Good morning, ladies and gentlemen, and welcome to the Howmet Aerospace Second Quarter 2020 Results Conference Call. My name is Beverlyn, and I’ll be your operator for today. As a reminder, today’s conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Paul Luther, Vice President of Investor Relations. Please proceed.

Thank you, Beverlyn. Good morning, and welcome to the Howmet Aerospace second quarter 2020 results conference call. I’m joined by John Plant, Executive Chairman and Co-Chief Executive Officer; and Ken Giacobbe, Executive Vice President and Chief Financial Officer. After comments by John, we will have a question-and-answer session. I would like to remind you that today’s discussion will contain forward-looking statements relating to future events and expectations. You can find factors that could cause the Company’s actual results to differ materially from these projections listed in today’s presentation and earnings press release and in our most recent SEC filings. In addition, we’ve included some non-GAAP financial measures in our discussion. Reconciliations to the most directly comparable GAAP financial measures can be found in today’s press release and in the appendix in today’s presentation. With that, I’d like to turn the call over to John.

Good morning and thank you for joining the call. Today, with Ken, I also have Tolga Oal who is on the call. Tolga is our Co-CEO. Tolga has been immersed in the business since his announcement of CO-CEO back at time of Investor Day in February. Now, let’s move to slide 4 to cover second quarter results. First, let me paint a picture of the quarter. As you’ll recall, we saw the first significant disruptions related to COVID-19 in the last three weeks of March. The initial effects were quarantine related disruptions within Howmet plants and certain customers that ceased production, for example, Boeing, Airbus, Safran, et cetera. The full impact was felt in Q2 with customers’ shutdowns, schedule cancellations, and Howmet plant disruptions. The results reflecting this impact show sales reduced year-over-year by some 31% and operating income, excluding special items by 42%. Nevertheless, we were pleased with the absolute numbers of 14.4% operating income margin and a 19.7% EBITDA margin. This reflects the swift cost containment actions undertaken, starting at the end of the first week of April. And you may recall that we took our initial restructuring charge in the first quarter results. These cost reductions continued to take effect each month in the second quarter and will continue into Q3 and Q4. Later in my remarks, I’ll begin to focus more on our exit rate trajectory for 2020 as we move into 2021. Relative to second quarter EBITDA margin at 19.7%, Howmet also generated earnings per share of $0.12. Now, let’s move to the balance sheet and cash flow. Adjusted free cash flow in Q2 was $76 million, excluding $11 million of separation costs. I’d also point out that the $76 million of cash generation included the effect of three items. Firstly, we reduced our AR…

Great. Thank you, John. Before getting started, I wanted to make a few comments on our basis of presentation. As a result of the separation on April 1, 2020, Howmet Aerospace has reported results of the separated entity, Arconic Corporation as discontinued operations for 1Q 2020 and prior periods. Per GAAP, it’s important to note that corporate costs for the pre-separation periods were only allocated to Arconic Corporation if the costs were specifically attributable to the entity. Therefore, for pre-separation periods, Howmet retained 100% of all shared corporate costs. For 2019, Howmet statements will show approximately $190 million of corporate costs excluding special items, since the shared costs were not allocated to our Arconic Corporation. For clarity, we’ve provided a schedule on slide 20 in the appendix, which is consistent with Howmet’s 2020 Investor Day and shows an estimate of historical operational corporate costs. For 2019, the comparable annual operational corporate costs were estimated to be $100 million, rather than $190 million. Looking forward into 2020, operational corporate costs are expected to be approximately $75 million. So, let’s move to slide 6. In the second quarter, commercial aerospace was 54% of total revenue, defense aerospace was 18%, commercial transportation was 12% and industrial combined with our other end markets was 16%. COVID-19 and 737 MAX production declines most severely impacted the commercial aerospace and commercial transportation markets, which were down 36% and 54% year-over-year, respectively. We continue to expect defense aerospace to grow year-over-year, due to the strong demand for the Joint Strike Fighter on both new airplane builds and engine spares. In the second quarter, defense aerospace was up 3% year-over-year; and within the industrial and other markets, IGT was up 25% year-over-year. Now, let’s move to slide 7. On this slide, we’ve provided historical information for the combined…

