Westlake Corporation (WLK) Q1 2015 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Chemical Corporation's First Quarter 2015 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. After the speakers' remarks, you will be invited to participate in a question-and-answer session. As a reminder, ladies and gentlemen, this conference call is being recorded, today, May 4, 2015. I would now like to turn the call over to today's host, Dave Hansen, Westlake Chemical Corporation's Senior Vice President of Administration. Sir, you may begin. David R. Hansen - Senior Vice President, Administration & Head-Media Relations: Thank you very much. Good morning, everyone, and welcome to the Westlake Chemical Corporation's first quarter 2015 conference call. I am joined today by Albert Chao, our President and CEO; Steve Bender, our Senior Vice President and Chief Financial Officer and other members of our management team. The conference call agenda will begin with Albert who will open with a few comments regarding Westlake's performance in the first quarter of 2015, followed by a current perspective on the industry. Steve will then provide a more detailed look at our financial and operating results. And finally, Albert will add a few concluding comments, and then we'll open the call up for questions. At times, we may refer to ourselves as Westlake Chemical, references to Westlake Partners refer to the Master Limited Partnership, Westlake Chemical Partners LP. References to OpCo refer to Westlake Chemical OpCo LP, whose assets consist of two ethylene production facilities located in Lake Charles, Louisiana, an ethylene production facility located in Calvert City, Kentucky, and an ethylene pipeline that runs from Mont Belvieu, Texas, to the Longview, Texas chemical sites. Today management is going to discuss certain topics that will contain forward-looking information that is based on management's beliefs as well as assumptions made by and information currently available to management. These forward-looking statements suggest predictions or expectations and, thus, are subject to risks or uncertainties. Actual results could differ materially based upon factors including the cyclical nature of the chemical industry; availability, cost and volatility of raw materials, energy and utilities; governmental regulatory actions and political unrest; global economic conditions; industry operating rates; the supply-demand balance for Westlake's products; competitive products and pricing pressures; access to capital markets; technological developments and other risk factors. This morning, Westlake issued a press release with details of our first quarter 2015 financial and operating results. This document is available in the Press Release section of our webpage at westlake.com. A replay of today's call will be available beginning two hours after completion of this call until 11:59 PM Eastern Time on May 11, 2015. The replay may be accessed by dialing the following numbers: domestic callers should dial 1-855-859-2056. International callers may access the replay at 404-537-3406. The access code for both numbers is 24819326. Please note that information reported on this call speaks only as of today, May 4, 2015, and therefore you are advised that time-sensitive information may no longer be accurate as of the time of any replay. I would finally advise you that this conference call is being broadcast live through an Internet webcast system that can be accessed at our webpage at westlake.com. Now, I'd like to turn the call over to Albert Chao. Albert? Albert Chao - President, Chief Executive Officer & Director: Thank you, Dave. Good morning, ladies and gentlemen, and thank you for joining us on our earnings call to discuss our first quarter results. In this morning's press release, we reported quarterly net income of $146 million or $1.10 per diluted share on sales of $1.1 billion for the first quarter of 2015. Our first quarter earnings reflect a sharply lower crude oil price environment in which Brent crude oil prices declined 55% from their peak of approximately $112 per barrel in June of 2014 to lows of approximately $50 a barrel in January of this year. Most global petrochemical producers utilize naphtha feedstock, which is produced from oil and priced of Brent crude. Naphtha-based producers are seeing lower manufacturing costs as their feedstock costs have declined in response to these lower crude oil prices and as a result global sales prices for the end products including polyethylene and PVC have lowered also. North American producers who mainly utilize natural gas derived feedstocks, which are globally cost competitive have had to lower selling prices for these end products in response to lower global sales prices. Reflecting industry conditions beginning in the fourth quarter and continuing into the first quarter of 2015, sales prices for our products have declined from the level seen in 2014 as crude oil prices declined and integrated Olefins margins moderated, partially offset by the decrease in ethane feedstock costs. In spite of the dropping oil prices, our business continued to perform well as profitability and the cash generation were both strong benefiting from the improvement of our global Vinyls business and our capacity integration. Our Olefins segment benefited from record ethylene production, improving global demand for end product and solid integrated margins. The results from our Vinyls segment reflects the benefit of our recent investments to extend our ethylene and chlor-alkali capacity and our feedstock conversion from propane to ethane feedstock as well as from the contributions from our Vinnolit and North American Specialty Products acquisitions. I would now like to turn our call over to Steve to provide more detail on the financial and operating results for the first quarter of 2015. Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: Thank you, Albert, and good morning, everyone. I will begin with our consolidated financial results followed by a detailed review of our Olefins and Vinyls segment results. In this morning's press release, Westlake reported first quarter 2015 net income of $146 million or $1.10 per diluted share compared to net income of $158 million or $1.18 per diluted share reported in first quarter 2014. First quarter 2014 sales were $1.1 billion, an increase of $76 million compared to the same period of 2014 mainly due to sales contributed by the Vinnolit, our specialty PVC business, which we acquired in July 2014. This increase was partially offset by lower sales prices for major products, which were result of lower crude oil prices. Income from operations was $229 million for the first quarter of 2015 as compared to $248 million for the first quarter of 2014. Income from operations in the first quarter of 2015 benefited from improved Vinyls integrated product margins mainly as a result of cost-advantaged ethane feedstock currently utilized at the Calvert City ethylene plant, following the completion of the feedstock conversion in ethylene expansion project, improved production rates at the Geismar chlor-alkali plant and the contribution from Vinnolit. However this benefit was more than offset by the decrease in integrated Olefins product margins as a result of lower Olefins sales price. In addition, results from the first quarter of 2015 were negatively impacted by approximately $9 million pre-tax or $0.05 per share, due the cost associated with planned maintenance turnaround at our Geismar