Mativ Holdings, Inc. (MATV) Q4 2018 Earnings Report, Transcript and Summary

Good day and welcome to the Neenah Fourth Quarter and Full Year Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note today’s event is being recorded. I would now like to turn the conference over to Bill McCarthy, Vice President, Investor Relations. Please go ahead, sir.

Thank you. On the call with me today are John O’Donnell, Chief Executive Officer and Bonnie Lind, Chief Financial Officer. As you may have noticed, we’ve had to change the time of our earnings call this quarter, but we do expect to return to morning calls for the remainder for the year. As usual, after our prepared remarks, covering financial results and progress against key initiatives, we will open up the call for questions. We released earnings this morning and reported quarterly revenues of 241 million, down 1% from the prior year and earnings per share of $0.76, which compared to $1.10 in the fourth quarter of 2017. A key event in the quarter was the sale of our nonstrategic facility in Brattleboro, Vermont on December 31. This plant was previously expected to be closed and earnings in the quarter were positively impacted by a reduction in the impairment loss for the facility based on terms of the sale. Excluding this and other items in both years, adjusted fourth quarter earnings per share were $0.53 and compared to $1.06 in the prior year. Further detail on adjusting items along with the reconciliation to comparable GAAP figures can be found in our press release. I’ll also note that our comments today will include forward-looking statements and that actual results could differ from these statements due to uncertainties and risks outlined in our website and in our SEC filings. With that, I'd like to turn things over to John. John O’Donnell: Thank you and good afternoon, everyone. Bonnie will cover the fourth quarter financials in detail, but I'll just say that clearly it was a challenging one. In Q4, we felt much weaker demand, driven by global economic uncertainties and our customers desire to manage down their inventories. Even more significant was the unrelenting increase in input costs. In fact, in the fourth quarter, pulp costs were up $11 million, an amount larger than the full year impact from higher costs in 12 of the past 14 years. Our teams continue to take actions to address this unprecedented arise in costs with significant price initiatives, including recent increases in all business units and a heightened focus on cost control and asset efficiency. Looking at the full year, we grew our top line 6% and topped a $1 billion in sales for the first time. Growth was led by technical products, which was up 13%. Filtration revenues increased 6%, supported by increased utilization of our investment in US capacity. Sales in the year from the Appleton facility were 15 million and on track to more than double, as we progress through 2019 with most of this growth coming from grades already qualified by customers. Though costs in 2018 were disappointing, magnified by lower yields on smaller runs, operational efficiencies have been improving, as our volumes and run sizes increase. Other technical product sales in 2018 were up almost 20%, largely driven by growth in digital transfer products with the Coldenhove acquisition. Revenues and synergies from this acquisition were well ahead of original expectations and provide a solid platform for growth as we move forward. In addition, we grew in specialty categories such as security, synthetic label and medical packaging, which have to offset a 1% decline in backing, our most economically sensitive category. Turning to fine paper and packaging, sales were down 2% for the year. Commercial print remains subject to secular pressures in the market. As you might expect, these pressures accelerate when peak pulp price and commensurate’ higher selling prices magnify downgrading to lower quality competitive offerings from integrated producers. Our teams continue to reinforce the quality and differentiated nature of our high end print brands with customers, while also driving growth in targeted areas like premium packaging. When we spoke after Q3, we were well on our way to our 7th year of double digit growth in premium packaging. While weak demand in the fourth quarter caused us to end the year shy of our target, we remain steadfast about the long term growth potential of this market and we still expect to grow our annual sales more than 10% for the foreseeable future. In 2018, bottom line performance was undoubtedly the largest challenge. The biggest hurdle was unprecedented run up of our pulp costs, which were more than $33 million in the year, about 10% more than we expected in our November call. Our teams implemented a number of pricing and other initiatives that successfully offset two-thirds of the increase, in line with what we foreshadowed on the last call, given the added increases in the fourth quarter. As previously communicated, cost increases are recovered more quickly in fine paper, given the list price nature of the pricing structure. Technical products input recovery takes a little longer, as they have a portion of products on adjusters with quarterly lags and filtration customers with annual contracts that are largely negotiated early in the year on a customer by customer basis. We also had other cost challenges and magnified by lower volumes in the second half of the year. In addition to the previously mentioned US filtration costs, rates were much higher in 2018 and our manufacturing performance was subpar. Operational inefficiencies were compound by softening demand and incremental downtime taken in the third and fourth quarters to manage inventories. While we can't control global economic conditions, we can carefully manage our costs and ensure our footprint is in sync with demand. One example is the divesture of our Vermont facility, which proved to be extremely beneficial, not only for its employees, but by helping to balance our capacity and provide a more focused and profitable fine paper and packaging asset base. After announcing plans in October to close the facility, we were approached by a company on the West Coast that plans to use the mill’s capability to satisfy the needs of a non-competing commodity market. The sale, instead of a closure, was a very positive outcome for all parties and I appreciate the efforts of the Neenah team, the workforce in Brattleboro and the buyer to complete the transaction by our year-end deadline. So to wrap up, while 2018 had its challenges and ended with some market uncertainty, we had a number of activities we completed that will benefit us in the future. I'll talk more about our outlook later in the call, but will now turn things over to Bonnie to cover financial results for the fourth quarter in more detail.

