Montauk Renewables Inc

NASDAQ:MNTK

Earnings Call Analysis

Company Faces Revenue Drop Due to Strategic Changes

In Q2 2024, the company reported revenues of $43.3 million, down 18.6% from $53.3 million in Q2 2023. This was primarily due to a strategic decision to not market certain RINs amid volatile pricing. However, realized RIN pricing increased by 44.4%. Operating income dropped by 49.1% to $11.7 million. Weather impacted production at Texas facilities, but an expansion at the Pico facility boosted output by 39%. The company reaffirmed 2024 guidance with RNG production expected between 5.8-6.1 million MMBtu and revenues between $195-215 million, despite recent challenges.

A Challenging Quarter Reflecting Strategic Decisions

In the second quarter of 2024, revenues dropped to $43.3 million, an 18.6% decline from $53.3 million in the same quarter of the previous year. This decrease was largely due to the company's choice to withhold a substantial amount of RINs (Renewable Identification Numbers) from the volatile market, which was driven by fluctuating D3 RIN index prices. The company adopted a strategic approach here, opting not to market approximately 4.7 million RINs generated in this period. Average realized RIN prices did see a boost of 44.4%, indicating market strength, but this was offset by the revenue dip caused by the marketing strategy.

Segment Performance: Renewable Natural Gas Leads

The Renewable Natural Gas (RNG) segment generated revenues of $38.8 million, down by 20.1% from $48.6 million in the previous year. This segment produced 1.4 million MMBtu, remaining flat year-over-year. However, severe weather in the Houston region adversely affected production, resulting in a loss of 47,000 MMBtu. Despite these challenges, the company's Pico facility expanded its capacity, producing approximately 39% more MMBtu year-over-year. It's essential for investors to consider these dynamics as they reflect on natural gas pricing and production stability.

Financial Metrics and Cash Flow Management

Adjusted EBITDA fell to $7 million, a stark decrease of 64.3% compared to the prior year's $19.2 million. Notably, net loss for the quarter was $0.7 million, a reversal from the $1 million profit observed the year before. Despite these financial challenges, cash flow from operations saw a significant increase of 138.4%, reaching $14.5 million, showcasing the company's ability to manage liquidity even amidst revenue pressures. As of June 30, 2024, cash and cash equivalents totaled approximately $42.3 million.

Guidance Maintained: Outlook amid Uncertainties

Management has reaffirmed its full-year guidance for 2024 despite recent weather-related challenges impacting production. The company expects RNG production volumes to remain between 5.8 million and 6.1 million MMBtu, with corresponding revenues projected between $195 million and $215 million. Renewable electricity production is anticipated to range from 190,000 to 200,000 megawatt hours, translating to expected revenues of $18 million to $19 million. This confidence is rooted in ongoing investments in production capacity and strategic enhancements.

Investment Projects Highlighting Future Growth

Montauk Renewables is actively advancing several key projects, including the digestion capacity expansion at the Pico facility and the development of a swine waste-to-energy project in North Carolina. These initiatives could bolster production and revenue streams in the coming years. Furthermore, the company is positioning itself to leverage potential regulatory changes that could benefit credit pricing significantly, particularly from the California Air Resource Board’s upcoming rulemaking, which might enhance the market for Low Carbon Fuel Standard credits.

Market Dynamics: Navigating Pricing and Regulatory Changes

The management underscored the company's strategic decision-making in response to market trends. The average realized price for RINs in the second quarter was $3.12, reflecting a significant increase from $2.16 last year, highlighting the potential for revenue recovery. As they manage pricing risks, their focus remains on direct placements of attributes into the hands of obligated parties instead of intermediaries, ensuring revenue streams are not just reactive but strategically proactive. Attention to potential weather impacts and regulatory landscapes will be crucial for understanding their performance trajectory.

Earnings Call Transcript 2024-Q2

[Operator]

Good afternoon, everyone, and thank you for participating in today's conference call. I would like to turn the call over to Mr. John Ciroli as he provides some important cautions regarding forward-looking statements and non-GAAP financial measures contained in the earnings material are made on this call. John, please go ahead.

