Evolution Petroleum Corp

AMEX:EPM

Earnings Call Analysis

Strong growth drives Evolution Petroleum's robust Q1 performance and shareholder returns.

Evolution Petroleum kicked off fiscal Q1 2025 with a 6% revenue increase to $21.9 million, boosted by 16% production growth. This was driven by high-performing wells in SCOOP/STACK, exceeding expectations by 65%. The net income surged by 40% to $2.1 million, while adjusted EBITDA rose to $8.1 million. The company plans to drill additional wells, projecting continued strong liquids production. With a stable dividend of $0.12 planned for December 31, marking 45 consecutive payments, Evolution remains focused on maximizing shareholder value amidst fluctuating market conditions.

A Strong Start to Fiscal Year 2025

Evolution Petroleum kicked off its fiscal year 2025 with a commendable performance, showcasing the strength of its strategic initiatives. For the first quarter, the company reported total revenues of $21.9 million, reflecting a 6% year-over-year increase. This rise was primarily driven by heightened production levels from new acquisitions in the SCOOP/STACK area and the successful drilling of the first three Chaveroo wells. Although there was a decrease in the average realized price per barrel of oil equivalent (BOE), the overall revenue growth signals a promising start for the year.

Notable Growth in Net Income and EBITDA

The net income for the first quarter soared by 40% to $2.1 million, thanks in part to the increased revenues and lower operating costs. Additionally, adjusted EBITDA rose by 21% to $8.1 million, evidencing the company's ability to manage expenses effectively while driving revenue. Cash flow from operations also improved significantly, reaching $7.6 million, compared to $4.3 million in the same quarter last year.

Resilience in a Challenging Gas Pricing Environment

Despite encountering the lowest natural gas prices since the pandemic in calendar year 2024, Evolution Petroleum continued to generate positive cash flow and maintain its multi-year dividend payout. The company actively engaged in hedging activities to mitigate risks associated with commodity price fluctuations, allowing it to safeguard its income amidst volatile market conditions.

A Focus on Shareholder Returns

Evolution Petroleum has a longstanding commitment to returning value to shareholders. In fiscal Q1, the Board of Directors declared a quarterly cash dividend of $0.12 per share, marking its 45th consecutive quarterly dividend. With a cumulative total of approximately $122.5 million returned to shareholders, the consistency of dividend payments underscores the company's dedication to delivering stable returns, even in uncertain economic times.

Operational Highlights and Future Outlook

During this quarter, the company successfully brought seven new wells online at SCOOP/STACK, with three more expected to come online shortly, underpinning robust operational performance. Total production surged by 16% year-over-year to 7,478 net BOE per day, driven largely by successful drilling efforts and enhanced production techniques. Looking ahead, management expressed optimism about continued production strength, particularly in the liquids sector for fiscal 2025, positioning the company well for sustained cash flows and dividend support.

Progress in Key Drilling Projects

Evolution plans to actively participate in additional drilling activities, including four horizontal wells in Chaveroo beginning in early fiscal Q3 2025 and six more in fiscal 2026. These initiatives signal a robust commitment to expanding production capabilities and capitalizing on high-return growth opportunities. Additionally, the resumption of CO2 purchases at Delhi is expected to enhance oil production moving forward, with a typical production response anticipated within a month of increased workflow.

Capital Expenditure Guidance and M&A Activity

For the remainder of the fiscal year, the company estimates capital expenditures to be within the range of $12 million to $14.5 million, focusing primarily on strategic growth areas like SCOOP/STACK and Chaveroo. Furthermore, management remains actively engaged in identifying and evaluating accretive M&A opportunities to strengthen its asset base and further expand production capabilities, positioning Evolution Petroleum to thrive in varying market conditions.

Earnings Call Transcript 2025-Q1

[Operator]

Hello, and welcome to the Evolution Petroleum Fiscal First Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to hand the call to Brandi Hudson, the company's Investor Relations Manager. Ma'am, please go ahead.

[Brandi Hudson, executive]

Thank you. Welcome to Evolution Petroleum's Fiscal First Quarter 2025 Earnings Call. I'm joined today by Kelly Loyd, President and Chief Executive Officer; Mark Bunch, Chief Operating Officer; and Ryan Stash, Senior Vice President, Chief Financial Officer and Treasurer.