production facility. First quarter 2015 results were also negatively impacted by approximately $19 million or $0.09 per share due to the utilization of the first-in, first-out or FIFO inventory accounting method as compared to utilizing the last-in, last-out or LIFO method used by some companies in the industry, primarily due to lower energy and feedstock cost. Please bear in mind that these calculations are only estimates and have not been audited. The FIFO impact was primarily in our Olefins segment as higher cost inventory was produced in the fourth quarter of 2014 flowing through our cost of sales in the first quarter. Westlake's net sales for the first quarter 2015 were $1.1 billion decreasing $32 million from net sales in the fourth quarter 2014, mainly due to lower sales prices for all of our major products reflecting lower oil price. However, this was partially offset by higher sales volumes for PVC, plastic and styrene. Income from operations in the first quarter 2015 of $229 million, decreased by $73 million from the $302 million reported in the fourth quarter, which was mainly attributable to lower integrated margins resulting from lower sales prices for all of our major products. Now let's move on to review the performance of our two segments starting with our Olefins segment. The Olefins segment reported income from operations of $191 million on sales of $583 million during the first quarter of 2015 compared to operating income of $272 million on sales of $723 million for the first quarter 2014. Olefins segment sales and operating income were lower mainly due to lower sales prices in the first quarter 2015 and lower polyethylene sales volumes as compared to the prior year period as polyethylene sales prices declined and customers closely managed their inventory levels. First quarter Olefins segment operating income of $191 million declined by $53 million over fourth quarter 2014, while sales of $583 million decreased by $16 million over the same period. These results were primarily due to lower sales prices as product prices declined along with the reduction of oil prices. In the second quarter, we will see announcements for polyethylene price increases of $0.05 per pound for May based on continued global demand and restocking efforts by our customers. Moving to the Vinyls segment. The Vinyls segment reported operating income of $47 million in the first quarter of 2015 and sales of $520 million as compared to an operating loss of $21 million on sales of $305 million in the first quarter of 2014. The increase in sales was driven primarily by higher sales volumes for caustic and PVC including additional PVC and cost of sales from our acquisition of Vinnolit. The improvement in operating income was primarily driven by higher Vinyls integrated product margins in the first quarter of 2015 that our result of lower cost ethane feedstock that we now utilize at the Calvert City ethylene plant following the completion of the feedstock conversion project and ethylene expansion project. In addition, first quarter 2015 operating income benefited from higher caustic soda sales, resulting from improved production rates at our Geismar chlor-alkali plant and the additional PVC and caustic sales contributed by Vinnolit. The first quarter 2014 income from operations was negatively impacted by lost sales and the other costs associated with the maintenance turnaround and project work at our Calvert City facility. The Vinyls segment operating income of $47 million in the first quarter 2015 decreased by $19 million compared to the fourth quarter 2014, while sales of $520 million decreased – with sales of $520 million decreasing by $17 million. Lower sales and operating income was primarily due to lower selling prices for PVC, caustic and building products driven largely by lower ethylene pricing, partially offset by higher PVC and caustic sales volumes as seasonal demand began to improve during the quarter. PVC prices increased by $0.03 per pound in March, an additional $0.03 per pound possible for April. Now, let's turn our attention to the balance sheet in the statement of cash flow. During the first quarter of 2015, we generated $191 million in cash from operating activities. Our liquidity position remains strong with cash balances of $946 million, while total debt was unchanged at $764 million at the end of March. For your planning purposes, we expect to have planned turnarounds in second quarter 2015 in Longview, Lake Charles in Germany that will have an impact of approximately $32 million pre-tax. Our 2015 capital spending forecast, which includes significant long lead items for 2016 Petro 1 ethylene expansion remains in the range of $450 million and it will be funded from our cash balance. Subsequent to the end of the first quarter, our master limited partnership, Westlake Chemical Partners, purchased an additional 2.7% interest in OpCo for $135 million, which represented approximately 11 times the multiple on 2015 forecasted OpCo EBITDA. This acquisition was funded by a line of credit extended by an affiliate of Westlake Chemical. Now, I'd like to turn the call back over to Albert to make some closing comments. Albert? Albert Chao - President, Chief Executive Officer & Director: Thank you, Steve. We are pleased with our first quarter earnings and our outlook for 2015 remains positive as we continue to benefit from strong U.S. industry conditions of low-cost feedstock and continued solid global demand for our products. The investments that we have made over the past several years to expand our ethylene capacity by 420 million pounds in Lake Charles and Calvert City to improve our cost position by expanding our access to low cost feedstock at Calvert City and to further extend our Vinyls chain integration by starting up our new chlor-alkali facility in Geismar and by acquiring North American Specialty Products and Vinnolit to expand our market position in specialty PVC pipe and specialty PVC resin have positioned us to increase our earnings potential. We continue to focus on creating value for our shareholders. The recent transaction in which Westlake Chemical Partners acquired an additional 2.7% ownership interest in our ethylene units at 11 times multiple a significant premium over our current trading multiple highlights the value of our OpCo assets. We continue to evaluate opportunities to grow our business and look for ways to use the structure of our MLP to gain access to lower capital cost and to facilitate future growth. We will continue to operate our business with a bottom-line focus while keeping costs in line. The underlying factors that drive our future earnings growth remain in place. Our feedstock prices remain globally competitive and demand for our products should strengthen as global economic growth continues to improve and oil prices remain low. Additionally, we expect our European operations to benefit from lower feedstock costs compared to 2014, and from improving European economic growth. Thank you very much for listening to our earnings call this morning. Now, I'll turn the call back over to Dave Hansen. Dave? David R. Hansen - Senior Vice President, Administration & Head-Media Relations: Thank you, Albert. Ladies and gentlemen, before we begin taking questions, I would like to remind you that a replay of this teleconference will be available starting two hours after we conclude the call. We will provide that number again at the end of the call. Operator, we're now prepared to take questions.