[John Ciroli, executive]

Thank you, and good afternoon, everyone. Welcome to Montauk Renewables earnings conference call to review the second quarter 2024 financial and operating results and development. I'm John Ciroli, Chief Legal Officer and Secretary at Montauk. Joining me today are Sean McClain, Montauk's President and Chief Executive Officer, to discuss business developments and Kevin Van Asdalan, Chief Financial Officer, to discuss our second quarter 2024 financial and operating results. .

At this time, I would like to direct your attention to our forward-looking disclosure statement. During this call, certain comments we may constitute forward-looking statements, and as such, involve a number of assumptions, risks and uncertainties that could cause the company's actual results or performance to differ materially from those expressed in or implied by such forward-looking statements.

These risk factors and uncertainties are detailed in Montauk Renewables SEC filings. Our remarks today may also include non-GAAP financial measures. We present EBITDA and adjusted EBITDA metrics because we believe the measures assist investors in analyzing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles.

Additional details regarding these non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures can be found in our slide presentation and in our second quarter 2024 earnings press release in Form 10-Q issued and filed this afternoon, which are available on our website at ir.montaukrenewables.com. After our remarks, we will open the call to questions. We ask that you please keep to one question to accommodate as many questions as possible.

And with that, I will turn the call over to Sean.

[Sean McClain, executive]

Thank you, John. Good day, everyone, and thank you for joining our call. I'll begin with updates regarding our ongoing development projects. As previously announced, we commissioned our digestion capacity increase at our Pico facility during the first quarter of 2024. Through the second quarter of 2024, our Pico facility has produced approximately 39% more MMBtu over 2023, as a result of this capacity expansion. While LCFS credit pricing remains at low levels, pending the ongoing rulemaking by the California Air Resource Board, we believe our facility is well positioned to benefit should future credit prices rise.

Also, as previously discussed, we continue to expect the dairy host to deliver the third and final tranche of increased feedstock during 2025. During the second quarter of 2024, we commissioned our first reactor for our swine waste to energy development project in North Carolina. We expect to operate this and additional reactors in 2025. Once the electric utility interconnection is complete. In the interim, this first reactor will be operated to provide for various data collection and testing activities. Test and refined feedstock conveyance, product gas composition and material composition related to the micronutrient organic fertilizer solid fractionation. Also during the second quarter of 2024, we continued the process related to both the outbound electric utility interconnection and related power purchase agreements.

These processes are interrelated, and we expect to successfully complete an interconnection construction activities to support our project time line. During the second quarter of 2024, we have installed the majority of the required feedstock collection process equipment on 2 of the farms with which we have feedstock agreements. We continue to thoughtfully bring additional farms under agreement targeting approximately up to 200,000 hog spaces to support our REC agreement with Duke. In August 2024, we received approval from the North Carolina Utilities Commission of our amendment to the new renewable energy facility designation of our project received late in 2023, that provides for the generation of RECs. This approval is a critical path item in the timing of the utility infrastructure design and other balance of plant componentry of our Turkey, North Carolina facility. Development continues with our second Apex RNG facility, our Blue Granite RNG project, our Bowerman RNG project and our European energy CO2 projects.

We continue to manage through the required utility interconnection upgrades for the Blue Granite RNG project and do not anticipate meaningful additional capital expenditures for the remainder of 2024. As previously discussed, a catalyst for the second Apex RNG facility includes a gas rights contractual requirements trigger by increasing landfill waste intake. And, in turn, gas feedstock availability that has periodically exceeded the processing capacity of our current facility.

Upon commissioning of the second Apex RNG facility, we expect there to be a period of excess processing capacity that is subject to the rate at which the gas feedstock availability increases from landfill activities. Our profitability is highly dependent on the market price of environmental attributes, including the market price for RINs. As we self-market a significant portion of our RINs a decision not to commit to transfer available RINs during a period will impact our revenue and our operating profit. We made a strategic decision to not transfer all available D3 RINs generated and available for transfer during the second quarter of 2024.

As a result, we had approximately 4.7 million RINs in inventory from 2024 second quarter RNG production. We have since entered into commitments and have fully transferred all of these RINs during the third quarter of 2024 at an average realized price of $3.32. Measurably higher than the average D3 index price for the second quarter of 2024 of $3.20. We have also since entered into commitments to transfer approximately 44.1% of our third quarter RNG production with an average realized RIN price of approximately $3.33.