We released our fiscal first quarter 2025 financial results after the market closed yesterday. Please refer to our earnings press release for additional information containing these results. You can access our earnings release in the Investors section of our website. Please note that any statements and information provided in today's call speak only as of today's date, November 13, 2024, and any time-sensitive information may not be accurate at a later date. Our discussion today will contain forward-looking statements of management's beliefs and assumptions based on currently available information. These forward-looking statements are subject to risks assumptions and uncertainties as described in our SEC filings. Actual results may differ materially from those expected. We undertake no obligation to update any forward-looking statements.

During today's call, we may discuss certain non-GAAP financial measures, including adjusted EBITDA. Reconciliations of these measures to the closest comparable GAAP measures can be found in our earnings release. Kelly will begin today's call with opening comments. Mark will provide an update on our properties and plans that they relate to our ongoing strategy of maximizing shareholder returns, and Ryan will provide a brief overview of our fiscal first quarter highlights. After our prepared remarks, the management team will be available to answer any questions. As a reminder, this conference call is being recorded. If you wish to listen to a webcast replay of today's call, it will be available on the Investors section of our website.

With that, I will turn the call over to Kelly.

[Kelly Loyd, executive]

Thank you, Brandi, and good morning, everyone. I'm pleased to report that our team has carried the momentum established in fiscal 2024 into the first quarter of fiscal 2025. Our strong financial results this quarter underscore the effectiveness of our strategy to diversify our portfolio and mitigate exposure to commodity price volatility.

As we all know, the current energy market environment presents both challenges and opportunities. Despite volatile natural gas prices, we've benefited from strong oil and natural gas liquids revenues as a result of our diversification efforts in fiscal 2024. Our strategy is to focus on assets with steady, predictable returns that allow us to thrive even amid fluctuations in commodity prices. This adaptability is key to our approach, enabling us to prioritize growth areas while managing risks, all with the aim of maximizing value for our shareholders.

Now I'd like to highlight some key operational achievements for fiscal Q1. Our total production increased by 16% year-over-year, reaching 7,478 net barrels of oil equivalent per day, driven by the positive contributions from our SCOOP/STACK acquisitions as well as wells drilled and completed, both there and at Chaveroo. This led to a 6% increase in revenue for the quarter, supported by record oil production. At SCOOP/STACK, many of the wells are performing well above our initial expectations, generating both higher returns and stronger production than our original type curves predicted. Similarly, in Chaveroo, production from the 3 horizontal San Andres wells is meeting our expectations. These wells are a testament to our strategic focus on efficient, high return growth opportunities.

As a result, we remain confident that liquids production will be strong in fiscal year 2025, enhancing our cash flow for years to come and building on our multiyear track record of executing strategic investments for the benefit of our shareholders.

At Delhi, we are proceeding as planned with ExxonMobil on the development of Test Site 5 with the first of 3 initial wells on track to be drilled by calendar year-end. Operations are on schedule with CO2 purchases having been resumed last month which we expect will yield a positive impact on oil production and revenue, partially offset by the CO2 purchase cost. These initiatives will continue to strengthen and further diversify our organic growth portfolio. One of Evolution Petroleum's proudest achievements is our long-standing commitment to returning value to shareholders through a consistent dividend program. This quarter marks our 44th consecutive dividend payment. And as you would have seen in our press release, we announced our 45th consecutive dividend payment to be made on 12/31 for $0.12 per share.

This is a testament to our dedication to delivering stable returns through varying market conditions. Supported by a diversified portfolio of low-decline, high-quality assets that require minimal CapEx and generate steady cash flows, our dividend strategy remains a cornerstone of our approach to shareholder return. Additions like SCOOP/STACK and Chaveroo further enhance our capacity to sustain and grow these returns, reinforcing our confidence in the strength of our dividend program.

Looking ahead, we remain focused on creating long-term value for shareholders by maximizing total returns through disciplined capital management and strategic deployment. For our current asset base, we remain steadfast in our straightforward approach, expanding in high-return regions, maintaining strict cost controls and ensuring that every decision supports our dividend program. We are well positioned with our balanced portfolio of oil and natural gas assets to continue to thrive under a variety of market conditions. We will also continue to evaluate accretive M&A opportunities and invest in our existing assets to drive further organic growth. Our track record shows that we can execute effectively on both fronts, and we continue to pursue what's best for our shareholders.

