Hess Midstream LP

NYSE:HESM

Earnings Call Analysis

Company Raises 2023 Financial Outlook

In the midst of a solid year, the company has elevated its 2023 financial guidance based on strong operational performance and anticipation of increasing volumes and revenues. Adjusted EBITDA guidance has been improved, now ranging from $1 billion to $1,030 million, marking an 8% increase for the second half of the year. Net income estimates were adjusted to encompass additional interest and tax expenses, with a new projection of $595 million to $625 million. Full-year adjusted free cash flow is foreseen to be around $625 million. Importantly, the company revised the expected growth in distributions per Class A share to at least 5% annually, while maintaining distribution coverage at 1.4x.

Solid Earnings and a Rise in Throughput Volumes Shape a Positive Outlook

Hess Corporation has reported a profitable second quarter with an upwards tick in gas processing and gathering throughput volume guidance for 2023. Leveraging increased volumes and enhanced operations, the company has managed to execute another accretive share buyback, all while increasing distributions for shareholders for the second occasion this year. The enhanced gas processing throughputs by 6% from the first quarter, benchmarked by strong wells performance and a boosted gas capture. Additionally, Hess anticipates an uptick in Bakken net production with 110 new wells expected to be online in 2023.

Strategic Financial Moves to Enhance Shareholder Returns

Employing a unique financial strategy, Hess Midstream has returned $1.35 billion to shareholders through targeted repurchases, resulting in an 18% reduction in total unit count since 2021. The company is not resting on its laurels; it foresees more than $1 billion financial flexibility through 2025 to continue buybacks. This is backed by a robust balance sheet, highlighted by a leverage of approximately 3.1x adjusted EBITDA - amongst the lowest in its peer group - and a targeted 5% annual distribution growth per Class A share through 2025, with a distribution coverage expected to exceed 1.4x annually.

Consistently High Margins Underpinning Financial Health

The financial fortitude of Hess is further evidenced by its net income of $148 million for the second quarter, which, when coupled with a roughly 80% gross adjusted EBITDA margin, underscores their operational efficiency. Revenue growth is spellbound by higher throughput volumes, reflecting a direct outcome of their strategic operation scaling. They expect this trajectory to benefit the coming quarters, setting the stage for a growth-studded year ahead.

Guidance Indicates Robust Financial Performance Ahead

Looking forward, Hess Midstream upgrades its full-year 2023 guidance due to commanding year-to-date performance, eyeing net income in the neighborhood of $595 million to $625 million and adjusted EBITDA in the range of $1 billion to $1,030 million—reflecting an 8% increase at the midpoint compared to the first half of the year. They're set up to be free cash flow positive, post distributions, a testament to both their fiscal prudence and underlying business strength. Q3 2023's guidance furthers this narrative, expecting a net income of roughly $145 million to $155 million, and distributable cash flow anticipated to hover around $200 million to $210 million, maintaining a healthy distribution coverage ratio. For Q4, continued growth in adjusted EBITDA is predicted, with lower operational expenses auguring for another strong quarter.

Earnings Call Transcript 2023-Q2

[Operator]

Good day, ladies and gentlemen, and welcome to the Second Quarter 2023 Hess Midstream Conference Call. My name is Gigi, and I'll be your operator for today. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded for replay purposes.

I would now like to turn the conference over to Jennifer Gordon, Vice President of Investor Relations. Please proceed.

[Jennifer Gordon, Vice President of Investor Relations]

Thank you, Gigi. Good afternoon, everyone, and thank you for participating in our second quarter earnings conference call. Our earnings release was issued this morning and appears on our website, www.hessmidstream.com.

Today's conference call contains projections and other forward-looking statements within the meaning of the federal securities laws. These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ from those expressed or implied in such statements. These risks include those set forth in the Risk Factors section of Hess Midstream’s filings with the SEC. Also on today's conference call, we may discuss certain non-GAAP financial measures. A reconciliation of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures can be found in the earnings release.

With me today are John Gatling, President and Chief Operating Officer; and Jonathan Stein, Chief Financial Officer.

I'll now turn the call over to, John Gatling.

