Q3 2019 Earnings Call
And welcome to the trend deals third quarter 2019 financial results Conference call.
We welcome the trends your management team, Frank <unk>, President and CEO , David Stacy Executive Vice President and CFO and Handy Myers director of Investor Relations.
Today's conference call will include brief remarks by the management team followed by a question and answer session.
The company distributed it it's press release, along with his presentation slides at close of market yesterday.
These documents are posted on the company's Investor Relations website and by means of a form 8-K filing with the Securities and Exchange Commission.
If anyone should require operator assistance during the call. Please press Star then zero on your telephone.
I'll now hand, the call over to Andy Myers.
Our disclosure rules in cautionary note on forward looking statements are noted on slide two.
During this presentation, we may make certain forward looking statements, including issuing guidance, describing our future expectations.
I must caution you that actual results could differ materially from what is disgust described or implied to be stations.
Factors that could cause actual results to differ.
To defer include but are not limited to factors set forth at our annual report on Form 10-K under item one a risk factors.
Today's presentation includes certain non-GAAP measurements a reconciliation of these measurements is provided in our earnings release.
And in the appendix or Investor presentation.
Absolutely replay of the conference call and transcript will be archived on the company's Investor Relations website. Shortly following the conference call.
A replay will be available until November 420 Twond.
Now I would like to turn the call over to friends or was it.
Thanks, Andy and welcome to Trinseos third quarter 2019 financial results Conference call.
I'd like to start by discussing some high priority initiatives.
First in an effort to increase organizational focus on efficiency, we announced changes to our executive leadership team at the beginning of October .
The new organizational design, which is built on a global functional structure will enable trinseos to increase organizational effectiveness through business process optimization.
This organizational shift is aligned with their business excellence program.
And the pillars that supported which will enable greater efficiency across the country.
These pillars are commercial operational supply chain and functional excellence.
This structure will have suffered benefits the trends here.
First on April greater commercial focus on or faster growth applications for example, adhesives and construction and latex binders and consumer electronics and performance plastics.
We had double digit your Robert your volume growth in each of these in the third quarter.
Second the transition to this new structure and the resultant efficiency gains will be a major contributor to the $20 million to $30 million up annual cost savings that we have identified.
In addition to lower costs. This new leadership structure were service well to effectively implemented.
The initiatives as projects that are currently underway.
For example, a project to transition administrative services, such as I T purchasing and supply chain.
From the Dow Chemical company, it's on track and is scheduled for completion in the first quarter for next year.
This important step to bring these functions fully in house, including the control over I T capabilities and systems will enable greater control over processes and be a critical enabler for future business process optimization.
Some examples of areas, where we realized ongoing benefits are.
Purchasing through our vendor consolidation and increased purchasing leverage.
And supply chain optimization of our logistics providers and in operations through more effective scheduling of our assets.
Another project that we previously discussed as the strategic evaluation of options for our polycarbonate facility in started in Germany.
Our primary goal of this valuation was to ensure that we have a reliable and cost effective supply of high quality polycarbonate for our higher margin compounding businesses, which consumes approximately 40% over polycarbonate production.
We export numerous options to achieve this fall and concluded that the best option is to remain in operation at the site and to exploit the significant structural and raw material cost savings that are team has identified.
These savings will be a significant contributor to the 20 to 30 million of savings that we have identified and would result in a more sustainable economic future for the facility.
This will also better support our growing sales to the higher margin medical and consumer electronics applications.
Now we'd like to talk about our recent participation in the case show in Germany, the largest global fair from plastics and rubber industry, which takes place every three years.
During the case show our team at trends, you'll have the opportunity to address several projects that response, where customers demand for sustainable and recycled products that will contribute to putting in and plastics waste.
As we mentioned on last quarter's call Trinseos, along with several other materials companies has formed styrenics circular solutions or Fcs.
This consortium is focused on creating infinitely recyclable plastics and highly efficient and sustainable facilities.
What makes this initiative exciting is that polystyrene has a unique potential for closed loop recycling.
With two fewer steps than recycling other partners.
Thats the case show, we outlined Trinseos plan to change or product offering to be comprised of 30% recycled content.
Where customers are for polystyrene packaging in Europe by 2025.
We also outlined.
Through yes, yes collaboration we will build a first of its kind chemical recycling planned for polystyrene in Europe to contribute to our 2025 goal.
