DFDS AS

CSE:DFDS

Earnings Call Transcript 2019-Q4

[Operator]

Hello, everyone, and welcome to the DFDS Q4 and year-end report 2019. [Operator Instructions] Please note that this call is being recorded. Today, I am pleased to present CEO, Torben Carlsen; and CFO, Karina Deacon. Please begin.

[Torben Carlsen, President, CEO & Member of Executive Board]

Good morning. Welcome to our Q4 call, where we'll present the Q4 and full year results as well as our outlook for 2020. Joined by me today is Karina Deacon, our new CFO; and Søren Brøndholt, the Head of Investor Relations. The uncertainty about Brexit led to a further slowdown in Q4, and that lowered the result as anticipated. What was less satisfactory in Q4 was Mediterranean's result, and I'll return to that in more detail in a minute. With us, in 2019 with an EBITDA that is just above 2018, which, to a large degree, reflects the tough headwind generated by Brexit since April. Looking ahead into 2020, we have to be cautious on Brexit as visibility on the final outcome is low and likely to remain low for the first 2 quarters and maybe longer. On the other hand, I expect DFDS to continue to be resilient. We have strong market positions across Northern Europe and in the Mediterranean, and our commitment to continuous improvement is firm. On top of that, we have an ambitious strategy that is forecast to have a positive impact on earnings in 2020, with Mediterranean as a key driver. So with that introduction, let us turn to Slide 3. Full year revenue, up 6%. EBITDA, up 1% to DKK 3.63 billion as Brexit and Turkish recession lowered the margin. For Q4, EBITDA is down 9% to DKK 771 million as U.K. ferry volume slowed further and noncomparable cost items reduced Mediterranean's result. Our 2020 outlook is a positive impact expected from Win23 strategy initiatives but paired with cautiousness on the U.K. ferry market due to the continued uncertainty on Brexit and also a possible coronavirus impact. Our outlook range for 2020 is DKK 3.5 billion to DKK 3.9 billion versus the DKK 3.6 billion actual 2019. With this, I turn over to Karina Deacon and Page 4.

[Karina Deacon, Group CFO & Member of Executive Board]