[John A. Gatling, President and Chief Operating Officer]

Thanks, Jennifer. Good afternoon, everyone, and welcome to Hess Midstream second quarter 2023 conference call. Today I’ll discuss our second quarter performance demonstrating continued focus on the safe execution of our operational strategy and our financial priorities, including returning capital to our shareholders. I will also review Hess Corporation's results and outlook for the Bakken. Jonathan, will then review our financial results and guidance.

In the second quarter, we continued to grow our business in a safe, efficient and cost effective manner, which has enabled us to increase our 2023 gas processing and gathering throughput volumes to guidance.

Additionally, in the second quarter, we executed another accretive share buyback and increased our distribution level for the second time this year. We remain focused on executing our strategy, which positions us for further anticipated growth in throughput volumes, net income, and adjusted EBITDA through 2025.

Now turning to Hess Midstream's operations. In the second quarter, throughput volumes averaged 358 million cubic foot per day for gas processing, 108,000 barrels of oil per day for crude terminaling, and 87,000 barrels of water per day for water gathering. Gas processing throughputs increased by 6% from the first quarter mainly driven by the number of wells brought online by Hess and continued increase in gas capture.

Now turning to Hess upstream highlights. Earlier today, Hess reported strong second quarter results with the Bakken net production averaging 181,000 barrels of oil equivalent per day, which was above their guidance range of 165,000 to 170,000 barrels of oil equivalent per day. Approximately half of the increase was due to the strong operational and development performance, and the remainder from higher production entitlements under Hess' percentage of proceeds or POP contracts.

As a reminder, POP volumes do not impact Hess Midstream's throughput volumes or revenues. Hess anticipates Bakken net production will increase to approximately 185,000 barrels of oil equivalent per day in the third quarter, and as a result of expected continued strong performance, raised their full year 2023 Bakken net production guidance by 10,000 barrels of oil equivalent per day to 175,000 to 180,000 barrels of oil equivalent per day.

Hess plans to continue to operate a four-rig drilling program and bring approximately 110 wells online in 2023. Furthermore, Hess continues to forecast Bakken net production to grow to an average of approximately 200,000 barrels of oil equivalent per day in 2025, which implies approximately 10% annualized growth rate in throughput volumes across all Hess Midstream systems from 2023 to 2025. Additionally, Hess expects to hold production at approximately 200,000 barrels of oil equivalent per day for nearly a decade.

Turning to Hess Midstream guidance, which was included in our earnings release this morning. With Hess' Bakken production guidance increase, and our continued gas capture success, we're raising our gas processing and gathering throughput volume guidance for full year 2023, which implies approximately 8% growth at the midpoint for the second half of the year.

Now turning to our 2023 capital program. We continue to make excellent progress on our 2023 capital plans, and are focused on supporting Hess and third-party development in the basin. We have an active maintenance program in the third quarter, including seasonally scheduled maintenance at several of our compressor stations. In addition, construction continues to progress on schedule for two new compressor stations and associated infrastructure that when brought online later this year will increase our gas gathering in throughput capacity by approximately 100 million cubic foot per day. For full year 2023, capital expenditures remain unchanged and are expected to total $225 million which is comprised of $210 million of expansion activity and $15 million of maintenance activity.

In summary, we remain focused on safe, reliable and efficient operating performance and project delivery that continues to drive increased volumes through our systems, which in turn has enabled us to increase our 2023 volumes guidance. Additionally, we continue to anticipate substantial throughput volume growth through 2025, which is expected to result in sustainable excess cash flow generation and potential to return additional capital to our shareholders.

I'll now turn the call over to Jonathan, to review our financial results and guidance.

[Jonathan C. Stein, Chief Financial Officer]

Thanks, John, and good afternoon, everyone. We continue to execute a unique and differentiated financial strategy, prioritizing consistent and ongoing return of capital to shareholders. In June, we completed another unit repurchase and recently announced another distribution level increase, which continues our track record of shareholder returns.

Since the beginning of 2021, we have returned $1.35 billion to shareholders through accretive repurchases that have reduced our total unit count by approximately 18%. In addition, to the combination of our 5% targeted annual distribution growth and four distribution level increases following each repurchase, we have increased our distribution per Class A share by approximately 33% over this period. As a result, our total shareholder return yield continues to be one of the highest of our midstream peers.