Thank you. And our first question comes from Hassan Ahmed from Alembic Global. Your line is open.

Hey, Steve. Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: Good morning.

Question around the Olefins side of things, obviously, we saw the propane-based ethylene margins expand quite considerably, call it, through the course of Q4 and Q1. So the question really that I have is, that as you take a look at your feedstock flexibility as it sits right now, keeping in mind what propane-based margins have done over, at least the last handful of quarters, are you satisfied with the level of flexibility that you have? Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: Yes, I think so, Hassan, because when you think about the feedstock that we use in ethane, it gives us the capacity capability that we wouldn't have, but we've been using a heavier feedstock by propane. So we are very pleased with the results that we've seen from the feedstock, which – and of course, the expansion from added pounds.

Fair enough. And now switching gears a bit to Westlake Partners, we all know obviously one of your competitors out there is considering MLPing their chlor-alkali assets. If at all there is a positive ruling around that, would those assets be assets you would consider sort of dropping into your MLP, part one? And part two, if you could just generally give us your thought process with regards to further dropdowns within the MLP? Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: Well, certainty we'll watch with interest any action on the MLP front and assets that might qualify and assess what if that might makes sense for us. In terms of the pace of the dropdowns, you saw the one that we announced last week and we continue to be very focused at making sure that we can continue to meet the objectives that we've been very clear on and that is having a distributable cash flow and growth for the LP unit holders on that low double-digit growth rate trajectory that we've been very clear in telegraphing.