Thank you, Torben. Let me talk you through our Q4 briefly. Our top line didn't grow quite as much in Q4 as in previous quarters. We saw good development in the Mediterranean, where we saw a 13% increase in revenue, but this was held back by a continued contraction in the U.K.-related business where we saw reduction in volumes, both in the North Sea and on the Channel. EBITDA declined, as Torben said, by 9%, very much impacted by an accounting technicality in the Mediterranean, which had a negative impact of DKK 48 million. When we acquired the U.N. Ro-Ro, they capitalized spare parts and ferry maintenance costs, this was aligned to our way of accounting. So in total, for the year, we actually had a negative impact from this of DKK 98 million in EBITDA. Adjusting for depreciation, the EBIT impact in Q4 was DKK 37 million and the equivalent number for the full year, DKK 75 million. In addition, we saw a further slowdown in the U.K. market for both passenger and freight due to the Brexit uncertainty. Together with a rather significant increase in depreciation, following investments in 2019, we landed an EBIT before special items 40% below Q4 '18. If we look further down in the P&L, you will also see a special items charge of DKK 55 million, primarily relating to the costs related to our decision to merge 2 routes from Istanbul to Southern France. And that meant, as you recall, that we terminated our sailings to Toulon.Lastly, just a small comment on the financials. We are up against the tough comparisons from Q4 '18, where we had a significant positive FX gain on the Toulon. So when we look at the finance charge in Q4, it's actually in line with what we saw in Q3. So nothing unusual on that. If we turn to the divisions on Slide 5, we have shown the Ferry Division, the development there. And we also see the impact of Brexit, which I just touched upon. So you can see North Sea and the Channel was particularly impacted from the lack of volume in the U.K., where we after a strong October saw significant declines in volumes again in November and December. That meant that revenue in ferry only increased 1.2% despite continued growth in Mediterranean and the opening of our new route between Gothenburg and Zeebrugge. In the Mediterranean, we did see improvement in trading in Q4 and the operational improvements we've done there on track. However, as I just said, it wasn't reflected in the EBIT because we saw a decline there of DKK 54 million, to a large extent, impacted by the spare parts accounting, but also due to lower utilization of trains from -- the trains to European destinations caused by port congestion in Trieste, which we focus -- continue to focus on. In the Passenger Division, we also saw a EBIT decline compared to '18 in addition to some one-off costs related to dockings and a catch up on depreciation as the ships were no longer booked or held for sail on the Amsterdam-Newcastle route. We also saw some increase in cost in the operation, which we continue to address. Turning to Slide 6 on logistics. Logistics, they increased revenue 2.4% in Q4, reflecting growth in the U.K.-Ireland of 18%. However, that was offset by a slowdown in the trade between the U.K. and rest of Europe which impacted, in particular, the continent. EBITDA improved by 17% in Q4. However, higher depreciation meant that when we look at EBIT, we see a decline. We did see an increase in depreciation in Q4 following further assets being included in our IFRS adjustment. Logistics was also impacted by a decline in the Nordics where the comparisons from 2018 were tough due to very high activity in our specialized services, which were not repeated in 2019 as expected. The continent was also impacted by lower volumes, particularly in the U.K. or related to the U.K., and then we did see some certain one-off costs associated with our workshop in Belgium. U.K.-Ireland then continued the positive development, and most activities there improved in earnings. So summing it all up on Slide 7. We reported revenue growth of 6% and EBITDA growth of 1%, in line with our latest expectations, which we shared with you in November '19. However, when we look further down in the P&L, the higher depreciation caused by the full year impact of our Mediterranean business and also the accounting effect from higher IFRS adjustments in '19, we did report a lower EBIT. This, of course, has an impact. So when we turn to look at ROIC, it's impacted by both the lower earnings, but also a higher average invested capital. That's very much linked to the full year impact of the acquisition of the U.N. Ro-Ro. Furthermore, we also, as you know, we had significant investments in 2019 of DKK 2.7 billion, including the 3 new freight ferries. At year-end, our minimum target level of 8% is actually achieved. And if we adjust for the Mediterranean business, you'll see that the ROIC was 12%. So when we -- as we have invested all the time, increase the ROIC in the Mediterranean, we should also be able to increase from the 8% that we are currently at. Finally, just a comment on our capital structure on Slide 8. We reported a ratio of 3.3x earnings, impacted by the significant investments and also the 2 acquisitions that we did in December. We are committed, of course, to -- in the long run to end in our -- within our target of 2 to 3x. And on that basis, we propose a dividend of DKK 4 per share at the AGM in March. That concludes the review of the '19 numbers, and then I hand back to Torben.

[Torben Carlsen, President, CEO & Member of Executive Board]