Thank you. Hello, everyone. We noted at the start of the call that there were adjusting items in the quarter with the two largest being a reduction to the Brattleboro impairment loss and a favorable adjustment related to the Coldenhove acquisition. In total, a pretext net benefit of 4.1 million in 2018 was excluded from adjusted earnings and this compared to added costs of 1 million in 2017 that were excluded. Today, I'll focus just on adjusted results and start with technical products. Sales of 130 million were up 3% in the quarter. Results benefited from a higher value mix of products sold with growth in digital transfer, security and transportation filtration grades and from higher selling prices. Volume was flat overall as growth in transportation filtration and in certain specialty grades offset lower sales in backings and other industrial products. Backings were challenged by slowing markets as well as integrated competitors during this period of extremely high pulp prices. Sales of technical products were also 2 million lower due to a weaker euro and on a constant currency basis, sales grew 4%. Technical products’ adjusted operating income of 6.1 million was down 5 million from a year ago. Pulp cost increases of 5 million were the highest of the year and results were also impacted by 3 million of higher manufacturing costs, largely due to fixed costs under absorption. As a reminder, we take our largest annual filtration maintenance down in October. This year, the plan down was slightly longer to complete an environmental compliance project and we took added downtime to match year end customer demand. These added costs were only partly offset by benefits in the quarter from higher selling prices and the more profitable mix. Turning next to fine paper and packaging, revenues of 106 million were down 5%. This was primarily due to 4% lower volumes, as growth in consumer sales was more than offset by decline in commercial print grade and weaker performance in packaging. As John noted, our highest value grades are pressured when pulp prices are high and lower price papers from integrated competitors become more attractive. Revenues also reflected higher selling prices, including a price increase implemented in the fourth quarter, so these higher prices were largely offset by a lower value mix in the quarter. Adjusted operating income of 11 million was down 3 million from 14 million last year. In addition to mix, income fell due to 6 million of higher input costs that were only partially offset by benefits from the higher selling prices and improved manufacturing efficiencies. Before turning to corporate items, I'd like to review segment reporting following the Brattleboro mill sale. In 2018, sales from this facility were about $30 million. So in 2019, our consolidated revenues will be reduced by this amount. 24 million of the sales change will come out of fine paper and packaging and the remaining 6 million out of other. As the other segment has now become immaterial, we will eliminate it and reclass 16 million of its remaining sales into technical products. While the sale reduced revenues, profit will increase as we eliminated its losses and reduced excess fine paper capacity. This profit improvement is estimated 5 million annually. However, in 2019, the year-on-year impact will be less since we were able to recognize over $1 million of benefit in the second half of 2018 from lower depreciation expense. Moving on to consolidated results, SG&A expense was 20.3 million, down from 24.9 million in 2017. The decrease was largely due to reduction in incentive recalls as well as lower overall spending. Adjusted unallocated corporate SG&A of 3.1 million was down from 4.5 million in the prior year for similar reasons. Both SG&A and unallocated costs were well below our respective quarterly spending guidance of 26 million for SG&A and 5 million for unallocated corporate costs. We do expect to be back in line with these levels in 2019. Quarterly interest expense was $3.2 million in both periods. Lower debt levels in 2018 were offset by slightly higher borrowing rates, as rates tailed off at the end of 2017 and they've been rising in the second half of 2018. We continue to expect our consolidated tax rate to be approximately 22%. In the fourth quarter of 2018, the rate was 12% and benefited from a change in Dutch tax law that will reduce rates from 25% to 20.5% by 2022. This change required us to re-measure deferred tax liabilities at Neenah Coldenhove and resulted in nearly $700000 of lower tax expense, an amount excluded from adjusted earnings. In 2017, our large negative tax rate resulted from actions taken to accelerate deductions and re-measure US deferred liabilities following passage of the Tax Cut and Jobs Act. Our cash tax rate is expected to be in mid-teens for the next few years, as we consume prior period R&D credits. This rate is higher than previous guidance as our projected pretax income and mix between jurisdictions shifted with the sale of Brattleboro and other factors, however, while the rate is higher, the amount of R&D credits didn't change. So it will just last a bit longer. After these credits are fully consumed, our cash tax rate will start to converge with our booked tax rate. As mentioned on our last call, we accelerated about 6 million of planned 2019 pension contributions into the third quarter to generate incremental tax savings and made no contributions in the fourth quarter. Consequently, cash spending in the fourth quarter was about 7 million from the prior year. For the full year, total post-employment benefit plan outlays were 23 million. In 2019, cash payments will drop down to around 16 million and our pension expense will increase by 2 million. Cash payments in 2019 are expected to feed expense by 3 million. Total cash generated from operations in the quarter was a really strong 29 million, over 10 million more than prior year. Our reduced investment in working capital as we manage our inventories as well as the change in timing of pension contributions, more than offset the lower operating earnings. Capital spending of 10 million was down from 15 million in the fourth quarter of 2017 and full year spending of 38 million also declined 5 million. Spending in both years was right around the middle of our targeted spending range of 3% to 5% of net sales. In 