Good morning ladies and gentlemen and thank you for standing by. Welcome to the Orion Engineered Carbons Second Quarter 2020 Earnings Conference Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to your host Wendy Wilson, Head of Investor Relations and Corporate Communications. Thank you. You may begin..

Thank you, operator. Good morning, everyone, and welcome to Orion Engineered Carbons conference call to discuss our second quarter 2020 financial results. I am Wendy Wilson, Head of Investor Relations and Corporate Communications. With us today are Corning Painter, Chief Executive Officer; and Lorin Crenshaw, Chief Financial Officer.

We issued our earnings press release after the market closed yesterday and have posted a slide presentation to the Investor Relations portion of our website. We will be referencing this presentation during the call. Before we begin, I'd like to remind you that some of the comments made on today's call are forward-looking statements.

These statements are subject to the risks and uncertainties as described in the Company's filings with the SEC. Actual results may differ materially from those described during this call.

In addition, all forward-looking statements are made as of today, August 5th, and the company does not undertake to update any forward-looking statements based on new circumstances or revised expectations.

Also, non-GAAP financial measures discussed during this call are reconciled to most directly comparable GAAP measures in the table attached to our press release. I will now turn the call over to Corning Painter..

our operational response to COVID-19 so far, and select leading indicators of recovery in our business. As always, we'll be happy to take your questions at the conclusion of our comments. Turning to Slide 3. Second quarter demand for Carbon Black was dramatically impacted by the pandemic.

Throughout the crisis, we focused on protecting Orion's employees and production capability, ensuring supply chain stability, enhancing our financial standing and supporting our customers' needs as they ramp up their production. Each month, since April, we saw Rubber Carbon Black demand improved sequentially across all geographies.

This trend continued into July. We believe our Rubber Carbon Black business will continue to be one of the first economic sectors to respond to improvements in the broader situation.

From a financial perspective, we reported adjusted EBITDA of $15.2 million and generated $85.7 million in operating cash flow despite Orion's lowest volume quarter on record, reflecting a $77.3 million working capital reduction and $10 million in fixed cost reductions year-over-year.

We also continue to take proactive steps to enhance liquidity by drawing the entirety of our uncommitted lines of credit and installing ancillary lines that increase our liquidity accessible at any EBITDA level by $36 million. Turning to Slide 4.

I'd like to provide an overview of the steps we have taken to manage our business in the face of a pandemic. Starting with people. The most important topic is protecting our people.

We continue to distribute personal protective equipment, such as masks, segregate work teams, implement daily temperature checks, maintain strict cleaning protocols, and in South Africa, we initiated a private shuttle service, so our employees would not need to use crowded transport systems.

We also continued our return to office protocols for office-based personnel, depending on geography. We'll continue to follow governmental and World Health Organization guidelines and modulate bringing employees back into offices as the virus wanes in geographies where it is not fully contained. Moving to production.

First, plants can operate without people. So keeping them safe and maintaining confidence that we care is important. Second, during the recovery phase, managing demand surge is critical. We are continuously adjusting our production plans and CBO procurement to support our customers in this very dynamic demand landscape.

Notably, at several plants in the U.S., when production rates were quite low in the early months of the quarter, we worked collaboratively with union leaders and workers to achieve great flexibility in terms of roles and responsibilities across the labor pool.

This allowed us to use this downtime to advance projects, enhancing the safety and reliability of our plants. Such efforts also temporarily lowered fixed costs, as labor was capitalized. Despite these efforts, we have had to implement temporary layoffs and part-time work arrangements. Moving to customers.

We are staying very close to our customers to keep them supplied in the face of what can be very large swings in demand and deviations from forecasts, as I alluded to earlier. From a financial perspective, during the quarter, we initiated actions to reduce expenses in 2020 by $10 million to $15 million.

A combination of strategies will drive these savings, some of which will result in temporary savings, such as salary freezes, lower discretionary spending, temporary layoffs and lower incentive compensation, while others will result in permanent savings such as select headcount reductions.

Roughly $3 million of these savings are expected to result in permanent reductions to our cost base. From a liquidity perspective, we took two actions during the quarter that further solidified our financial standing.

First, in April, we drew $40 million, the entirety of borrowings available under our uncommitted lines solely to eliminate any funding risk under those lines. Secondly, in June, we added two new ancillary lines that together bolster liquidity available at annual leverage ratio by $36 million.