Our target is to make the facility capable of processing up to 50 tons per day of post consumer polystyrene feedstock.
This will make a significant contribution toward achieving European commissions targets for recycling rates.
Lastly, trinseos working to incorporate post consumer recycled content in our products for consumer electronics and medical.
Therefore, keeping materials and the value chain for longer periods of time.
In addition, trinseos proud to be part two key sustainability initiatives.
The first is circular plastic alliance, which is fledged undertaken across the plastics value chain to use 10 million tons of recycled plastic and its new products by 2025.
And the second is operation clean sweep.
Trends, you're just renewed its pledged to drive towards zero pellet loss as part of our commitment plastic pellets out of the environments.
What was clear to me from the various discussions we had with our customers and our business partners at the case show is that there was a great opportunity for trends you were to solve some of our customer sustainability challenges.
Also it is clear the trends you're was providing needed leadership in the areas of deployment position and chemical recycling of plastic waste.
Before I provide my third quarter comments, let me give you a brief update on their crest for information we received from the European Commission relating to styrene monomer commercial activity in Europe .
Recall that we received this request in the form of a letter from the European Commission in June of 2018.
Last week, we received a supplemental request for information that was limited to historical employment entity and organizational structures and certain financial styrene purchasing and styrene market information.
We're in the process of responding to the supplemental request and we continue to fully cooperate with Europe European Commission on this matter.
Now I want to take a few minutes to review the financials from third quarter, and what we observed across our markets.
During the third quarter, we saw a continuation of the macroeconomic conditions, we've seen over the prior four quarters.
This lower demand environment in combination with a low level of styrene outages cost styrene margins to decline in Q3 in comparison to those from the first half of the year.
In fact this year is on track to have the lowest level of styrene outages since we began tracking them back in 2012.
And we've been a disproportionate share of these outages in 2019.
Therefore, we have updated or full year guidance to reflect this.
Despite these economic uncertainties, there have been some bright spots.
Styrene margins in Europe have increased three consecutive months from the year to date low point in August with no November margin over raw materials, increasing to its highest level since may.
In China, the Cajun China manufacturing PMI in October was 51.7.
Which is the highest reading and over two and a half years and represents the fourth straight month with an increase.
Specific to the markets we serve in China, we are encouraged to see the implementation of additional Chinese auto stimulus.
Two of the most populated cities in China decided to raise license plate quotas from June 19 until December 2020.
This has led to a substantial increase in new license plate registrations and these cities during the third quarter and we're hopeful that government initiatives like this will stimulate sales growth in the automotive market.
Appliance production in China.
Which is the large market for a polystyrene and yes, sop production growth of both refrigerators and their conditioners in the third quarter versus prior year.
In the U.S. light truck sales were the highest in the third quarter of any quarter. This year and were 5% above prior year.
70% of our automotive volumes in the us or into this market segment.
Since I became CEO in March.
Spoken about the importance of business excellence as a key to success and I outlined some of the anticipated benefits.
We expect to getting the future, but it won't stop there.
I'm going initiatives are even more vital during challenging economic times like these and we're confident in our ability to drive positive results as we move forward.
We've seen business excellence success and polystyrene as it generated strong results in the third quarter.
A period, that's been seasonably seasonally weaker than in prior years. We've also seen year to date adjusted EBITDA in polystyrene that a 75% above prior year.
These results were due in large part to the business excellence initiatives put in place with an emphasis on strategic pricing and customer mix.
We've seen good year over year growth in several of our higher margin downstream markets.
Adhesives, construction and consumer electronics.
In addition year to date fixed cost spending and excluding onetime items across the company.
As bill below prior year as productivity initiatives have more than offset inflation.
While we recognize that the rate of economic recovery as largely outside of our control. We acknowledged the responsibility we have in providing value to our shareholders part of that value was through projects and initiatives I mentioned earlier as well as through the continued return of cash to our shareholders.
In late August we were authorized by our board to repurchase up to 3.3 million shares of our of our stock.
In the third quarter, we purchased approximately 1.1 million shares, which combined with our quarterly dividend returned $56 million where shareholders during the quarter.
Year to date, we've repurchased about 6% of outstanding shares and returned almost $150 million to our shareholders through share repurchases and dividends.
