Alpek SAB de CV

BMV:ALPEKA

Earnings Call Transcript 2018-Q3

[Operator]

Good morning, everyone, and welcome to Alpek Third Quarter 2018 Earnings Conference Call. With us this morning, we have from Alpek, José Valdez, CEO; José Carlos, CFO; and Hernan Lozano, IRO, who will discuss the company's performance and answer any questions you may have.

As a reminder, today's conference is being recorded and will be available on the company's website, www.alpek.com.

I will now hand the call over to Mr. Lorenzo (sic) [Lozano]. Please go ahead.

[Hernan Lozano, executive]

Thank you. Good morning, and welcome. We very much appreciate everyone's participation today. This call will be divided into 2 parts. First, Pepe Valdez, our CEO; and José Carlos, our CFO, will provide a general overview of Alpek's third quarter 2018 performance and an update on relevant events. Afterwards, we will have a Q&A session.

Before we get started, let me remind you that the information discussed in today's call may include forward-looking statements regarding the company's future financial performance and prospects, which are subject to risks and uncertainties. Actual results may differ materially, and the company cautions not to rely unduly on these forward-looking statements. Alpek undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

I will now turn the call over to Mr. Pepe Valdez.

[Jose de Jesus Valdez Simancas, executive]

Thank you, Hernan. Good morning, everyone, and thank you for joining us today. I will begin by introducing our new CFO, José Carlos Pons. José Carlos is joining us after 22 years at Nemak, where he held several executive positions, such as Director of the South American Business Unit. His last position was VP of Business Development, where he played a key role in multiple strategic initiatives, including acquisitions, joint ventures and organic investments.

In addition to his finance-related duties as Alpek's CFO, José Carlos will lead our strategic planning team and work closely with the planning teams at the business unit level, providing support in M&A, credit evaluation and forecasting, among others.

I am excited to have José Carlos in our team and very much look forward to leveraging his new strategic vision as we seek new value-enhancing opportunities ahead.

Moving on to results. The third quarter marks a new record for Alpek's consolidated EBITDA. The impact associated to the fire in Altamira and the temporary disruptions caused by Hurricane Florence were more than offset by a favorable feedstock price environment, better-than-expected global reference polyester margin and the consolidation of Suape/Citepe.

Oil and feedstock prices rallied above Alpek's revised guidance during the third quarter. The spot Brent crude oil price rose above $80 per barrel, and the U.S. paraxylene contract price surged to its highest level since 2014. The rising feedstock price environment had a positive effect on EBITDA.

As anticipated, reference integrated PET margins in Asia decreased after the spike observed in the second quarter. However, third quarter results benefited from the peak Asian reference margin posted in June. A proxy to illustrate this will be to adjust the quarterly average Asian margin calculation by a one month delay. Not surprisingly, the adjusted average third quarter Asian reference margin was higher than during the second quarter.

In spite of the recent rally, we maintained a more conservative view on Asian reference polyester margin. This was reaffirmed by the month-to-month decrease observed after June. Even so, we do expect a sustained underlying recovery year-over-year, supported by [ healthier ] supply-demand balance.

Regarding our operations, I am glad to inform you that the [required] PTA plant in Altamira were completed, and the facility was restarted in early September. The unplanned shutdown caused by the fire on July 15 was shorter than expected.

In the third quarter, we were also concerned about the potential impact from Hurricane Florence to our 3 polyester sites located in North and South Carolina. Fortunately, the facilities were only subject to short disruptions caused by the storm. Our polyester team worked diligently to mitigate the impact of the Altamira unplanned shutdown and Hurricane Florence.

In Brazil, this was the first full quarter of Alpek control operations at Suape/Citepe since we integrated the assets on May 1. We were pleased by the sequential improvement that this business achieved, driven by a combination of strong global polyester margin and a sustained ramp-up in production that resulted in higher sales volume and lower unitary conversion cost.

Next, I will focus on updates related to the M&G bankruptcy, the cogeneration plant divestment and the U.S. PET antidumping case.

Alpek continued to support M&G Mexico's PET operations to secure financing. The final tranche of the $60 million secured credit facility was disbursed during the third quarter, and the process advanced among M&G and its creditors to implement a definitive restructuring plan. As you may recall, this credit facility was issued in January and is secured by a second lien on M&G Mexico's PET plant in Altamira.