Finally, we continue to take efforts aimed at lowering safety stock levels and have continued to step up credit monitoring of customers to protect our balance sheet, while holding the line on terms.

From a supply chain perspective, we continue to believe that we have adequate access to raw material supplies at all our plants for this foreseeable future.

Friction we experienced during the quarter was primarily around uncertainty in demand and order patterns and continued reliability issues in the logistics sector, which we were able to manage through agile production scheduling and adapting inventory strategies.

Nevertheless, we are tightly monitoring our supply chains, particularly for consumables and international shipping ability and have qualified alternative suppliers as needed. Communities in ESG.

As I mentioned earlier, we successfully completed our air emission control project at our Orange, Texas plant, despite the requisite physical distancing protocols. Additionally, we have continued to support the communities surrounding our sites by donating PPE, cleaning equipment to those on the frontlines.

For example, in South Africa, the team donated hundreds of blankets and thousands of masks to the COVID-19 isolation facility located at the Nelson Mandela Bay Stadium in Port Elizabeth. Now turning to Slide 5. I'd like to shed light on what we are seeing and share a few thoughts on the current pace and shape of the recovery.

This slide shows the demand pattern around the world as of July. As you can see, on a year-over-year basis, our Rubber Carbon Black business has recovered sharply since April. Specialty Carbon Black, as we predicted, deteriorated in May before improving sequentially in June and July.

As a reminder, back in April, Rubber volumes were down year-over-year in the high 60s percentage range in the Americas and EMEA and 30% in APAC. In April, Specialty volumes were down year-over-year in the range of 38% to 8%, depending upon the geography with the Americas and EMEAs regions lagging and the APAC region clearly holding up much better.

As of July, Specialty volumes had recovered somewhat, but now lag Rubber. Clearly, volume showed strong resilience in July. I would just caution that we benefited from some restocking, some timing-driven purchasing and some reliability-based volumes in the month.

It's quite possible that this might be the strongest month in the quarter, considering the continued spread of COVID-19 in many of our markets. Slide 6 provides a breakdown of the complexion of our business by end-markets and our view of how select markets will emerge as the economy rebounds.

It's still quite early, but the dynamics are playing out largely as predicted on this slide. From a replacement tire perspective, which makes up roughly 60% of our Rubber business, we have seen a relatively sharp bounce off the April bottom. Levels are still below 2019, but demand has significantly picked up vis-a-vis the doldrums of March.

Mobility and congestion are good coincident gauges of miles driven and therefore, the health of this business. Based on Apple's mobility data, these measures were much stronger than April across all geographies. Although recently, there has been some leveling off in the U.S.

Shifting gears from the replacement side of the Rubber business to the original equipment side, which makes up 40% of Rubber volumes and 15% of our Specialty volumes, this business will ultimately track global sales of new trucks and light vehicles. This market has also picked up from April.

According to IHS, whereas in April, global light vehicle production was down 61%, as of June, production was down 26%.

While we are encouraged by the improvement, we expect this business to lag the replacement market and be more tethered to the key indicators of a classic downturn in the business cycle, such as unemployment levels, discretionary consumer spending and consumer confidence.

A common question in recent months has been, what's likely to change long-term for the Carbon Black business as a result of this crisis? I don't think there is going to be a change.

Miles driven, automobile servicing and motor vehicle production, the drivers of the Rubber Carbon Black business are likely to continue supporting the 3% growth this sector has reliably delivered over many years.

Meanwhile, people are likely to continue feeling most comfortable riding in their cars, not on planes or public transportation for some time to come.

Within the 85% of our specialty business does not go into automotive, at this stage, the trends we are observing across the broad range of diverse end-markets we serve are proving to be more cyclical than secular in nature and Specialty is well positioned to recover as the broader economy rebounds.

On Slide 7, now turning to our second quarter results in greater detail, as you can see on Slide 7, against the backdrop of the lowest volume in Orion's history, even compared with 2009, adjusted EBITDA declined by approximately $56 million, reflecting the broad based rubber and specialty volume declines.

Price in the Rubber segment particularly in the U.S. and Specialty mix were favorable during the quarter. And now, I'll turn the call over to Lorin..