Thank you very much. On Page 9, looking a little bit further into the different Win23 initiatives, especially those that will have a main impact in 2020. Key drivers, as we've already alluded to, is a return to growth in the Turkish economy, which will drive significant improvement for DFDS in 2020. The Gothenburg-Zeebrugge space charter that we announced in '19, we will, 1st of April, change from 3 vessels on that route to 1 mega vessel, which will significantly improve the operational results of that route. We made 2 smaller logistics acquisitions towards the end of '19, and we'll see the full impact -- the full year impact of both of those in 2020. And then on our route from Rotterdam to Immingham, we will, during 2020, replace 3 existing ferries for 2 mega ferries, thereby, again, achieving significant operational benefits and better financial results. We also have a number of passenger projects aimed at attracting more and better-paying passengers that will have an impact in 2020. As we said, when we launched Win23, there is a macro risk that is hard to put a number on. But of course, with the current Brexit and Mediterranean slowdowns, this is mainly a negative risk to our Win23 project. Turning to next, Page 10. We have listed a number of key drivers that will determine our performance in 2020. I will not go through all of them. It's a format that some of you recall from '18 and previously that we have reintroduced, where we have certain -- things that are certain, some that are expected, some that are more uncertain and then some macro drivers underlying the situation. But if we start with the certain elements, I've been through most of them already on the previous page. I do want to highlight, of course, that the quite lucrative DfT contract that we had in '19 is not coming back in 2020, the Department for Transport in the U.K. On the expected side, we have not seen this yet, but we certainly expect that there will be quite significant volume growth in the Turkish market as the Turkish economy is recovering. In the uncertain column, the oil price spread has been quite detailed -- analyzed by different analysts and investors. And on the next page, I'll go a little bit further into the status on that. Then a new element, the coronavirus could have 2 places where it impact us. Obviously, Chinese tourists are not likely to show up in 2020 on our ferry passenger route from Copenhagen to Oslo. And we are also already seeing some delay of the delivery of new buildings as shipyards in China have been closed down after the new year celebration in China due to the risk of spread of the virus. With that, let us turn to Page 11, where I'll talk a little more about the oil price spread. There is a global transition to the 0.5% maximum sulfur limit. Most of you know that DFDS in all other markets than the Turkish market transitioned to the 0.1% limit already in 2015 and therefore have quite good experience with the scrubber installations. And we are currently installing scrubbers in our Turkish fleet. Approximately 50% of the fleet is now equipped with scrubbers, and the rest will be equipped during Q1 and 2. The price spread between MGO or low sulfurs and high sulfurs widened quite significantly in October. You can see the orange curve that goes from a level of EUR 160, EUR 170, EUR 180 spread to close to EUR 300 spread towards the mid-October, keeping that level until the end of the year, where then a dramatic reduction in spread again happened. So it is beneficial for DFDS when there is a very -- when there's a bigger spread rather than a lower spread. But as this graph indicates, we should not expect any extraordinary income from this. It seems that the spread has stabilized around the historical levels, and that is what we are counting with. So turning to Page 12, where we'll talk about the 2020 outlook. We expect growth of probably minimum 4% coming from continued growth in Mediterranean, the acquisitions in logistics and the organic actions from Win23. We have a positive earnings impact from the Win23 strategy initiatives, as we've been through in this presentation, which is somewhat offset by negative earnings impact from the continued Brexit uncertainty, hitting primarily our North Sea and Channel operation on the ferry side. Combined, this leads us to guide a EBITDA range of DKK 3.5 billion to DKK 3.9 billion for 2020. Investments should reach about DKK 2.3 billion, which is primarily driven by delivery of the new -- ferry new buildings. Turning to Page 13. What are the priorities for us in order to deliver this outlook, where it is to, of course, deliver on the financial ambition embedded in our Win23 strategy. It is to closely monitor our U.K. market activities and the U.K. market development to see how we can adjust where relevant, our activity and cost to mirror the situation. Then in especially 2019, the climate changes moved very high on our agenda. And luckily, we have, for many years, looked at ways to reduce the impact on the environment from our transportation activities. And we'll continue to invest in various solutions to decarbonize in the short run and also in the longer run. With that, we will turn on over to -- for questions to the audience.

[Operator]

[Operator Instructions] The first question is from Dan Togo from Carnegie.

[Dan Togo Jensen, Financial Analyst]

On the -- all the initiatives that supports, so to say, profitability and is included in this Win23 strategy. Is it fair to say that they can contribute, on an accumulated scale, around DKK 300 million annually to profitability, these initiatives that you enforce now here in '19 -- or sorry, in '20 compared to '19? That's the first question. I'm assuming, so to say, that you have a -- I mean, if you are going from DKK 3.6 billion up to DKK 4.9 billion organically, it's a run rate of around DKK 300 million per annum?

[Torben Carlsen, President, CEO & Member of Executive Board]

Your line -- either your line or our line is very bad, Dan. But I think you asked what the combined impact of our Win23 initiatives are in 2020, whether it's a fair assumption that they would reach DKK 300 million. And I think that is a fair assumption. I didn't hear the second question.

[Dan Togo Jensen, Financial Analyst]

Yes, but that's exactly right. Then you end up, so to say, in the high end of what you guide for basically. So what are the negative impacts that takes, so to say, potentially EBITDA to a more or less flat? What are all the negatives that we should be aware of? And yes, so to say, what is the scenario that can take you to the low end of the guidance range, but all this also working for you, so to say?

[Torben Carlsen, President, CEO & Member of Executive Board]

I think without going through a long list of ups and downs, the main very obvious ones are the DfT amount we are not repeating in 2020. Also with redelivery of some chartering vessels, our -- and it becomes a little technique, but the IFRS 16 adjustments go down by quite a significant amount. And then, as we said, in more general terms, we do expect that U.K. volumes will stay quite flattish with the Q1 comparison. Of course, that would be very hard for us as the volumes in Q1 last year were strong due to the lead up to the expected Brexit, 31st of March 2019.