Regarding the Corpus Christi project, we are actively engaged in the process to obtain the required approvals from governmental authorities to execute our winning bid. Unfortunately, we are unable to provide an accurate estimate on the duration of this regulatory process at this time.

The process to finalize the sale of our 2 cogeneration power plants in Mexico moved forward as multiple open items will resolve during the third quarter. It is important to note that the Altamira cogeneration plant's construction is on track to conclude in the coming months.

Also, the signing of long-term power contracts advanced amid the favorable rise in Mexican power tariffs. The majority of the Altamira plant's power should be contracted out in anticipation to the facility's startup, as occurred in Cosoleacaque plant a few years back.

On the case to address the unfairly traded PET imports, the U.S. Department of Commerce announced affirmative final determination in its antidumping duty investigations. Final rates on PET imports from Brazil, Indonesia, Korea, Pakistan and Taiwan range from 5% to 176%. Next, the U.S. International Trade Commission is expected to issue its final injury determinations during the fourth quarter, making the end of the trade case.

On a final note, year-to-date, results reflect the combination of favorable elements such as higher oil and feedstock prices, better-than-expected global polyester margin, consolidation of Suape/Citepe and a lower-than-expected impact from the unplanned Altamira plant shutdown. As a result, 2018 EBITDA is on track to exceed our $750 million revised guidance by more than $100 million, creating a new record -- a new yearly record for Alpek. However, we expect fourth quarter EBITDA to be lower than the 2 previous quarters based on seasonality, normalized Asian integrate -- more than normalized, I should say, lower Asian integrated PET margins following the mid-'18 spike and a potential inventory loss, assuming feedstock prices soften before year-end.

At this point, I would like to turn the call over to José Carlos.

[José Carlos Pons de la Garza, executive]

Thank you, Pepe. Hello, everyone. I'm very excited to join Alpek's team and taking on this new role as their business is going through several transformational events, along with a strong [ move forward ]. I very much look forward to meeting with many of you in the near future.

Onto consolidated results. The third quarter was marked by growth in volumes, sales and EBITDA. Alpek's third quarter revenue was 48% year-on-year and 10% quarter-on-quarter, driven by higher average consolidated prices and volume, mainly in the polyester segment.

Consolidated volume was 16% higher than 3Q '17 and up 2% when compared with 2Q '18 as growth driven by the Suape/Citepe acquisition more than offset a decrease in organic volume caused mainly by the temporary disruption associated to the fire in Altamira PTA and the Hurricane Florence. Third quarter consolidated EBITDA was a record $274 million, including $40 million net gain from 3 nonoperating items: the first item was a $33 million noncash inventory gain resulting from a strong value from feedstock prices during the quarter; second, a $9 million gain from advanced insurance payment associated to the Altamira fire; and third, a $1 million nonrecurring legal expense. Adjusting for these 3 items, comparable consolidated EBITDA was $234 million, more than 100% higher than 3Q '17, boosted mainly by the polyester segment.

A favorable feedstock price environment with strong year-over-year recovery in global polyester margin and the consolidation of Suape/Citepe contributed to comparable polyester EBITDA growth of 198% when compared to the third quarter 2017 and 12% versus second quarter 2018. Moreover, comparable Plastics & Chemicals 3Q '18 EBITDA was up 36% on a year-over-year basis as growth in expandable polystyrene and Caprolactam complemented a strong polypropylene perform.

In contrast, comparable Plastics & Chemicals EBITDA decreased 3% quarter-on-quarter as growth in expandable polystyrene and Caprolactam was more than offset by the effect of lower polypropylene volume.

Moving down the P&L. Alpek's third quarter profit related to the controlling interest was $80 million compared to $142 million in the previous quarter as higher operating income was more than offset by noncash foreign exchange losses and higher income tax.

Regarding our balance sheet and certain cash flow items, net debt was $1.6 billion, up $341 million year-to-date, including the $435 million investment in Suape/Citepe. Also, the increase in sales, coupled with a rising feedstock price environment, has required additional investments in net working capital, mainly for the polyester segment. Although relative to sales, net working capital days are lower year-over-year.

It is important to note that this was the first quarter since 2Q '17 that net debt posted a sequential decrease. Consequently, our leverage ratio continued to decline during the third quarter. Net debt-to-EBITDA has come down from 3.3x at the close of 2017 or 2.9x in the second quarter to 1.9x in 3Q '18.