Thank you very much, Corning. Now turning to Slide 8, volumes were down 42% year-over-year and 33% sequentially, with lower demand in both segments and in all regions. Notably, the absolute volume level we experienced was roughly 15% to 20% worse than the worst quarter of 2008, the last major economic downturn.

Against this backdrop, adjusted EBITDA was $15.2 million, basic EPS came in at negative $0.30 per share and adjusted EPS was negative $0.14 per share. Contribution margin declined 48.2% year-over-year, primarily driven by lower volume, partly offset by base price increases in rubber.

As Corning indicated, cash flow was a highlight for the quarter, despite facing a tough environment, with an exceptional $77.3 million working capital reduction, in line with the levels that we expressed on the first quarter call, driving operating cash flow of $85.7 million and free cash flow of $53 million, as defined as adjusted EBITDA minus CapEx, minus the change in working capital.

Slide 9 explains the drivers behind contribution margin, adjusted EBITDA and net income in greater detail. Starting at the upper left-hand side, contribution margin declined 48% year-over-year, as lower volume and the impact of lower oil prices on margin offset base price improvement in both segments and favorable mix in Specialty.

During the last call, we shared that decremental margins in the range of 30% to 35% for Rubber and in the mid-40s for Specialty, were good forecasting proxies during the current downturn and this proved to be the case, excluding the contribution to lower revenue related to FX and simply passing through lower feedstock cost.

Adjusted EBITDA fell 79% year-over-year to $15.2 million, reflecting the steep drop in contribution margin. Notably, cost reductions of around $10 million cushioned the impact somewhat, of which roughly two-thirds were manufacturing-related, showing up in cost of goods sold, and one-third were S&A-related.

The manufacturing cost reductions were primarily driven by lower bonus accruals, higher than usual capitalization of labor, as select personnel had time to advance select critical safety and reliability projects and temporarily lower maintenance repair and overhaul cost.

The decline in S&A was primarily driven by lower bonus accruals and discretionary expenses such as travel.

Overall, for modeling purposes, given the timing of the way expense reductions will impact the P&L the balance of the year, the second-half S&A runrate should roughly match the first half run rate, with distribution cost driving that number higher or lower depending upon volume levels.

Finally, we recorded a net loss for the quarter, primarily driven by lower adjusted EBITDA, reflecting the broader economic dynamics that we have described in detail, partially offset by lower taxes. On Slide 10, you see our year-to-date sources and uses of cash.

The main message is that despite the extraordinary volume decline we have experienced, we generated positive cash flow for the quarter and cash from operations has funded all but $11 million of our cash needs year-to-date with working capital providing a countercyclical buffer as expected.

I would add that the reduction in net working capital related to lower inventory was not entirely attributable to lower oil prices. I want to salute our supply chain leaders, plant managers and planners around the world who work diligently despite very low volumes to drive inventory down sequentially, even excluding the impact from oil.

As a result of the working capital reduction, over 80% of our year-to-date borrowings have proven to be strategic, as expected, with $79 million of the $95 million of year-to-date borrowings serving to simply bolster our overall cash position, reflecting a significant revolver draw during the first quarter and uncommitted credit line draws during the second quarter.

Slide 11 summarizes our leverage and liquidity profile at quarter end. Net leverage was around 3 times, up from 2.5 times at the end of the first quarter.

Liquidity available at any leverage level was $333 million, up $86 million sequentially from $247 million last quarter, primarily driven by cash from operations and the conversion of another $45 million of revolver capacity to ancillary capacity. We expect leverage to rise for the rest of the year.

However, as a reminder, our one financial covenant, a net leverage test of 5.5 times is a springing covenant. It's only in play when revolver borrowings exceed 35% of our EUR 250 million revolver commitment level.

Since debt drawn on ancillary lines does not count towards this 35% trigger and we have now converted two-thirds of our revolver to ancillary lines, our leverage could actually exceed 5.5 times and the covenant still not be in play.

As a result of our success at converting a significant portion of our revolver to ancillary capacity, we can now borrow 100% of the EUR 250 million commitment under our revolver at any adjusted EBITDA level without our financial covenant being in play.

The chart at the bottom of the table shows what our liquidity stack would look like on a pro forma basis where we did access the full amount.

Overall, as we plan for a wide range of scenarios for how the economic outlook may transpire over the coming quarters and years, the strong state of our liquidity and the absence of any debt maturities until 2024 gives us great confidence in our ability to successfully navigate through this downturn.