Very helpful. Thanks so much.

Thank you. Our next question comes from James Sheehan from SunTrust Robinson Humphrey. Your line is open.

Thanks. Just wondering if you would comment on your building products volumes in the first quarter, how did they do? Albert Chao - President, Chief Executive Officer & Director: Yeah, building products has improved somewhat, but the first quarter, due to the weather conditions, the demand there has not grown as much as we expected.

And how do you think that the second quarter is going to look. Is there going to be a big bounce back from the weaker first quarter? Albert Chao - President, Chief Executive Officer & Director: Yes. We expect the second quarter, the volume to improve.

Thank you. And can you just talk about, what you're seeing in Europe around Vinnolit? You referenced in your summary remarks about European economy is getting stronger. How much do you expect that to benefit your Vinnolit business? Albert Chao - President, Chief Executive Officer & Director: Yes. With the lower euro compared with the dollar, as well as the lower ethylene prices, our European economy is doing better. Europeans PVC demand is doing better. And having price increases as well due to a lower – the increased demand. So we expect the business, general, for this year to be better than the last year in the euro terms.

Your Vinyls volumes were up the 80% this quarter, was that all Vinnolit? Albert Chao - President, Chief Executive Officer & Director: PVC demand compared – I don't know which quarter you are comparing with. But PVC demand in the first quarter sales has been better than last year first quarter as well as better than the fourth quarter. So Vinnolit suddenly played a large part, but I think generally speaking, the Vinyls business has, especially PVC resins has picked up speed.

So in the 80% figure that you list in your press release for the year-over-year change in Vinyls volumes, how much of that would have been legacy Westlake volumes? Albert Chao - President, Chief Executive Officer & Director: Well, Westlake volume would improve somewhat, but I think that the Vinnolit as well as our chlor-alkali plant at Geismar that started up first part of 2014. This year's first quarter performance is much better. So I think, Vinnolit and the new chlor-alkali capacity expansion addition has been the majority of the increase.

Thank you. Albert Chao - President, Chief Executive Officer & Director: You're welcome.

Thank you. And our next question comes from the line of Frank Mitsch from Wells Fargo Securities. Your line is open.

Good morning, gentlemen. Albert Chao - President, Chief Executive Officer & Director: Good morning. Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: Good morning.

Hey, just a follow up on the Vinnolit and you obviously mentioned the euro move making it more competitive. Can you give us a sense as to what's – roughly what percent is typically exported out of the region and where may that be standing here in 2015 given the benefits on currency? Albert Chao - President, Chief Executive Officer & Director: Yes, certainly. Vinnolit exports, I think, on the average less than the European PVC industry because most of its plants are in England, in Germany, and not on the Coast, already do export to the CIS region as well as other regions around Europe so the export may not be overseas to Asia or elsewhere but more the greater Europe area.

And you're seeing that pickup right now, correct? Albert Chao - President, Chief Executive Officer & Director: In general, business has picked up, yes.

All right, terrific. And then, I believe when you were talking about the $0.05 per pound price increase for polyethylene here in May, you're talking about global demand getting better as well as some restock. Can you size for us what you think is going on in terms of restock? And, I guess, by that I mean where my inventory levels be at the consumer level? How sustainable might that shot in the arm in terms of demand be? And heck, while I'm at it, how confident are you in that $0.05 price increase? Albert Chao - President, Chief Executive Officer & Director: Yes. Since November last year until now the U.S. polyethylene industry has dropped approximately $0.16 a pound in prices reflecting lower ethylene and lower crude oil prices. And this is the first price increase in U.S. for the polyethylene industry. And today, U.S. polyethylene prices domestically are lower than around Asia and Europe. So I think that given the restocking as well as the higher prices overseas, I think, the likelihood for price increase is very strong.

Thank you so much. Albert Chao - President, Chief Executive Officer & Director: You're welcome.

Thank you. And our next question comes from Kevin McCarthy from Bank of America. Your line is open.

Yes. Good morning. Albert Chao - President, Chief Executive Officer & Director: Good morning.