This concludes my remarks. And I would now like to open the floor for questions. Operator, please instruct the participants on how to place their questions.

[Operator]

[Operator Instructions] We will now take our first question from [ Alexandra Obregon ].

[Unknown Attendee]

And José, congratulations on your new role. I have just one question. Could you please talk on the dynamics for the Plastics division today and what you're expecting in the near to midterm, particularly as trade negotiations in the world have escalated? I guess what I mean is, have you seen so far or expect any changes in the segment due to tariffs between China and the U.S.? Or any new trade negotiation?

[Jose de Jesus Valdez Simancas, executive]

[ Alexandra ], we -- so far, I have to say what we have seen in terms of the trade issues between particularly China and the U.S., what has happened in our plastic products and also polyester products, we have seen very significant import duties from Chinese products into the U.S. So I would say that for us, I believe it sort of helped a little bit. But as you well know, in the case of polyester, which is our largest business, we have already a dumping duty, so these traditional duties on polyester imports, it has a relatively minor effect. In terms of plastic, it's a little bit positive, I would say. We don't have traditionally or normally a lot of imports in the U.S. from China, a little bit of EPS, a little bit of polypropylene, perhaps, not a lot. So again, the fact that duties were imposed on these products, also for imports from China, should be a positive but relatively minor.

[Unknown Attendee]

And just a very quick follow-up. If we were to quantify the amount of imports in these divisions from China, is it possible to disclose what percentage is coming from there?

[Jose de Jesus Valdez Simancas, executive]

I don't have the numbers right now, but it's very small percentage. It's very small, meaning less than 5% of the total demand.

[Operator]

We will now take our next question from Frank McGann, Bank of America.

[Frank McGann, analyst]

Just one question. In terms of the planned sale of the cogeneration plants, I was just wondering what your thoughts are now on the importance of that sale given that you're having better results and the electricity market in Mexico seems to be improving. I was wondering, is that something that you could reconsider or that potentially, you might back off from moving forward with those sales?

[Jose de Jesus Valdez Simancas, executive]

That's a good question, and you're right on target, yes. Remember, we have explained before that the reason for our divesting the cogeneration assets was mostly twofold. Number one, of course, for us, it's critical to maintain our investment-grade rating. That was number one. Number two, also because we thought this would be a value-enhancing opportunity for shareholders. So from the perspective of the investment-grade rating, you are right. I'd say we do have now much more flexibility than we thought a year ago or even 3 months ago. So from that perspective, of course, the pressure we saw for us to sell these assets. And on the other hand, it is also a situation that is truly -- that they're having a very difficult first quarter in terms of grades of electricity of power in Mexico. The rates have improved dramatically. So right now, we -- the key issue for us is to continue to sign more long-term contracts in the next month and -- because the more contracts we have signed, the higher the value of these facilities. So yes, I mean, we are also looking at that. And for sure, the only reason why we will continue with this divestment is that we can, in fact, get value, a significant value from the sale.

[Operator]

We will now take our next question from Vanessa Quiroga.

[Vanessa Quiroga, analyst]

My first question is regarding your PTA capacity in North America. Now that Brazil is running at healthy utilization rate, for our estimates, where do you plan to place any extra PTA capacity that you now have in North America? And the second question is regarding margins. How have margins performed during the last couple of months? And if you think that this is where we will be in the fourth quarter in your results for polyester and polypropylene?

[Jose de Jesus Valdez Simancas, executive]