Moving to Slide 12, Specialty volumes fell 29% year-over-year and 15% sequentially for the reasons detailed earlier. Geographically, volumes were down in all regions and across each of our core end-markets.

From a profitability perspective, gross profit per ton declined 23%, almost entirely due to sharply lower volumes, partially offset by mix, with decremental margins in line with expectations around the mid-40s, excluding the contribution to lower revenue related to FX and simply passing through lower feedstock cost.

The next slide breaks out the major year-over-year drivers of adjusted EBITDA, which were lower volume, partially offset by positive price and mix. Turning to Slide 14, Rubber volumes were down 46.4% year-over-year and 39.2% sequentially for reasons detailed earlier.

Geographically, volumes were down in all regions and across each of our core end-markets.

From a profitability perspective, gross profit per ton declined 69%, primarily due to sharply lower volumes, but also due to unfavorable inventory valuation adjustments, partially offset by price and lower fixed costs with decremental margins in line with expectations in that 30% to 35% range, excluding the contribution to lower revenue related to FX and simply passing through lower feedstock cost.

Slide 15 shows the development of adjusted EBITDA with sharply lower volumes, the primary driver of the decline, as previously discussed. With that, I will turn the call back over to Corning..

Thanks, Lorin. Moving to Slide 16. As you know, in March, we withdrew our 2020 guidance. However, we continue to provide insights and sensitivities on the drivers that we believe will be helpful to investors in developing financial scenarios for the balance of the year.

We are happy to answer any questions regarding these assumptions detailed on this slide. At this point, I'd like to share an update on our CapEx outlook. We are returning our 2020 capital forecast to the $140 million to $145 million range.

Last quarter, we lowered our projected CapEx spend for the year by about $15 million, anticipating that physical distancing mandates would require us to slow work on complex projects requiring heavy staffing, which it did.

However, there are several smaller safety, reliability and productivity-related projects that we were able to advance safely, often taking advantage of demand-related downtime. These projects will strengthen our asset base and position us to emerge stronger from this downturn. During our last call, we estimated that the cost of the U.S.

air quality investments would be $250 million, plus or minus 8%. At that time, I indicated that we were proceeding towards a stage-two front-end loading or FEL2 quality design estimate for the final two plants and that upon completion, it would represent the most robust cost estimate we have had to-date.

Just as background, an FEL is a body of work conducted early in a project when it's easier and more cost-effective to make design changes. Doing this work does add cost, but it sets the project up for ultimate success. Front-end loading activities fall into three stages, FEL1, 2 and 3. FEL2 is developed up to a predefined level of detail.

Not yet sufficient for construction and operation, but enough to develop a cost estimate, a schedule estimate and to make any critical decisions that will influence the final design of the project. For example, budgetary estimates are secured from the key equipment vendors. In our case, we’ll also have the insights based on our first two plants.

A preliminary version of the FEL2 report was recently completed and it confirms the cost range that we previously shared. Taking the $250 million midpoint, we expect around $115 million or 45% will have been spent between 2018 and the end of this year, with the remaining $135 million spread between 2021 and 2023.

We are pleased to be on track to be almost halfway done by this years' end and have the most robust estimate to-date of our ultimate costs. We will now press forward with an FEL3-level estimate for the third plant and we'll update you on the likely timing of its completion in future quarters.

This estimating process sharpens our focus on the importance of continuing to drive pricing to reinvestment level returns, such that we achieve adequate returns on invested capital. Turning to Slide 17, in closing, I would like to highlight a few takeaways from this quarter.

First, I am pleased that we generated positive cash flow despite such an extraordinarily difficult economic environment and secured additional liquidity in the throes of the worst quarter volume-wise in our company's history. These achievements reflect well on the resilience of our business and the confidence of our financial partners in the same.

Second, demand in the Rubber segment is recovering already as manufacturers ramp up their production. How the pandemic will play out from here and what public health measures will be taken, we cannot say. However, we are confident that this business will continue to be one of the first to rebound and is resilient.

Third, I want to highlight that our Specialty business delivered solid profitability, mid-teens margins in these extraordinary times, while demand will reflect the broader economy, what we just experienced demonstrates the quality and the strength of that franchise.