As part of our normal monetization activities, the company routinely queries the market for updates to potential offtake structures, where we self-monetize the majority of our attributes under EPA registered pathway sharing agreements, those agreements upon expiration are subject to changes in sharing percentages and other conditions that are negotiated during renewal. Though we have not yet experienced a significant increase the pathway attribute sharing arrangements we may look to place more of our RNG volumes under fixed price contracts should contractual sharing percentages continue to increase. We are aware that the EPA expects to target March 2025 to propose renewable fuel standard obligations for 2026. The 2025 compliance year already has its renewable volume obligations set at [ 1.3 billion D3 ] RINs. Prior to the EPA setting volume obligations for the 2023 through 2025 compliance years, the EPA has set RVO obligations annually. Given our history and industry experience, we believe that we are positioned to navigate any uncertainty with RVO rule making.

And with that, I will turn the call over to Kevin.

[Kevin Van Asdalan, executive]

Thank you, Sean. I will be discussing our second quarter 2024 financial and operating results. Please refer to our earnings press release and the supplemental slides that have been posted to our website for additional information. As Sean just noted, subsequent to quarter end, we have sold the 4.7 million RINs, which are generated, but unsold as of June 30, 2024. The actual realized price for those RINs was $3.32, which compared to our D3 average realized price for the second quarter of 2024 of $3.12. The average index price of D3 RINs in the third quarter of 2024 is approximately $3.31. We have approximately 55.9% of the RINs we expect to generate from third quarter 2024 RNG production available for commitment.

Total revenues in the second quarter of 2024 were $43.3 million, a decrease of $10 million or 18.6% and compared to $53.3 million in the second quarter of 2023. The decrease is primarily related to a strategic decision in the second quarter of 2024 to nonself market a significant amount of RINs from 2024 RNG production due to the volatility in the second quarter of 2024 D3 RIN index price. The decrease is partially offset by an increase in realized RIN pricing of approximately 44.4% during the second quarter of 2024 compared to the second quarter of 2023.

Total general and administrative expenses were $8.7 million for the second quarter of 2024, flat compared to the second quarter of 2023. Our professional fees decreased approximately $0.3 million or 26.9% in the second quarter of 2024 compared to the second quarter of 2023. Employee-related costs, including stock-based compensation, were $5.4 million in the second quarter of 2024, an increase of $0.2 million or 3.5% compared to $5.2 million in the second quarter of 2023. The increase is primarily related to the forfeited stock awards in the second quarter of 2023.

Turning to our segment operating metrics. I'll begin by reviewing our renewable natural gas segment. We produced 1.4 million MMBtu of RNG during the second quarter of 2024, flat compared to $1.4 million during the second quarter of 2023. Our Texas facilities, McCarty, Atascocita and Galveston collectively produced 47,000 fewer MMBtu in the second quarter of 2024 compared to the second quarter of 2023. As a result of severe weather causing widespread multi-day power outages across the Houston, Texas region. Our Pico facility produced 13,000 MMBtu more in the second quarter of 2024 as compared to the second quarter of 2023. Due to the commissioning of our digestion expansion project.

Revenues from the Renewable Natural Gas segment during the second quarter of 2024 were $38.8 million, a decrease of $9.8 million or 20.1% compared to $48.6 million during the second quarter of 2023. Average commodity pricing for natural gas for the second quarter of 2024 was 10% lower than the prior year period. During the second quarter of 2024, we self marketed 10 million RINs, representing a [ $7.4 million ] decrease or 42.7% compared to 17.4 million RINs self marketed during the second quarter of 2023. Average pricing realized on RIN sales during the second quarter of 2024 was $3.12 as compared to $2.16 during the second quarter of 2023, an increase of 44.4%. This compares to the average D3 RIN index price for the second quarter of 2024 of $3.20 being approximately 47.9% higher than the average D3 RIN index price for the second quarter of 2023 of $2.16.

At June 30, 2024, we had approximately 0.4 million MMBtu available for regeneration and had approximately 4.7 million RINs generated and unsold. We had approximately 0.4 million MMBtus available for RIN generation and had approximately 3.0 million RINs generated and unsold at June 30, 2023. Our operating and maintenance expenses for our RNG facilities during the second quarter of 2024, $13.9 million, an increase of $2.2 million or 18.9% compared to $11.7 million during the first quarter of 2023. Our RNG facilities reported increased total segment utility expenses of approximately $0.3 million during the second quarter of 2024 as compared to the second quarter of 2023.