[Dan Togo Jensen, Financial Analyst]

Okay. And then just on the -- on Med and the Trieste situation. When can we see, so to say, a solution here in that port and these bottlenecks results, so to say?

[Torben Carlsen, President, CEO & Member of Executive Board]

We are continuously seeing improvements even with the current operational setup with 2 ports in Trieste. Our expectation is that sometime during Q2, we'll be allowed to merge the 2 terminals, and then we'll see further improvement.

[Operator]

Next question is from Ruairi Cullinane from RBC.

[Ruairi Cullinane, Analyst]

My first question relates to your D&A guidance. I was surprised that it would decrease 2% given the investments that you're making. So please, could you take me through that? And secondly, the increased ferry competition that you're seeing on the Baltic Sea. If you could expand on that, that would be great. And finally, I was wondering if you're seeing any changes in customer behavior tool and since the election in the U.K.? I understand that Brexit is the key source of uncertainty for your clients, we have seen a recent improvement in PMI trends. So I wondered if any of your customers were seeming more bullish.

[Karina Deacon, Group CFO & Member of Executive Board]

Yes, let me just answer your first question about the depreciation charge. We are returning a number of vessels during 2020. We had -- we're returning some vessels we had on charter. And we also, as you have seen, we are going to sell 1 of our vessels. So when we take that into account, we expect this depreciation charge to go down by the approximately 2% we guided for.

[Torben Carlsen, President, CEO & Member of Executive Board]

On the potential increase of competition in the Baltics, we have seen that a competitor is trading between Sweden and Lithuania, not in direct competition with us, but in similar waters. And we have seen that it seems that more tonnage have been allocated to this. We have not seen any impact at this stage, but we do expect some impact. In terms of U.K. and especially consumer behavior, it is a little bit of a -- maybe mystery is too hard a word, but we do see the confidence in the PMI in U.K. And we can also see that our logistics business, which is active in the U.K., is doing fine, actually doing good. And I think it can be explained in this way that consumers are okay. They are probably not buying the high end, expensive electronics, and that's at least what we can see in the volumes. So that's where we are hurting a little bit on the logistics side going into the U.K. And then the people in charge of construction and investment in factories or production facilities are still on the sideline, not making those investments probably until they see what the regulatory environment will be for such investments. This is also the reason for us thinking that there is a likelihood that towards the end of 2020 or maybe the second half of 2020, if there is a way forward with the deal between U.K. and the continent that we will start seeing some of these more long-term decisions that will drive growth and trade.

[Operator]

Next question is from Lars Heindorff from SEB.

[Lars Heindorff, Analyst]

The first question is regarding Mediterranean. Can you -- volumes were up by 22% measured in terms of lane meters. But what is the underlying trends there if you adjust for the acquired volumes?

[Torben Carlsen, President, CEO & Member of Executive Board]

You said Mediterranean?

[Lars Heindorff, Analyst]

Yes.

[Torben Carlsen, President, CEO & Member of Executive Board]

I think the -- you're talking about what -- how big a percentage is the new customer bringing or...

[Lars Heindorff, Analyst]

Yes. Yes.

[Torben Carlsen, President, CEO & Member of Executive Board]

Yes. I think if we look at Turkey, there is probably a underlying negative somewhere. It is a little bit difficult because remember, a competitor stopped operating. So it's not just 1 customer. It's more customers that have come, but it's probably an underlying negative growth of 5%, 6%, 7% in Turkey that has then been compensated by our new customers up to this plus 20%.

[Lars Heindorff, Analyst]

Okay. And then the second part, can you just remind me the DfT contract, how much did that contribute within 2019 or contracts because there was more than one?

[Torben Carlsen, President, CEO & Member of Executive Board]

There's a -- it's about well, it hit in several places, but in total, it was a impact of DKK 125 million.

[Lars Heindorff, Analyst]

Most of them?

[Torben Carlsen, President, CEO & Member of Executive Board]

In North Sea.

[Lars Heindorff, Analyst]

Yes. And then the redelivery, can you just explain to me the -- you talked about the redelivery of time charter vessels. Is that will add costs? Is that correctly understood? Or did I misunderstood you?

[Torben Carlsen, President, CEO & Member of Executive Board]

I think it was a technical thing that it changes the IFRS 16 adjustments, and it reduces -- and even though it has been charter vessels, they have hit the depreciation due to those accounting rules. And when they are handed back, they will drop. But handing those back, of course, will reduce cost, but then bigger vessels are coming in with higher costs, but there are a few of them. So in total, an optimization.

