Aris Water Solutions Inc

NYSE:ARIS

Earnings Call Analysis

Aris Achieves Robust Growth and Margin Expansion in 2023

In 2023, Aris focused on fundamental execution, which included enhancing profitability, minimizing working capital, and improving operational flexibility, while also achieving business growth. The year brought a 16% increase in volumes, margin recapture, and a specific highlight was the unprecedented growth of produced water recycling in the Permian Basin. Aris's water recycling and sourcing business sold an astonishing 482,000 barrels of water per day, amounting to over 44 million barrels in the fourth quarter alone, marking a sequential growth of 5% and a remarkable 32% year-over-year growth.

Capital Efficiency and Shareholder Value Improvement

Aris capitalized on the growing demand for water infrastructure in the Northern Delaware Basin, aiming to participate in further growth at attractive rates of return. Prior capital investments started to bear fruit, resulting in anticipated better leverage of the system and improved capital efficiency moving forward. This strategic approach, coupled with electrification initiatives and operational cost reductions, was projected to reduce capital spending by approximately 40% in 2024 relative to 2023. Additionally, Aris sustained positive free cash flow for the year, affirming the potential for boosting shareholder returns.

Financial Performance Exceeds Expectations

Aris's adjusted EBITDA reached $175 million, which was up by 17% for the year, exceeding the upper end of their guidance range. The fourth quarter saw a particularly impressive adjusted EBITDA growth of 37% from the same quarter in 2022. These figures were bolstered by the company's largest annual CPI escalations and effective cost-saving measures, which expanded margins by more than 10%. As for capital expenditures, Aris incurred about $20 million in the quarter, cumulating to $156 million for the year — below the provided guidance and reflective of a nearly 41% decrease in net working capital, highlighting the company's strong operational and financial efficiency.

2024 Outlook - Continued Growth with Focus on Efficiency

Looking ahead to 2024, Aris set a forecast for produced water volumes to be between 1.02 and 1.07 million barrels of water per day, approximately a 2% to 5% growth adjusted for specific asset sales. They anticipated skim oil recoveries and maintained a steady expectation for water solutions volumes. Aris projected an adjusted EBITDA of $180 million to $200 million for 2024, indicating a 9% increase at the midpoint compared to 2023. This growth is backed by a focus on continuous improvement, cost reductions, and benefits from inflation-based rate escalations, with expected margins ranging from $0.42 to $0.44 per barrel, representing a 10% increase from the previous year.

Strategic Capital Allocation and Return to Shareholders

The company planned for capital expenditures between $85 million and $105 million for 2024, confirming a significant reduction in spending. Furthermore, the anticipation of generating free cash flow of $45 million to $65 million during the year highlighted Aris's potential to evaluate enhanced returns to shareholders via dividend growth or share repurchases.

Earnings Call Transcript 2023-Q4

[Operator]

Greetings, and welcome to the Aris Water Solutions Q4 2023 Earnings Conference Call. [Operator Instructions]

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Tuerff, Senior Vice President of Finance and Investor Relations. Thank you, David. You may begin.

[David Tuerff, executive]

Good morning, and welcome to the Aris Water Solutions Fourth Quarter 2023 Earnings Conference Call. I am joined today by our President and CEO, Amanda Brock; our Founder and Executive Chairman, Bill Zartler; and our CFO, Stephan Tompsett.

Before we begin, I'd like to remind you that in this call and the related presentation, we will make forward-looking statements regarding our current beliefs, plans and expectations, which are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties and other factors that could cause actual results to differ materially from results and events contemplated by such forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements. Please refer to the risk factors and other cautionary statements included in our filings made from time to time with the Securities and Exchange Commission.

I would also like to point out that our investor presentation and today's conference call will contain discussion of non-GAAP financial measures, which we believe are useful in evaluating our performance. These supplemental measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with U.S. GAAP. Reconciliations to the most directly comparable GAAP measures are included in our earnings release and the appendix of today's accompanying presentation.

I'll now turn the call over to our Founder and Executive Chairman, Bill Zartler.

[William Zartler, executive]

Thank you, David. 2023 was a fantastic year for the Aris business. We focused on fundamental execution, which include profitability, reduced working capital and improved our operational flexibility while continuing to grow the business. Volumes were up 16% for the year, and we recaptured margins, which had been eroded by inflation and cost challenges driven by our rapid growth in late 2022.