Our McCarty -- facility operating and maintenance expenses increased approximately $0.5 million primarily related to the timing of gas compression system maintenance expenses. Our Rumpke facility operating and maintenance expenses increased approximately $0.5 million primarily related to gas processing equipment made, media change out and disposal costs. Our Apex facility operating and maintenance expenses increased approximately $0.5 million, primarily, again, related to the timing of preventive maintenance related to gas processing equipment. Our poster facility operating maintenance expenses increased approximately $0.3 million related primarily to well-field operational enhancements. We produced approximately 45,000 megawatt hours in renewable electricity during the second quarter of 2024, a decrease of approximately 4,000 megawatt hours or 8.2% compared to 49,000 megawatt hours during the second quarter of 2023.

Our security facility produced approximately 3,000 megawatt hours less in the second quarter of 2024 compared to the second quarter of 2023. As a result of ceasing operations in connection with the first quarter of 2024 sale of the gas rights at this location back to the landfill host. Revenues from renewable electricity facilities during the second quarter of 2024 were $4.5 million a decrease of $0.1 million or 3.2% compared to $4.6 million during the second quarter of 2023. The decrease is primarily driven by the decrease in our security facility production volumes. Our renewable electricity generation operating and maintenance expenses during the second quarter of 2024, were $4.7 million, an increase of $1.3 million or 37.3% compared to $3.4 million during the second quarter of 2023.

Our Bowerman facility operating and maintenance expenses increased approximately $0.9 million, which was primarily driven by the timing of annual original equipment manufacturer preventative maintenance expenses, which are nonlinear period-over-period. Our Tulsa facility operating and maintenance expenses increased approximately $0.4 million, which was driven by well field collection enhancements.

During the second quarter of 2024, we recorded impairments of $0.2 million, a decrease of $0.1 million or 37.6% compared to $0.3 million in the second quarter of 2023. The specifically identified impairment losses in the second quarter of 2024 primarily relate to various RNG equipment that would deem us elite or no longer suitable for current operations. The second quarter of 2023 impairment relates to specifically identified machinery and feedstock processing equipment that were no longer in operational use. Operating income for the second quarter of 2024 was $0.9 million, a decrease of $12.7 million or 93.6% compared to $13.6 million for the second quarter of 2023. Our operating income was impacted by our strategic decision to not sell 4.7 million RINs generated but unsold during the second quarter when the average D3 RIN index price was approximately $3.20. R&G operating income for the second quarter of 2024 was $11.7 million, a decrease of $11.3 million or 49.1% compared to $23 million for the second quarter of 2023.

Renewable electricity generation operating loss for the second quarter of 2024 was $2 million, an increase of $1.4 million compared to $0.6 million for the second quarter of 2023. Turning to the balance sheet. At June 30, 2024, $60 million was outstanding under our term loan. As of June 30, 2024, we had capacity available for borrowing under our revolving credit facility remaining at $117.5 million. During the second quarter of 2024, we generated $14.5 million of cash from operating activities an increase of 138.4% compared to $6.1 million for the second quarter of 2023. Based on our estimate of the present value of our Pico earn-out obligation, we reported an increase of $0.4 million to the liability at June 30, 2024.

This increase was recorded through our RNG segment royalty expense. For the 6 months of 2024, we incurred approximately $40.8 million in capital expenditures, of which $19 million related to our Montauk Ag Renewables development in North Carolina, $6.9 million to the second Apex facility, $6.7 million to our Bowerman RNG project, $1.8 million to the Blue Granite RNG project and $1.3 million for our Pico Digestion Capacity increase. As of June 30, 2024, we had cash and cash equivalents of approximately $42.3 million in accounts and other receivables of approximately $22.0 million. Accounts receivable primarily relate to second quarter RIN sales comprising the majority of this balance, of which the majority was collected after June 30, 2024.