[Lars Heindorff, Analyst]

Yes. But the impact and the delta from that -- of the earnings impact and from the redelivery of those time charter vessels?

[Torben Carlsen, President, CEO & Member of Executive Board]

The net impact will be negative because the IFRS adjustment exceeds the positive effects from the new -- freight new buildings. So it's a net negative on EBITDA due to the accounting practice. But on the EBIT, it would be a positive.

[Lars Heindorff, Analyst]

Okay. I'm a little bit confused. Anyway, we can take it later. Then the other part was regarding the development in the volumes in Baltic Sea, down by 2% measured in lane meters, and you talked about increased competition. Is there something going on there already in the fourth quarter? Because if I understand, you previously -- answer to your previous question correctly was that you haven't really seen any material impact from the potential competition yet. But still, volumes are down. Is that -- what is that caused by?

[Torben Carlsen, President, CEO & Member of Executive Board]

We have seen a couple of things in the Baltics. And there's also, on the Northern routes, it's not an increased competition as such, but it is a competitor that is maybe a little bit more aggressive than before, which is impacting our Paldiski-Kapellskär and the Hanko lines, which are subjected to competition from 2 or 3 competitors, both of them. But there, we have lost some market shares as well. So that is what it is.

[Lars Heindorff, Analyst]

And that is -- okay. And is that something that you expect will continue into or have continued into the first part of this year? Or how do you see that development?

[Torben Carlsen, President, CEO & Member of Executive Board]

There seems to be some loss of market share on -- especially the -- well, the Hanko route is very small, but the Paldiski-Kapellskär route.

[Lars Heindorff, Analyst]

Okay. Then the channel. And I perfectly understand your worries about the volumes, and that it's quite uncertain about Brexit and where it'll end up, given the development, both in volumes and the CPI, how that developed, which is in opposite direction. But some of the things that you have mentioned earlier has been that you could take measures sort of to counterbalance the negative impact from the Brexit and the volumes. And one of those measures could be to install more retail and tax-free as you used to have in the good old days on some of those vessels. Can you just give us an update on where you are on those considerations?

[Torben Carlsen, President, CEO & Member of Executive Board]

Well, we can, of course, only start selling tax-free if the situation is such that, that is coming back, which will only be in '21 at the earliest. But we could -- within a few weeks, we could start selling tax-free if we needed to and the vessels have the capacity and storage space to accommodate this. In the shorter term, we are monitoring capacity versus demand. And we have canceled certain departures, typically night departures on the Channel, if we can see that the demand is not there. So that's what is happening on the North Sea going from 3 vessels to 2 vessels, Rotterdam-Immingham will actually increase capacity but it will reduce our operating costs. So that is also a measure that will help us stay at the right levels in the North Sea business.

[Lars Heindorff, Analyst]

And then lastly, Stora Enso contract. I understand that it's been loss-making in the second half of 2019. What should we expect from that in terms of volumes and earnings in 2020?

[Torben Carlsen, President, CEO & Member of Executive Board]

I don't know if we say that the contract as such is loss-making, but the route that we have started on the back of that contract has been loss-making. We expect that loss to continue the first 3 months of 2020, and then we expect a significant uplift as we go from 3 to 1 vessel on that route from 1st of April.

[Lars Heindorff, Analyst]

Okay. So the delta going into 2020? Can you give us any indication about what you expect in terms of that?

[Torben Carlsen, President, CEO & Member of Executive Board]

It is a significant number. We don't guide on -- down to a route level, but there will be a -- it's a double-digit number.

[Operator]

And next question is from Marcus Bellander from Nordea.

[Marcus Bellander, Senior Analyst]

Three questions, if I may. If we start with the EBITDA in Q4, which was down 9%, and you attribute that decline to a further slowdown in U.K. volumes. And maybe I'm being stupid here, but if I look at your volume numbers on Page 16 in the report, it doesn't seem like neither North Sea nor Channel volumes are down year-on-year. So I'm just wondering if you could explain that perhaps.

[Torben Carlsen, President, CEO & Member of Executive Board]

On the North Sea, you've got the Gothenburg-Zeebrugge volumes in there, which we did not operate in Q4 '18. So adjusted North Sea is down. I think it was 6.5% in Q4 on volumes.