Vanessa, in terms of capacity, well, yes, for sure, it's a good question, we were exporting PTA to Brazil around 300,000 tons per year. After the acquisition of the PTA Brazilian plant, PetroquímicaSuape, we are planning to reduce those exports to approximately 70,000 tons per year. So that -- you're right that we saw like 230,000 tons of PTA in our Altamira plant. But we have to also be aware of the fact that we are net buyers of PTA in the U.S. So most of that PTA will go to supply our North American operations of polyester. So we're in very good shape there. We are relatively healthy on that. Now in relationship to -- or in relation to polyester, to polyester margin in Asia, I think, yes, it's fair to say that in the -- these margins reached a peak in June, and they have incoming markdown since then. The margins -- I mean, the very high margins lasted for like one month in June and then July went down, and sequentially, all months have been coming down. But the important thing for us, really, I think, is that where do the margins stabilize at the end of the day, and we still believe that there's going to be stabilizing more around the $300 -- $280, $300 per ton, which is -- compared to the $200, $225 in the previous years, '17 or '16 -- or '16. So we do believe, of course -- and we never assume that these very high margins that we saw in June, July and May would remain, but we still believe that we're going to have higher than historical margins for a while due to supply-demand balances in Asia and in China, in particular. But for sure, in the -- now in terms of -- not of month but in terms of quarter, the higher quarterly margins were in third quarter, where it's higher than during the second quarter. But as I say, so there will be a lower margin for fourth quarter that we are anticipating, but it's still on a healthy level. And on the propylene -- or polypropylene, I would say the margins are -- remain strong, and we believe that the margins will be strong for the next couple of years as new capacity enters into the market. So that's more or less the situation. Let me explain something else because it is really important for you and a lot of the other analysts. The impact from the margins in Asia has been reflected mostly in what were South American operations because in our South American operations, both Argentina and Brazil, our PET prices, we link to the Asian margins. So more or less follow the Asian margin, Brazil and Argentina. In the U.S. market, and I think this is very important, which is, by far, our largest volume, only like 7% of our volume was linked to Asian margins. Okay?

[Vanessa Quiroga, analyst]

Okay, okay. No, that's very helpful. Where are margins today? Or yes, like most recently, where are margins? Are they around $300 right now already or...

[Jose de Jesus Valdez Simancas, executive]

Look, the last number I saw this morning are somewhere between, depending when you talk China or Asia, are somewhere between $260, $280, $290. But at this point, we have to be careful with those numbers because somehow, the prices of paraxylene are extremely high. And there is the expectation, I would say, in the different players, the users, the buyers of PET, in particular, that these prices of paraxylene are going to come down. And for that reason, if these prices come down, perhaps, the margins will improve a little bit, okay? So right now, they are on $260, $280, $290, but I would say that they should remain there, or we are expecting a little bit of improvement once the paraxylene prices normalize.

[Operator]

We will now take our next question from Eduardo Altamirano from HSBC.

[Eduardo Altamirano, analyst]

Actually, I have 2. One is in terms of the dividend sort of outlook for next year. It seems like with cash flow, where it stands, we had made a call that you could potentially issue up to, let's say, around -- based on where today's price is, will around 10% dividend yield for next year based on what your cash flow is for this year. Is that too outlandish? I mean, within your company statute, it's been around MXN 0.70 or MXN 1.20. Last time you paid a large dividend was MXN 1.48-plus. So just want to understand kind of the dynamics of what you're seeing, at least for next year, in terms of returning cash to investors?

[Jose de Jesus Valdez Simancas, executive]

Look, at this point, I would feel very confident that we will pay a dividend next year. I would not dare to say what sort of yield that is going to be. And -- but I think that it's going to be depending on the, again, divesting of the cogeneration assets. And probably, I would say within next 2, 3 months, we will be able to come up with a number.

[Eduardo Altamirano, analyst]

Understood. And then...

[Jose de Jesus Valdez Simancas, executive]

Sorry us to be -- sorry not to be more specific.

[Eduardo Altamirano, analyst]

No, no, no. I completely understand. And then from a longer-term perspective, I mean essentially, your master play of consolidating PET in the Americas has worked very well. It seems that you hit a pretty good stride. The cycle is working in your favor right now. What -- how should we start looking at the company? Should we continue to see it as kind of a base chemicals company? Should we look at kind of any sort of further potential downstream integration, upstream integration at this point within any of your chains? What is that you're looking, let's say, kind of not necessarily within next 6 months to 1 year but 3 to 5 years down the line of where you'd like to be?

[Jose de Jesus Valdez Simancas, executive]

Look, I think we have been looking at integration projects for quite some time now. We just -- I mean, for us, it's critical to integrate into propylene supply, for example. That's the most critical one. But unfortunately, we haven't found the right opportunities yet. So we'll have to see and wait a little bit now for the new administration to understand -- to better understand what they're planning to do with the energy reform here in Mexico. Ideally, for us, of course, to be able to backward integrate, we will have to -- we will need feedstock, local feedstock. And eventually, if -- with the energy reform, we have hoped that this local feedstock will be available, mostly ethane and propane, for example. If more and more people are allowed to invest in exploration and production, I mean, you have at least a hope that more ethane and propane will be produced in Mexico. And that gives people the opportunity of backward integrating, for example, into glycol, as one example, and into propylene. Those 2 projects, we have mentioned for quite some time that we would like to have this integration. But again, at this time, we still have to wait and see what opportunities we have with the feedstock and prices. In terms of upstream integration, I don't really see anything in the horizon for us. I don't think we -- yes, okay.