With regard to the interest of 2.7% in OpCo that was dropped down for $135 million, can you comment on how that valuation was determined and how we should think about multiples and valuations for future dropdowns in that context? Albert Chao - President, Chief Executive Officer & Director: Yes, Kevin. There is a committee of independent directors at Westlake Partners. They're commonly in the industry called the Conflicts Committee and they negotiate with the Westlake Chemical on that valuation and certainly that's an arm's length negotiation from a value perspective. And so, as you'd imagine, they hire advisors as does Westlake Chemical to derive that ultimate price paid.

So it's really the product of a negotiation rather than any sort of formulaic approach? Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: That's correct. It is – as I say, there is no formulaic approach, as I say it's a product of a negotiation and in both sides use their advisors in that process. But there are – certainly looking at the structure, which we think is a very stable based contract structure for Westlake Partners and we think a very nice structure that provides insulation from the ebbs and flows in the commodity business.

Understood. And then, I guess, two housekeeping questions, Steve. In the second quarter recognizing it's still early in the quarter, would you expect the FIFO accounting impact to shift to a benefit based on what you see today? Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: It's been pretty flat at this stage. Albert Chao - President, Chief Executive Officer & Director: Yeah. Ethane may have dropped a little bit so far, but the second quarter is not over yet. Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: Yeah. It's been pretty flat at this stage. It's hard to make a call for the quarter at this stage because it really, as Albert noted, it hadn't really changed a whole lot over the month of April and first couple of days of May.

Okay. And then last one for me, again, on the housekeeping side, I think you had mentioned a $32 million hit from various plant turnarounds recognizing one of them is in Europe. Could you help us out a bit with how that might split between your two segments? Albert Chao - President, Chief Executive Officer & Director: Yeah. Those that are in Europe are obviously in the Vinyls segment let's call that $8 million to $10 million and the rest is going to be in the Olefins space.

Great. Thank you very much. Albert Chao - President, Chief Executive Officer & Director: You're welcome.

Thank you. And our next question comes from Brian Maguire from Goldman Sachs. Your line is open. Brian P. Maguire - Goldman Sachs & Co.: Hey. Good morning, guys. Albert Chao - President, Chief Executive Officer & Director: Good morning. Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: Good morning. Brian P. Maguire - Goldman Sachs & Co.: Just following up on that last question on the outages, I think last quarter you mentioned you weren't expecting to have any outages this year. So just wondering if this is a strategic or maybe tactical decision to take advantage of some changing market dynamics in the U.S. or Germany or maybe in advance of some expectation of prices going up or are there some operational issues to be aware of or just basically what's driving the timing and size of those outages? Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: No, Brian, what I'm doing is I'm calling out the outages on the Olefins side are polyethylene outages and just because we have a number of the them occurring in the second quarter both in Lake Charles and Longview, I thought, it was worthy of calling them out. Normally, they are spread more evenly throughout the year, and I just thought, given the sensitivity of the people's awareness, I thought, I'd call out the turnaround that's occurring in Europe in Cologne and Knapsack in the second quarter as well for Vinnolit. Brian P. Maguire - Goldman Sachs & Co.: Okay. I got it. And the Geismar impact in the first quarter, give a dollar amount? Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: Yeah. I made reference to that in my prepared remarks – it was $9 million, $0.5 per share. Brian P. Maguire - Goldman Sachs & Co.: Okay. Great. Any impact positive or negative from the differential between Texas and Louisiana ethylene prices for you guys. I know you have most of your production in Louisiana but just curious to see if you think that's a material benefit for you guys? Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: No, no material impact there one way or the other. Brian P. Maguire - Goldman Sachs & Co.: Okay. And just one last one, if I could. Two of your competitors in the caustic soda market announced a transaction earlier in the quarter. Just curious to know if you think that will have any impact for the outlook on caustic pricing or supply/demand and have you seen that market trends so far this year? Thanks. Albert Chao - President, Chief Executive Officer & Director: Yes. I think, IHS is forecasting a $40 for short-term increase in caustic prices for May, and we believe that with the improving economics that the price increase should go through. Brian P. Maguire - Goldman Sachs & Co.: Great. Thanks. Albert Chao - President, Chief Executive Officer & Director: You're welcome.

Thank you. And our next question comes from Don Carson from Susquehanna. Your line is open.