[Marcus Bellander, Senior Analyst]

Okay. And those -- so those Gothenburg-Zeebrugge volumes come with lower earnings then?

[Torben Carlsen, President, CEO & Member of Executive Board]

No. But they -- that route only started in June.You have to exclude those volumes to have a like-for-like comparison. Yes. And if you exclude those volumes, you have a 6.5% reduction in volumes on the North Sea.

[Marcus Bellander, Senior Analyst]

Okay. Okay. Great. Understood. On the Channel?

[Torben Carlsen, President, CEO & Member of Executive Board]

It is correct that we don't have that much of a decline in volumes, but we do see a lower rate as we've had to, as you recall, take back market shares that we lost in the -- especially Q2 where we gained in Q3 at a slightly lower lane meter rate. And also on the Channel, passenger volumes are down, I think, 3%, 4% compared to last year.

[Marcus Bellander, Senior Analyst]

Okay, understood. That makes sense. Second question, you guide for revenue growth of 4% in 2020, but your -- the midpoint of your EBITDA guidance indicates almost no year-on-year improvement at all. And I mean, normally, you have pretty high operating leverage. So I'm just wondering what the sort of the moving parts here are. And I realize that the Department of Transport contracts has probably had a high margin and some of the revenue you're adding is in logistics, so maybe that's low margin. But are there any other factors at play here?

[Torben Carlsen, President, CEO & Member of Executive Board]

The 2 big ones, DfT and the IFRS adjustment, would explain the lacking leverage really because we have to compensate there more than DKK 200 million.

[Marcus Bellander, Senior Analyst]

Okay. Yes. Yes. Okay. Great. And then last question. You highlight the risk of -- or associate it with the coronavirus and then how it may reduce the Asian tourists on the Copenhagen-Oslo ferries. But I'm just wondering, is it -- aren't the tourists -- station tourists mainly in summer. So are you essentially accounting for the risk that the coronavirus outbreak will last for, let's say, 6 months or something like that?

[Torben Carlsen, President, CEO & Member of Executive Board]

Well, we start getting Asian tourists from April, and we just assume that it will have an impact on Chinese tourists. What we hope is, of course, that it will be curbed relatively quickly so that it will not have an impact on the Koreans and the Thailand guests. I think right now, it is difficult to think that 3 months from now, we'll have Chinese tourists coming, not least due to the hysteria surrounding this and other customers' potential response or reaction. But of course, it is very, very early days with the coronavirus, and we'll just have to wait and see.

[Marcus Bellander, Senior Analyst]

Okay. And is there any chance that you could quantify the effect -- the negative effect that you've included in the guidance from the coronavirus?

[Torben Carlsen, President, CEO & Member of Executive Board]

No. We can maybe say that we have widened the range compared to what we did last year, and that is probably what we have done to include some impact from corona.

[Operator]

Next question is from the line of Lars Heindorff from SEB.

[Lars Heindorff, Analyst]

Sorry, it's me again. Just a follow-up on the underlying volumes in the North Sea. If we -- if I calculate backwards to get to the minus 6.5%, and I think you said minus 6% underlying in the third quarter, I get to a number which is around 240,000 lane meters per quarter, which is the effect from the new volumes from the Gothenburg-Zeebrugge route. Is that roundabout correct sound there -- does that sounds correct?

[Torben Carlsen, President, CEO & Member of Executive Board]

If you've done the calculation, it should be correct, yes. Yes, let's take that offline if you want to verify some calculations that you've made.

[Operator]

And there are currently no further questions registered. So I'll hand the call back to the speakers. Please go ahead.

[Torben Carlsen, President, CEO & Member of Executive Board]

Thank you very much, everybody, for joining the call and for your good and thoughtful questions. In 2020, the duality, if we can call it that, of 2019 is likely to continue. On Brexit, we are well prepared, closely monitoring and pursuing the challenges and see if there are any opportunities to adjust to market changes, including capacity. And then for our Win23 strategy, 2020 is going to be an exciting year where I believe that all the hard work we put into strategy execution is going to show more significantly in the number -- in the numbers from DFDS. Thank you, and have a good day.

[Operator]

And this now concludes the conference call. Thank you all for attending. You may now disconnect your lines.