[Operator]

We will now take our next question from Gabriel Barra from UBS.

We will now take our next question from Alejandro Chavelas from Actinver.

[Alejandro Chavelas, analyst]

Just to -- I would like a little bit more insight into how the capacity utilization in Brazil is looking right now. A simple calculation will tell us that you're very close to full utilization with the number you disclosed regarding the holdings in Brazil. I just want a little bit more insight in how is that ramping up. Should we think about the same 170,000 tons going forward? That would be my only question. The others have been already asked.

[Jose de Jesus Valdez Simancas, executive]

Okay. Alejandro, look, capacity utilization in Brazil right now is 100% in PTA and, I would say, like 60% in PET. That's more or less capacity utilization. And going forward, we still see PTA running at capacity. In part, I can say that we had a new record, a new production record in PTA during the month of August. But then we had some reliability issues in September that we are trying to fix, mostly related to -- maintenance was postponed in the previous month. So we are, right now, working very hard in improving reliability of the PTA plant. But assuming that we will be able to solve those issues, we will expect to operate at capacity that lands in the -- during the next months. In PET, that will depend a little bit on the Asian margins, but we're going to expect to be operating at, let's say, 50% going forward as well. That means that we supply our share of the domestic market and some exports of PET as well. So that's going to be the situation for us.

[Operator]

We will now take our next question from Vincent Falanga (sic) [ Vicente Falanga ] from Bradesco.

[Vicente Falanga Neto, analyst]

I had 2 questions. First of all, just to come back on a point that you were mentioning. Alpek has been capturing a good price momentum in its PET and PTA export market. Is there any delayed positive price impact that we can still capture in your contracts in North America as you renew these annual terms? And my second question would be if you can provide some updates on your hybrid recycled-virgin pellet project in Argentina.

[Jose de Jesus Valdez Simancas, executive]

Look, the margins in Asia, they have remained at the $400, $500 level. Yes, I would say that your question or your insight, I mean, if that were the case, yes. The possibility of capturing price increases in North America during next year would be very high. But since we are assuming that the prices in North America -- I mean, in Asia are going to remain, as I say, in this $280, $300 level, then we believe that, based on this assumption, North American margin next year will be very similar to what they are today, which is obviously not a bad place to be. I mean, margins now are reasonable, not great but certainly much better than last year. And so at this level, I mean, I believe we could be having a, let's say, reasonable profitability. In Argentina -- yes, in Argentina, of course, the recycle plant is operating better and better. We have had a lot of issues in the last couple of years. Some of these issues have to do with the collection of the -- of bottles. It's sometimes difficult. But we are learning and we are making improvements, and we are now very confident that operation is going to be operating reasonably well in the next months. And regarding the -- yes, yes, yes?

[Vicente Falanga Neto, analyst]

Go ahead, go ahead. Sorry.

[Jose de Jesus Valdez Simancas, executive]

No, I was going to say, as you're probably aware, we're starting and becoming more important part of the business going forward. Our customers are very keen to increase their recycling content.

[Vicente Falanga Neto, analyst]

And I remember you were developing -- Alpek was pioneer in developing a PET pellet that was half recycled, half virgin, right? Is that project moving forward or...

[Jose de Jesus Valdez Simancas, executive]

Well, I mean, yes. We are working on 2 areas. One, of course, is to produce, hopefully, recycled PET that can be used like 100% if you want to. But yes, we are also working in recycling -- in using part of this recycle in our plan together with a virgin production. And that -- then you can adjust the percentage depending on quality of the bottles and on customer requirement. Yes, we're working on both alternatives.

[Operator]

We will now take our next question from Gilberto Garcia from Barclays.

[Gilberto Garcia, analyst]

Can you provide more color on the situation with the M&G process in Corpus? Is there anything you can tell us regarding -- if the process is taking longer than you originally expected? Or is it just there's limited clarity and just have to wait?