Strategically, we have remained disciplined in our approach to capital allocation, growing organically under long-term contractual agreements while selectively evaluating and closing new agreements in an improving pricing environment. There is greater demand for water infrastructure in the Northern Delaware Basin than there are existing assets, and we have the opportunity to participate in further growth at attractive rates of return. Inorganically, we've maintained similar discipline with a continued focus on strategic fit and accretion across all metrics in both the short and long term. Our conservative balance sheet and ample liquidity give us the flexibility to invest when the timing and economics are most compelling.

Looking to 2024, we're excited about the business and our opportunity set. We will benefit from our prior capital investments and anticipate being able to better leverage the system to improve capital efficiency going forward. Combined with continued operational and commercial improvements, we anticipate sustained positive free cash flow for the year, which will improve our options for capital allocation, which can include increasing our shareholder returns. Our team is focused on continuing the strong execution we demonstrated in 2023, operating safely and reliably for our employees and customers while enhancing water sustainability in the Permian Basin.

With that, I'll turn it over to Amanda.

[Amanda Brock, executive]

Thank you, Bill. I'd like to start off by echoing Bill's comments. We had an outstanding year, delivering great results quarter-over-quarter, and we enter 2024 with significant positive momentum. I want to recognize the tremendous efforts of the Aris team who worked extremely hard and performed consistently above expectations. I'm immensely proud of our collective achievements. At the onset of 2023, we said we would improve profitability while continuing our rapid pace of growth and infrastructure expansion. While there is still work to do, we exceeded our annual goals, expanding margins by more than 10% and improving operational and financial efficiency.

We maintained a strong rate of growth. We increased produced water volumes 19% and water solutions volumes 9% year-over-year, which combined with our expanded margins, culminated in adjusted EBITDA of $175 million, up 17% for the year and exceeding the upper end of our guidance range. In our produced water business, we averaged 1.1 million barrels per day for the fourth quarter, ahead of our expectations and continued our sequential growth for the ninth consecutive quarter.

As we've previously discussed, we have allocated additional resources to skim oil recovery and averaged approximately 1,360 barrels per day in the fourth quarter, ahead of expectations due primarily to higher volumes from flowbacks and operational improvements. Our large-scale infrastructure and proven ability to deliver treated water in large quantities, again, allowed us to win additional spot business, driving higher-than-anticipated water solutions volumes in the fourth quarter. As we've previously seen, the water solutions business can be lumpy, and higher water volumes in the fourth quarter were also a function of a pull forward of activity originally scheduled for the first quarter of 2024. As operators limit their use of groundwater, the growth of produced water recycling in the Permian Basin has been unprecedented. Our water recycling and sourcing business sold 482,000 barrels of water per day or over 44 million barrels in the fourth quarter alone, growing 5% sequentially and 32% year-over-year.

We are extremely proud of this growth and our success in managing costs and logistics while optimizing the use of our infrastructure and enhancing water sustainability in the Permian Basin. Over the course of 2023, we reduced rental equipment and diesel fuel expenses by converting facilities to permanent electrified infrastructure. We reduced these costs by approximately $7.6 million on an annualized basis, exceeding the target we set at the beginning of the year. We have additional facilities identified for conversion, and believe that we can capture further electrification savings in 2024.

In terms of revenue, the largest of our annual CPI escalations took effect at the beginning of the third quarter; and combined with the success of our electrification projects and rental expense reductions, drove significant margin expansion of $0.05 per barrel since our cost peaked in the middle of 2022. We've also made a lot of progress in the field, piloting technologies for the treatment of produced water for beneficial reuse. The results have been promising, and a lot of lessons learned as we focus on cost and treatment technologies that can operate consistently at scale.

Working with our industry partners, ConocoPhillips, Chevron and ExxonMobil, we will be piloting and evaluating 2 additional desalination technologies and we'll also be evaluating the commercial viability of mineral extraction from our produced water. We look forward to updating you next quarter.