With that, I'll turn the call over to our COO, Mark Bunch, to review our operations in more detail. Mark?

[J. Bunch, executive]

Thank you, Kelly, and good morning, everyone. I will focus my remarks on key operational highlights from the quarter and encourage listeners to review our earnings press release and filings for additional details across our asset base. During fiscal Q1 2025, the company's operators brought 7 wells online at SCOOP/STACK with 3 additional gross wells coming online after the quarter ended. Additionally, Evolution has agreed to participate in 5 gross horizontal wells across the acreage since the effective date of the acquisitions, 32 gross wells have been brought online.

In the Chaveroo field, Evolution plans to participate for its full 50% working interest in 4 horizontal wells and drilling block 2 for fiscal 2025. These operations are expected to begin early fiscal Q3 2025. The company has preliminarily agreed to 6 additional horizontal wells in drilling block 3 that are expected to begin in early fiscal 2026. At Delhi, production was up quarter-over-quarter due to the replacement of one of the CO2 recycle compressors that limited the CO2 injection fiscal Q4 2024. Production was also affected by the CO2 purchase pipeline being down for preventive maintenance for about 8 months from the end of February 2024 through October 2024. We're happy to announce that the CO2 purchases resumed in October.

In the Williston Basin, fiscal Q1 production was impacted by a few high-volume wells going down. Production for these wells were quickly restored during Q1. After the successful electrification project in the prior quarter, we participated in another electrification project that will further improve our lifting costs going forward. Production operations are on track quarter-over-quarter at Jonah and Hamilton Dome fields.

With that, I will turn the call over to our CFO, Ryan Stash, to review our financials in more detail. Ryan?

[Ryan Stash, executive]

Thanks, Mark, and good morning, everyone. As Brandi mentioned earlier, we released our earnings yesterday, which contains more information on our results. Now I'd like to go through our fiscal first quarter financial highlights.

In fiscal Q1, we had total revenues of $21.9 million, up 6% year-over-year. The increase in revenues was primarily due to an increase in production volumes as a result of the SCOOP/STACK acquisition and new drills there as well as production from the first 3 Chaveroo wells drilled, partially offset by the decrease in our average realized price per BOE. Net income for the first quarter increased 40% to $2.1 million compared to the prior year period, and adjusted EBITDA increased 21% to $8.1 million primarily due to increased revenue and reduced operating costs from the year ago period. Cash flow from operations also increased materially to $7.6 million for the quarter compared to $4.3 million in the prior year period.

As Kelly mentioned, our financial results highlight the strength and adaptability of our diverse asset base. In calendar 2024, we faced the lowest natural gas pricing environment since the COVID-19 pandemic. However, we continue to generate another quarter of positive cash flow while maintaining our multiyear quarterly dividend. In fiscal Q1, we continued to add hedges to meet the terms of our credit facility, which benefited GAAP net income and EPS for the quarter. Our ongoing goal for the hedging program is to reduce downside commodity price risk while preserving the maximum potential upside.

Accordingly, we will continue to monitor the market, and if presented with strategic opportunities, we may add additional hedges. We ended the quarter with $6.9 million in cash on hand and borrowings of $39.5 million outstanding under our revolving credit facility, which was used to fund the acquisitions of our SCOOP/STACK assets and total liquidity of $17.4 million, including cash and cash equivalents. In fiscal Q1, Evolution paid $4 million in common stock dividends and $2.7 million in capital expenditures, primarily related to the development in the SCOOP/STACK and Chaveroo fields.

With respect to shareholder return, on November 11, 2024, the Board of Directors declared a quarterly cash dividend of $0.12 per share of common stock to shareholders of record on December 13, 2024, and payable on December 31, 2024. This will mark the 45th consecutive quarterly cash dividend and the tenth consecutive dividend at the current price level. To date, Evolution has returned approximately $122.5 million or $3.69 per share back to shareholders in common stock dividends.

I'll now hand it back over to Kelly for closing comments.

[Kelly Loyd, executive]

Thanks, Ryan. To sum it up, fiscal Q1 was a strong start to the year, marked by our commitment to strategic growth and disciplined portfolio management. While we continue to navigate a dynamic market environment, particularly in natural gas pricing, our diversified asset base has allowed us to drive consistent production and revenue growth. Our recent investments in high-quality, low-decline assets are proving valuable positioning us well for sustainable results in the quarters ahead.