Moving to the full your expectations, while we're seeing signs of market improvements so far in the fourth quarter, we're experiencing similar operating conditions to the third quarter and.
In addition, given the declining raw material environment, we expect an unfavorable net timing impact of about $5 million in the fourth quarter, but similar quarter over quarter results excluding that timing.
For the full year, we expect net income of 105 million to $112 million and adjusted EBITDA of 365 million to $375 million.
This outlook assumes a minimal impact from that timing for the full year.
2019 has been a your strong cash generation and we expect to finish the year with the run $320 million of cash from operations, which we expect to results in $200 million of free cash flow.
Looking ahead to 2020, we plan on providing more detail on our fourth quarter call in February .
However, regardless of the economic backdrop that develops for 2020, we're determined to improve our business results via business excellence as well as the successful execution of our growth initiatives.
Through the efforts I've highlighted on this call I believe we will be better position to adapt to whatever economic environment. We experienced in the future. This will enable us to continued to generate cash and deliver value to our shareholders.
Now operator, please open the phone lines for questions.
As a reminder to ask a question you will need to press Star then one on your telephone.
Draw your question press the pound our Heskey.
Please standby will be compiled the Q and a roster.
Your first question today comes from the line of date, David Begleiter of Deutsche Bank. Your line is open.
Thank you good morning.
I'm frankly, given the recent strength in styrene margins what are your expectations for 2020, I know, there's more capacity coming on in China.
We have seen a good rebound here the last as you said three months since timing.
Right so.
So we.
We see that in 2020, theres going to be new capacity coming on in China in the first half for the year that will equal about 20000 metric tons and an increase of 6% that represents about 6% of global capacity.
Against that we see demand growth growing at about 2%.
No. The one thing I would point out, though I think overall, we could expect operating the effective operating rates in 2020 to be basically the same or better than they were in 2019 and the reason I see that is 2019 was historically low in terms of the outage level that.
We experience with less than 7% of the industry capacity in outage. So that was the lowest level that we.
That we've seen since.
2012, and normally it spend 10% to 12% since 2015, so theres a real potential for the effective operate operating rates to improve in 2020, despite the new capacity coming into the market.
It really hinges on as a return of than to normal operating or outage rates and.
What happens also to the non integrated producers in China in the face of lower cost bigger more effective capacity coming online so.
Our outlook is that growth plus the returned to normal operating rates is basically going to equal the new capacity and then the upside for US is what happens to the non integrated producers.
Very good and just lastly on on rubber Frank.
The business has not performed vis-a-vis expectations. What do you think is the more normalized earnings power of this segment over the next few years.
So.
We like the the up the opportunities that we haven't rubber, especially because we're targeting.
Through our product line high performance tires, which is where our SSP our technology goes at night.
Let me give you a little bit of a background on the performance this year and what's driving that.
And while.
Underlying performance in Q3 was about $12 million of EBITDA.
And the seven that we've shown was understated because we have $5 million of build draw impact and also $2 million of timing impact.
Now overall year to date, we've actually held our.
SSP, our margins relatively stable to prior year or flat.
To prior year, but in Q3, we actually saw a 3% increase in our SSP our volume. So when you look at the future for our business. It's all driven by growth in high performance tires, and how we qualify or new generations of SBR technology, what's we.
Had a drag from.
Basically SBR, which is a commodity more of a commoditized for a standard tire.
Rubber that in the lower in depressed economic conditions standard tires.
Replacement tires don't grow as fast or they don't have sustainability like high performance tires. So again I think in this environment our.
Results were driven by the decline in.
Standard tires, but our outlook is pretty we like where we are given our position in high performance tires with SBR.
Thank you.
Your next question comes from the line of Frank multiples of affirming research. Your line is open.
Thank you and and good morning.
Frank You mentioned that 2019 were seeing a lower level of styrene monomer outages. Then that is typically the case I was wondering if you might be able to put some metrics around that in terms of percent out.
This year relative to two other years and what what you would anticipate would be kind of a normal level of a up styrene outages.
So this year, we had less than the industry experienced less than seven percents of capacity in outage, both planned and unplanned what the unplanned.
The unplanned rate was particularly low and by typically we would have seen.
For example, double digit total industry capacity outages.
Looking at the numbers now going back to 2015, there were just under 13% industry capacity and outage in 2016. It was just.