We are managing the company for long-term success and increased shareholder value and I truly believe that we will emerge from this challenging period stronger. We think the underlying demand for Carbon Black and therefore our earnings power remains unchanged. Our balance sheet and liquidity position is strong.

The recent FEL2 estimate provides the greatest clarity we have ever had on the EPA investments. And though the global economy may well be in for a long, tough period, both of our businesses enjoy substantial earnings leverage to the eventual recovery. Operator, please now open up the lines for questions..

[Operator Instructions] Our first question is from Josh Spector with UBS..

Yes. Hey guys. Good morning. Thanks for taking my questions.

Just on the comments on July trends and potential restocking being a factor in North America and Europe, is there any way for us to get a feel for how much that could be impacting trends near-term, either by looking at maybe June versus July trends? Or if you have any feel on maybe replacement tire market takeaway trends from retail outlets? Anything that might help us frame that?.

Unfortunately, we don't have the ability to be very precise on that and in fact, when we talk to our customers, I think people are very transparent and trying to help each other work through it. I would say they see pretty volatile conditions themselves.

So just as a – I would say, just as a general caution that statement versus that we have a lot of insight to exactly what's happening from a restocking point of view..

Can you share where volumes were down in June versus July?.

I'll say this that July was a significant increase from June, I think beyond that is commercially sensitive..

Okay. And then, just on pricing in Specialty carbons. I mean I think pricing was only down a few percent, which is kind of surprisingly small given the move in energy and feedstock prices. Just trying to think about how you expect that to unfold, maybe over the next couple months.

Do you expect any further pricing declines? Is that a lag? Or do you expect to hold pricing better now than perhaps you did in prior cycles?.

So, and you are speaking specifically around Specialty, yes?.

Yes, specifically on Specialty..

Okay. So if you were going to look at our slides where break out the major backdrop on that, the EBITDA walk. It show we are actually a positive there. That's more on mix.

I think that all in all, given my goodness, all the changes in demand and the disruptions in the market, Specialty pricing has proven to be really quite resilient going through this and I expect that to continue to hold up..

Okay. Thank you..

[Operator Instructions] Our next question is from Jon Tanwanteng with CJS Securities..

Good morning gentlemen. Thank you for taking my questions and very nice quarter, all things considered..

Thank you, Jon..

Thanks, Jon..

My first question is, just on the working capital drawdown in the quarter and the tailwind from the energy prices.

Are you expecting to keep that for the foreseeable future? Or if you are expecting some sort of reversal, to what extent would we see that in the next quarter or two?.

Yes. So our balance sheet reprices on about a 60 to 90-day basis. I'd say 60 to 90 because our inventory turned pretty slow in the second quarter. As we look forward, it all depends on your view on oil prices.

If they hang out here in say, the mid-40s, then we'd actually expect to invest in working capital in the third quarter because our expectation is that volumes will be stronger in the third quarter.

And so, it all depends on where oil prices go, but on an oil price-neutral basis, we'd expect to invest in working capital, because we expect volumes to be stronger..

Got it. That makes sense.

And then, Lorin, how should we think of incremental margins heading into a recovery out of the trough given that you are layering in all these ongoing costs and efficiency efforts?.

Yes. I think that the proxy we shared, that 30% to 35% on Rubber and mid-40s on Specialty, works on the downside and it works on the upside.

I would caution you on the quarter, we were thrilled to see the fixed cost reduction, but some of those cost reductions related to, say, reversing bonus accruals and capitalizing labor in a slow time, those will not persist. And so, we beat expectations, I think, on the decremental margins.

But I would encourage you to stick with that 30% to 35% and mid-40s and that will serve us well on the upside..

Okay. Got it. And then, just a little more color on the commentary regarding July possibly being the strongest month from Corning.

Can you get into a little bit more detail regarding what insights drove that commentary? Either what you are seeing at customer inventory levels, whether it's some kind of sell-through data or maybe expectations of less or more seasonal downtime at your clients, what have you?.

Right. So, as one thing is just as we look forward for how we see our order book, I'd say, we see stability rather than increasing volumes. So I think just our kind of read of actual movements on the ground would just say, certainly, the pace of the recovery, I think, may pause.

I think also you can look at supplemental unemployment insurance in the U.S. now being cut back. You can look at the spread of COVID-19 in many geographies and just realize that those are things that are going to be a headwind for the global economy, and we are going to be a part of that.