I also want to take a moment to thank the entire Evolution Petroleum team for all their hard work and dedication this quarter as well as our shareholders for their continued support and trust. Your commitment is crucial to our success and we remain focused on delivering the value you deserve. With that, I'll turn it over to the operator to begin the Q&A session. Thank you.

[Operator]

[Operator Instructions] Today's first question comes from Bobby Brooks with Northland Capital Markets.

[Robert Brooks, analyst]

So the 7 gross SCOOP/STACK wells brought online in the quarter, you mentioned how those exceeded our expectations and the plan is to bring on an additional 13 growth gross well through fiscal '25 with 3 having already went online since the quarter end. So I was just curious on, one, your -- are your expectations now higher for the next batch of wells given the results? And two, could you maybe discuss the cadence you expect in bringing on these last 10 wells online?

[J. Bunch, executive]

Yes. So the wells that we drilled are -- they came in about what our type curve projected. And so we expect the same results drilling wise from the new round of wells. We'll drill here starting sometime in January, the first 4 wells.

[Kelly Loyd, executive]

He's on a SCOOP/STACK.

[J. Bunch, executive]

Are you talking about -- am I -- I may be answering the [indiscernible]. I'm sorry.

[Kelly Loyd, executive]

Yes. So Bob, to answer your question on the wells that we have info on, which is wells so far, we have more than 3 months of data. On average, they have come in approximately 65% above our acquisition type curve. So we're very pleased with that. In the SCOOP/STACK, so the 13 number was company-wide. So SCOOP/STACK, what we know of today, and look, we expect more to come in. We just don't have them all today. We have -- the 3 wells already drilled, and we have 5 more that we've already been notified about. And those are going to occur timing-wise. Well, again, the 3 are done, right? But the next 5 sort of spread out throughout the fiscal year.

Like I said, we do expect to pick up more. We just typically do, but that's all we've been notified so far. The other ones that make up the 13 would be the 1 well in Delhi and the 4 wells in Chaveroo.

[Robert Brooks, analyst]

Okay. And just any I'm sorry, you go -- yes. So I guess just any insight -- any thoughts as to -- I mean, coming in above 65% above the acquisition type curve. Obviously, that's really notable. I can probably assume some of it is due to kind of a conservative underwriting. But is there any other -- is there some type of technical? Is there some type of technique that using to drill these wells and bring them online. That's resulting in this really strong production or anything specifically that you can point to that is driving that outperformance versus what your acquisition type curve was?

[J. Bunch, executive]

No, I don't think that there's any real difference in their performance. The difficulty in type curves in the SCOOP/STACK is the geology changes a little more often than it doesn't seem like the Delaware. So type curves are a little bit more difficult to do. And you're right, we were -- we actually tried to make reasonable type curve assessments when we did the acquisition. And we didn't want -- we certainly didn't want to be hyper-aggressive on them.

[Kelly Loyd, executive]

But for instance, Gulf port advertises 2 Bcf per 1,000 lateral foot, right? And that was kind of when we're evaluating this we hope that they got there, but it looks like some of their wells are getting there. They've been successful. So yes, we were a little conservative as we want to be.

[Ryan Stash, executive]

Yes. In fact, the Gulf port wells, there's a lot of data available yet, but a little bit of data that we have, those are going to look like a lot better than we were -- we thought they might be. So -- but again, that was -- the issue about that there a lot of data around where the Gulfport wells were in that number. That's correct. Yes.

[Robert Brooks, analyst]

Got it. And then just a follow-up, you guys mentioned in the press release and prepared remarks, you agree to participate in 5 and another 5 gross new horizontal wells on that SCOOP/STACK acreage, I just want to get some clarity, those are included in those 14 gross -- that 13 gross well number that you come online?

[J. Bunch, executive]

Yes, that's correct.

[Robert Brooks, analyst]

Got it. And then -- so I was just kind of curious, what is -- what should we expect as the production? What should we expect as a production uplift look like on those 50% working interest wells in Chaveroo? And maybe also, could you just touch on the CapEx expectations there as well?