Furthermore, our leverage of approximately 3.1x adjusted EBITDA is one of the lowest among our peers, highlighting our differentiated ability to deliver significant shareholder returns, while also maintaining balance sheet strength. Earlier this year, we announced that we expect to generate greater than $1 billion of financial flexibility through 2025 for potential incremental unit repurchases. Utilizing this capacity, we execute our second repurchase transaction this year of $100 million that was accretive on both a distributable cash flow per Class A share basis and in earnings per Class A share basis.

Supported by the repurchase, we recently announced a further return of capital to our shareholders through an immediate 1.5% increase in our quarterly distribution level beyond our targeted 5% annual distribution per Class A share growth. As we have done in the past with reduced share count following the repurchase, this distribution level increase maintains our distributable cash flow at approximately the same amount as before the repurchase. From this new higher distribution level, we will continue to target at least 5% annual distribution growth per Class A share through 2025 with expected annual distribution coverage of at least 1.4x.

Following the recently completed unit repurchase, we expect to still have more than $1 billion of financial flexibility through 2025 for potential future unit repurchases that can be executed multiple times per year over this period. In addition, in May of this year, our sponsors completed an approximate $345 million underwritten secondary public offering of Class A shares that supported continued increasing liquidity in our shares. Following the unit repurchase and secondary offering transaction, public ownership of Hess Midstream on a consolidated basis has now increased to approximately 24%.

Turning to our results. For the second quarter, net income was $148 million compared to $142 million for the first quarter. Adjusted EBITDA for the second quarter was $248 million compared to $239 million for the first quarter. The change in adjusted EBITDA relative to the first quarter was primarily attributable to the following.

Total revenues excluding pass-through revenues increased by approximately $18 million, primarily driven by higher throughput volumes, including continued increased gas capture, resulting in segment revenue changes as follows: Gathering revenues increased by approximately $9 million. Processing revenues increased by approximately $8 million and terminaling revenues increased by approximately $1 million. With physical volumes growing as more wells come online, we expect continued growth in revenues through the rest of 2023.

Total costs and expenses excluding depreciation, amortization, pass-through costs and net of a proportional share of LM4 earnings increased by approximately $9 million as follows: Higher seasonal maintenance activity of approximately $6 million. Higher operating G&A, property taxes and other costs of approximately $3 million resulting in adjusted EBITDA for the second quarter of 2023 of $248 million at the high end of our guidance.

Our gross adjusted EBITDA margin for the second quarter was maintained at approximately 80%, highlighting our continued strong operating leverage. Second quarter maintenance capital expenditures were approximately $4 million, and net interest excluding amortization of deferred financing costs were approximately $42 million. The result was that distributable cash flow was approximately $202 million for the second quarter, covering our distribution by 1.4x. Expansion capital expenditures in the second quarter were approximately $48 million, resulting in adjusted free cash flow of approximately $154 million with a drawn balance of $198 million on a revolving credit facility at quarter end.

Turning to guidance. For the full year 2023, we are updating our guidance based on strong year-to-date operational performance. We are updating net income, distributable cash flow and adjusted free cash flow guidance to include the impact of an incremental $10 million in interest expense on borrowings under our credit facilities used to fund the Class B unit repurchase transactions in 2023. The updated net income guidance also includes the impact of an incremental $5 million of income tax expense resulting from ownership changes following these previously completed Class B unit repurchases and the recent secondary equity offering transaction.

As a result, we now expect net income of $595 million to $625 million. Supported by strong volume growth in the first half together with continued expected throughput and revenue growth across all of our systems, as well as lower than expected operating costs in the first half of the year, we are updating our adjusted EBITDA guidance to $1 billion to $1,030 million, representing an increase at the midpoint of our guidance.

As implied in this updated guidance, we anticipate adjusted EBITDA in the second half of the year to approximately 8% higher at the midpoint relative to the first half. With total expected capital expenditures of $225 million, we expect at the midpoint to generate adjusted free cash flow of approximately $625 million. With distributions per Class A share targeted to grow at least 5% annually from the new higher distribution level, we expect to be free cash flow positive after fully funding distributions for 2023.

For the third quarter of 2023, we expect net income to be approximately $145 million to $155 million, and adjusted EBITDA to be approximately $250 million to $260 million, reflecting higher volumes offset by seasonally higher operating costs, including the active maintenance schedule at several of our compressor stations that John, discussed earlier.

