SJW Group

NYSE:SJW

Earnings Call Transcript 2022-Q1

[Operator]

Good day and thank you for standing by. Welcome to the First Quarter Financial Results Conference Call. 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. [Operator Instructions]

I would now like to hand the conference over to James Lynch. Please go ahead.

[James Lynch, Chief Accounting Officer]

Thank you operator. Welcome to the 2022 First Quarter Financial Results Conference Call for SJW Group. I will be presenting today with Eric Thornburg, Chairman of the Board, President, and Chief Executive Officer; and Andrew Walters, Chief Financial Officer and Treasurer.

For those who would like to follow along, slides accompanying our remarks are available on our website at www.sjwgroup.com.

Before we begin today, I would like to remind you that this presentation and related materials posted on our website may contain forward-looking statements. These statements are based on estimates and assumptions made by the company in light of its experience, historical trends, current conditions, and expected future developments, as well as other factors that the company believes are appropriate under the circumstances.

Many factors could cause the company's actual results and performance to differ materially from those expressed or implied by the forward-looking statements. For a description of some of the factors that could cause actual results to be different from statements in this presentation, we refer you to the financial results, press release, and to our most recent Forms 10-K, 10-Q, and 8-K filed with the Securities and Exchange Commission, copies of which may be obtained on our website.

All forward-looking statements are made as of today and SJW Group disclaims any duty to update or revise such statements. You will have an opportunity to ask questions at the end of the presentation.

As a reminder, this webcast is being recorded and an archive of the webcast will be available until July 27th, 2022. You can access the press release and the webcast at our corporate website.

I will now turn the call over to Eric Thornburg. Eric?

[Eric Thornburg, Chairman, President & Chief Executive Officer]

Welcome everyone and thank you for joining us. I'm Eric Thornburg and it is my honor to serve as Chair, President, and CEO of SJW Group. It is my pleasure to be joined on this call by Jim Lynch, Chief Accounting Officer; and Andrew Walters, Chief Financial Officer.

After my initial remarks, Jim will review our financial results for the quarter that delivered $0.12 per diluted common share compared to $0.09 in the same period last year. Andrew will then discuss our California water supply status later in the call. He will also provide an update on regulatory developments and share our financial guidance for 2022.

We're fortunate to lead the employees of SJW Group across all of our four states who are passionate about delivering a reliable supply of high-quality drinking water and wastewater services for the families and communities that we're privileged to serve. Our people continue to deliver for customers, communities, shareholders, and each other.

In early 2022, we focused on laying the groundwork to deliver our 2022 financial and ESG goals successfully. Some of our achievements include reaching a settlement agreement in San Jose Water's 2022 general rate case with the Public Advocates Office and receiving approval from the Maine Public Utilities Commission on the settlement agreement between Maine Water Company and the Public Advocates Office for the Biddeford-Sacos division new $60 million drinking water treatment facility.

Through the winter months, we continued investing in drinking water infrastructure. Just this week, Connecticut Water filed an application with the Connecticut Public Utilities Regulatory Authority to begin recovery of $10 million in completed drinking water infrastructure projects. Andrew will discuss this later in detail.

We strengthened governance around our ESG commitments through the creation of an ESG Council. The council is made up of executive leaders, state presidents, and senior managers representing ESG initiatives within the organization. It will provide the framework for the prioritization and reporting on delivery of projects, initiatives, and investments as related to environmental, social, and governance initiatives and will track our progress toward established ESG goals such as our pledge to reduce Scope 1 and 2 greenhouse gas emissions by 50% by 2030 using a 2019 baseline. We will hold ourselves accountable to report on existing commitments and create meaningful new goals. Our ESG scores are strong. ISS rates our governance at its best rating. Among our water utility peers, we're tied for first in social and tied for second in environment.

One example of our ESG commitment is our new Saco River Drinking Water Resource Center in Maine. We've set aside 250 acres of land near the facility has protected open space and conducted wetland restoration on the property. Agreements have been executed for the installation of a solar photovoltaic array that will offset 100% of the energy needs of the new facility. Development is underway for a pollinator garden and a trail for passive recreation.