[J. Bunch, executive]

Yes. The CapEx expectations are about drilling complete are about [ $3.5 million, 88. ] And so there'll be 4 of them. So the uptick will be -- you expect they're going to be roughly 220 barrels per day -- 220 barrels per day gross per each well. Oil. [indiscernible].

[Robert Brooks, analyst]

Yes. And then so net to use, about 110 barrels a day of oil?

[J. Bunch, executive]

Yes, that would be net to our working interest on -- the nets are usually about 80% out there.

[Robert Brooks, analyst]

Got it. And then just last 1 for me. You guys' LOE cost came in well above what I was modeling for. Is that mostly -- are the LOE costs mostly down just because of the CO2 pipeline shutdown? Or is there some -- so no, is there any efficiency gains or anything operationally that you feel you guys have achieved that driven that down as well or just mostly the CO2?

[J. Bunch, executive]

Not that substantial. The big change, the reason you would have had a big miss had been on the CO2 purchases.

[Ryan Stash, executive]

Yes. The only thing I would add, Bobby, is just as you see production from SCOOP/STACK and Chaveroo sort of become a bigger part of our company, those inherently have lower lifting costs, right? I mean Delhi and Hamilton Dome being secondary, tertiary high 30s like per barrel LOE typically, whereas the shale kind of wells have much lower, right, talking $10 to $15 per barrel. And so that's going to -- that could drive our ROE down over time.

[Robert Brooks, analyst]

Congrats on the solid quarter.

[Operator]

The next question comes from John White with ROTH Capital.

[John White, analyst]

Congratulations on a solid quarter. I know you don't give official guidance, but can you give us a ballpark figure on what CapEx might look like for the remainder of the fiscal year?

[Ryan Stash, executive]

So we still think we had guided kind of $12 million to $14.5 million for the full fiscal year. And we still think that's a good number, John. So I would say the remainder -- I don't have the number right off the top of my head, but the remainder of the year should get you to around that $12 million to $14 million total CapEx for the full fiscal year.

[Operator]

The next question comes from Jeff Gramp with Alliance Global Partners.

[Unknown Analyst]

I was curious to dig into the kind of cadence or expectations, if you will, with respect to Delhi and resuming those CO2 purchases. I know in the past, there's been some pauses or operational curtailments that have curtailed CO2 injections in the past. So wondering just kind of looking back empirically, once you accelerate injections, what's kind of the typical time line for the field to make a production response? Does that take a quarter or 2? Or what should we kind of think about the Delhi production trajectory looking like?

[J. Bunch, executive]

In the past, when this has happened, you've seen production affected reasonably quickly, probably then you start to see it within a month or so as they start to bring back injection rates. And we already saw an increase in production anyway from the recycle being brought back on. So this is just going to add to that. And -- but it will be a movement upward. We expect that our rates will go higher, but then the overall effect will be just an overall flat or decline.

[Kelly Loyd, executive]

Yes. So there are really 2 issues that affected CO2, right, during the time frame that we're talking about, right? The recycle -- the compressor, it was down.

[J. Bunch, executive]

Yes. The recycle was down for a while, and that caused -- and that's a large part of the reinjection volume. So we had reduced volumes. And then we also, for 8 months, the delta line was down, so we didn't purchase CO2.

[Kelly Loyd, executive]

Yes. So at the end of July, the recycle came back. And so we saw a fairly immediate response there. And then now with the Delta line, the purchase line being back on, we do expect to see a positive production response over time with that.

[Unknown Analyst]

Great. So would you say it's not particularly aggressive to expect the next fiscal quarter to see some of that manifest at least a portion of it?

[J. Bunch, executive]

I think you would see some of it come in, in the next -- in this fiscal quarter.

[Unknown Analyst]

Great. Okay. Perfect. And then for my follow-up, just kind of a general M&A question for you guys. It would be great to get kind of the latest and greatest there in terms of what you guys are seeing, both in terms of deal flow as well as prospective seller appetite with respect to the [indiscernible] spreads?

[Kelly Loyd, executive]

Sure. So I actually think right now, we're seeing a lot of deals -- potential deals coming out there. We've talked to people who are -- they seem to be willing to talk. I think it's a pretty good time to be looking out there. So we're excited. We don't -- I'm not going to say we have anything in the hopper, but we're looking at lots of stuff like we always do. It's business as usual on that front. And I think it's a pretty exciting time to be in the acquirer right now.

