Largo Inc. (LGO) Q1 2020 Earnings Report, Transcript and Summary

Good day. My name is Joana and I will be your conference operator today. I would like to welcome everyone to the Largo Resources First Quarter 2020 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. I will now turn the conference to Alex Guthrie. Please go ahead.

Thank you, operator, and welcome everyone to the Largo Resources Q1 2020 financial results conference call. Today's call is being recorded and a replay will be available starting tomorrow within the Investor Relations section of our website at largoresources.com. Our Q1 2020 results press release, MD&A, and financial statements are also all available on the company's website and on SEDAR. Some of the information you’ll hear during today's discussion will consist of forward-looking statements, including, without limitation, those regarding future business outlook. In addition, non-IFRS financial measures such as cash operating costs, excluding royalties, total cash costs, revenue adjustment payable, revenues per pound sold, vanadium sales per pound sold, revenue adjustment per pound, and revenue adjustment payable at April 30th will also be discussed during today’s conference call. Actual results could differ materially from those anticipated and risk factors that could affect results are detailed in the company's AIF and other public filings, which are all available on SEDAR and the company's website. Further information regarding Largo’s use of non-IFRS measures is also available in our Q1 2020 results press release and in the company’s latest MD&A. Financial amounts presented today will be in Canadian dollars, except as otherwise noted. Market and industry data contained and incorporated by reference during this call concerning economic and industry trends is based upon good faith estimates of our management or derived from information provided by industry sources. Largo believes that such market and industry data is accurate and the sources from which it has been obtained are reliable. However, we cannot guarantee the accuracy of such information and we have not independently verified the assumptions upon which projections of future trends are based. Speaking first today will be Largo's President and CEO, Paulo Misk, who will provide highlights from the company’s Q1 2020 results followed by Largo’s CFO, Mr. Ernest Cleave, who will then provide additional detail on the company’s Q1, 2020 financial performance. Following Ernest, Largo’s Director of Sales and Trading Mr. Paul Vollant will provide an update on the vanadium market. Finally, we'll open the call for questions. I will now turn the call over to Paulo for opening remarks.