Just under 11% of the industry capacity and outage so.
On average over the past half decade.
It's been above 10%.
So.
This year was an anomaly and it was the lowest year since 2012.
Very helpful. Thank you I mean, obviously, it's it's difficult to forecast.
Unplanned outages, but a reversion to the means suggests some positive.
Looking at 2020, and and just to kind of follow up you mentioned that any other the share purchase reauthorization, you, obviously ticked up the level of buybacks in the third quarter from the second quarter.
What should what kind of level.
Would you anticipate.
Your trends you are buying back kind of on a quarterly or annually annual basis.
For Q1 beyond.
Yes, Frank we really couldn't forecast and the precise number.
Let me go back to you authorization that we put put in place back in August .
Basically with our share price that time was approximately $30. We're in the $30 range and so as of the board got together ends we made a determination to put in place. The program that we described and we had an acquisition strategy that was basically looking at.
Various purchasing levels at different pricing and.
We would do that same thing and.
So I can't really predict how we would do that going forward, but we would take a balance capital deployment approach and continue.
To return cash to our shareholders through that.
Gotcha alright, thank you.
Sure.
Your next question comes from the line of his then how much of our Alembic Global Your line is open.
Wanting Frank.
Frank wanted to get a sense of where you see inventory levels right now a foot styling in particular I mean, it seem to me that particularly out in Asia, you know inventories had gotten quite lean.
Is that fair are you seeing sort of any pick up stick downs in inventory and we're not there relative to normal levels.
Hi, Good morning, aside it's Dave I'll I'll answer that.
Inventory levels, we see now in the mid 60, so 65 KTM.
In China.
And that compares to an historical average about 100 kgs.
Now what that means for us obviously, we haven't seen as Frank mentioned the level of outages.
That would lead to periods. It increased margins as we've seen the last couple of years and I think thats indicative of the demand environment, but.
So the low level of outages I think.
What it price it means for us is that.
If there were to be as we get into first quarter, particularly in that in the heavier outage season.
Heavier planned outage season, if there are some unplanned outages on top of that I think the market is.
Is poised to see an increase in margins.
With this leaner level of inventories.
Perfect. Thanks for that Dave and as a follow up on the polycarbonate business side, obviously, you guys have decided yet.
Identifying these cost cutting opportunities to hold onto that.
As you guys were doing that do you entertain a sale process was to have any interest you know any buyer interest in Doug and beyond the polycarbonate business you know what are your thoughts about.
Portfolio management.
It'll be a checking out its be a.
Potential sale of other assets.
So let me first address the strategic review that we went through with start and I think it's important to remember that our focus for stock that is to provide the best long term economics for the polycarbonate supply to our downstream business compounding business, that's possible and that's about 40.
What percent of the capacity of that asset. So when we started that review there were all up we considered all options to achieved that goal and to improve the long term economics.
For the site and at the end of the day after reviewing the options and we had.
Developed.
Okay.
I guess opportunities to ship to other areas, but was what was clear is that in the long term are.
Best Economics to support our downstream business was through the continued operation of the site taking advantage of the significant.
Operating and raw material savings opportunities that the team developed so again all options around the table, but this is the best option is to keep running it and take advantage of the opportunities to improve it.
And in terms of broader portfolio management.
The on beyond body covenants.
We will always look at our assets across our portfolio and.
Look for opportunities to improve goes and or.
Optimized the asset.
Our asset portfolio and that's going to be an ongoing effort as part of our business Excellence initiative and we will continue to do that when we do wench ribs. Those reviews that most of our assets being in Europe , we will have to be given that process very transparently.
Communicating with our works councils for statutory reasons. So again, we will continue to do that and we will be transparent about it.
Very helpful guys. Thank you so much.
Your next question comes from the line of Mike.
Barclays. Your line is open.
Thanks, Good morning, guys.
I wanted to first circle back on polycarbonate I believe one of your leading European competitors in that business has taken the approach to aggressively prioritize volume over price. So I guess can you just talk through the market dynamics, you're seeing in that business and how if at all that factors into your calculus and competing in some of these polycarbonate.
Applications.
Sure.
So.
We've listened to our competitors comments regarding the market and frankly, we agreed with their assessment of the capacity additions and supply demand dynamics that are occurring in the industry and again when we look at when we think about our business, we're thinking about how does our gas.