[Ryan Stash, executive]

Yes. I mean I would say, Jeff, we have seen what you would expect typically sellers try to get out ahead of year-end. So there have been some processes launch and still some ones going on. So I think that activity has been encouraging. And our discussions with brokers, it does seem like folks are looking to get assets out in the market. I mean, obviously, you've seen a lot of transactions occur. We saw a big 1 announced, right, from [indiscernible] seen Exxon and [indiscernible]. So I mean I think there's still going to be a lot of that selling down of the large mergers that's going to come out over some time.

[Kelly Loyd, executive]

Thanks, Jeff. I was going to say, and as always, look, I mean, we're going to make sure it's a highly accretive deal before we pull the trigger on anything. So we as you can tell from our acquisition type curves on SCOOP/STACK, we tend to be pretty conservative. But we're scattering like we always do.

[Operator]

The next question is from Jeff Robertson with Water Tower Research.

[Jeffrey Robertson, analyst]

Mark, on the upcoming horizontal wells at Chaveroo, based on your experience with the first wells? Will there be -- will you do anything different drilling from a drilling and completion standpoint?

[J. Bunch, executive]

Yes. We're going to be drilling with produced water this time because it will save substantially on the cost for drilling fluid, especially if we have an issue where we have fluid loss. And that's probably the main change that we're doing. And that just kind of helps us make control our cost to the upside if we have issues.

[Jeffrey Robertson, analyst]

And in the SCOOP/STACK, I know Oklahoma generally is a pretty fragmented area. Do you all have opportunities to add incremental working interest in wells that are proposed? Or is that mainly controlled by the operator?

[J. Bunch, executive]

Well, sometimes you get -- we get offers all the way all the time where we get asked if we want to participate for additional acreage in units that were going to be drilled. We also just doesn't aside on the acquisition side, we get offers all the time from people to add small interest to wells that we own or with operators that we have working interest with. So all of that is true. It's a pretty active marketplace.

[Jeffrey Robertson, analyst]

And lastly, on the field, if my spreadsheets right, production in the Barnett went up a little bit in the quarter after having declined for a while. And costs, I think, in the Barnett on a unit basis went down. Was there anything different going on in the Barnett Shale during the quarter than what you had experienced in prior quarters?

[J. Bunch, executive]

No. Mainly, it was -- mainly the deal was just better run times and diversified, the operator has been very active in trying to reduce costs since product prices are so low in the Barnett right now. So it's that, too. They're actively trying to keep it as efficient as possible. I guess one of the bigger deals, I'd say, I think [ EnLink ] has finally worked through a lot of their issues out there. So that's what's really improved our run times. They're the gatherer for the system -- for the Barnett system.

[Jeffrey Robertson, analyst]

And I guess lastly, Ryan, when you think about the weighting between commodities over the rest of this fiscal year, with production coming in SCOOP/STACK and the second half fiscal second half completion of the new round of wells in the Delaware Basin. Will oil mix change much from what it is, what you think -- what you saw in the first quarter of 2025, will those -- 2 areas offset each other to keep the commodity mix similar to what it was in the first quarter?

[Ryan Stash, executive]

I mean I think over time, you're going to see a little bit. So whereas we're maybe around 54% gas right now, we might see that go down a little bit and oil go up, but we're talking like a 1% or 2% change here over time until we start getting more and more of the Chaveroo wells online, we're not going to see a meaningful change to that, right? And keep in mind on the SCOOP/STACK, we've seen obviously some more oil-weighted areas being drilled here given the commodity prices, but if gas continues to move and if we can see prices over $3 this winter and even higher, I wouldn't be surprised to see some more gas wells come online, right, which could affect it.

[Kelly Loyd, executive]

Exactly. Overall SCOOP/STACK honestly was just about reflective of our entire company portfolio, just about 54%, 55% gas, 30% oil the rest NGLs.

[Operator]

This concludes our question-and-answer session. I would now like to turn the call back over to Mr. Loyd for closing remarks.

[Kelly Loyd, executive]

We just want to thank everybody for taking the time, and we really do appreciate your continued support and a happy belated veterans today to all of our veterans out there on Monday. So thanks again, everybody.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.