Thank you, Alex, and welcome everyone to our quarterly update conference call. I will begin the call by highlighting some of the company's ongoing and preventive measures associated with the global COVID pandemic. We continue to measure the rapidly developing impact of the COVID-19 pandemic and continue to take all possible actions to help minimize the impact on the company, its people, and on the community of Maracás. Our thoughts continue to be with those affected by this virus. Operations at the Maracás Menchen Mine continued during Q1 2020 and the company maintained its 2020 production, sales and cost guidance on a business as usual basis. At this time, there has been no significant disruption to the company ability to ship products from site and the supply chain for its operation and the level of critical consumables remained at normal levels. Additionally, not a single employee or contractor has tested positive for the virus and we believe that the risk to our operating team in Maracás continues to remain relatively low. To-date the restrictions imposed by the government in Brazil have not significantly impacted the company operation, but the potential future impact of these restrictions and other restrictions globally on the company's operations, sales efforts and logistics is unknown, but could be significant. The federal government in Brazil has declared mining operations, including activities of mining, ore treatment, production, sales, transportation, and the supply of mineral goods as essential to the country. These activities will continue despite local government restrictions on business activity and the circulation of people. The company has also implemented additional safety protocols including travel restrictions, health screening, the increased hygiene measures in our efforts to minimize the spread of the COVID-19. The company continues to follow the recommendations provided by the health authorities and all corporate office personnel have been instructed to work from their homes where possible. The company has stopped its critical functions at the mine site and has encouraged those on non-essential roles to work from home. In our effort to mitigate some of the effects relating to the COVID-19 in our local communities, the company has provided four ventilators and purchased and donated COVID-19 test kits to local hospitals. In addition, we have donated PPE materials such as protective coveralls, safety boots, masks and safety glasses as well as 4,500 food baskets to families in the State of Bahia to further help with impacts caused off the COVID-19 pandemic. We continue to do our part to help stop the spread of COVID-19 and help ease the effects caused by the virus. Largo produced 2,831 tonnes of vanadium in Q1 2020 representing an increase of 35% over Q1 2019. This increase was largely due to the company expansion project that was completed in Q4 2019 and the kiln maintenance performed in Q1 2019. Production on Q1 2020 was however 6% lower than Q4 2019 as a result of the hotspots in the cooler’s shell which required number of stoppage for maintenance on the refractory. The company’s Q1 2020 global V2O5 recovery was 79.9%, was in line with both Q1 2019 and the budget with strong recovery levels in both the crushing and milling areas of the plant. The annual kiln and cooler shutdown to replace the refractory and the planned improvements to the kiln and cooler to increase capacity that was scheduled for April 2020 has been deferred to later in 2020 as a result of the cautionary measures taken by the company in light of the COVID-19 pandemic. This work is not expected to have an impact in the company's production later this year. The company instead performed enhanced preventive maintenance program in the chemical plants for approximately 15 days. And as a result, production in April 2020 was 480 tonnes of V2O5. The company performed well on a unit cost basis, achieving a cash operating cost excluding royalties of $2.79 per pound in Q1 2020, which represents a decrease of 18% over Q1 2019. For Q1 2020, total cash costs were $3.01 per pound of V2O5. We are very pleased to report the company’s achieved commercial independence in April 3, 2020 following the expiration of its off-take agreement. We are over 85% committed on our annual sales guidance for 2020 and the company expects the balance will be sold in the spot market and be used to build safety stocks in strategic regional hubs. The company expects Q2 2020 to be a transition quarter where sales will be lower and inventory may increase mainly due to a longer period of time between production and revenue recognition as a compared to the terms under our previous off-take agreement. The company continues the necessary work required for the construction of its V2O3 processing plant, which is expected to commence in Q1 2021. The company’s V2O3 processing plant at Maracás Menchen Mine is expected to increase sales in the high purity aerospace market, chemical industry and vanadium electrolyte used in the vanadium redox flow batteries. The company expects the ramp up and commissioning of the plant to conclude in Q3 2021 and total capital expenditure to be in the range of approximately US$10 million to US$11 million with US$9 million being incurred in 2020. The company is also evaluating the timing for the construction of its ferrovanadium conversion plant, including the deferral of planned 2020 capital expenditures in light of the COVID-19. This deferral will not impact the company's commercial strategy in 2020, as it will continue to utilize third-party convertors around the globe. In addition, precautionary measures regarding COVID-19 has caused delays in the start of the company's 2020 drilling program and work will commence as soon as the drill contractor and the company are able to mobilize people and equipment to the mine site based on the government recommendations. In summary, we believe the transition away from our previous off-take agreement will prove beneficial both strategically and economically for the company, as we begin to sell our vanadium products internally. The Maracás Menchen Mine has a proven track record of premium product quality and operational stability, which allows Largo to provide its customers with reliable source of vanadium supply for the global steel and high purity markets. Largo is now an even more important player in the global vanadium industry, and we look to continue maximizing value for all of our shareholders as the industry’s preferred producer and supplier for vanadium. With that, let me turn the call to Ernest who will provide highlights from our Q1 2020 financial performance.

Thanks everyone for joining the call today. The company reported net income of $5.7 million in Q1 2020 compared to a net loss in Q1 2019 of $2.2 million. This was largely due to an increase in revenues, a decrease in finance costs and a decrease in the total tax expense, which was partially offset by an increase in operating costs and an increase in the foreign exchange loss. Revenues in Q1 2020 were $58.2 million after a positive re-measurement of trade receivables of $2.4 million, representing an increase of 31% over Q1 2019. Revenues per pound sold were US$6.31 in Q1 2020 compared with US$7.19 per pound in Q1 2019. The company sold 3,170 tonnes of V2O5 in Q1 2020, representing an increase of 51% over Q1 2019 and which represents a new quarterly sales record. Vanadium sales from a contract with a customer was $55.8 million in Q1 2020 compared with $101.4 million in Q1 2019. Vanadium sales per pound sold in Q1 2020 was US$6.05 compared to US$16.46 per pound in Q1 2019. This decrease was largely due to a decrease in the V2O5 price with an average price per pound of V2O5 of approximately US$6.07 for Q1 2020 compared with approximately US$16.34 for Q1 2019. As a consequence of the increase in the V2O5 price since Q4 2019 and the positive revenue adjustment per pound realized in Q1 2020, the company's revenue adjustment payable was US$64.8 million at March 31, 2020. The company's revenue adjustment payable at April 30, 2020 was largely unchanged at US$64.4 million. And assuming fluctuations in the V2O5 price of $1 per pound after April 2020, the company expects the revenue adjustment payable to impact future periods either positively or negatively by approximately US$3.9 million. Operating costs for Q1 2020 were $36.4 million compared to $29.1 million in Q1 2019 and include direct mine and mill costs of $24.3 million. This compares with $19.5 million in Q1 2019. The increase in direct mine and mill costs is mainly attributable to the increase in production and sales during the quarter. As Paulo mentioned, cash operating costs, excluding royalties of US$2.79 per pound were down 18% over Q1 2019 and total cash costs were US$3.01 per pound V2O5. In summary, the company's liquidity position remains strong. Following the expiration of our off-take agreement, the company's cash balance at April 30th was $204.6 million and that is equivalent to US$147.5 million, and the revenue adjustment payable was US$64.4 million. We view the transition to commercial independence as an economic catalyst to the company and look forward to reaping the full benefits associated with the elimination of the re-measurement of our trade receivables or payables under the previous off-take agreement, as well as receiving 100% of the price premiums associated with high purity vanadium sales. With that, I will now turn the call over to Paul Vollant, who will provide an update on the vanadium market. Following Paul's updates, we will open the call to questions.