Third quarter maintenance capital expenditures and net interest excluding amortization of deferred finance costs, are expected to be approximately $50 million, resulting in expected distributable cash flow of approximately $200 million to $210 million, delivering distribution coverage of approximately 1.4x. In the fourth quarter, we expect continued adjusted EBITDA growth relative to the third quarter, on higher volumes than expected lower seasonal OpEx.

In summary, we are very pleased to have delivered additional incremental return on capital to Hess Midstream shareholders and look forward to a visible trajectory of growth in our operational and financial metrics that underpins our unique and differentiated financial strategy with a focus on consistent and ongoing return on capital.

This concludes my remarks. We'll be happy to answer any questions. I will now turn the call over to the operator.

[Operator]

Thank you. [Operator Instructions]. Our first question comes from the line of Brian Reynolds from UBS.

[Brian Reynolds, UBS]

Hi, good morning, everyone. Maybe to touch on the guidance update, curious if you could just provide some additional thoughts on rate in the lower end versus the whole range given year-to-date performance? And specifically, if you could just comment a little bit more around second half well connect cadence versus the original guidance expectations. I think you talked about a 110 well connects for the year in the Bakken. Thanks.

[Jonathan C. Stein, Chief Financial Officer]

So, John, maybe I'll just talk a little bit about the financial, then I'll turn over to John, to talk about the well connect.

In terms of the guidance for the rest of the year, and in terms of raising the guidance, we've had strong performance particularly on the gas side as we talked about particularly gas capture has been extremely strong. And therefore, together with the growth that we expect to see through the rest of the year, and John, can talk more about that, and he talked about that as more wells come online. We do have some seasonality to the rest of the year. We do expect in the third quarter, we seasonally have higher OpEx in the second and third quarter compared to Q1 and Q4.

In the third quarter, we expect it to be even higher relative to the second quarter as a result of the maintenance compressor stations that John described. So, what we see really going from here is really going to be increasing revenues as we capture more on the volume side, in the third quarter that will be offset by increasing OpEx, but still increasing EBITDA. And then the fourth quarter, expect the EBITDA to go up even more from the third quarter as we still have increasing revenues, but expect lower seasonal OpEx.

That still represents, as I said, 8% increase relative to the first half, and so that -- all of that was taken into account in terms of lowering really the taking, bringing up the lower end of our guidance range. Really the way to look at that is, we're really just moving the midpoint -- expected midpoint of our guidance really up as a result of that. So, let me turn it over to John, to talk about the well connect.

[John A. Gatling, President and Chief Operating Officer]

Yes. On the well connects, we ended the year with some weather challenges that carried into early part of 2023. That was resolved in the first quarter, and we've seen the level of well count flatten out from second quarter and we expect it to be relatively flat through the balance of the year. So, we expect the pace of new wells coming online to be consistent for the balance of the year.

[Brian Reynolds, UBS]

Great. Thanks for that. And maybe as a follow-up, just talking on basin rig count has reaffirmed its four rig count cadence, but we have seen rigs decline in the base since the mid-30s from the low-40s early in the year, where we typically see a seasonal pickup. So just kind of curious of how we should think about any risk to a rig reduction at this point? And if you could discuss perhaps how has rig levels are contemplated and has midstreams for ’24 and ‘25 outlook? Thanks.

[John A. Gatling, President and Chief Operating Officer]

Sure. So maybe I'll address your second part of your question first and then I'll go back to the overall basin rig count. The first part of your question, Hess has been consistently saying they're planning to run four rigs for the foreseeable future. Our plan is consistent with that and actually builds on Hess' plan. So that's part of the integration between the upstream and the midstream is working together on the development plans and making sure that the well activity, the wells coming online, that the infrastructure is in place to make sure that the that the production can get to export and get to market without any holdup, and I think we've demonstrated that through our continued increase in gas capture.

As far as your -- the first part of your question regarding the basin rig count activity, we have seen the rig count drop off, like you said, from the low-40s down to, say the mid-30s. But we've continued to see oil production in the basin continue to grow. So, I think it's just a function of timing for different operators that's driving that. I don't think that there's any anticipated real material slowdown in activity in the basin.

I think it's rig shifting between operators sometimes depending on how the rig count is counted, from that it can fluctuate rigs, handful of rigs here and there. So, again, I don't think we've seen anything from an overall activity perspective in the basin that would change the trajectory for where we think production in North Dakota is going.