The facility itself was designed using the Envision Framework, a joint collaboration between the softness program for sustainable infrastructure at the Harvard University Graduate School of Design and the Institute for sustainable infrastructure. I'm also quite proud of our DEI progress. We've been successful in recruiting and retaining a diverse workforce throughout the organization. Of our 771 employees, approximately 35% of our employees are people of color, nearly two-thirds are under the age of 50, and women are about one-third of our total workforce.

Our supplier diversity program has also taken root. Building on our successful program at San Jose Water, our diverse spend across all four states continues to increase with more than $55 million placed with diverse suppliers in 2021, which is 21% of our addressable spend, great progress and our strong commitment to continue this important work.

I'll now turn the call over to Jim, who will review our financial results. Jim?

[James Lynch, Chief Accounting Officer]

Thank you, Eric. Our first quarter 2022 operating results reflect new revenues authorized in each of our four operating utilities, new customer growth, primarily in Texas and increased customer usage when compared to the first quarter of 2021. In California, we experienced an increase in residential customer usage due to lower-than-normal precipitation coupled with warm temperatures. Business usage in California was lower by 5% compared to the first quarter of 2021.

In California, we continue to follow the mandatory call for conservation declared by Valley Water, our wholesale water supplier for a 15% reduction in water use compared to 2019. Also in the first quarter, we benefited from the recognition of a property sale, partially offset by the onetime impacts of depreciation in our California concession assets, expenses related to our 2018 billing Order Instituting Investigation, or OII, settlement and certain deferred and acquisition-related tax expense true-ups.

First quarter revenue was $124.3 million, an 8% increase over the first quarter of 2021. Net income for the quarter was $3.7 million or $0.12 diluted earnings per share, which is a 43% increase over the first quarter prior year net income of $2.6 million or $0.09 diluted earnings per share. The net change in diluted earnings per share for the quarter was primarily attributable to cumulative rate increases of $0.06 per share, new customers of $0.03 per share and increased customer usage of $0.02 per share.

In addition, we recorded a nonrecurring gain on the sale of nonutility property of $0.07 per share. These increases were partially offset by an increase in production costs due primarily to unit price increases of $0.05 per share, increased depreciation of $0.05 per share and other expense items of $0.07 per share. Our first quarter revenue increase was primarily the result of $5.2 million in cumulative rate increases, $2.5 million from new customers and $1.8 million increase in customer usage.

As Eric mentioned, we have filed a settlement on our California general rate case. We expect to receive a decision in the third quarter of 2022. Once received, we will apply the GRC decision retroactively to January 1, 2022, as provided for under our approved interim rates decision. Total 2022 first quarter water production costs increased $2.7 million compared to the first quarter of 2021. The increase was primarily due to $4.5 million in higher average per unit cost for purchased water, groundwater extraction and energy charges, partially offset by a $1.8 million increase in surface water supply production. Andrew will talk about our surface water outlook a little later in our call.

Other operating expenses increased $3.3 million or 3% for the quarter, primarily due to $4.2 million in higher depreciation related to utility plant additions and our California concession assets. Higher administrative and general expenses of $3.3 million, primarily due to increases in labor and pension expenses and increases in maintenance and taxes other than income taxes totaling $1.2 million. These increases were partially offset by the recognition of a $5.5 million gain on the sale of non-utility property, no similar gain occurred in the first quarter of 2021.

The increase in maintenance expense reflects approximately $400,000 of expenditures on projects constructed pursuant to a settlement agreement approved by the California Public Utilities Commission on February 27, 2020 in connection with the billing practices OII issued by the CPUC in September of 2018. The settlement includes a requirement for the company to invest $5 million in utility plant that has not allowed an investment rate of return or rate recovery. The company's investment will focus primarily on GHG projects specifically in the area of solar panel installations.

We expect to incur $2 million of additional project costs related to the OII settlement in 2022 and the remaining balance in 2023. The effective consolidated tax rates for the quarters ended March 31, 2022 and 2021 were approximately 22% and a negative 52% respectively. The higher effective tax rate for the quarter ended March 31, 2022 was primarily due to discrete tax expense items, including a true-up of certain deferred income taxes.

Turning to our capital expenditure program. We added $43.7 million in company-funded utility plant during the first quarter of 2022. This represents 20% of our total 2022 planned capital expenditures. From a financing perspective, first quarter 2022 cash flows from operations increased 36% over the first quarter of 2021. This change was primarily the result of an increase of $6.9 million in regulatory assets, primarily due to balancing the memorandum account activities.

