? You discussed them at the analyst meeting earlier this year.

Just give us an idea of what they are and just kind of estimate of when they'll be producing and then kind of aggregate amount of people to be best from all together of the type of the topic of generate.

Sure.

Cheryl, you want to go through that?.

Yes, that's no problem. Hey, Rob, so we have the urea expansion project at Pryor that's to upgrade ammonia to an additional 75,000 tons of UAN. We expect that to go into full operation during the turnaround at Pryor next year. So that's one of the key projects from a margin enhancement perspective.

So that's clearly, as you know, the upgraded margin from ammonia to UAN, which is impactful. We also have additional nitric acid storage that we're putting in at El Dorado. Also planned for the first half of next year. So that's an additional 5,000 tons of storage. It allows us to keep those asset plants running at full rate all the time.

And that allows us to maximize upgraded product at El Dorado. So that's another important one. And we're also working on a coding agent for our H-Jan [ph] product. It helps with durability, as H-Jan doesn't always store well in the heat in the summer months.

It also helps with potential export opportunities that we may have on that product, also on track for the first quarter or second quarter of 2024. So I think those are the three that are the furthest along at this point. Probably 7 million to 10 million of annual EBITDA from a run rate perspective.

Then we've got some more project in the pipeline, but nothing to speak of publicly at this point..

Thanks, Cheryl. I appreciate that update. Just one last question on the New Star Pipeline turnaround that took place during the quarter.

Can you give us an idea of what that cost in terms of tonnage for LSB? Also maybe give us an idea relative to what that tonnage was last year when they did their turnaround?.

So, for the most part, I think we, I would say we were able to make up a lot of the tons in the back half of the quarter. I think the new start pipeline came up a little bit earlier than planned. So I don't think Rob that there was a material impact to the third quarter for the ammonia tons.

If you look at our volumes, we, we did move quite a bit of volume in the third quarter..

Thank you so much. That's it for me..

Thank you..

[Operator Instructions] Our next question is from the line of David Begleiter with Deutsche Bank. Please proceed with your question..

Thank you. Good morning. This is Anthony Mercandetti on for David. Unfarmed incomes have fallen. Corn prices have come down quite a bit this year. Curious to get your thoughts on how you view the operating environment with potentially lower commodity prices and perhaps lower yields.

Do you still see strong ag fundamentals going forward into 2024?.

Yes, so you're right, corn prices have come down from the recent highs of $7 a bushel and we're sitting and have been trending right around $5. But still a really healthy price for corn and a good price for farmers. An incentive for them to really plant a maximum amount of corn.

So I think we're at a point now where if we stay at those levels and given some of the lower commodity prices, as you mentioned, which are input costs for them, I think they're still making relatively good income. So I don't think we'll see an impact. That's certainly not a downward trend.

And I would think that we're going to see strong planting, which would translate into stronger pholomonia [ph] application. And then we're expecting a really good spring..

Got it. And then, yes, just on that last point there, 2023 is a bit of a challenging year. And I know it's early, but just curious if you can take us through maybe some of the puts and takes that you've alluded to earlier on how you're viewing 2024 from where we stand today.

I'm just trying to get a feel for how you view the demand environment early on in this ammonia application season and what that could potentially mean for this planting season in the spring..

Yes, so I think we're going to see healthy demand for fertilizer across the board. And if you look at 2024 as a whole, I think we're expecting that average fertilizer prices and certainly average nitrogen fertilizer prices in 2024 will be higher than they were in 2023..

Very helpful. Thank you..

At this time, we've reached the end of our question and answer session. I'll hand the floor back to management for closing remarks..

I want to thank you for participating in our earnings call and for your interest in LSB Industries. And if you have any other questions, please feel free to follow up with either Fred, Cheryl, or myself. Thanks so much..

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation..