Ladies and gentlemen, thank you for standing by, and Welcome to the Ingevity second quarter earnings conference call. [Operator Instructions] As a reminder, this conference is being recorded..

I'd now like to turn the conference over to Dan Gallagher, please go ahead. .

Thank you. Good morning, everyone. This is Dan Gallagher, Vice President, Financial Planning and Analysis and Investor Relations at Ingevity. Welcome to our second quarter earnings conference call..

Earlier this morning, we posted a presentation onto the Investors section of our website that we will be speaking to on today's call. If you haven't already done so, I would encourage you to download this file in order to follow along on the call. You can find it by visiting ir.ingevity.com..

On Slide #2 of that deck, you'll see our disclaimer that today's earnings call may contain forward-looking statements. Relevant factors that could cause actual results to differ materially from these forward-looking statements are contained in our earnings release and in our SEC filings, including our Form 10 and our most recent Form 10-Q. .

Ingevity undertakes no obligation to publicly release any revision to the projections and forward-looking statements made during the call or to update them to reflect events or circumstances occurring after the date of the call. .

Throughout this call, we may refer to non-GAAP financial measures, which are intended to supplement, not substitute for, comparable GAAP measures.

Definitions of these non-GAAP financial measures and reconciliations to comparable GAAP financial measures are included in our earnings release and can be found on the Investor Relations section of our website..

For the purpose of this earnings call, 2016 non-GAAP financial measures are compared to the equivalent 2015 pro forma non-GAAP measures. .

Our agenda is on Slide 3. With me today are Michael Wilson, President and CEO; John Fortson, Executive Vice President and CFO..

As you can see by our agenda on Slide 3, Michael will provide some commentary on the highlights of the quarter and will review our performance for our 2 segments. John will discuss our current financial status, and then Michael will make a few brief closing remarks. At that point, we will open up the phone lines for a Q&A session..

Joining Michael and John during the Q&A portion of the call would be Ed Rose , President of Performance Chemicals; and Ed Woodcock, President of Performance Materials..

With that, I'd like to turn the call over to our President and CEO, Michael Wilson. .

Thanks, Dan, and good morning, everyone. Thank you for joining us this morning and for your interest in Ingevity. We are very pleased to host our first-ever earnings conference call as an independent publicly traded company..

We're even more pleased to report that our second quarter results were solidly in line with our expectations. .

If you'll turn to Slide 4, I'll walk you through some highlights for the quarter. .

On May 16, we began operating as a stand-alone company following a tax-free spin-off from WestRock Company. On that day, our stock under the ticker symbol NGVT began trading in the regular way on the New York Stock Exchange.

The separation occurred by means of a pro rata distribution of all the stock of Ingevity to WestRock stockholders, who received 1 share of Ingevity common stock for every 6 common shares of WestRock..

Yesterday and today mark important milestones for our business as we report earnings publicly for the first time..

As I mentioned earlier, our results were solidly in line with our expectations.

We reported second quarter net sales of $249 million, despite sales that were 5% lower versus the prior year second quarter when the business operated as the specialty chemicals division of MeadWestvaco, we achieved adjusted EBITDA that was essentially level with the prior year quarter..

Our adjusted EBITDA of $58 million translated to diluted adjusted earnings per share of $0.66. Our second quarter adjusted EBITDA margin of 23.5% was up from the prior year quarter adjusted EBITDA margin of 22.2%, representing an improvement of 130 basis points.

Our sequential comparisons reflect the seasonality of some of our end-use applications, particularly sales to the pavement industry. Versus the first quarter of 2016, second quarter sales were up 22% and adjusted EBITDA was up 29%..

A key contributor to our strong performance this quarter was our ability to reduce costs across the company.

Company-wide cost-reduction and productivity initiatives launched in the first quarter aimed at lowering SG&A, manufacturing and supply chain costs and minimizing stand-alone costs have benefited the results by $15 million through the first half of the year..

Perhaps more notably, our results reflect strong growth in our high value-added businesses. .

Turning to Slide #5. You'll see that our Performance Materials segment set another quarterly record for sales. This was driven primarily by increasingly stringent regulations for automotive gasoline vapor emissions enhanced by robust vehicle sales, particularly in the United States..

Sales in our Performance Materials segment were $75 million, up $11 million or 17% versus the second quarter of 2015. This growth was a result of strength across all activated carbon applications. Segment EBITDA of $30 million was up $7 million or 28% versus the prior year segment EBITDA..

As a reminder, our activated carbon products are essential to automotive gasoline vapor emission control. The emissions we control are not from the tailpipe but from the gas tank and fuel systems. These emissions occur while the vehicle is parked, running or being refueled..

We've seen a substantial increase in volume and revenue for our products that are used to comply with the harmonized U.S. Tier 3 and California LEV III regulations. These regulations are phasing in now across the U.S. and Canada, with minimum new vehicle phasing compliance requirements of 60% by 2018, 80% by 2020 and 100% by 2022..

Regulations are also continuing to advance in other parts of the world. In China, Beijing will be implementing new regulations, effective December 2017. In addition, this quarter, the Chinese Ministry of Environmental Protection published the China 6 regulation for comment on May 13. The China 6 regulation would be a national regulation. .

Both of these standards called for the use of onboard refueling vapor recovery, or ORVR systems, which would require larger amounts of more highly engineered activated carbon products than do current regulations. The timing for implementation is yet to be determined but could begin as early as 2018 or 2019..

Enhancing the positive impacts of the regulatory trend is growth in vehicle production and sales. North American light vehicle production is up 2.6% in the first half versus the same period last year. And as gasoline prices have remained low, there's been a shift in the types of vehicles sold.

In the U.S., sales of light trucks, which utilize more of our material, are up 9% on a year-over-year basis..

Regionally, the European auto market continues to perform well, as does Asia's, despite slower year-over-year vehicle sales growth in China. We are continuing to innovate and advance the state of technology in this segment..

As an example, another source of gasoline vapor emissions on a vehicle is from the engine. One of our newest applications is used in the air induction system to capture these vapors. To address this source of emissions, we commercialized an innovative carbon-infused synthetic sheet.

This high-value innovation could represent a significant new revenue stream for us in the United States..

In the second quarter, the Performance Materials segment also achieved higher sales to process purification customers, primarily in the water treatment area..

Given our expectation for long-term demand growth, we continue to invest to ensure production capacity keeps pace with demand. Our new facility in Zhuhai, China continues to ramp up, and we expect to make our first shipments of product to automotive customers on schedule in the third quarter..

In addition, we've recently completed a capital-efficient debottlenecking project at our Wickliffe, Kentucky facility. .

As you can see on Slide #6, in our Performance Chemicals segment, sales of pavement technology products set a second quarter record due to ongoing adoption of our innovative technologies and strong customer relationships. This achievement partially offset volume and pricing pressure in the segment's industrial specialties and oilfield applications..

Segment sales in the quarter were $174 million, down $24 million or 12% versus the prior year. A reduction in volumes, predominately industrial specialties applications, was the key contributor to this decrease..

Segment EBITDA of $28 million was down $6 million or 18% versus the prior year quarter. This was driven by the revenue impacts, which were partially offset by FX benefits, reduced spending at the segment's manufacturing facilities and cost-reduction efforts..

While sales in pavement technologies applications were up sequentially as expected, given the seasonality of the business, they were also up 5% versus the prior year second quarter, while up 8% for the half year.

Sales in North America, our largest geography for pavement technologies applications, were up 16% year-to-date, driven predominantly by continued technology adoption, including strong sales of our Evotherm and Evoflex warm mix asphalt product lines..

Year-to-date, 18% of our Evotherm and Evoflex sales have been for formulations introduced in just the last 12 months. These formulations allow better workability with recycled material..

In December of last year, a new longer-than-usual 5-year Federal Highway Bill was signed into law. It's the first time since 2005 that this key piece of infrastructure legislation has exceeded 2 years in duration. We believe this will enable greater predictability regarding major projects undertaken by state departments of transportation..

Our European and Latin American sales also increased by double-digit percentages, while Asia, and more specifically, China, is down substantially due to declines in paving activity. This is the first year of the new Chinese 5-year economic plan and as typical, we're seeing lower spending in the first year of a new plan..

Sales into industrial specialties applications, and these include printing inks, adhesives, agricultural chemicals, lubricants and others, were down 17% versus the prior year period. This was due mostly to a 13% decline in volumes as a result of continued pressure from both direct competitors and substitute materials..

As the price of oil remains low, substitute materials, such as hydrocarbon resins, become more competitive in our key markets. We continue to adjust mix and reduce cost in this business in order to maintain performance. In addition, we are continuing our focused efforts to grow organically in certain applications..