Looking ahead to 2024, we continue to work closely with our customers to be their partner of choice, delivering safe, reliable and sustainable water infrastructure solutions. Volumetrically, as the basin matures and our customers' pace of growth moderates, we anticipate our own water volume growth will more closely mirror oil production growth in the Northern Delaware Basin, with year-over-year volumes expected to be up approximately 2% to 5% after adjusting for prior asset divestitures.

In addition to the sustainable growth rate, we expect to benefit from improved profitability from the positive momentum on margins coming out of last year, additional operating cost reductions in chemicals, filtration and waste disposal as well as further contractual revenue escalation. With considerable investment to date in our infrastructure and greater operational visibility and flexibility through our control room and automation efficiencies, we also anticipate being able to more fully leverage our existing assets this year, which should allow us to bring our capital spending down by approximately 40% versus 2023.

Steve will expand on the details, but sustainable volume growth, our anticipated continued expansion of operating margins and significantly reduced capital spending, sets up 2024 as a pivotal year for Aris as we anticipate sustained positive free cash flow. Our compelling outlook for this year is a testament to our keen focus on margins and the hard work and consistent results of our team delivered in '23, and we're excited by our continued momentum into the first quarter of 2024.

With that, I'll turn it over to Steve to discuss our financial results for the quarter and details on our outlook for 2024.

[Stephan Tompsett, executive]

Thank you, Amanda. We reported adjusted EBITDA for the fourth quarter of $49.3 million, up 37% from the fourth quarter of 2022 and up 10% sequentially from the third quarter of 2023, again, exceeding expectations for the quarter. The sequential increase was largely due to additional short-cycle commercial wins and some pull forward of activity in water solutions, higher-than-anticipated skim oil recoveries and lower G&A costs. For the full year, adjusted EBITDA of $175 million was above the high end of our original guidance.

For capital expenditures, we incurred approximately $20 million in the quarter, bringing us to $156 million for the year, below the low end of our guidance as we were able to optimize and better leverage our existing assets and defer a portion of our capital spend into this year. For the year, ongoing process improvements delivered an almost 41% decrease in net working capital and a period which saw revenue grow more than 22%, driving a $43 million working capital benefit.

Taken together, our operational performance, lower capital investment and working capital improvements delivered $14 million in positive free cash flow in 2023. Looking ahead for the year 2024, we expect produced water volume to be between 1.02 million and 1.07 million barrels of water per day, up approximately 2% to 5% year-over-year when adjusted for the impact of our Martin County asset sale completed in the third quarter of last year.

We're forecasting skim oil recoveries of approximately 1,300 barrels of oil per day at an average WTI price of $76 per barrel. And as a reminder, each $1 change in oil price relative to expectations would correspond to a change of $475,000 in EBITDA per year. For the water solutions business, we expect first quarter volumes to average 325,000 to 345,000 barrels per day and expect full year volumes of between 430,000 and 470,000 barrels per day, approximately flat year-over-year, which corresponds with currently forecasted Permian Basin rig and frac crew counts.

As we've seen in the past couple of years, water solutions volumes generally ramp up throughout the year as operator capital budgets are refreshed and wells are drilled in the first half of the year, with flowback activity concentrated in the back half of the year. With the cost reductions Amanda referenced, a focus on continuous improvement and contractual tailwinds from inflation-based rate escalations, we forecast margins between $0.42 and $0.44 per barrel for the year, which represents a 10% increase at the midpoint relative to 2023.

Given the outlook from our customers and continued operational improvements, we are forecasting adjusted EBITDA of $180 million to $200 million for 2024, increasing 9% versus 2023 at the midpoint. Alongside a moderating growth outlook from our customers and our ability to drive further capital efficiencies, we anticipate capital expenditures to total between $85 million and $105 million for the year, including $12 million to $16 million of maintenance and system optimization capital and approximately 40% reduction versus 2023. The higher end of the range includes potential business development projects under evaluation, which could deliver incremental earnings in 2025 and beyond.

For the first quarter, we anticipate $30 million to $35 million of capital expenditures as our spending is expected to be weighted towards the first half of the year. With continued earnings growth and significantly reduced capital expenditures, we anticipate 2024 to deliver a clear and sustained free cash flow inflection point for Aris. We anticipate generating free cash flow of $45 million to $65 million for the year, which will give us the optionality to evaluate greater shareholder returns through either dividend growth or share repurchases.