Adjusted EBITDA for the second quarter of 2024 was $7 million, a decrease of $12.2 million compared to [ $19.2 million ] for the second quarter of 2023. The second quarter of 2024 was $6.7 million, a decrease of $12.2 million or 64.3% compared to EBITDA of $18.9 million for the second quarter of 2023. Net loss in the second quarter of 2024 was $0.7 million compared to a net income of $1 million in the second quarter of 2023. Our income tax expense decreased approximately 11.6%, a decrease of approximately $11.6 million for the second quarter of 2024 as compared to the second quarter of 2023.

The decrease is primarily related to interim tax provision calculations using our estimated annual effective tax rate against a pretax loss for the second quarter of 2024, as compared to the 2023 estimated annual effective tax rate applied against pretax income for the second quarter of 2023.

I'll now turn the call back over to Sean.

[Sean McClain, executive]

Thank you, Kevin. In closing, and though we don't provide guidance as to our internal expectations on the market price of environmental attributes, including the market price of D3 RINs. We are reaffirming our full year 2024 outlook provided in May, 2024. For 2024, we continue to expect our RNG production volumes to range between 5.8 million and 6.1 million MMBtu with corresponding R&D revenues to range between $195 million and $215 million. This range, though unchanged accounts for impacts resulting from the hurricane, which impacted the Houston, Texas region with widespread utility outages in July 2024. We expect our 2024 renewable electricity production volumes to range between 190,000 and 200,000 megawatt hours with corresponding renewable electricity revenues to range between $18 million and $19 million, also unchanged from our previous earnings call. And with that, we will pause for any questions.

[Operator]

[Operator Instructions] Our first question will be coming from Matthew Blair of TPH. Matthew your line is open.

[Matthew Blair, analyst]

Thank you, and good afternoon. You kept your full year production guidance for RNG, the same despite some of the challenges in the second quarter with the power outages in Texas. Could you talk about -- how are you able to do that? And what are the bright spots in terms of areas that might be producing a little bit more than you expected? And then can I also ask for the third quarter, you mentioned that you already monetized the 4.7 million of RINs and inventory. But do you expect to monetize all of the RINs that you produce in the third quarter? Or is there a chance that you might hold back some of the Q3 production from sale as well?

[Kevin Van Asdalan, executive]

Thanks, Matthew. Yes, we are anticipating this question in regards to our holding guidance though we've had 2 consecutive quarters with weather impacts, predominantly impacting our Houston region, which generates, give or take, about 50%. So what we do, we set our budgetary expectations with where we think the year is going to go in regards to production impacts. We expect well field investment to drive production increases. Though we have had those 2 quarters of weather impacts. We go through various sensitivities and historical look back in regards to at the beginning of the year what landfill hosts tell us their landfill expansion plans are going to be, and then we try to go through various sort of discounting, if you will, or delay impacts for what that expansion may look like at various sites.

And then in regards to why we believe the second half of the year is still going to develop in appreciable volumes holding that guidance. Will take a look at our budgeted expected capital expenditures into our well field as compared to what we've actually incurred, we still have enough runway left in the rest of this year, that we believe we'll get some meaningful uplift from the capital that we anticipate investing into our well field at certain of our sites as well as some of the ongoing and known optimization enhancements that we're doing either through well field collection or within our plants. That will not necessarily be solely related on our landfill host expansion activities.

In regards to the guidance ranges. While we know that our Houston region has been impacted by weather events in the previous 2 quarters, we believe that our existing guidance from an R&D production standpoint takes into account those impacts in the second and third quarter.

[Sean McClain, executive]

I can take the piece regarding the timing of RIN monetization. How I would like to answer it is the decision as to whether or not we'll monetize is a function of our prioritization to have those attributes to be placed directly into the hands of the obligated parties rather than tying it to ebbs and flows and pricing although it is a consideration as we look at what is readily available in the marketplace, news from the EPA, recent pricing trends, but the leading driver is the purchasing cadence of the obligated parties, the way in which we manage our cash flows and our available cash and our borrowing facilities affords us the opportunity to take those attributes and place them where they belong, which is in the hands of the obligated parties not to intermediaries that may hold those in the hopes that they're able to extract the margin as they ultimately place those into the hands of the obligated parties.

That will drive any decisions that we have as to what we hold coming in and out of any particular quarter and the volumes at which we would delay.

[Kevin Van Asdalan, executive]

And then one other note, Matthew, is that obviously, we've had conversations and we take into consideration the feedback that we're getting and knowing that our 10-Q was just hit EDGAR right before the call. We have included a new table that is trying to help people like you to see the variability or volatility in regards to RIN that we may or may not have generated but unsold at any given quarter.