Thanks, Ken. Let’s move to slide 15. We are providing you an outlook, and that really is to give the best possible visibility to the Company. Of course, we have been monitoring air traffic around the world, and the best estimates of aircraft builds. And this leads us to provide this view to you for the balance of the year, given that we’re well into the second half. However, we do recognize that there remains significant uncertainties regarding the external environment, for example, spikes regarding COVID-19, visibility of customer inventory corrections and aircraft build rate changes in the face of any further COVID spiking. Here are the salient points. Full year revenue is expected to be $5.2 billion for the year, plus or minus $100 million; commercial aerospace is expected to be down 35%, consistent with our previous view; commercial transportation is expected to be down 45%, which is a modest improvement from our prior view; defense aerospace and industrial are expected to be up, with defense aerospace up 10% and industrial up 5%. The consolidated annual revenue for all of our markets is expected to be down approximately 25% to 28% year-over-year. EBITDA is expected to be $1.03 billion for the year, plus or minus $$35 million, but it is made up of very different quarters. For example, in Q1, we had I think, a good level of revenues, nevertheless, offset by disruption in the last -- latter part of March, and then of course, the transition quarters, as I call them, the second and third quarters, then to the fourth quarter to new operating cost levels. Naturally, the outlook remains our best estimate at this stage, given the volume variability due to the complete airline and aircraft build environments as previously mentioned. Q3 revenue is expected to be…

Thank you. And we will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Carter Copeland of Melius Research.

Hey. John, can you just give us a sense of the reduction in the run rate, kind of build rates on the OEM side? What we should be thinking you’ve kind of laid out here for the next, I don’t know, 18, 24 months as that’s level loaded at down 35% or 40% or 50%? Any color you can help us on how you thought about that build plan and how that fits in with your cost plan?

Yes. I mean, the most visibility that we have currently is, I think for Airbus where they’re given clear indications of build rates, which are well-publicized through -- certainly for narrow-body through I think April of next year at a rate of 40, with wide-body being down, I think rejections are like the A350 down to 5 per month. On Boeing, I’m going to say, we’ve -- I think everybody knows, we’ve had several demand forecasts over the last few months. And currently, the build rate there is predicted to be very low at 7. So, it’s difficult to discern that at the moment in terms of where we are relative to inventory take et cetera, et cetera. And also, we recognize or we have to recognize that the amount of, I’ll say, for us in our engine business, what then flows through by way of engine demand and then entry levels in, for example in GE et cetera, et cetera. So, essentially, the way we think about it is we’ve taken at which Boeing and Airbus have published, run that out through as best as we can into 2021. And then, just notes to ourselves is that while we have no visibility into like when we would expect recovery to occur. But I guess, the flip side that we have where we’re taking, I think inventory reductions as part of our also top-line sort of degradation at the moment, then, as builds we mentioned begin to recover, then we will see some inventory build in advance of that to prepare the pipelines for that demand recovery. So, we’re choosing not to call out when this demand will return. The one thing we’ve done is to recognize that it’s a difficult environment. The mantra has been cost elimination, not cost deferral, such that as and when we do begin to see a demand pull, then given, say, the EBITDA margins that we achieved in the quarter and where we think will be for the year and at the end of the year, then we’re well-positioned to take advantage of any demand recovery, as and when it occurs. The other thing we’re consciously doing is that if we see a particularly low point, and we have called out Q3, and I don’t plan to chase cost reduction for a quarter, but I also want to make sure that we are well positioned to be able to meet recovery as and when it occurs and trying to define what that sort of loading is. And then, should the future not turn out to be as we currently believe it to be, then obviously, we’ll further adjust that cost base as necessary. So, I don’t know if that gives you a pretty good picture, Carter, of how we’re thinking about it and what we know and compared to what we don’t know at the moment.

Yes, certainly does. And with respect to the inventory reduction in the channel that you’re hinting at, and -- or that you see coming in Q3, any color you can give us on -- is that in one area more than another, whether that’s engine versus fasteners or whatnot? Any color there would be helpful.