So it's more statements around macro things than any specific insight around inventory levels around specific customers. That's our read of what's happening versus really high-quality information being shared..

Got it. That makes sense. Thank you very much..

[Operator Instructions] Our next question is from Mike Leithead with Barclays..

Mike?.

Hello. Sorry..

Yes. We hear you now..

First two questions on CapEx.

The increase in this year's CapEx, were those projects pulled forward from 2021 or just additional maintenance that you are doing because you had downtime? And second, the EPA project, that $135 million remaining, how should we think about that phasing roughly as we think through the next couple of years?.

Okay. So I'd say it was a mix of some projects that were slated for next year, also a mix of some projects that we knew we needed to do. It will require a total site outage and we hadn't really scheduled in a time when we were going to do that.

So we took advantage of the outages that we had to pull those forward, as well as have allowed us to work with our teams and our unions to come forward with kind of a win-win approach as we work through this difficult time.

Looking forward on the EPA, roughly speaking, next year, I'd say about $65 million, then $50 million then, let's say, $20 million..

Got it. Okay. And then just as we think about pricing into next year, obviously, you've been very clear about your philosophy around reinvestment economics, but you will probably end the year at a lower volume than last year.

So, how do you think about kind of those dynamics heading into next year, obviously, trying to push price versus maybe a weaker demand backdrop?.

Well, I think, first of all, the key thing is, we are pricing for 2021, not 2020. And I think you can look at the size of that rebound that we reported in Rubber Carbon Black and say, I think 2-21 is going to be a great year.

If you look at 2010, coming out of 2009, for the industry, it was a great year and beyond that, I'd say the underlying factors that drive it, particularly in North America around on sourcing of tire production, but the absolute absence of new Carbon Black factories going in, that just sets this up and against that, we have the backdrop of the latest trade friction, the U.S.

moving towards implementing new tariffs on tires. I think all that sets it up for another successful year..

Okay. Thank you..

[Operator Instructions] Our next question is from Josh Spector from UBS..

Hey guys. Thanks for letting me get in again.

I was just curious, [Indiscernible] by the impact of the inventory revaluation in the quarter and any comments on what you expect for that next quarter, if anything?.

Josh, I think I got your question. You broke up a little bit.

Like – would you just repeat it, please?.

Sorry about that. Just trying to quantify the inventory revaluation in the quarter..

Sure. So, the impact on the revaluation was only about $5 million, less than we expected coming into the quarter. The oil price rally over the last 45 days of the quarter was very helpful. And so, it was about $5 million.

And no, we don't expect, absent some sharp precipitous decline in oil prices or something of that sort, any carryover impact, that should be behind us at this point..

Okay. Thanks. And just on the raw materials side, I mean, in earlier comments, you said you have all raw materials secured. But I was curious if you could comment on any constraints in the quarter given the volatility in refining and chemicals markets.

Was there any issue perhaps sourcing the exact material that you normally get? Is there any advantage or disadvantage from a cost perspective that would flow through over the next couple quarters that we should consider?.

In general, I'd say, no. We had stability in our supplies and that would probably also turn over to the commercial situation. There is always a few opportunities one way or the other, but nothing out of the ordinary. I think it just reflects the overall stability of the business model that really just was not an issue for us..

Okay. Thanks. And I'll maybe try one more, just a higher level question. In a scenario where trends in July become kind of the steady state over the next year.

Is there anything that you would do differently from a production or operations standpoint to position yourself for that? Or would it just be keeping some of the temporary cost out longer? Just thinking in a longer-term scenario, would you actually reposition or do anything really different?.

Yes. So, I think the question is really, would we change our production footprint, that kind of thing. And you could be in a situation where in a given facility, might you idle a reactor? That's totally possible.

But when you consider the distribution costs and the advantage of location and the fact that our reactors are different and making different grades, I think we'd be very unlikely to close a facility driven by market conditions at current levels..

Got it. Thank you..

[Operator Instructions] Ladies and gentlemen, we have reached the end of the question-and-answer session. I would like to turn the call back to Corning Painter for closing remarks..

Hello, everyone. Thank you one more time for joining us today in this different time slot that we selected for this week. We appreciate your interest in the company and appreciate your time. Have a good day..

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