2019, we expect to remain in this range with total spending below 40 million, of which sustaining capital is only 15 million. The remaining 60% of the spending is targeted for projects that will deliver attractive financial returns. And moving onto our balance sheet, debt declined more than 10 million in the quarter and cash increased by almost 2 million, with year-end debt of 239 million, down from 255 million at the start of the year, our balance sheet is strong and our debt to EBITDA ratio remains under 2 times. That is comprised of 175 million US bonds due in 2021 and the remainder in short term borrowings, primarily against our revolving credit facility. I'm pleased to note that during the fourth quarter, we renegotiated this global revolving credit facility. The total aggregate commitment was increased from 200 million to 225 million and the term was extended through 2023. In addition, we reduced the interest rate spread on borrowings by 25 basis points and amended terms to provide more flexibility. As of year end, we had just under 58 million drawn against this facility at an average interest rate for the quarter of 3% and had over 150 million of additional capacity readily available. While faced with some large headwinds in 2018, we remain financially strong with a conservative balance sheet and businesses that continue to generate substantial cash flows. I believe the recent favorable changes we were able to make to what revolver reflect the credit markets confidence in the future of Neenah. With that, I'll turn it back to you John to discuss our 2019 outlook. John O’Donnell: Thank you, Bonnie. I'd like to start with a couple of big picture comments if I could. First, due to announced pricing activities, moderating input costs and our significant cost reduction focus, I certainly expect profits to increase meaningfully from where we ended the second half of 2018. What will be different in 2019 however is that the year-on-year comparison and distribution of profits will vary from what's been typical for us. Normally, we'd expect the majority of profits to occur in the first half of the year and in 2018, this represented two-thirds of the total year. In 2019, this is likely to be more balanced for reasons I'll talk about next. Consequently, year on year comparisons will undoubtedly be more challenging early in the year and look much better in the second half. Next, I’ll cover expected impacts from key external factors and then wrap up with actions and initiatives underway. I mentioned in early November that we were starting to sense more uncertainty in global demand. This ultimately contributed to lower shipments and inventory de-stocking by customers in the fourth quarter. Economies in Western Europe and Asia have slowed and while most of our fine paper businesses in North America, approximately 60% of technical products and 20% of the packaging sales are overseas. So as we enter 2019, volumes across our businesses are likely to be lighter early in the year, especially compared to a very strong first quarter in 2018. We expect our top line to grow for the full year in 2019, as increases in our businesses more than offset a 3% decline from the divestiture of Brattleboro. Our largest currency exposure is the euro. Forecasts reflect a weaker euro in 2019 and down significantly in the first half. A weaker euro is unfavorable for us and currently, the currency is 115 compared with 123 in the first quarter of last year. We've sized sensitivities in our press release and this $0.10 differential would reduce quarterly sales by around $5 million and EBIT by $1 million or $0.05 a share. The biggest issue for most companies in our industry has been the steep and prolonged rise in pulp and input costs. For us, this represented a $33 million hurricane force headwind in 2018, the largest in our history. While I'm not in the business of forecasting pulp prices, after 11 consecutive months of increases, it does appear prices have peaked and we're finally seeing them start to decline. Since about half of our pulp contracts have pricing on a quarterly lag, we will begin to see the benefit of these lower prices starting in the second quarter. While pulp costs are declining, they're still projected to be higher in the full year 2019 than they were in 2018. We’re currently estimating 10 million to 15 million of higher costs with most of the negative impact occurring in the first half of the year. Our teams are responding to these record costs through significant pricing activities as I mentioned earlier. We successfully overcame two-thirds of higher input costs in 2018 and with these past actions and recent announcement, we expect to offset incremental costs in 2019 as well as recover what we didn't overcome last year. This will help contribute to improved margins, especially in the back half of the year. We're continuing to focus on growing in targeted categories like filtration and premium packaging and digital transfer as we work to increase the overall organic growth rate of Neenah and we'll look to complement those efforts with value adding M&A. Along with these top line activities, we remain extremely focused on cost and asset optimization across all businesses and in all areas of spending. I talked earlier about a clear example in the recent sale of our Vermont facility. We also continue managing cost and capacity with demand variability and have numerous cost savings projects that we execute each year. We're prioritizing those efforts that generate the greatest cost savings, both capital and non-capital and as Bonnie mentioned, about 60% of our capital in 2019 is directed to projects that will generate attractive financial savings. In closing, while 2018 ended on a difficult note, our business strategies and capital deployment priorities remain sound and focused on Neenah’s long term success. Our financial strength supports ongoing investment in our businesses, as we work with customers to meet their evolving needs and allows us to provide meaningful direct cash returns to shareholders. Most importantly, I feel confident that we've got the people and the capabilities in place to execute these strategies and drive that our shareholders expect. I look forward to sharing our progress with you in the coming year and thank you for your time today. I’ll now open the call for questions.