Thanks, Ernest, and thanks everyone for joining the call today. As Paulo previously mentioned, following the expiration of the company's off-take agreement, we continue to be fully dedicated to the promotion and sales of Largo's VPURE and VPURE+ products. We have assembled a very strong commercial team who have committed approximately 85% of the company's annual guided sales for 2020. We expect the balance will be sold in the spot market and used to build safety stocks. Since our last conference call, the European V205 price increased 25% to $6.88 per pound of V205 between March 20th and today. This price increase is largely due to low availability and supply concerns because of the government enforced lockdown in South Africa, where about 10% of the global vanadium supply comes from. On the demand side, we continue to see steel production in China returning to pre-COVID-19 levels. Rebar production in China is up approximately 10% year-on-year, largely driven by the construction sector. China was a net importer of vanadium in March, which we see as a further positive sign for demand. In Europe, we are seeing an increase in activity which hopefully means that the worst is now behind us. On the supply side, South Africa has now begun easing its lockdown and operation should gradually get back to normal. The European ferrovanadium price has remained relatively flat in April, with prices sitting at $25.88 per [kgv], and continues to trade at a significant discount to V205. The most of those markets that mainly caters to the aerospace industry is experiencing greater impacts due to COVID-19. We expect a period of low demand for its high purity vanadium requirements. As a result, our high purity V205 sales should be lower than expected in 2020. This, however, does not affect our total guided sales for 2020 as we remain confident to place our vanadium units in other markets. Overall our view continues to remain positive in the medium and long-term, as large government stimuluses are supporting infrastructure spending in China and other emerging markets. With that, we will now open the call for questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator instructions]. Your first question comes from Heiko Ihle from H.C. Wainwright. Please go ahead.

To underscore, you mentioned that well the worst is now behind us and I hope that you're right on this in a variety of different ways during these crazy and unprecedented times. As per your MD&A, on March 18 you get a fund in Brazil at an interest rate of 3.35%. A week after, on March 24th, you get another credit facility with a different bank in Brazil, fully drawn down at a rate of 6.29%. This is as per Page 8 of your MD&A. A couple of questions on this: Why is the difference in interest rates so large? And also -- and this is probably a more complicated one, why draw down all these funds like literally a month before your agreement with a firm that I won't mention here, ultimately expired?

Yes, let me take those questions. And thanks for those Heiko. Just in terms of the coupon on those two lines of credit. The candid reality was that the market was rapidly evolving due to COVID-19 and the cost of the second transaction increased from the early negotiations and discussions. But we still felt that it was a level that was leveling off from a coupon perspective to take on board. As to your second question, we see the money that we're drawing down on the credit lines as a buffer, as a safety to the company level operations. But these are not revolving lines. So to the extent that we don't draw down on them, they could be retractable adjusted in future. So we found it was prudent to actually draw down on the money when it was available so that we have it in hand. And that was the thinking behind actually taking that cash.

So what you're essentially saying is the interest rate doubled in a week given the world was falling off a cliff?