In the second quarter, we introduced several new innovative products. For example, we introduced a new additive for metalworking fluids, which provides high mixed film boundary lubrication, low foam, ease of formulation and hydrolytic stability.

We introduced several new innovative ink formulations providing alternatives to hydrocarbon technology, and we introduced a new additive for formulated crop protection products. .

When compared sequentially to the first quarter of 2016, sales in our industrial specialties applications rose by 2%. Sales in our oilfield technologies applications were down 27% versus the prior year quarter, primarily due to a 21% reduction in volumes.

This business has been negatively impacted by low oil prices and the consequent reduction in oil drilling and production. That said, it accounts for a small portion of our total sales, only about 6%. .

As you know, oil prices have fallen from the $100 barrel level 2 years ago down to its current level in the $40 per barrel range. According to Baker Hughes, U.S. and Canadian drilling rig count is down approximately 47% versus this time last year.

To support our oilfield customers, we've been working on introducing new products and formulations to this industry that deliver expected performance at lower cost. For example, we've recently introduced our new EnvaMul line of emulsifiers specifically designed for oil-based muds and drilling applications where cost is a primary driver.

We're also leveraging our global footprint to geographically diversify sales for our expanding product line, specifically in the Middle East. .

Despite the difficult market conditions, sales rose sequentially versus the first quarter by 9%..

In summary, for the quarter overall, strong growth in our Performance Materials segment and in pavement technologies products in our Performance Chemicals segment, coupled with our cost-reduction initiatives, enabled us to maintain earnings, while improving margins despite ongoing headwinds for portions of our product portfolio..

At this point, I'll turn the call over to John Fortson, our Executive Vice President and Chief Financial Officer, for a more detailed review of our financial status. .

Following John, I'll close with a few remarks prior to the Q&A.

John?.

Thank you, Michael. Good morning, everyone. There are 3 areas I would like to cover. First, I will provide some additional color on our financial performance in the quarter and over the first half of the year. I will review our cash generation and capital structure, and lastly, I'll review and provide some additional details on our guidance..

If you turn to Slide 7, as Michael mentioned, the second quarter as well as performance in the first half of the year was in line with our expectations. .

Revenues of $249 million in the quarter and $453 million for the first half were down 5% and 10% each from their prior periods, respectively. This reflects the continued pressure in our Performance Chemicals segment, being largely offset by continued growth in our Performance Materials segment..

Adjusted EBITDA of $58 million and $104 million for the second quarter and first half of the year, respectively, are essentially level for the quarter and represent a 2% decline for the first half of 2016 when compared to last year. Margins improved in both measured periods..

Second quarter adjusted EBITDA margins increased 130 basis points compared to the prior year quarter and 180 basis points when compared to the first half of the prior year..

Performance Materials Q2 2016 segment adjusted EBITDA margins, while remaining above 40%, dropped sequentially by 320 basis points. This was primarily due to planned maintenance outages that were not significant in Q1 and higher sales to process purification customers..

Because of the volume and price pressure in Performance Chemicals, we remain very focused on cost reduction. We are committed to $25 million dollars to $30 million of cost reductions in this fiscal year as compared to 2015. We are on track to achieve this target with $15 million of savings already realized in the first half of the year..

We have been successful in delivering significant raw material savings, including reduced crude tall oil, or CTO costs. However, our current contractual arrangements are limiting our ability to capture further savings from lower CTO prices.

Over the next 12 to 24 months, assuming current marketing conditions persist, we would expect to see reduced CTO costs as the merchant market adjusts..

Other cost-control efforts include increased productivity in our plants despite reduced run rates, lower natural gas costs, improved FX rates and reduced SG&A spending. We are very proud of what our team has accomplished in this regard.

Every part of the organization has pulled together to prioritize and reduce costs wherever possible, while managing the spending needed to resource our growth and innovation..

SG&A in the quarter was down $3 million from the prior year second quarter and as a percentage of sales, it was essentially flat..

For the second quarter of 2016, we recorded interest expense of $5 million, net income attributable to Ingevity was $24 million. This translated to diluted earnings per share of $0.56 for the quarter. When adjusted for separation and stand-alone cost, diluted adjusted earnings per share were $0.66..

On Slide 8, you'll find some key balance sheet and cash flow information. Our net debt to 2015 adjusted EBITDA on the day of the spin was 2.5x, consistent with WestRock's commitment. Since the spin, we have paid down $19 million in debt, and as of June 30, our net leverage ratio was 2.4x..

Long-term debt was $570 million, including our capital lease obligation amount of $80 million related to the Wickliffe IDB. .

As many of you may be aware, we have assumed an industrial development bond obligation that was guaranteed by WestRock related to the construction of our Wickliffe, Kentucky facility. .

As a part of the spin-off, restricted cash was placed on our balance sheet in a trust invested in assets to meet this obligation in 2027..

We finished the quarter with $69 million of restricted cash for this purpose and additional cash and cash equivalents of $56 million..

As of June 30, 270 -- $207 million of our $400 million revolving credit facility is available to us..

We generated strong cash from earnings in the second quarter as performance in the pavement technologies portion of our Performance Chemicals segment and our Performance Materials segment both posted strong results.

This, combined with reductions in inventory and an increase in payables, led to cash from operations in the first half of 2016 of $37 million. .

We are continuing to see strong cash generation into the third quarter. However, it is important to note that we have certain payables related to the merger that have been settled with WestRock in the third quarter, and our state and federal tax payments this year are concentrated in the latter half of the year..

Trade working capital improved this quarter as we better managed inventory of CTO, saw a sizable increase in our payables. As I mentioned, these payables will be reduced in the third quarter. Accounts receivable increased significantly.

However, this is normal and in line with the increases in sales of the pavement technologies applications as we -- that we see in the second quarter as we move into the spring and summer paving months..

Paving activity will remain strong in the third quarter, before falling off dramatically with the end of the paving season. Working capital efficiency remains a priority for us in this environment..

Our CapEx in the first half of the year was $22 million. We continue to anticipate spending of about $60 million to $70 million in the year. The spending is weighted towards the back half of the year due to the timing of major planned outages.

Several of these outages are larger in their scope, as some of the maintenance and upgrades we'll be making are significant once in every 15- or 20-year type of events. .

For example, we are replacing a kiln in our Covington, Virginia activated carbon facility. .

We remain committed to generating $40 million to $50 million in free cash flow during 2016..

Our June 30 year-to-date effective tax rate is 39%. As we move forward, we continue to manage our tax rate, and we expect our effective tax rate for the year to be 36% to 38%. We have 42.1 million shares outstanding as of June 30. Additional information will be available on our 10-Q, which we expect to file later today..

Turning to Slide 9, We are tightening our guidance for fiscal year 2016 to sales of between $880 million at $910 million and adjusted EBITDA between $180 million and $195 million..

Over the next 2 quarters, we expect to see some new and some continued headwinds. The second half of the year is expected to be impacted by planned outages at several of our manufacturing facilities. This will result in plant downtime, lower fixed cost absorption and increased maintenance spending.

The pressure in industry specialties and oilfield applications is expected to continue. .

We also expect to experience normal seasonal impacts, including the end of the paving season, which results in significantly lower sales and profitability in the fourth quarter..

These headwinds will likely be countered by several factors. We expect continued growth in the Performance Materials segment and continued adoption of innovative pavement chemistries within the Performance Chemicals segment. .

Lastly, cost-reduction initiatives remain on track to deliver $25 million to $30 million for the year. In response to these expectations, we remain focused on disciplined execution.

For the balance of 2016, we are prioritizing our cost-reduction efforts and finding new growth opportunities across our Performance Chemical markets, while ensuring we continue to resource and position the Performance Materials segment to ramp up to meet the rapidly increasing regulatory demands expected over the next several years. .

Thank you, and I will now turn the call back to Michael. .

Thanks, John. Our first quarterly earnings report as a publicly-traded company reflects the diversity and the strength of our business. With the spin-off from WestRock behind us, we're highly focused on driving profitable growth, while at the same time, capturing efficiencies across the company. .

I continue to believe very strongly in the potential for our company. The attractiveness of our markets, the soundness of our strategy and now the resources and flexibilities that have come with our independence, provide us the means to create value for our shareholders. We hope you share our enthusiasm for Ingevity. .

At this point, operator, we'll open up the call to questions. .

[Operator Instructions] We will begin with the line of Michael Sison with KeyBanc. .

When you think about Performance Materials, you really had a strong first half, 20% type of operating income growth.

Can you help us gauge how the second half should perform in terms of growth?.

Mike, I think overall, I would expect that the second half of the year will sort of mirror or reflect the first half. We'll continue to see strong revenue growth as we go sequentially into the third quarter. And of course, technology adoption will continue to drive growth into the fourth.

The issue that we have in the fourth quarter is that you have more automotive companies taking downtime for the holidays and fewer selling days. So the fourth quarter is a little softer, I would say, for Performance Materials. But overall, it's the continued trajectory of strong growth. .

Right.

And then when you think about Performance Chemicals and some of the competitive pressures you talked about, what's the cadence in terms of that business heading into the second half of the year?.

I think, in general, we see that the market conditions that we have been dealing with in the first half of the year persisting into the second half. We are continuing to see competitive pressure, as we said in the prepared remarks, in our industrial specialties applications and oilfield applications.

Pavement technologies applications will remain strong in the third quarter. But of course, you move into the end of the paving season as you get into the late fall. So typically, that business falls off in Q4. So really if you think about the calendarization of our revenues and earnings, it's really Q2 and Q3, which are our strongest quarters.

Q1 and Q4 are a bit softer. And I would say, between the 2, typically, Q4 is a little softer than Q1. .

Okay, great.

And one last one, as you think about Ingevity in total for the next couple of years, what do you think the long-term potential is now that you've kind of had a quarter under your belt as a stand-alone company?.

Look, we think that the company has a bright future. There is a tremendous opportunity for value creation. We've spent a lot of time talking about what we see happening for our Performance Materials business in the automotive market. We think that's an application that could double in size over the next 5 to 7 years.

So that's clearly implying a growth rate that's sort of low to mid-teens from a revenue standpoint for Performance Materials. I think, ultimately at this point, I'm looking at the Performance Chemicals as more of a GDP growth business until market conditions improve. .

Next, we'll go to the line of James Sheehan with SunTrust Robinson Humphrey. .

A question on auto production. Some of the automakers are talking about maybe a peaking of auto builds, at least in the U.S. And this is obviously important to your automotive carbon business.

Can you talk about what you expect your growth rate to be, given that you have a higher penetration with regulation? If we were to see kind of flat auto production, what do you think your demand growth profile would look like?.

Yes, John, I think as we think about the North American market, for example, our growth projections really have that market being fairly flat. We've talked about the fact that globally, over the next -- the longer term, a 10-year period, that automotive sales growth should be 2% to 2.5% globally.

But relatively flat is the near-term projection for North America. I guess the point that I'd like to bring out is as you think about the growth drivers in this segment, it's really the adoption of the regulatory piece that is the majority of the growth -- what's driving the growth. The auto sales rate is more of an underlier to that.

So even if auto demand is flat globally, we're still going to see significant growth in this business. .

Great. And on the air and water purification piece of your business, that's obviously a lower-margin part of the business.

Do you foresee staying in air and water purification longer term? Or do you see moving 100% into automotive carbon over time?.

No, I think process purification is a segment that we will always have some participation in. It's not clearly our primary focus, but it is a market that we have served for a long period of time. We have strong customer relationships there and there's particular cases we've capacity available, it benefited the quarter. .

And could you talk a little bit more about this air induction system opportunity.

How do you frame that opportunity going forward? And when would you expect to see kind of a commercialization and material impact on your sales? ?.

Well, the commercialization is happening now. It is predominantly for U.S. automakers and selected ones of those. It is a high-value, high-margin product for us. It helps automakers who can't meet the standards through other technology, including the carbon canister technologies that we're putting in place.

Some have better fuel injection systems than others that allow them to meet the standards. But in some cases, they need this type of technology to comply. I really don't want to project sort of an overall market opportunity, but we do believe it will be significant to the segment as we go forward.

Maybe I'll just add -- ask Ed Woodcock if he has any further comments on that. .

Yes, thanks, Michael. I'd add in, Jim, that it's going to follow the same phase-in period that you're seeing with the U.S. Tier 3, LEV III. So the ramp-up of revenue generated from the air induction systems will follow that time line. .

Next, we'll go to the line of the Ian Zaffino with Oppenheimer. .

As far as the working capital reduction you're going to see throughout the year, can you maybe give us a magnitude of that or at least try help us understand what the cadence of the free cash flow is going to be as sort of the paving season and as you get some of those receivables back?.

Yes, Ian, it's John. I think what we've said is the working capital is sort of a 12- to 18-month process for us to try and work down, although we've set ourselves an objective to try and get our inventory levels back to where they were at the end of '15 by the end of this year. So that's what we're targeting. And I think, we'll hit that. .

Okay. And then on the paving side of the business. I know you mentioned the 5-year plan in China. When do we actually see the ramp in that business? I know you said first year's slow.

What is the second year versus the first year? What's kind of the third year versus the first year? Just trying to understand that ramp and what's going on there too?.

Yes, I'm not sure that I can give you a quantification in terms of how it will play out, but what we typically have seen is that the first year is the weakest. Sometimes the second year can be weak as well, but the spending does ramp as it goes through. And typically, we see the highest levels of spending in the fifth year of the plan.

So I think, where we are now, China being down for us in 2016, hopefully, it would be flat to improve in 2017. But -- then we would expect it really to ramp up '18, '19 and '20 in China. .

[Operator Instructions] Next, we'll go to the line of Christopher Hillary with Ruble Capital (sic) [ Roubaix Capital ]. .

I wanted to ask you if you could just maybe put some more details on the more unusual maintenance items that you're pointing out that are affecting the second half? And then how that would then maybe affect comparisons as we go into next year?.

Yes, I think that's a great question because we do have significant outages that are scheduled for the second half the year, and I would say they're more to the fourth quarter than the third but we do have outages in both. Of course, in every chemical business, you're going to have planned outages on an annual basis.

Oftentimes, we would plan for 1 to 2 week of -- for an outage for routine maintenance.

In this case, and it's particular, I think, to the Performance Materials or activated carbon side of the business, we have a couple of significant outages because we're replacing some major pieces of equipment that you might not typically replace but every 15 to 20 years.

And it just so happens that those are occurring this year in this year's second half. So as we think about the impact of outages for Ingevity overall in the second half of the year, it's probably from an earnings standpoint, a $10 million to $15 million impact, with the majority of that impact being in Q4.

And of course, that's reflected in our guidance. .

And next, we'll go back to the line of Jim Sheehan with SunTrust Robinson Humphrey. .

In terms of the pricing pressure you're seeing in Performance Chemicals, specifically TOFA, could you talk about what -- any changes you've seen in the third quarter to date? And is that pressure basically similar to the second quarter? Or is it starting to alleviate?.

I would say that the pressure has begun to subside, but the pressure is still downward. I think, we're going to see that continue for at least another couple of quarters, certainly not calling a bottom for that.

But certainly, the -- I guess, the slope of the decline has shallowed significantly and you could really see that if you look at the year-over-year comparisons for Q1 to Q1 of last year and then Q2 of this year versus Q2. .

Great. And in terms of your contract resets on CTO, you should see some margin benefit next year.

Is that something we should start to see in the first quarter? Or how would you see the timing of contract resets?.

Yes, I think, we're seeing some benefits already in 2016. I think we'll see some modest benefits in 2017.

As you know, we have a portfolio of supply agreements, and those range from annual to multiyear and really, I think, for the most significant of those, it's going to be at least mid-2017 to mid-2018 before we're really in a position to reset those contracts.

And of course, what happens at that point is going to depend on market conditions, supply-demand dynamics at the time that we're renegotiating those. In the meantime, we're trying to position ourselves strategically, both from a inventory standpoint and a contractual standpoint to put ourselves in the best position possible to capture savings. .

And on your paving technologies business, this is seasonally stronger in the second quarter and third quarter.

I was just wondering if you could comment, have you -- did you see any unusual activity in the second quarter that maybe represents a pull forward from the subsequent quarter? Or do you see demand in that segment similar, both second quarter and third quarter?.

I think the third quarter will be very similar to the second quarter in pavement technologies applications. .

[Operator Instructions] There are no further questions. .

Okay. Well, with that, I just want to thank all of you for participating in this morning's call. We certainly appreciate your interest in Ingevity. We do hope you share our enthusiasm for the business, and we look forward to talking with you next quarter. Have a great day. .

Ladies and gentlemen, this conference will be made available for replay after 12:30 p.m. Eastern today through September 4 at midnight. You may access the replay system at any time by dialing 1 (800) 475-6701 and entering the access code 397579. International participants may dial 1 (320) 365-3844 and enter the access code 397579. .

That does conclude our conference for today. Thank you for your participation. You may now disconnect..