Payments of amounts previously invoiced and accrued increased $5.2 million and other changes increased a net of $2.8 million, primarily due to funds received from the State of California Water and Wastewater Arrearages Payment Program. General working capital and net income adjusted for non-cash items increased by $2.6 million. These increases were partially offset by a decrease in collections of accounts receivable and accrued unbilled utility revenue of $3.4 million and a decrease in the net collection of taxes receivable of $2.2 million.

At the end of the first quarter, we had $184 million available on our bank credit lines for short-term financing of utility plant additions and operating activities. The average borrowing rate on the line of credit advances during the quarter was approximately 1.64%.

With that, I will stop and turn the call over to Andrew.

[Andrew Walters, Chief Financial Officer & Treasurer]

Thank you, Jim. Our Board has authorized a $223 million capital spending planned for 2022. Nearly half of it is allocated to pipeline replacement projects. The plan includes budgeted investments of $115.1 million in California, $61.4 million in Connecticut, $21.8 million in Maine and $24.5 million in Texas.

The WICA and WISC infrastructure recovery mechanisms in Connecticut and Maine respectively and California's forward-looking spending authorization as well as the growth in customers in Texas minimize regulatory lag on these infrastructure investments.

San Jose Water Company's 2021 GRC application for new rates in 2022 through 2024 is pending before the CPUC. SJWC and the Public Advocates Office filed a settlement agreement resolving all issues in the proceeding on January 13, 2022, which will be considered by the CPUC for adoption. The settlement provides a revenue increase of approximately $54 million over the three-year period with an increase of approximately $25 million in 2022. The settlement also recognizes the need for continued investments in the water system to deliver safe and reliable water service providing authorization of a three-year $350 million capital budget.

Additionally, it further aligns authorized and actual consumption, particularly for business customers, addresses our water supply mix volatility and provides greater revenue recovery in the fixed charge. The decision is expected in the third quarter of 2022. With interim rates in place, we will be able to apply the rate increase adopted in the Commission's final decision retroactively to January 1, 2022.

The 2022 to 2024 cost of capital proceeding for the four large Class A California utilities is also pending before the CPUC. The application requests an increase in revenue to support a return on equity of 10.3%, an adjustment to the proposed capital structure of 54.55% equity and 45.45% debt partially offset by a decrease in the cost of debt to 5.48%. The decision is expected in the third quarter of 2022.

San Jose Waters Advanced Metering Infrastructure application is pending before the CPUC as well. An all-party settlement agreement was submitted to the CPUC for adoption that would authorize infrastructure investments of approximately $100 million over four years outside of the capital budget request in the GRC to deploy AMI. The decision is anticipated in the second quarter of 2022.

In Connecticut we filed an application with the Connecticut Public Utilities Regulatory Authority on April 26, 2022 requesting recovery of approximately $10 million in completed projects through the Water Infrastructure and Conservation Adjustment Mechanism. If approved by PURA as proposed the new WICA would be effective on July 1, 2022 and would generate about $900,000 in annualized revenues.

In Maine on April 5, 2022 the Maine Public Utilities Commission approved a stipulated agreement between the company and the office of Public Advocate that recognize all project costs set a 9.7% return on equity across all of Maine Waters division and a $6.3 million increase in annual revenues in the Biddeford-Saco division July 1, 2022.

The settlement agreement was the second step in a multiyear rate plan that gradually raises rates for the new $60 million drinking water treatment facility in the Biddeford-Saco division. The new facility is scheduled to go online in the coming weeks and will replace a 138-year-old treatment plant.

The first step of an innovative rate smoothing mechanism that was approved by the MPUC last summer, the third step and last filing associated with the new treatment facility is expected to be in the second half of 2022.

Maine Water received MPUC approval for a 3% increase in WISC effective January 1, 2022 for Skowhegan Division. In February 2022 the company filed a rate case applications in four of its divisions. We continue to see a pipeline of growth opportunities in SJWTX, our Texas Water and Wastewater utility.

On January 20, 2022 SJWTX closed on the acquisition of Texas Country Water in January 2022. Overall, the company now serves more than 24,000 service connections between Austin and San Antonio and three of the five fastest-growing counties in the United States, Comal Hays and Kendall Counties.