[Operator Instructions] Today's first question comes from Jon Tanwanteng of CJS Securities.

What are your customers saying to you in Q1? Are there inventories still higher, are they still saying any pull through of their product? John O’Donnell: Yeah. As I’ve tried to foreshadow on the call there, I would say that Q4, which is a normal end of the year, inventory reduction was probably magnified because of the end of the year. But I would also say, there's still a lot of caution that remains, especially in our markets overseas and I talked about our backings category on the call being down 1% this year and there's a category that's grown average price 7% for two years prior and it's more of a GDP type of a category. So when they're feeling really good about the business, our saturated backings business does fairly well. When they're more cautious, we really see it in that category first.

And then John, I think you mentioned you could recover input pricing, given the forecast for the rest of the year. Can you also recover headwinds from currency, is that in the plan or is that a little bit harder to do? John O’Donnell: Well, so how much can I stack on the shoulders here, $45 million to $50 million of input costs over two years for this team is pretty impressive recovery from a selling price and as you can appreciate, we're trying to balance the pressure that puts on very top end brands, if you will. As a reminder, we play in that high end niche and by playing in that high end niche, when our costs go up to their highest levels as they are now and we're competing with commodity players that are one-third, the costs, it really puts a lot of pressure on volume and that's what we're feeling. So, our intention is to -- I mean, we've had some tailwinds from currency in the past and we've got some headwinds now and I don't think we've been disadvantaged one way or the other in that sense. I think I'm going to be reporting those to you, doing everything we can through cost reduction efforts, but at the same time, that's really something I think is not in the control of the organization and probably second to recovery in those prices, there's no larger impact to our margin restoration than capturing the prices that we've announced out there.

And then finally, Bonnie, you mentioned you increased your revolver limit recently, do you anticipate using that additional firepower soon and what will your priorities be if you were to use it?