[Jose de Jesus Valdez Simancas, executive]

Well, honestly, we knew the process was going to take longer, yes, but it's taking a little bit longer than we had expected. And at this stage, it's just complying with the FTC's request. The FTC has been very thorough in this situation. And again, everything is depending on their decisions, but if you were to ask me, I would say we're cautiously optimistic that we'd be able to address the FTC main concern.

[Operator]

[Operator Instructions] We will now take our -- a follow-up question from Vanessa Quiroga from Crédit Suisse.

[Vanessa Quiroga, analyst]

The follow-up question is regarding the contracts that you're probably negotiating now or have been negotiating for about a month with the North American customers. Do you have any feedback on how much of the improvement in prices and margins that we've seen globally can be reflected in these upcoming contracts?

[Jose de Jesus Valdez Simancas, executive]

Well, Vanessa, as I mentioned before, we are going to have improvements in the contract, so improving the contract. But perhaps, in some of the spot prices, we are going to have slightly lower margins. So overall, we are estimating that the margins for 2019 should, in the U.S., in particular, should be very similar to the margins in 2018.

[Operator]

We will now take our next question from [ Michael Sauve ] From [ Arocet Capital ].

[Unknown Analyst]

Two questions. First is with the finalization of the penalties on the PET imports in the U.S. due in the fourth quarter and later in the year, do you expect that to have any significant impact on the profitability of that operation? Or would you say that it's more of a protection? That's the first question. Second question is about the cogen plants. So I wonder if you could give us an updated estimate of what kind of EBITDA contribution those plants can make maybe now that you have more contracts signed, you have a better sense. And the timing of that EBITDA, should we see a lot of it or most of it next year?

[Jose de Jesus Valdez Simancas, executive]

Okay. Well, first of all, the penalty for PET imports, look, I believe that the restrictions on imports and duties on imports will reflect, more than anything, in volume. I think the idea, at least our idea, is that this will allow us to increase our volume, replacing imports that were illegally coming, illegally in terms of pricing, coming into the U.S. So I think there's going to be an impact in volume, for sure, not in margins because at the end of the day, margins will always -- I mean, lower margins, particularly in Asia and China. We're always looking at that as a reference. And so...

[Unknown Analyst]

And how far can we -- the volume increase, like I'm just trying to get a sense. Is that an important volume increase? Or is it something kind of...

[Jose de Jesus Valdez Simancas, executive]

Well, you could say that in the market, you could say, hopefully, some sort of 8% to 10% of the domestic shipment could increase. I mean, imports are a little bit more than 300,000 tons market. It's a little bit below 4 million. So some of those imports will be reduced. I'm [ not ] assuming 300,000 to 400,000, perhaps, of volume that we will recover from imports, which, again, is like a 10% share of the market.

[Unknown Analyst]

Okay, great. Then cogen?

[Jose de Jesus Valdez Simancas, executive]

In cogen, in terms of the EBITDA, look, we are now considering that the client will start supplying commercially to customers in February. And we consider, by that time, we will have contracted, hopefully, 70% to 80% of the Altamira operation. And the EBITDA estimation we have at this time will be, together with existing facility, certainly, will be more than $100 million.

[Operator]

We will now take a follow-up question from Alejandro Chavelas.

[Alejandro Chavelas, analyst]

Just a follow-up question. Regarding the FTC's concerns for the Corpus Christi construction, what would be the FTC concerns? You mentioned it, but I would like a little bit more clarity regarding what the FTC's concern is about regarding the JV and so forth.

[Jose de Jesus Valdez Simancas, executive]

Well, the concerns are the usual concerns in these cases, okay? In terms of concentration and in terms of market share consolidation, the famous HH Index, those are the concerns. But not only that, I think it's very important with them of getting feedback from customers. That's extremely important. And they've gone through this process. And as I mentioned before, we are hopeful that customers are supporting this type of this project. And at the end, we're hopeful that this will help the -- all of the approval process.

[Operator]

With no questions in the queue, I'd like to turn the conference back over to Mr. Lozano for any additional or closing remarks.

[Hernan Lozano, executive]

Yes. I would just like to thank everyone for participating in today's call. Please feel free to contact us if you have any follow-up questions or comments. And have a great day.

[Operator]

Ladies and gentlemen, that does conclude today's conference. Thank you for joining us.