It’s both. It’s one of the most difficult things that we have to try to get out in terms of visibility, because obviously we’re not proving to exactly, for example, how many engines are there, how many spares are being held, and indeed what the inventory levels exactly were. We did note -- we did have significant arrears as we went out of 2019. But, as I think as I said on the earlier call, I mean those arrears can evaporate when the builds are no longer required. So, we just believe that we are seeing -- and we are in this period of inventory reduction, we can’t be certain as to how much will be cleared. In the third quarter, maybe still be some lingering over into the fourth quarter and even beyond depending on what the outlook looks like. At the same time, what we recognized in our own cash flows is that this year our own working capital will not be as good as it could be, particularly regarding inventory itself, because we will have even the end of the fourth quarter some trapped inventory by -- given what we previously understood demand to be, we had scheduled materials and some of those we’ll have to take and some of the things we have in our plants today, we will not be able to deliver. Even though we are holding our customers to account if -- there will be some significant turning of few tens of millions of trucked inventory throughout the year, which will take again some time to burn off in the following year. So, again, to summarize, inventory is the most difficult thing to get visibility around. And all we can do is look at these current schedules and we just see that definitely a quarter will be impacted further as our customers reassess their requirements.

Great. Thank you for the color, John.

Thank you.

Your next question comes from the line of David Strauss of Barclays.

Thanks. Good morning, everyone.

Hey, David.

Good morning.

So, John, I guess, I want to follow up on Carter’s questions around destocking. The decline that you saw in commercial aero in the quarter, 36% I know is different across different businesses, But overall, it was much better than pretty much all your peers, your supplier peers that saw a bigger decline and are calling for destocking to go on now for several quarters. It sounds like you’re calling for a Q3 destock and then, we’re back kind of in line with production rates. I guess, what kind of visibility you have, or what are you seeing that could be different than what everyone else seems to be indicating?

I’m not saying we’ll have everything cleared in the third quarter, for sure, because we just don’t have that level of certainty or visibility that we’d like to have. So, we’re making some allowance for that that will continue throughout the year. But, I think, it will be bit more intent in the third quarter. The other thing which we are noting, and I’m going to say it again, because I think I surprised you a little bit, the first quarter call when I think, I said something to the effect that I saw commercial transportation recovering a little bit more quickly than commercial aerospace. And indeed, we are seeing that. It’s that while second quarter was quite dramatic as most commercial truck plants were closed, I mean completely closed during April and part of May, but we are seeing improved demand mostly in North America and in Europe. And we think that that will strengthen as we go into the fourth quarter. So, the way we’re trying to map out our year is that we -- CT is still fairly low in Q3, but we believe to be getting better from what visibility we have from of our customers. And we see a further inventory introduction in commercial aerospace in Q3, making some allowance for that to continue into Q4 and it’s like a bandwidth we try to give you in terms of guidance to where we believe we’ll end the year. So, I wish it was more certain. And I think the one thing that’s I think should be recognized and we have done our best to give you guidance, we just do recognize that it isn’t perfect for sure.

And then, moving over to the margin side of things. So, you talked about the cost savings being permanent and further pricing opportunities as we go forward here. Where would you kind of peg incremental margin -- once volume starts to come back or stabilize here, where do you think incremental margins can shake out and when do you think you can get segment margins back to that kind of 20% range, above 20% range that we were at in Q1 before pre-COVID? Thanks.

Yes. I mean, that’s a sort of a sad news, so I don’t really want to put my head in, in terms of calling out margin guidance for the future. What our approach is, is to say, we’ve chosen not to defer things. So - because, I’m always concerned about cost deferral being something that as and when you do see improvement, costs flood back into your business. And I don’t think that’s the way to go forward. So, I think it’s a pure cost elimination. And I think the very best periods of time indeed, I think many industries you saw, to some degree, the companies in after 2008-2009. When you’ve made these very serious attempts to reduce structural costs, then some of those -- most of those, maybe all of those will go back into the business. And so, then you really are just taking variable cost back on to making future revenue. So, margin rates do begin to improve at that time. I mean, so question really is, when does volume and inventory build I talked about earlier, when does it occur? And that’s -- none of us know. And I’m just trying to make sure that we position Howmet as best as we can, such that as and when volume does come back, then if we kind of print those sort of EBITDA margins that are talked about for Q2 and for Q4, when things are tough, then hopefully, that leads you to the belief that we can do that when volumes improve. And that’s what it’s all about. It’s like preparing Howmet for the upswing which will come. But, I think, none of us know when it is. But, I think our job is to make sure that we position it as best as we can, as quickly as we can, such that we can generate cash throughout. And that’s what you’re seeing.