SJWTX has more than tripled its customer base over the past 15 years providing service to about 70,000 people today. With a diverse portfolio of water supplies a growing wastewater business and continued additions to the customer base through organic growth and acquisitions, we remain optimistic about the prospects for SJWTX and its increased contributions to consolidated earnings.

The traditional rainy season in California has ended. After a promising start and late fall of 2021, we experienced unusually dry weather through the rest of the season. While drought conditions persist the current level at Lake Elsman with additional inflows throughout the year will likely support approximately 1.8 billion gallons in total production for 2022.

As shown on this chart, Lake Elsman is slightly above the five-year average and significantly higher than the same period of 2020 and 2021. This should bring total surface water supply production in 2022, close to or/at the volume in the GRC settlement. We are announcing 2022 guidance of $2.30 to $2.40 per diluted share. Our guidance assumes CPUC approval of San Jose Water's general rate case settlement agreement, implementation of Maine Water's MPUC approved stipulation agreement for the Biddeford-Saco division on July 1, 2022 and completion of the four other divisional GRCs in Maine, in 2022. Finally, it also assumes an equity issuance of $30 million to $40 million in 2022.

With that, I will stop and turn the call back over to Eric.

[Eric Thornburg, Chairman, President & Chief Executive Officer]

Thank you, Andrew. It's with deep appreciation and respect that SJW Group bid farewell to Board member, Katharine Armstrong, following her 13 years of dedicated service to the company. Since joining us in 2009. Katharine has guided our investments in her beloved state of Texas, as well as elevated the company's commitment to the environment and community engagement. On behalf of the Board and all of our employees we wish her the very best.

In summary SJW remains an attractive investment with a focus on designing, building and operating high-quality regional water service platforms that we believe will sustain attractive long-term returns for our shareholders. Our investments are smart and enduring and we are confident over the long-haul that the investments we have made will contribute to growth in profitability, earnings and dividends.

With that I'd like to turn the call back to the operator for questions.

[Operator]

[Operator Instructions] Your first question comes from the line of Richard Sunderland with JPMorgan. Your line is open.

[Richard Sunderland, JPMorgan]

Hi, good morning. Thank you for the time today.

[Andrew Walters, Chief Financial Officer & Treasurer]

Hi Richard. Good morning.

[Richard Sunderland, JPMorgan]

I wanted to unpack guidance a little bit in some of the assumptions there. And maybe starting with cost of capital is the debt reset contemplated in guidance? And how are you treating the ROE assumptions in there?

[Andrew Walters, Chief Financial Officer & Treasurer]

Richard that's an excellent question. As it relates to the cost of capital the debt reset is contemplated in the guidance because that's what we've asked for. So, we don't expect to get anything more than we've asked for. As it relates to the ROE these are under ongoing discussions, so I won't comment but we have not added anything specific to that.

[Richard Sunderland, JPMorgan]

Got it. And then thinking about some of the moving pieces on the quarter and how they relate to guidance as well. Could you speak to I guess the gain on sale and the OII settlement expensing, if those items are in or out of guidance? And then I guess similarly the onetime items called out as well in the aggregate?

[Andrew Walters, Chief Financial Officer & Treasurer]

Sure. So I'll take that Rich. And basically, the items that we have included in our guidance include all the onetime items that have been incurred up to date. They also include the OII that Jim mentioned earlier in the call as well. So, it should be reflective of everything that we know of as of today.

[Richard Sunderland, JPMorgan]

Got it. So that's very helpful. So just to put some numbers around this, I guess the gain on sale is $5.5 million and then it sounds like the OII in the aggregate for '22 would be a $2.4 million offset, as well as the $0.03 of onetime items, I guess to the positive. Is that -- am I thinking through the pieces correctly, or maybe if you could just run through the math for me that would be helpful?

[Andrew Walters, Chief Financial Officer & Treasurer]

Sure. And I might also ask Jim for anything that I missed here. But first of all starting off with the $5.4 million related to the sale that is offset by -- at least not in the earnings I'm talking about for the guidance. There's the $2.4 million that was related to the OII of which $400,000 was already accounted for in this first quarter. And that $0.03 so there's a remaining $2 million to be incurred for the rest of the year and that $0.03 was the positive after the offsets for depreciation and some of the other items that Jim had highlighted in his discussion earlier. I don't know Jim, if you want to comment on anything specifically to the other offsets.