Turning to our balance sheet. We ended the quarter with a healthy debt to adjusted EBITDA of 2.4x, below the low end of our long-term leverage target and $330 million of available liquidity, which provides us with significant financial flexibility. Finally, for the first quarter of 2024, we declared our tenth consecutive dividend of $0.09 per share, to be paid March 21 to shareholders of record as of March 7.

With that, I'll turn it over to Amanda to wrap up.

[Amanda Brock, executive]

Thanks, Steve. To close, I want to again highlight the success of 2023, our consistent execution across the year and the momentum it provides us looking forward into 2024. We've made great progress, and our business today is more efficient, more profitable and more predictable, which is evident in our 2023 results. We are not done. In 2024, we will continue to identify new opportunities for growth, execute on additional cost reductions and margin expansion and further leverage our existing assets to deliver increased value from our business. Our reduced capital spending will allow us to achieve greater free cash flow and provide us the opportunity to increase shareholder returns.

With that, we are happy to take questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Spiro Dounis with Citi.

[Unknown Analyst]

[ Ed ] on for Spiro. Just starting off, how would you stack the priority for excess cash flow here given your -- under your leverage target? And where would M&A fall on that?

[Amanda Brock, executive]

Thanks for the questions. In terms of priorities, we're thinking about everything. So in terms of sort of responding as to what we're going to do, I think it's early. We have those conversations all the time. Obviously, there's the buybacks, there's the dividend, there's the paying down debt. We are going to continue to evaluate that and just expect to be -- talk to everybody about that later in the quarter -- sorry, later in the year.

[Unknown Analyst]

Okay. Makes sense. And I guess just kind of thinking about '23 was a year of execution for you, and you've largely met those goals. How are you thinking about what the focus will be for 2024?

[Amanda Brock, executive]

We're going to continue to be very focused, Spiro, on execution. We still see opportunity for margin expansion in our core business, working with our customers on additional growth opportunities adjacent to our core system. So we continue to see execution and also looking at other opportunities that may be there as it relates to our beneficial reuse, mineral extraction. But I think we're just going to continue to have our heads down and execute and feel very optimistic about '24.

[Operator]

[ Jackie ], your line may be muted.

[Unknown Analyst]

Congrats on the great quarter here. First, I'd just like to start on volumes. So it seems that the first quarter seems to be flat at the midpoint sequentially, but with upside to be better. Is that upside, could that come from a carryforward from a better fourth quarter? And understanding that there is a seasonality factor here, it seems as though the first quarter is higher than the full year guide. Could you give us your thoughts on how volumes should trend throughout the year?

[Amanda Brock, executive]

Thanks, [ Jackie ], and thanks for the question. Great question. I'm going to let Steve take that to explain how we see this is back-end weighted.

[Stephan Tompsett, executive]

Yes. And [ Jackie ], I think when you look at some of the public commentary from some of our larger customers, they've indicated some of the volume profile they expect throughout the year. And so a lot of that flows into our own internal forecasts. When we provide our outlook, we do get about 6 months' notice from our customers. We have a very good line of sight in the first half of the year, and we do start working further out beyond that. But when we're providing guidance around the volumetric outlook, we're very deliberate around what we put out based on what we know and what we're confident in.

So as we move through the year, we'll see where our customers come out with refined volumes. There could be upside from greater activity as we get to the back half of the year.

[Unknown Analyst]

Great. That makes sense. And then just on margins, you mentioned further margin improvement for 2024. And you mentioned that there may be further efficiency initiatives on the cost side. What specifically are those initiatives for 2024? And in that context, when you look at better margin guidance for the year, is that what's driving the higher outlook here? Or fees also doing some of that work?

[Amanda Brock, executive]

So when we look at our operations, we are constantly looking to places that we can drive costs down. So when I think about '24 and working with the team, we're going to be very focused on the reuse area, chemicals across the system, labor productivity, also very focused on waste and filtration and what we can do to reduce costs in those areas. We will have some continued electrification, which will continue to drive costs down. So [ Jackie ], it's really a combination of things, looking across our entire portfolio and being very deliberate as we sort of manage our cost and identify opportunities for efficiency.