Said support that high volume higher growth.
Applications in downstream compounding and.
It's it's about how do we best serve that and best position ourselves to grow in that area going forward and our merchant sales I would say in this in this area provide an overall positive earnings contribution, but they're not the primary goal for us and why we operate that site.
Give us critical mass.
And economies of scale for our downstream for the internal supply. So we see we have a sustainable position irrs, but assuming relatively small minor merchant position.
And our focus is to operate that site with the best Economics Pos possible.
Got it Thats helpful. And then just to follow up on synthetic rubber.
Obviously volumes have been hit by the weaker auto demand, but maybe could you parse apart the mix effect, you're seeing in SBR demand versus SBR demand.
And how unit margins for this business have.
Trended over this choppy demand environment.
Hi, Mike, Yes, Dave I can I can address that I think Frank outlined it pretty well, maybe if you look at the composition of our.
Of our manufacturing capacity in synthetic rubber.
It's roughly evenly split between SBR and Thats SBR SPR being the more commoditized, which goes in the standard tires and a lot of that frankly ends up in Asia and the standard tire market.
And Thats SPR, which is targeted towards the.
Hi performance that higher.
Market.
Our volumes as Frank mentioned, they're up about 3% on the SBR side.
Where where we're focused on growing in developing that market, but they are down double digits on the SVR side on a percentage year over year basis, our volumes in the SPR down double digits.
And.
And frankly, there has been a big margin hit that side of the business also.
There is if you look on a global basis, there is excess capacity in the SBR, so that subject to margin fluctuation and weak demand environment.
Conversely on SBR.
We have largely contracted business with the large tire producers.
And we've held margins for several years.
Pretty consistently NSS VR.
Got it thank you.
Your next question comes the line of Eric Petrie of Citi. Your line is open.
Hi, good morning, Frank.
Question on your cost.
A question on your cost savings target of 20 to 30 million.
How do you see the run rate going forward. It do you see all that being captured next year and how would you split it by business segment.
That's a great question on the last piece, we it's too early for us to a portion that to a business unit and I guess, maybe let me give you a context on the.
On that number.
First I would tell you we have a much bigger pipeline of opportunities than the $20 million to $30 million and the sources of these are efficiency gains from the transition to a global functional organization, which is more stream streamline says and then there's operating improvements that we normally have at the site in opportunities there and.
Then also raw material savings.
So right now we're in the process of Resourcing. These various initiatives and then developing the sequencing, but I would tell you the vast majority of that will be.
We'll hit our PNM in 2020.
But the exact timing and phasing of that we won't know for a couple more months until weve resource that.
Fully implement the program, but again, it's it's much bigger than that number going forward in the future and I guess, one add on that would give to you is that.
This program that we have to become systems independent from Dow chemical is a really.
Important enabler for future process efficiency for us in the future and that'll be a big source of.
Opportunities as we look at how we redesigned our business processes and supply chain and in there and our manufacturing operations et cetera. So I'm confident that we will have a continued pipeline of opportunity bigger than this but 2020. The majority of that we should see realize.
It's hitting the piano.
Okay. Thank you asked for my follow up you mentioned European sovereign margins, improving could you give us comments on the Asian market I think prices declined to roughly $850 down from 1000 in September so any comments, there and you know.
How much volume you might be buying based on those economics are purchasing.
Be helpful.
Yes, hi, or gets Dave I think I think you're right. We have seen a decline in styrene margins in Asia, but our exposure there is much smaller so.
Give you the numbers just just to refresh everybody see to level set.
We have about 700, Katie Hayes of manufacturing capacity for styrene in Europe .
That we've produced a little bit less than that this year, obviously, because we've had a couple of outages but.
But generally speaking our our exposure to styrene margin in in Europe is 700 Eightys.
We're purchasing about 100 K Tees in Asia.
So we've got a relatively small and we're going to relatively small exposure there.
And we're purchasing that I'm cost economics in Asia.
And then we've got 500 eightys of exposure through our 50% ownership interest in Americas Styrenics.
So.
So in total it's about a.
Billion EUR.
1300, kgs have exposure to styrene margin with Asia being by far the smallest.
Helpful. Thank you.
Your next question comes from the line of Vincent Andrews of Morgan Stanley .
Line is open.