[Brian Reynolds, UBS]

Great. Appreciate the color. Enjoy the rest of your morning.

[John A. Gatling, President and Chief Operating Officer]

Sure. Thank you.

[Operator]

Perfect. Thank you. [Operator Instructions]. Our next question comes from the line of Douglas Irwin from Citi.

[Douglas Irwin, Citi]

Hi, thanks for the question. Maybe just to start with buybacks, and maybe a two part question here. I guess first, around kind of the outlook and some guidance. We’ve started the year with over a $1 billion of financial flexibility as you framed it, and then we've seen $200 million of buyback since then and you still guiding to over a $1 billion of flexibility. So I guess first, just curious if that's kind of an indication of an improved outlook there. And then second, just wondering if you could maybe talk a bit about how much of that flexibility is attributed to kind of spare revolver capacity versus maybe excess free cash flow going forward.

[Jonathan C. Stein, Chief Financial Officer]

Okay, sure. So yes, in terms of the $1 billion, let just start there, and the plan going forward, right. As we had said at the beginning, we have more than a $1 billion, if you really think about what we've talked about and talk about EBITDA growth, of more than 10% and free cash flow growth also more than 10%. So, we have significant capacity financial flexibility to be able to execute, and as we've highlighted, historically, we had done in ’21 to ’22, one large buyback per year. Now going forward, we intend to do multiple buybacks per year on an ongoing basis through 2025 using that flexibility. So, we're really in a great spot there. I continue to have more than a $1 billion even after those [two $100 million] (ph) buybacks in the first and second quarter.

In terms of funding that and capacity going forward, really highlight, first I would say just to highlight that when we said at the beginning, we had explained that really about 40% of that $1 billion at least we expect to be funded from excess free cash flow as our free cash flow positive after distributions. And then the remainder would be funded with debt and relative to our leverage capacity as we fall below our targeted 3x leverage target.

So, where we are now is we've basically funded the first two on the revolver, we still have $800 million left on the revolver together with the fact that 40% of the flexibility of the financial capacity we have will be funded with free cash flow after distribution and that $800 million we have on the revolver, we have significant capacity there and really no pressure in terms of that.

As we have done in the past, certainly we have the option to trim out those borrowings on the revolver, and we can look at that, we don’t have the optionality to decide if and when we do that, whether it makes sense relative to the market, at our own capital structure. But I think right now, we have significant flexibility whether it be on the $800 million in terms of the revolver capacity and together with again the 40% of that $1 billion is $400 million at least of excess free cash flow that we will generate over the next three years and two and a half years, all that provides significant financial flexibility for us to continue to execute our return on capital program on an ongoing basis with multiple buybacks per year through 2025.

[Douglas Irwin, Citi]

Got it. That's all helpful. Then my second question just around taxes, which seemed to have an impact on the net income guidance this quarter. Can you just remind us when you expect to be a cash tax payer? And then could you maybe just quickly kind of walk through some of the implications of how the buybacks and the increased Class A ownership might impact the tax profile going forward?

[Jonathan C. Stein, Chief Financial Officer]

Yes, sure. So yes, as I described in my comments as we described in the earnings release, so we did have an impact to our net income, adjusted net income to reflect the higher tax expectations as a result of the secondaries, primarily as well as the repurchase.

First, I’d highlight two things. First, is to say that we will have no -- that's only on really, I'll call it, book tax basis, a tax expense, but we do not expect to pay material cash taxes in the next couple of years based on the shield that we have, which includes coming partially from the secondaries that we do. And then second thing I would highlight is as we highlighted, the repurchases are extremely accretive on a DCF per share basis as well as on EPS basis as well.

In terms of what's happening, in terms of the mechanics of that, Hess Midstream LP is treated as a corporation for federal tax purposes that allows us to be able to issue 1099s rather than K-1s which has been very positive in terms of increasing our investor base. But as we do the secondaries and more ownership is owned in that entity, then since it's treated as a corporation of federal tax purposes, it impacts our tax expense there. But again, those secondaries also provide, contribute to the tax shield that, as I said, that means that we're not paying any material cash taxes we expect for the next couple of years.

[Douglas Irwin, Citi]

Got it. That's all for me. Thank you.