Yes, Albert, just a question on current business trends what you are seeing in April. On polyethylene, did you see a lot of pre-buying in April which would indicate customers think that the $0.05 price increase will go through on May 1? And what are you seeing in PVC? I know that we've had a slow start to the year here. How did April progress? And I think you indicated there is still some uncertainty over that $0.03 April price increase. Albert Chao - President, Chief Executive Officer & Director: Yeah, certainly, Don. I think the polyethylene business is quite strong. As I said earlier, overseas polyethylene prices are at or higher than U.S. prices, (30:55) to catch up. And demand is good as spot price has gone up. So we believe that the May increase should be quite good. As far as PVC, we had $0.03 upon price increase in March. And we expect a portion of the $0.03 upon price increase to get through April. Demand is very strong in the U.S. and overseas. And even though, there is more ethylene coming up, I think the ethylene supply is still not there quite yet. So there is a balance between the strong demand and supply.

And Steve, what impact did the euro have as you translated your Vinnolit earnings back into dollars on? What kind of a drag was that? Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: We actually didn't have a significant adverse impact as a result of it. Obviously, there is a balance sheet impact and the cumulative translation adjustment comes through, but on a P&L perspective, we really haven't seen a significant impact adversely as Albert noted. We continue to look for opportunities to use that lower euro to penetrate other markets.

Okay. And then, finally just a clarification on the Petro 1 turnaround, one of the industry publications has that listed is going down for maintenance outage in October, November, but you're saying now that that's not accurate, that you're not taking it down for that first half expansion and until after the New Year? Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: It's a 2016 timing and we'll give a more clarity of exactly when in 2016 that will occur, but that's correct, it's 2016.

All right. Okay. Thank you. Albert Chao - President, Chief Executive Officer & Director: You're welcome.

Thank you. And our next question comes from Jeff Zekauskas from JPMorgan. Your line is open.

Hi, good morning. Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: Good morning, Jeff. Albert Chao - President, Chief Executive Officer & Director: Good morning.

Hi. Could you reflect upon a little bit on the change year-over-year in SG&A expenses? I think you were roughly $55 million in the first quarter and maybe last year at this time you were $39 million. Is that something that has to do with Vinnolit or management compensation or is there a new level for quarterly SG&A expense? Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: It's – Jeff, thank you for the question, it's largely Vinnolit, that's largely the big driver there.

Okay. And then secondly, Westlake is really very different than the other petrochemical companies in the way that it manages its balance sheet in that at Lyondell and at Dow there are very large share repurchases and there is a higher level of debt to EBITDA, whereas at Westlake you've chosen to manage the balance sheet being net debt free and there's been an avoidance of share repurchase. Can you explain the difference in your strategy versus the other two companies or why this is the best way to manage the cash flow as the balance sheet? Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: Jeff, I guess, I would say, as we continue to look for and we've gone through a period of very significant capital spending and the acquisitions we've made. Several acquisitions over the last several years have also launched the master limited partnership mid-year last year and continue to look for opportunities to deploy capital in an efficient way. But certainly, we do believe in continuing to deploy that in a way that is value additive to the shareholders. And if we can't find a way to deploy it effectively into the business, we can certainly continue to return it as we have to shareholders. And certainly that is – certainly our expected continued plan is to continue to look for those ways to deploy it into the business. But if we can't, we certainly can and have paid dividends both regular and special as well as bought shares back.

So can you say something more tangibly, that is, for example, if you didn't find an acquisition by the end of the year, what might you do with your balance sheet? Would that be a sufficient length of the time to change your approach or would you need more time to make your decision? Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: Yeah, Jeff, I wish, I could be as specific as you'd like, but the reality is, we can't tell you the ideas that we have internally and we don't always control the timelines of those ideas.

Or some of those things that you're looking at relatively large in the size, such that you would want to maintain such a conservative balance sheet? Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: They vary in size.

Okay, great. Thank you so much. Mark Steven Bender - Senior Vice President, Chief Financial Officer, Treasurer & Director: You're welcome.

Thank you. At this time, the question-and-answer session has now ended. Please proceed with any closing remarks. David R. Hansen - Senior Vice President, Administration & Head-Media Relations: We'd like to thank you very much for participating in our call today. And we very much look forward to having you join us again for our next conference call to discuss our second quarter 2015 results. Have a wonderful day.