Our priorities are always the same, right, organic capital spending is our highest priorities and acquisition, returning cash for our shareholders, de-levering if our debt levels are high, so what we really like to have is a lot of dry powder, so that if opportunities present themselves, we can finance them with our lowest cost of available capital. John O’Donnell: And we would love for you to recognize the fact that, if in fact we are having more challenging economic times, we're in a great position with our balance sheet to continue to execute our strategies regardless of the capital allocation.

Got it. And maybe just a follow up to that, are you seeing more opportunity if everyone in your peer group is facing the same pressure. John O’Donnell: You're talking about M&A and I would tell you that I think there's a lot of money out there and I would love to believe that the multiples are coming down. But I'm seeing little evidence of that. There's a lot of activity and we're still actively participating. If I have a little button that I wear, it’s friends don't let friends overpay for companies. And so we're very diligent on that, as we look at different companies, but I haven't seen a meaningful change that would suggest that we have more opportunity than we've had in the past.

And our next question today comes from Steve Chercover of Davidson.

So I guess kind of a follow on to that first question, I was hoping you could help us kind of benchmark how much costs have yet to be recovered. I know, you really had a chance to get any of the 11 million in pulp inflation that you saw in Q4, but that plus what was paying on from the earlier quarters, $15 million or $20 million of recovery. John O’Donnell: No. I said two-thirds of the 33, so really about 21, we have been able to capture. So you're right, shorthand, if you take the 21 plus the 11 in the quarter, that's pretty close to what the full year impact was. And our 10 to 15 that I said for 2019, it's a forecast and you'll be the first one to make fun of me for my forecasting skills. So, we definitely enjoy -- we definitely have 11 million that we have experience that we need to pick up. We expect 10 to 15 especially earlier in the year. And we've got a lot of the pricing already announced, so filtration pricing is underway, it's, as we said, take place at beginning of the year, more annual contract and fine paper announced three increases, which I was unheard of last year. Two of those three will definitely roll into this year. One of them was fairly early in the year, almost experienced a full year breakthrough. So our perspective is we have probably the most of the pricing already announced that's moving into this year for the fiber that we anticipate.

And with respect to fine paper, the announcements on commodity freesheet that have just rolled through after pretty substantial closure, does that impact you at all or should we think that you're basically in a different club than the commodity guys? John O’Donnell: Yeah. I don't and I’d always love to be in the special club, but what I will tell you and where it's going to be more challenging is that most of the announcements on commodities were on their copy sheets and a lot of the more real commodity products, what touches us is opaque and opaques, they're very, very high end which many of the players took advantage of the time where we're in the highest cost period and didn't announce increases in opaque and that caused us, we've always seen trading down as print technologies get better. To that end and when the price disparity is so large and right now, it's between our sheets of work, we’re almost 3 times higher than some opaque sheets which might be good enough for that level of a pricing differential. So I think that puts a little extra pressure on us during those time periods. Again, they didn't go up in products that likely would be traded with ours.

And switching gears to filtration, if I'm not mistaken, the Appleton machine has been running now for two full years. So is that accurate and how's that going versus the plan? John O’Donnell: Yeah. Well, you're right. It has been two years, watching the kids grow up, time flies. When we said last year, we said $15 million to $20 million in top line and we did achieve that 15 million to 20 million and I think I was fairly overt in my disappointment in some of the cost, whether it's been in the run sides and the yields and as we've staffed up and candidly and I've I know I've mentioned this in the past, a little slower qualification that I would like as we're moving through -- we've got a lot of reason for optimism and we anticipate that the revenue is going to actually double in this next year, at least double from that piece of it and we will see a corresponding improvement in our results as we're moving forward. So, I think that's a pretty good summary.

Sure. And so there's still qualification yet to be received? John O’Donnell: Yeah. So when we look at next year, we're going to move from $15 million to basically $30 million in next year and our expectations are, we still have a lot of growth for a couple of years, three years after that, if you will. As we move into next year, if you said right now, at any point in time, I have got the majority, probably 3 quarters of next year's volume already qualified, okay, and that's the best I’ve looked rolling into the beginning of the year and of course everything in the first quarter is pretty much qualified to that end. So now, what we're going to see is not the product qualification, but the ramp up in the size of the orders and so it's more of a size than it is from the newness and that's where we expect to gain our efficiencies and improve our overall returns. There are still qualifications going whether it's for new projects and that's true of either of our filtration facilities.