In terms of margins driving, it is a margin story on rates. We have set rates, but we -- from those set rates, as you know, from our contracts, we have the revenue reset with CPI. And we have CPI really that comes across the year with 2 big adjustments at the end of March, at the end of Q2, actually Q3 and then in January. So it's a function of rates and margin.

[Operator]

Our next question comes from the line of Eli Jossen with JPMorgan.

[Elias Jossen, analyst]

So I just wanted to circle back to the free cash flow deployment. So you alluded to potentially increasing shareholder returns. Should we expect a dividend raise in 2024? Or otherwise, what color can you add for those potential to increase shareholder returns?

[Stephan Tompsett, executive]

Yes. As you saw in the press release and in our financial statements, our leverage is very low relative to our targets. So no need to allocate capital to further debt reduction at this time. So that leads you to either dividends or share repurchases. Repurchases would exacerbate some of the issues we see from the low float that's out there. But when you step back, we're a far cry from where we think the intrinsic value of our stock is. And so there's some compelling value when we look at potential repurchases. So dividends, repurchases or accommodation of both are on the table. We're working through that. And as Amanda said, we'll be back to you guys here later in the year.

[Elias Jossen, analyst]

Okay. I look forward to that. And then maybe just as a follow-up. In the release, you also touched on your recent divestiture of noncore assets that kind of allows for capital redeployment into higher-return organic projects. Maybe just a little bit more color on what those types of projects might look like.

[Amanda Brock, executive]

Certainly. I mean we're seeing a lot of projects right now, particularly in our core [ Simon ] and Northern Lea County area. These are just going to be additional projects working with our customers where we expand our system to capture additional volumes at very attractive rates.

[Operator]

Our next question comes from the line of Don Crist with Johnson Rice.

[Donald Crist, analyst]

You made big strides on connecting your facilities to the grid last year. Can you remind us where you are in that process? Are you over halfway in connecting everything to the grid now? And what kind of savings do you expect this year from those efforts?

[Amanda Brock, executive]

We are more than halfway. And as we told you, Steve's going to have the exact numbers for you.

[Stephan Tompsett, executive]

Yes, Don. When we originally announced that we had 19 locations we're going to connect, at this point, we've got 16 of those done. We do have 2 additional facilities we've added to the list. So there's 5 done -- 5 remaining out of that 21. And at this point, we're mostly waiting on Xcel, the regulated utility to get there. So we're in the queue, but we're at the mercy a little bit but we've made significant progress. On the recycling facilities, we do have another 2 locations there. So well over the halfway mark, but we'll see some incremental margin improvement this year from those.

[Amanda Brock, executive]

As you know, Don, we indicated that we hope to achieve $7.5 million savings by actually connecting all of those systems. And we finished the year with more to go and actually achieving $7.6 million in savings.

[Donald Crist, analyst]

Yes, it's great progress. And Amanda, if you'll indulge me just a little bit. From where I sit, I'm asked a lot about OFS consolidation and M&A in the light of E&P consolidation. And my answer to investors are the water industry in general, especially in the Permian, is kind of ripe for M&A given the large amount of private equity on that side of the business. From where you sit, not saying that you're going to do a lot of M&A. But from where you sit, do you see that industry as ripe for consolidation as we kind of move through '24 and into '25?

[Amanda Brock, executive]

Great question, Don. I'm going to let Bill on for that because we're having this conversation all the time.

[William Zartler, executive]

Yes. I mean Don, the market is fairly fragmented. There's a couple of larger players out there, but the fragmented players do and will need to be consolidated. I think that our focus has really been on making sure that what we do is truly accretive to our business. We have such great long-term contracts and customers that it's hard to evaluate those in light of where we're valued today and using our equity in anything that may be dilutive in any form or fashion.

So we do think the industry is ready for some level of consolidation. The challenges around the Delaware Basin versus the Midland Basin and landowners and their ability to extract value in these complex systems or at least integrated systems makes it more challenging, but we are in the middle and constantly evaluating all of the opportunities to consolidate what we think should be, over time, consolidated.

[Operator]

Our next question comes from the line of Selman Akyol with Stifel.

[Selman Akyol, analyst]

So I just want to start with, in your opening comments, you talked about how higher spot volumes were helpful. And so maybe you could just talk about what really drove that. And then as well as we're 2 months into the first quarter, how you saw that cadence progress as we moved into the new year.