[James Lynch, Chief Accounting Officer]

Yeah, Richard, this is Jim Lynch. So in terms of the actual quarter there were a couple of items that were onetime in nature. One was a depreciation charge that related to our 2022 -- well they're related to our lease concession in California. And then another had to do with some tax true-ups that we needed to do relative to deferred taxes. So those have been baked in both to the quarter results and the guidance that Andrew was referring to earlier.

[Richard Sunderland, JPMorgan]

Okay. Understood. Very helpful. Maybe one last one from me just around the 2022 equity. Any sense on timing or how you expect to address that?

[James Lynch, Chief Accounting Officer]

Yeah. We have the ATM in place right now and we're certainly going to look at the needs of the company and when they're kind of directing us towards that type of an issuance. But we'll also be watching the market. We want to make sure that when we do raise that equity it's at a time when the stock is performing at a high level at a comfortable level. So we have some flexibility in terms of the timing there.

[Richard Sunderland, JPMorgan]

Okay. Great. I appreciate the color today. Thank you.

[Eric Thornburg, Chairman, President & Chief Executive Officer]

Thank you, Richard. Appreciate the questions.

[Operator]

Next question comes from the line of Hasan Doza with Water Asset Management. Your line is now open.

[Hasan Doza, Water Asset Management]

Hi. Good morning, gentlemen. A couple of questions. The first is, I heard your commentary about the water purchase or storage embedded in the new GRC settlement. That makes sense the 1.8 billion gallons. That I understand. But my question is currently before the new GRC is implemented, because the decision probably comes out in the third quarter, but obviously we are going to be in the summer beforehand. And if I'm not mistaken, currently in your rates the amount of gallons embedded is about 2.5 billion gallons, not 1.8 billion. So my question is before the GRC is implemented in the summer, how much water do you expect to purchase in thousands or millions of gallons relative to the existing threshold that's in your rates which I believe is 2.5 billion gallons? That's my first question.

[Andrew Walters, Chief Financial Officer & Treasurer]

Hasan, can I just make sure I understand your question and for Jim too. Are you asking for what next year -- next quarter's purchase of water is going to be specifically, before we come to a final decision potentially by the end of the quarter?

[Hasan Doza, Water Asset Management]

In the event of any delays in the CPUC, there's no guarantee that when the CPUC will have a decision. But you will be -- I mean am I right? I mean, the CPUC decision could move one month two month whatnot. What I'm trying to understand is forget about -- forgetting about the new GRC because we don't have real visibility on the time line that could shift. What I'm trying to understand is based upon your available water storage, do you have a plan as to how much water you're purchasing going into the summer? That's kind of the essence of the question. How many thousands or billions of gallons do you expect to purchase in the next three, four months going into the summer?

[Eric Thornburg, Chairman, President & Chief Executive Officer]

Thanks, Hasan for your question and the clarity helps. We don't forecast that. We haven't disclosed any numbers on that. But I think what's most important is that the settlement agreement includes a full cost balancing account for water supply. And if approved that would be retroactive as well to January 1. So we've successfully negotiated a reduction in our supply mix from the 2.5 billion of our own surface water production to the 1.8 billion which we believe is really beneficial to our shareholders but also to our customers because in the years in which we do have abundant rainfall and even perhaps just slightly above normal then anything there would be a balance between shareholders and customers reflected. So we're really -- ultimately would be agnostic as to what that water supply number was as a result of the settlement. So that's the best way to think about that is that it will be reflected back to January 1.

[Hasan Doza, Water Asset Management]

Okay. My two remaining questions. The second one is what is the tax rate assumed in the guidance? Because I know the first quarter tax rate is a little bit hard to understand. So I'm just trying to understand a normal tax rate for the year? And what's embedded in the guidance? That's my second question on tax rate.

[Andrew Walters, Chief Financial Officer & Treasurer]

Sure. Hasan, we typically don't necessarily forecast all the details around the tax rate because there are a lot of different moves throughout the year, but we're at 16% in our forecast for now.