Yes, David, what I would add to that too is, you saw that we increased our structural cost out target in year to a $150 million in year. And when you’re looking at where we are year-to-date, we had $26 million in the first quarter, that was really related to the 2019 action that came into this year; in the second quarter, we had $55 million. So, year-to-date, that puts us at about $81 million. So, good track record, if we have 81 already in the bank, and we’re targeting 150 for the full year. On top of that, if you look at back to the first quarter, we took a severance charge at the beginning of COVID-19 of about $20 million, and then you see another severance charge in the second quarter of about $46 million. So, there’s good trajectory on the cost out, the prices continuing. And also, we’ve exited some unprofitable businesses last year as well. So, that should help us.

All right. That’s helpful color. Thanks.

Your next question comes from the line of Robert Spingarn of Credit Suisse.

Hi. Good morning.

Hi, Robert.

First, I’d like to thank you for the level of detail here and frankly, for the willingness to guide, because not many have. I wanted to -- on that, I wanted to ask you about -- you’ve talked about visibility, and I just wanted to get a sense especially on the MAX, how well you can see what your customers have in terms of inventory? Are you building MAX engines now at a rate of 7 per month or 14 for the engine 7 for the shipset? And can you tell what kind of inventory the engine manufacturers have on hand?

Our schedules for any LEAP-1B engine currently are at a very low level, not surprisingly, given the engine inventory, which is there, which we don’t have exact numbers because it’s a project to GE Aviation. And obviously, they had a level of part flow that was assuming much different build levels compared to where we find ourselves at the moment. So, we are at a very low point of build [ph] for the LEAP engines and LEAP-1B in particular for -- with Boeing. And so, I think that will continue at a very low level throughout 2020. And then, assuming that the recertification goes ahead, which we have no reason to believe that it won’t, and that be good news and then Boeing plan to resume deliveries and then increase build rates as we go into 2021. And that’s a bit -- that’s the time that we’re looking forward to, because we have been without a MAX build for a long period of time now. And so, I think, the whole industry is looking forward to that time. Because we do think that narrow-body is where the demand will be in the future.

Is there any way you can give us some sense of your content on that program, on a per aircraft basis, or anything you can say?

We’ve never given or not in recent times given shipset values by aircraft. I don’t really want to do that on today’s call. But clearly, if you look at the impact that we had in our first quarter, where we did call out MAX more specifically, and then you can see obviously, it’s essentially not present at all in our second quarter. You can see that the combined effect of that MAX and the COVID related impacts of aircraft assembly plants being down, because of employee quarantine, and also just the whole demand from airlines, I mean, it’s a very, very difficult picture for the commercial aerospace aspect of that business. But I don’t really want to call out the shipset value at the moment.

And just a clarification, I don’t think you said this before. But, in terms of the commercial aerospace revenue decline in the quarter, I think 36%. Can you specify how much that was down for OE versus aftermarket? And I’m not just thinking about airfoils and aftermarket, but all of your commercial aero aftermarket. And then, what’s contemplated in the second half guide for those two buckets?

So, last quarter, we gave a bit more granularity regarding spare sales and for the most intense purposes, it’s around $800 million, $850 million level for the whole company. So, let’s use the round some $800 million. And in 2019 it was approximately 400 for defense aero and for industrial and therefore 400 for commercial aerospace. I’m thinking that this year that the 400 for defense aerospace and industrial business a little bit higher. So, given the build, the OE build and the spare packages which you need to go with those. So, think about a 10% plus increase in that, call it out of 450 could be a bit more -- we don’t know yet. And then for the balance, I see a very severe contraction in the commercial aerospace from that $400 million, probably down to the $150 million plus or minus from that $400 million. That’s on a year. Therefore, obviously massive reductions in the like Q2, Q3 for the aftermarket. So, it all balances out probably in that region, maybe just shy of the $600 million range for total spares for Howmet in 2020, but with very different quarters, as you can imagine, given the lack of requirements for say repair and overhaul at the moment.

I see. Thank you very much.

Thank you.

Your next question comes from the line of Gautam Khanna of Cowen. Your line is open.

Hi. Can you hear me?

Hi, Gautam.

Okay. Perfect. Good morning. I was -- forgive the question. I have to…

You want to have solution?