[Operator]

Thank you. [Operator Instructions]. Our next question comes from the line of Praneeth Satish from Wells Fargo.

[Praneeth Satish, Wells Fargo]

Thanks. Good morning. Maybe just staying on buybacks. I guess, how do you differentiate between doing more buybacks versus doing M&A. If we look at the stock, it trades at 10x EBITDA and generally, you can buy assets at a much lower multiple than that. So just curious how you compare and contrast the two when looking at your $1 billion of flexibility?

[Jonathan C. Stein, Chief Financial Officer]

Right. So, in terms of your capital allocation, I think two things. First is, I think on the M&A side, both John and myself have been clear. We're not interested in any large scale corporate M&A. We've done, as we've done in the past, we're certainly open to bolt-on or things like that, but those are things that would have a high bar and they would have to fit within our -- in terms of our physically within our system as well as from a risk point of view not to dramatically change our risk profile.

So with that, really our financial flexibility therefore and our financial strategy, as a result really includes prioritizing return to capital, and therefore, that has come through that $1 billion of financial flexibility that we've talked about being really towards buybacks, which have been, as I talked about in my comments, approximately 18% of our shares have been bought back together with the related dividend increases, 33% increase in our dividends just over the past two and a half years. And with $1 billion, if that was all allocated to buybacks, that would be another 10% to 15% potentially of our total share count. So really, that's our focus. We have a clean story. very much visible growth as we've talked about, able to give, I think, differentiated forward visibility towards 10%, greater than 10% EBITDA growth as well as greater than 10% free cash flow growth. And so, therefore, we're going to stay focused on that, and certainly return to capital therefore as a priority within our financial strategy.

[Praneeth Satish, Wells Fargo]

Got it. And then looking at ethane prices, they've come up quite a bit here in July. And I'm just wondering if you've seen any more ethane recovery at your plants, whether there's any constraints on that side or any kind of just, I know you don't have the price exposure, but any other kind of implications from this?

[John A. Gatling, President and Chief Operating Officer]

No, I think we're uniquely positioned with our Tioga Gas Plant that we've got deep cut ethane extraction capability at the plant. It's running at full capability. And we're going to continue to look at our joint venture plant with Targa Resources down south, south of the Missouri River to look to optimize that for our customers. So from our perspective, we really don't see any constraints on ethane recovery.

[Praneeth Satish, Wells Fargo]

Got it. Thank you.

[John A. Gatling, President and Chief Operating Officer]

Thank you.

[Operator]

Thank you. [Operator Instructions]. Our next question comes from the line of Jeremy Tonet from JPMorgan Securities LLC.

[Jeremy Tonet, JPMorgan Securities LLC]

Hi, good afternoon.

[John A. Gatling, President and Chief Operating Officer]

Hi, good afternoon.

[Jeremy Tonet, JPMorgan Securities LLC]

Just wanted to, I guess, come back to the EBITDA trajectory for the second half of the year. And as you talked about the midpoint of the guidance implies 8% uplift, back half versus front half. And wondering if you could break this down for us a little bit with regards to how much of that is kind of seasonality or other factors or how much does that portend to I guess 2024 EBITDA growth strength maybe being a bit higher than previously affected?

[Jonathan C. Stein, Chief Financial Officer]

Well, I think the way to think about the rest of the year is like I said, we're really going to have we've given guidance therefore for Q3 that implies a slight step up even more so into Q4. Again, that's really -- continued growth in revenue that should be relatively consistent with the four rigs and continued gas capture operating. So really then it's really going to be OpEx, which is going to create this kind of seasonality to EBITDA with the higher OpEx going up in Q3 and then seasonally coming down in Q4. So that will also create some more EBITDA.

In terms of 2024, we certainly have a lot of great momentum coming through this year. There's really no change to what we've said, which is to continue growth in net income and EBITDA more than 10% through 2025. Obviously, in January, we'll give an MVC for 2026, and that will also apply what our expected continued growth is there.

So, really there are no change to 2024, just have some great momentum and looking for that to continue through the rest of the year to go on the revenue side and then continue into ‘24 and onto ‘25.

[Jeremy Tonet, JPMorgan Securities LLC]

Got it. That's helpful. I'll leave it there. Thanks.

[Operator]

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.