And our next question comes from Dan Jacome of Sidoti & Company.

Just wanted to stay on the topic of Appleton here for the moment. I think on the last call, you provided an interesting metric about what percent of total volume the Appleton was representing. But then there was an outsized contribution to your cost, do you have at handy by any chance what percent of volume versus what percent of your cost, so just want to understand what sort of progress you're making on the underlying margin structure of this new capacity? John O’Donnell: I don't have that and in fact it's not coming to memory, it has more to do with my age than it does with the fact. Good news. I know there's a transcript out there that you could reference that –

I think it was the one where what percent of your cost was representative of the revenue versus the trial cost.

Yes. It was on the 3Q call.

Dan, do you remember what our member was?

Yeah. 3Q, you said 5% of volume but 30% of the cost, so I was just trying to understand what happened in the fourth quarter, relative to that metric. John O’Donnell: I should have looked back on my notes, that was – I’m trying to look at that implementation and try to give it as much color as I can, and that’s not something we normally track. I would suppose that it was very similar, as we rolled into the fourth quarter, fourth quarter wasn't an enabling quarter just by the diminished volumes that we would normally see in a fourth quarter, even though we have another quarter of experience. Now, you’ve heightened that metric, it's going to improve all throughout of 2019, maybe that's something that, if it seems more relevant, I’ll pull it forward. I apologize, I don't have off the top of my head.

Right. No. I totally understand. So the ramp up is the next critical phase in this capacity lifecycle. Just trying to, I guess, are you still confident that the incremental revenue once the machines are fully integrated and you've attained attractive size orders, incremental revenue can be 80 million, because I think you said you did 15 this year, so if you just annualize that, that's well below 80 million. I’m just trying to understand that. John O’Donnell: Yeah. I think we’re in that 70 million to 80 million range from that piece of it. So yes, again, the bigger challenge is, early on, you're qualifying more low end value grades that are easier to produce and then as we move up the continuum, the higher value grades then move in. Our expectation is that the margins for the businesses, for the product that we sell out of Appleton will be like the margins that we sell out of [indiscernible] global businesses for like grades.

I wanted to turn the questions over now to other Vermont. Your nicely rationalizing manufacturing capacity, I was wondering, in your footprint, is there any other potential low hanging fruit, other capacity or regions that you, in the fine paper segment, that you might be looking at a little bit more closely because it sounds like the shuttering of this capacity will provide a very nice earnings tailwind in the coming year? John O’Donnell: Yeah. And just to highlight, we’re very pleased we didn't have to shutter it, we’re very happy that the employees, they are still, we’re able to retain and we repurposed it through another owner, which I think was a good outcome for all of us. You’re right. Our first focus is really keeping the assets running forward, those are timings as we go through the year in seasonality. When we look across our fine paper business, we have, up to this big spread from input costs, have done a pretty good job of offsetting the secular decline with a growing package of category. I think it was really pressured more this year, even with the decline that we experienced in the quarter and 2% for the full year, that load and asset and it's complete, it will create a little more complexity for us and then we will have to be creative in how we manage capacity at the lowest possible cost, but there's no outstanding or eminent facility closure or machine that can be removed today, which is good. That means I've got enough volume to keep them all running.

Sorry again for my poor choice of words earlier, but that brings to my last question just on premium packaging, can you just refresh our memory again on what you're targeting the organic growth rate of that business line? John O’Donnell: Yeah. So, packaging -- premium packaging, we really view the growth rate of it to be in the low single digits. We've demonstrated for 6 years prior that a double digit growth rate and we were on that track through third quarter and ended up in the high single digits for premium packaging. Our expectation is that we have a double digit growth rate on an annual basis, it's more lumpy in its order pattern, so you lose a big piece of business or gain a big piece of business again, it can have a spike that's still, our current expectation for premium packaging, our belief is that it will continue to focus on the markets in the paper business post recovery of the input costs and not have to put so much pressure on just that premium packaging category to recover all the volume.

And ladies and gentlemen, this concludes the question-and-answer session. I’d like to turn the conference back over to Mr. McCarthy for any final remarks.

Okay. I'd like to thank everyone for your interest today and as always, please feel free reach to out to me if you have any further questions. Thank you.

And thank you, sir. Today’s conference has now concluded. We thank you all for attending today’s presentation. You may now disconnect your lines.