[Hasan Doza, Water Asset Management]

Got it. And my final question just as a follow-up to the first question where you were answering the gain on sale and the other one-time items. My quick math as I was following your answer, it comes out to about $0.10. You have about 30 million shares outstanding roughly speaking. Is that a fair ballpark estimate in terms of if I add up the gain on sale of $5 million then subtract the $2 million net OII and a couple of the other depreciation items, I get to about a $0.10 positive impact from those items. Is that a fair ballpark calculation? And if not what is the right EPS estimate specifically one-time items?

[James Lynch, Chief Accounting Officer]

Yeah. So on the one-time items, there was also as I mentioned the deferred tax item that was driving the tax rate up above the 16% that Andrew just mentioned to 22%. We did state both in our earnings release and on the call this morning that the one-time items basically netted to a $0.03 delta. And that from a recurring basis we were at a $0.09 -- as compared to $0.09 in the prior year.

Also I would remind you of the statements that we made earlier on our call that the rate case in California has not been baked into the results in the current year. So we are experiencing 2020 expenses and increases related to 2022, I should say 2022 expenses and the increases related to our operations that occur in 2022 without having the income recovery from that. So that's how I'd kind of think about one where we wound up in the first quarter and what we will be looking at as we move into the second quarter.

[Andrew Walters, Chief Financial Officer & Treasurer]

And Hasan just to kind of make it very easy to think through it. If you take the $0.03 that Jim talked about and then you also talked about the ongoing $2 million from the OII that's what you would look at from what's been done to what's included in the -- in our guidance. So all the one-time items are already included plus an additional $2 million is included for the OII.

[Hasan Doza, Water Asset Management]

Okay. Thank you, everyone. Appreciate it.

[Andrew Walters, Chief Financial Officer & Treasurer]

You're welcome. Thank you Hasan.

[Operator]

[Operator Instructions] Your next question comes from Jonathan Reeder with Wells Fargo. Your line is open.

[Jonathan Reeder, Wells Fargo]

Hi, good morning. I guess, I'll try to ask Hasan's last question just a little differently. What would the $230 million to $240 million guidance range be if you just exclude all the one-time items that are known and/or anticipated throughout the year?

[Andrew Walters, Chief Financial Officer & Treasurer]

Go ahead, Jim.

[James Lynch, Chief Accounting Officer]

I would suggest that you would take the $0.03 a way to get it to the $0.09 for the quarter. If you take a look at for the year, you would add back the $2.4 million on the OII cost of capital. So that would be adding back an additional roughly -- I'm going to say it's $0.03 for ease of discussion. So it would be right about -- right around the $243 million $244 million $245 million range on the upper range and the same on the lower range at roughly $0.03 to $0.04.

[Jonathan Reeder, Wells Fargo]

Okay. And then I guess, I'm confused the $5.5 million gain like how does that translate into only $0.07? Like that's $0.18 on a pretax basis I believe.

[James Lynch, Chief Accounting Officer]

Yes. So in that particular part of the discussion, we're referring to a comparison between the prior year and the current year. And that comparison is done on an earnings per share basis. So recall that we had a pretty big swing in taxes. And so that's showing what the actual tax impact was to that $0.14 to $0.15 pretax per share gain. Or item, I should say not gain or gain.

[Jonathan Reeder, Wells Fargo]

Okay. And then I guess last question I guess. I think you kind of already answered this, but the $0.09 from continuing ops that doesn't reflect any assumed benefit from the pending GRC settlement, right?

[James Lynch, Chief Accounting Officer]

That's correct.

[Jonathan Reeder, Wells Fargo]

Okay. Any way to tell us how much that would have added if, we would assume that's in there, or...

[Andrew Walters, Chief Financial Officer & Treasurer]

It's a great question. If you look at it the -- it obviously, depends on the allocation through the year but I would add from a revenue perspective approximately $4 million. The key to focus on is you got $25 million for the year and it's just based off the allocations. But based on where we are, it'd be about a $4 million add.

[Jonathan Reeder, Wells Fargo]

Okay. Thank you. Appreciate it.

[Operator]

There are no further questions at this time. Presenters, do you have any closing remarks?

[Eric Thornburg, Chairman, President & Chief Executive Officer]

Yes. Thank you, operator. Thank you all of you for joining our call today. We really appreciate your interest and support of San Jose Water Company and SJW Group. We look forward to keeping you updated on our progress throughout the year. And again, thank you very much for participating in our day.

[Operator]

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