Well for that particular customer. But it wasn't across the board, but certainly things have been rapidly evolving and this was one instance where this was clearly evident.

Can you venture a guess on your G&A savings during Q2 given the -- I mean travel has essentially stopped, conference attendance I mean is all virtual now. How meaningful of a number do you think that is and how sustainable throughout the rest of the year and going forward?

I don't think it's going to be a number that moves the needle tremendously. If you look at our operating cash costs per pounds and total cash costs, which has been a measure of all our costs including our sales division, corporate divisions, et cetera, there's probably like a $0.21 difference, right? Yes there will be some savings, but candidly they won't be pretty minor. We have tried to be cost-conscious all the way along, so it isn’t really that much cut on the G&A side.

The next question comes from Carlos De Alba from Morgan Stanley. Please go ahead.

Hopefully you and your families are safe. I have a series of questions. The first one primarily related to, how much volume do you consider that should go to build the safety stocks this year? And also can you maybe refine a little bit more or give us some color as to how much of your sales could go now to the high purity market in light of the comments that you made earlier that you see them, given all the guidance that you had previously provided? And then regarding cost, is it fair to assume that the evolution of your cash cost will probably peak in case of the level in the second quarter because of the maintenance that took place. Or if you do the kiln maintenance later in the year, that could impact the cost and therefore depending when that maintenance takes place, that will be the peak of your cash operating costs? Any colors on the evolution of course throughout the year that be useful? And then finally, if I can ask about the price outlook. If we [indiscernible] by South African supply restocking and demand even if we saw the worst already, you'll be likely staying below what we thought it was going to be at the beginning of the year. How do you see prices for the remaining of the year for vanadium? Thank you.

I just want to answer about the maintenance and the impact of kiln and then provide -- I appreciate if I could give you all the answers regarding commercial insights and market. The maintenance of the kiln that we are postponing 2020 basically will not impact the production because we have already intermediate stockpile of the V2O5 in order to keep producing our final products, which means it's not going to have impact on the dilution of the indirect cost. And also all the production, all the costs related to the maintenance is considered the CapEx, sustaining CapEx. So it's not coming back to the OpEx anyhow. And we are very confident that everything that we have planned, even though we have certain restrictions with COVID-19 will be implemented and we will follow in 2020 overall. Paul, could you give the answers regarding the commercial market please?

Sure Paulo. Hi, Carlos. With regards to your first question and volume, we intend to add safety stocks. Target today is to be safety stocks around the globe in various regional hubs that will present approximately one month worth of production and that would be spread between the mine in Maracás and 2 or 3 locations in Europe, U.S. and Asia. With regards to your second question on the high purity sales and the impact of the current crisis, as you understand it's a very dynamic issue and we're working very closely with our customers to see how we can support them in this situation and also build long-term win-win relationship with them. So, so far, it's difficult to give a clear guidance, but we would expect that our sales for high purity would still be above what we had into previous years. So, we feel confident that we can increase our sales of high purity in 2020 compared to 2019. With regards to the price forecast, again, it is difficult to say. We try not to give too much forecast. But, if we look at the long-term historical average, it is still significantly higher to today's price. And we still expect that the price will continue to remain -- to become stronger in the near-term.

Just on the stocks, one month of production, are you guys starting from zero or you’re already halfway through or how close are you to the one month?

We have been starting from zero following the end of our off-take agreement with Glencore and we have buildings through it right now. So, yes, we think it's not going to be fully in place before another few months I’d say.

And if I may squeeze one more, I missed the details of Paulo’s comments on the revenue recognition, and the changes that you may have under the current commercial strategy versus what you had before. I wonder if you could repeat that please?

That is for Paulo, correct?

Yes. I think Paulo alluded to something -- some changes in revenue recognition under the current commercial strategy. I may be wrong, but I thought that he was talking about.

Paulo, do you mind if I just take that quickly?

Yes, please.

The section that Paulo was talking about is in the past we've sold to Glencore from the mandate and effectively we get paid 20 days later. So, it's a very simple process. What Paulo was alluding to is the fact that our sales cycle is now changing where we are actually building up these intermediary inventories and stocks in various locations. And obviously, we have inventory in transit. So, the nature of our operations has changed and addresses hard work under the previous off-take partner.

The next question comes from Lee Cooperman from Omega Family Office. Please go ahead.

You mentioned slightly two different numbers, you said 80% or 85% of 2020 production was committed and 15% to 20% in the spot market. What was the committed price of the 80%, 85% and how does that compare with how you're selling, what you're getting in the spot market? That's question one.

This is Paul. Paulo, if you want to go with that?

No go ahead, Paul. Go ahead.

Our sales commitments on the guided annual sales forecast for 2020 was 85% and the remainder as we said before would be going to the spot market and also to build safety stocks. The committed sales largely contracted on formula prices. So, they are prices based on current price with either a discount or premium to the market depending on the quality of vanadium that our customers require. And so these prices will evolve as the time of delivery comes.

So, you're saying, well that’s committed, that’s not committed as to price?

No, the volumes are committed, but the price will be finalized at the time of delivery.

Would you expect that price to be higher or lower than the spot market currently?

Well the price would be based on the spot price at the time of delivery. So depending on where the prices are, let's say in June for the June deliveries, we will calculate the actual invoice price to the customer.

I think it was a number of 6.88 you mentioned as the current price. Is that correct?

Yes, that is the average price of the Metal Bulleting for the European V2O5, which is our main benchmark.

The second question maybe it is directed to Ernest. Can you just take me through the fully diluted share account and how you get there? I guess there was a very major increase year-over-year in diluted shares almost 100 million, and I don't know if that's just due -- I don't think the stock went up that much. So, that wouldn't be the result of that. Was it to large increase in diluted share count? And what is the fully -- is the 624 million an accurate portrayal of the fully diluted share count presently?

So, let's deal with the 624 million first. 624 million is based on the treasury stock method. So, I give you the fully diluted just on an absolute basis is 676 million, which breaks down to shares of 562 million, there is about 2.5 million RSUs, options just 7 million and warrants 104 million. Then on the fully diluted, it's only a function of what's happening on a particular quarter in terms of where we are -- where we've been in the cycle. But on an absolute basis, we're still pretty much where we've been since last year. So, we added it all in, I think at one stage we were sort of 650 million, but we're 676 million right now. So, I think it's been relatively consistent.

As a rough idea, do you have any recollection if in fact, we got the 676 million shares, how much money that company would take in for the RSUs, the options, the warrants, were all exercised?

The biggest portion is the warrants, the warrants just shy of 104 million and the exercise priceis about 0.41 cents -- about 0.41 in Canadian for all of those, if you were to bring them all in there.

Okay. That's close enough. Okay. Then can you address the ForEx loss? Is that the result of a change in the U.S. dollars versus Canadian dollar or the Brazilian real? What is the currency that we should be watching?

Yes, that's a great question. So interestingly, there are really two impacts, and you can -- if you look at, I believe it's 116 in our financial disclosures in the financials, you can see we've had two different impacts. One was the impact in Brazil, which was negative, and the impact in Canada, which was positive. I’ll explain both. The negative adjustment in Brazil was related to the revaluation of the Glencore obligation. So the amount of money that we're paying in a few days was 64.4 million, actually gets revalued in the Brazilian accounts and that gives rise to a loss if Brazilian real is deteriorating. Conversely, on the Canadian side, our U.S. dollar investments increase proportionately with the strengthening of the U.S. dollar. So the net of the two was still a loss but that impact in Brazil is not going to go away as we pay down this obligation to Glencore in a couple of days. And you shouldn't see such large FX variances but they're really booked variances as we revalue those dates.

On the balance sheet you had CAD206 million of cash. Of the 64.4 million you’re paying out to Glencore are in U.S. dollars or Canadian dollars?

So that's U.S. So what happens is we have a 64.4 million owing to them. They owe us from April sales of US$7 million. So that's a normal receivable to the company. So the net is 57 million.

So US$57 million, so roughly speaking, I just multiply it by 1.4. So the cash position of 206 million be reduced by the cash payout. And then...

So after the Glencore payment, you'd be left with about US$82 million -- $83 million, so I mean if you deduct it till the date of 25 million, it leaves you with about $58 million net U.S. cash after the payments.

Based upon your committed sales and current price levels and your cost of production, I assume you would expect to generate cash this year?