[Operator]

And our next question will come from Saumya Jain of UBS.

[Saumya Jain, analyst]

How are you guys looking at any potential changes in [ LCF ] rent prices or [indiscernible] given upcoming elections, how you factor in both potential [indiscernible].

[Kevin Van Asdalan, executive]

I would -- I guess I would first respond that we generally don't provide guidance in regards to our internal expectations for the price of environmental attributes. We are all very aware that [ CARB ] is going through various rule making. I believe there's a -- the next meeting for [ CARB ] in November, I want to say, where we expect some building and rulemaking to impact, I believe, 2025 in the overall programs, emission reduction targets. We're bullish that those -- that, that rulemaking will be beneficial and have an appreciable increase in LCFS pricing. But as with other regulatory outcomes that doubles in the details, and we believe that when that LCFS credit pricing increases, certain of our sites, notably Pico, that will be primed to benefit from an eventual uplift in LCFS credit pricing.

[Operator]

And our next question will be coming from Paul Cheng of Scotiabank.

[Paul Cheng, analyst]

Sean, can you tell us what is the second quarter weather impact on the production? And also that in your full year guidance or prior third quarter, have you built in any expectation for the hurricane season?

[Kevin Van Asdalan, executive]

Yes. Thanks, Paul. I know that you asked, Sean, but I'll answer that very quickly. We estimate that the approximate impact across the Houston facilities in the second quarter, was around [ 47,000 ] to direct impact in the second quarter. And in the third quarter, I would say that we're probably seeing a similar expectation of struggles on production out of Houston. I want to say that generally, in the second quarter, those power outages were approximately 5 to 8 days. And then I believe that, that sort of approximation of widespread power outages from the hurricane in July was again about 5 or 8 days or so depending upon the region of Houston.

[Paul Cheng, analyst]

Yes, because I mean, the national weather center is predicting this is going to be one of the perhaps the most happy hurricane season. So I'm just curious whether you guys build in some additional downtime in your forecast? And also that when you're talking about your current full year, so what is the biggest risk for you not to hit that target?

[Sean McClain, executive]

The process by which we would incorporate future weather impacts is at least initially rooted in our historical outages or unplanned outages associated with utility outages or direct impact from weather events, indirect or direct. That budgetary process has a natural component that you're taking the total capacity that is available for production, and you are taking into consideration the sort of the average that you're seeing or the trend, rather, that you're seeing in those weather phenomenon. Now although there may be speculations that suggest that this will be the most active hurricane season. there has been an increasing trend that you see in those weather phenomenon. And so the projections that we put in place, albeit the optimistic side where you are placing investments, as Kevin mentioned, into the well field, the timing of landfill operations that you'll see the positive lift that, in this case, has allowed for us to maintain with confidence our full year guidance.

You do see that trend that will increase the impact of the weather events that we put into our projections for 2024.

[Operator]

Our next question will be coming from William Blair of TPH.

[Matthew Blair, analyst]

It's Matthew again. Just looking through the Q, it looks like your 2024 CapEx range is down to $84 million to $106 million from the $149 million to $167 million previously. But looking at the table of projects the start dates for your 4 major growth projects are all the same, all unchanged. So could you talk about what's changing on the CapEx side? Are you pushing anything out? Or -- why is this year's CapEx number coming down?

[Kevin Van Asdalan, executive]

Yes. Matthew, that's specifically in regards to the Bowerman RNG project and primarily related to one significant component associated with that. It's solely a -- we expected a large outlay for one component to come in the third or fourth quarter of 2024. We have now anticipated that outlay to be pushed into 2025. It's a timing issue with -- out of a period this year into next year, which we do not anticipate to impact the overall commissioning of our [ Arman ] RNG projects. So it's solely a function of sort of vendor expected timing that with that particular project.

[Operator]

[Operator Instructions] I would now like to hand the call back to Sean for closing remarks. .

[Sean McClain, executive]

Thank you. And thank you all for taking the time to join us on the conference call today. We look forward to speaking with you when we present our third quarter 2024 results.

[Operator]

And this concludes today's conference call. Thank you for your participation. You may now disconnect.