Exactly. So, here we go. Earlier, I think you said, maybe last quarter that pricing would -- or you implied, pricing would be better than $20 million this year. I wanted an update on that. I wanted an update on your ‘21 view on pricing. And I’m trying to answer the question, do you think earnings per share will be up next year over this year? So, maybe you can also address the carry forward structural cost out next year, pricing and obviously, understanding revenue was -- price is a function of volume shipments. So, I get that’s maybe just directional for next year. But, if you can opine on whether you think earnings per share will be up next year, given the tough Q1 compare and all the other moving parts? And then, I have a follow-up.

Well, I am not into giving 2021 reference or guidance at this point in time. I feel that’s way too early to be talking about that. And we tried really hard to try to give you the visibility that we have done today. And I think someone early recognized, we either have the courage to give that in the second half, we don’t understand one of those two. So, I don’t think I’m going to talk to 2021 at the moment. I mean, I have a view, but we try to think about that very clearly for ourselves in terms of what is our run rate in terms of revenues, what are our run rates in terms of margin, how does it pan out? And so, we certainly have that uppermost in our mind about the trajectory into ‘21 and also into ‘22. So, we’re trying to think a lot about that. But, I don’t really want to give guidance at this point. So, I think, the most important thing was to try to give you a feel for exit rate trajectory, which you got, and trying to give you some view of how we are seeing some inventory issues that have to be worked through. And hopefully those are largely done by next year, but there’s no guarantee. I’ve tried to give you a view about maybe there is some recovery in commercial transportation and as we move towards the latter part of the year. And then, in terms of pricing, clearly, absolute dollars are going to be a function of revenue. We know that revenue is not going to be what we had in 2019. And we also recognize that the environment and our customers, we’re all suffering at the moment, we’re all in a world of hurt. But,, we also believe that the trajectory in terms of the price we’ve talked about is largely impact will be -- can’t be exactly the same given the current pressures of the industry. And we’ve tried to call out again in Q2 and give some steer for, in our words, for the balance of here. So, at the moment, as best as you can be, I think,, we’re largely on track for doing what we said we’d do and positioning the Company as best we can in terms of cost structure. And trying to give you the flow -- ebbs and flows regarding inventory, albeit we called out the imperfect nature of the visibility that we have. At the same time, really try to give ourselves the absolute best positioning that we can such that as and when revenues do begin to pull, as they always do, and they will and in advance of that I guess, we should see a decline is Howmet is really well-positioned to build and manufacturer those parts and also get the right levels of profitability, given what we’ve done the way we proved our cost planning for 2020.

Yes. I appreciate that. I guess, there are a couple of notable things, the structural cost out next year versus this. How does 150 this year compared to what you anticipate for next. And maybe just directionally, if pricing will be better and pricing realization will be better in ‘21 versus ‘20, because that was the plan at the Investor Day. I wondered if at least directionally still the plan?

If I was going to walk away from the direction out of it and I didn’t. So, I -- and the second point is, clearly, there’s going to be a positive effect carryover into ‘21 of the cost reductions that we are carrying through at the moment, given the fact that essentially they commence in April in the face of the demand that we see. So, I think the thing that you should think about is the words that we’ve chosen that we would eliminate cost, not defer it. And so, I think those companies which defer, I mean, you see across the whole industrial space, there is phenomenon of deferral. And I don’t want cost to flood back in when programs are reinstated. So, that’s the way we’ve approach it.

And my follow-up is inventory plans through the first half of next year or beyond, you mentioned there’s going to be some trapped inventory at year-end. Do you think inventory will be a source of cash maybe for the next year, or can you give us a timeframe as to when that might abate? Because, it obviously is in the second half. How long…

Obviously, it all depends upon the angle of the demand line. Let’s assume that if all things were flat, then the fact we have trapped inventory at the end of this year would mean that would be a source of cash in 2021. Obviously, if 2021 were to show some form of demand increase, then all things being equal, normally, you have some working capital that will begin for us. But, obviously, it will be muted by whatever inventory we carry out of 2020 into 2021. And all I’ve said so far, without getting into specific numbers, some tens of millions that we’ll be having in excess at the end of this year.

Your next question comes from the line of Seth Seifman of JPMorgan.

Thanks very much and good morning. I was wondering -- I appreciate the fact that recovery in commercial aerospace, we’re all kind of groping around in the dark. But, I wanted to ask about commercial transportation since I don’t really know anything about that end market. When we think about when it’s realistic to think about getting back to the 2019 level, in that end market, is there a little bit more visibility there or forecasting ability?