Actually we're going to be flat because of the impact of building the inventory over that two month period, that May, June period. So for the remaining period of sort of eight months, May through December, we’re going to be flat to slightly negatives. So we're going to be ranging in this 50 million on a U.S. cash range. So 58 million will probably be at high. But we're going to be in and around the mid to low 50 million in cash over the remainder of the year.

And that's after paying back the loans that you took out earlier this year. Correct?

That's net, so yes.

But the 50 million would be after allowing for the repayment of those loans.

Yes. So it’s net, so it's cash, the [24 million].

The next question comes from Jim Young from West Family Investments. Please go ahead.

Just to clarify the outlook for the cash flow from May to December, where you said you'd be basically flat to a little bit negative. What price assumption are you using for the posted price of V2O5 for that assumption, please?

Hi, Jim. Yes, we went through 6.45, 6.45, it was our forecast on that.

So 6.45 you're basically assuming that V2O5 price will modestly decline between through the course of the end of the year on average.

We just took the April average really, and just extrapolated that over the remainder. I think we're actually slightly more positive but for forecasting purposes we just did that.

Okay. Secondly, you'd mentioned that the closure in South Africa due to COVID, it had a positive impact I guess on the overall dynamics in the vanadium industry, I guess about 10% of the industry. But could you just share with us, what are you hearing out of Russia? Because as I watched the Johns Hopkins COVID numbers, Russia is now the second largest country with the known COVID cases. And so given the situation with EVRAZ and alike, any color that you can provide us on the status of production and any other disruptions that you're hearing about in Russia or can you...?

Sure. Yes, so, the closure of the mining operations in South Africa definitely had an impact and raised a lot of concerns in Europe on the availability of V205, South Africa produces about 10% of the global vanadium market. If you consider actually China consuming more or less 60% and producing 60% of the overall market, the effect of South Africa outside of China is actually much greater than that. It's more than 20% of the supply outside of China. The mine in South Africa seem to be reopening gradually in May. So, I think that situation will get back to a more normal situation by the end of this month. In Russia, we have not any stoppage of the operation and I think mining and industrial industries are very strategic for the country. So, so far, they are continuing to operate. But I think we also share your concern in the sense that Russia's production is almost double the one from South Africa and it represents the vast majority of the vanadium produced outside of China. So, any impact in Russia will have a huge impact on vanadium market. But, so far we don't know of any disruption of production in Russia for vanadium producers.

Okay. And you kind of broke up a little bit there, Paul. Are you saying effectively that Russia and -- South Africa is about 10% of the industry supply and Russia is like 20%?

Yes. Roughly, yes.

Okay, good. And secondly, the last question I have is, regarding the Chinese imports. I believe Paul, you had said that the China had some -- been a net importer in the month of March. And as I recall that China historically has been a net supplier to the global industry and the last time that China imported products into the country on a net basis that the prices had a fairly positive impact on the prices going forward. So, can you just give us a sense as to what is -- when will the April numbers be released and any other context you can give us regarding the state of the Chinese market overall and the impact on the global vanadium market would be helpful? Thank you.

Yes Jim. I think, it's definitely very positive news that China wasn't there to book V205 in March. The COVID-19 situation, I think been dealt with earlier than in the rest of the world in China, and we're seeing very good steel demand and there’s been consumption in China at the moment. So yes, it can only be very positive for the markets. There are most stringent application of the rebar in China currently, which definitely would help push vanadium industry rights, in this new industry. You might know that ferrovanadium prices are trading currently at a significant premium to vanadium in China. So that's also creates a positive momentum for vanadium consumption and prices. So overall, I agree with you. It's a very good sign if China by far the largest consumer of vanadium is importing V205 in March. And regarding vanadium numbers, we will probably know in the next week or two.

Okay. The premium business ferrovanadium prices really in China, can you give us a sense as to what the relative premium that they're trading at today?

Yes, it's approximately 25% to 30%.

Thank you. There are no further questions. I will now turn it over for closing comments.

Thank you, operator and thanks to everyone for joining us today. As we noted earlier, Largo's Q1 2020 results press release, financial statements and MD&A can be found within the Investor Relations section of our website at largo.resources.com. That concludes our call. Thanks, everyone.

Ladies and gentlemen, this concludes the conference call for today. We thank you for participating and we ask that you please disconnect your lines at this time. Enjoy the rest of your day.