[Amanda Brock, executive]

Yes. So we mentioned the higher spot volumes. We were able to bring those in. And what we've talked about is when there is availability on our system going out to our customers and bringing volumes in on an interruptible basis. That's as it relates to disposal. What we were really referring to is bringing in additional water solutions business that's a much shorter-cycle business. And you're looking constantly for opportunities where somebody may need additional water for completions. And so in Q4, we mentioned bringing in some volumes from Q1 '24 and also being able to sort of win additional business. It's just very fluid, and we are well positioned with geographic reach and the number of recycling locations we have to actually win additional spot business.

[Selman Akyol, analyst]

Understood. And then also, I think you referenced sort of 1,360 barrels of skim oil, and then your guidance is 1,300. So is that just conservatism? Because if you expect volumes to ramp across your system, we naturally expect that to move higher as well.

[Amanda Brock, executive]

So it's a level of looking at what we tend to get over time. When we mentioned the 1,036 skim oil barrels, we also indicated that it seemed to be higher as a consequence of flowback, we also had some benefit of price. And so we do see some lumpiness in those skim volumes. So we are just estimating that over the year, we will sort of have steady state at that 1,300 barrels a day.

[Operator]

Our next question comes from the line of John Daniel with Daniel Energy.

[John Daniel, analyst]

Amanda, this might be a rookie question, and it is a bit of a long-term one. But when you think about how important water recycling is to your customers, their ESG goals, and perhaps high switching costs, I'm not sure if that's right or not, but I would think so. How will that ultimately influence pricing strategy as contracts mature years down the road? I feel like pricing could have [ revised ] higher over time.

[Amanda Brock, executive]

John, I don't think you've ever had a rookie question, but good question. So yes, the relationships we have with our customers and as a consequence of the physical infrastructure we have and the volumes we aggregate in order to deliver these large quantities of water to our customers as they need more and more with these multiple fracs, the relationships are very sticky. I think as contracts roll off and as there is more demand in the basin for reuse versus groundwater, for example, I do think that there will be pricing power. We will also see some pricing power and rate increase over time in our disposal business as volumes just over the basin continue to increase.

[John Daniel, analyst]

Got it. Okay. And then when I look at the customer that you guys have, which is a very good one, and many of those are the people that are viewed as the likely consolidators. I know in some of the dumb iron oil service businesses, and that's a term of endearment, but those types of companies will switch to their incumbent providers pretty quickly because of service and reliability. I'm curious like what happens when big company A buys big company B, your customer? They've got a different water infrastructure partner. How quickly do they want to change? Do they change? Just any thoughts on that would be helpful to me.

[Amanda Brock, executive]

Let me answer sort of from a legal perspective first. Our contracts, which are long-term contracts with our customers, are sort of covenants running with the land. So what that means is even if they sell or consolidate, they will still have that contract in effect. So we have contractual support. But Bill, why don't you respond to that?

[William Zartler, executive]

John, probably we've seen that happen with Concho rolling into Conoco. And as [indiscernible] a relationship already and continue to get more business from Conoco along the way. And so the takeaway piece of this and the infrastructure required is this is a midstream business. These are long-term contracts. But in order to facilitate the oilfield servicing part of this, if you will, the water recycling that's in high demand, you have to have the infrastructure in place to be able to deliver and control those volumes, which we do under those contracts. And so the stickiness is around the infrastructure and its ability to perform more than it is the relationship per se.

And so I think that, ultimately, the sticky part of that business is that we will perform virtually 100% of the time because the infrastructure is there. The buffer pumps are there, the pumps are there, the massive amounts of their water plus other people's water that we can blend and treat and redeliver for these big trucks is just impossible to replicate.

[Operator]

There are no further questions at this time. I'd like to pass the floor back over to Amanda Brock for closing remarks.

[Amanda Brock, executive]

Thank you very much. First of all, I want to thank everybody who called in and our customers who we continue to work with very closely and appreciate. We had a great year in '23 and we are continuing to push hard into '24 because our work is not done. So with that, I want to especially thank our employees who work so hard to deliver the great year we had in '23 and provided us with this positive momentum into '24. So we look forward to talking to you all again later in the year.

[Operator]

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