We’ve got a view at the moment. I’m not claiming, given everything that’s going on that it’s a well informed view. But, I am thinking that in 2022, we’re going to be pretty close in terms of volume, wheels produced against 2019. Now, I’m not -- what do I mean by pretty close, but I’m not saying it’s going to be above, getting close too. So I’m feeling a little bit more confident there. And then, commensurate with the fact that I think as we’ve told and informed the market that each year we do take a little bit of share from the steel wheels. We have introduced as you know that new 39 pound wheel and therefore the market leading forefront. And that’s also witnessed by our market shares across the world in wheels. I’m thinking that actually as we go into 2023, we’re going to see above 2019 volumes. Now, this is what I said, this is what we think, doesn’t mean so that’s where it will be. But this is how we’re thinking about the business. And believe more importantly what we’re doing at the moment, we’re repositioning our capacity in that business, such that when volume pull does occur, is that we’re able to manufacture it an even more efficient way than we’ve previously done. But that’s going to require that volume positively there to fit the scene in terms of our results. So, I think this is -- things that we could not have done, if we have had the demand levels of ‘19, just going to ‘20 and ‘21, we’re going to take the opportunity to try to re-profile some of our production to enable future, also improve cost levels to occur. So, ‘22 for the volume and ‘23 for above 2019 is how we see it.

Okay. Thanks very much.

It’s a long way answer when you’re battling in individual weeks and quarters at the moment.

Yes. No, I fully appreciate that. And then, I guess maybe speaking of 2023, when -- at the Investor Day earlier this year, you talked about a plan to sort of remain for three years. Obviously, nobody knew what was coming. And so, just to kind of confirm or ask you if any change in your thinking as a result of everything that’s happened over the past five months or so?

I think, you’re just asking me, am I old and worn out now by the current travails that we’re going through? The answer’s no. I mean, Tolga is giving huge assist, and the business getting into it across the base. And the plan is exactly as I stated. I made a commitment. I always see commitment through. And no diminution in that regard at all. It’s just that we’re working through some issues of business, which we hadn’t really expected. But, it’s just business. It’s just the normal thing you go through and accept that life is not totally smooth.

Your next question comes from the line of Josh Sullivan of The Benchmark Company.

Curious on the financial conditions of your smaller suppliers, as well as maybe some other adjacencies to yourself. Is there any conversation of increased consolidation? Just given a very challenged financial conditions for everybody, but particularly the smaller suppliers. Are your customers coming to you saying that -- suggesting any tie-ups at this point?

No. I -- my take -- in fact I got this question by one of our management teams in recent quarterly business reviews. And my take on it is that right now there’s no companies which are in -- we have enough clarity and confidence to be able to take aggressive steps given that none of us know the shape of future aircraft demand -- what airline loading factors are. Of course, as always, as time goes by, things change. I mean, today, if any proposals were made to any companies, my view is that no Board could possibly ever evaluate anything at this point. Because on what basis would an evaluation be made, because the visibility is so low. On the other hand, give it, to 2021 sometime, could be 2020, but I think that there will be increased clarity. And I think that it’s going to be during that time period, when if there is M&A activity across the, let’s say, the wider industrial space and then aerospace, the sub sector of that is that I’d expect those sort of moves to occur during that period of time when there will be more disability, so that any time that companies want to make acquisitive step or when any acquisitive steps are received, it just depends upon then your Board’s evaluation. So, that’s my guess. But, no, we’ve not been approached by any of our customers to consider acquiring anybody or anything like that.

And then just relatively, I mean, given the lack of clarity, I mean, are there any areas that you’re concerned about suppliers and their financial condition, their ability to supply you?

We scanned our supply base. And out of all of our suppliers, there’s just been one, which we saw attuning, we need to keep a good eye on just to make sure that they are in a position to supply. And by and large, we’ve tried to put the supply base into condition where we’re not totally dependent upon any single supplier of part. Because that’s not a good place to be. But, let’s say -- obviously I’m not going to call out which are the ones which may cause a problem, but so far so good. And I’m not seeing any problems that are going to cause us a problem.

Thank you for the time.

Okay. Thank you.

Ladies and gentlemen, we have reached our allotted time for questions. Thank you for participating in today’s conference. You may now disconnect.

Thank you.