Hi, this change because steel on for Vincent Thanks.
Thanks for taking my question just a quick question on your for Q expectations, you noted a similar.
Good.
Market I guess SBQ I'm, just curious as to why you would end down I guess in going a little bit more seasonality and maybe what are the factors that make you feel comfortable with that.
Yes so.
Mike.
If I understand the question.
We basically are seeing very similar operating rates and business environment in Q4, so far as what we've seen in Q3.
The performance net of.
Timing should be basically the same now we are seeing optimism wind up turns in the various markets that we're serving and downstream markets, but it'll take time, we believe for that to flow through to our through the supply chain to us and so we'll have a better read on that.
As we get into later Q4 in early Q1.
Does that answer the question.
Hey, guys. Thank you and then just kind of following up on that I guess.
Raw materials, just curious spending moved up quite a bit throughout the year.
There's a lag effect, obviously is a multimillion back in the fourth quarter.
As we head into one Q into Q on just thoughts on the raw material impact.
What should we expect.
Hi, Tony from that.
Yes.
Hi, Angel I'd stay, but I mean, I think it's little too early for us.
Obviously, the what happens to benzene will be largely influenced by what happens to crude and Q1 in Q2.
And as well as outages I think it's a little too early.
A little too early for us to to pass judgment of where.
Feedstock prices will be in Q1 in Q2.
One thing I'd do I'd, just point out to you, though angela's you're right.
We were a couple of cracker outages in.
In Europe .
The effective caused benzene.
Prices to rise.
The August September timeframe, so that and as we mentioned earlier August was that the trough styrene margin month for us in the year. It was largely caused by that by that impact in Europe and that those outages have.
Have ended.
Which is largely contributed to the increase in styrene margins, we've seen in the in several months since then.
So that was really the primary driver of.
Benzene price movement over the last three or four months.
Great. Thank you.
Your last question in queue today comes from the line of Bob part of Goldman Sachs. Your line is open.
Good morning, This is Don Campbell on for Bob.
No that polystyrene actually had pretty encouraging results growing EBITDA year over year eminent third quarter on when we look at 2020 gave a pretty interesting bridge I'm in terms of capacity in demand grow for styrene.
Just curious how much of that starring is going into polystyrene versus I guess other styrene direct.
Just.
Im going to get you a precise answer to your but.
It's a little it's a little hard to parse it out that way deal and because.
As you know, we we manufacture styrene that we also purchased styrene. So I mean, it's somewhat fungible and in terms of.
Which of that.
Which are the manufactured versus purchase styrene.
Goes into polystyrene versus latex or rubbers is very hard for us to parse out.
What I would say I think what I would say, which I think is important.
Which I think it's important just for understanding the economics.
Of our polystyrene business and how we account for.
How we account for polystyrene.
Polystyrene segment, we transfer styrene internally from our feedstocks business, regardless of whether its bought or sold its transferred internally.
At market.
Okay. So that what we report as EBITDA in there in our polystyrene business and the same holds for latex and rubber any other businesses.
What we report as EBITDA in that business is the polystyrene margin over.
The market cost.
Styrene that that effectively or polystyrene business is buying styrene at sought to make sure you understand that.
The and to get your specific question about you're right.
The results of.
The results of polystyrene have been given the first three quarters. The year, we've been running at a 15 or $16 million adjusted EBITDA run rate versus about a 12 million quarterly run rate for the past several years.
And the reason for that is.
Commercial excellence activities, we've done a very good job.
Parsing out the market segmentation and pricing activities in that market and what I would say going into 2020 Dillon is that.
There are two fairly large polystyrene plants that have been shut down.
That will be shut down and in Europe over the next two or three months.
One of them as being converted to produce ABS and the other is being shut down and.
Those combined or about 7% of European capacity.
So that should we think that will provide us with some tailwind for 2020.
And again polystyrene is larger regional product doesn't ship globally. So.
So that.
That 7% reduction in in Europe .
Should be helpful going into next year.
Got it that's helpful and I know and the free cash flow billing you soon minimal sources and uses them working capital I think generally or I guess last two years or so in the fourth quarter, you've gone pretty decent use it or source of working capital in the fourth quarter.
What's kind of driving the difference in 2019.
Yeah I think.
I think we base that probably you're right Dillon, we typically have seen.
We have seen a release as sales decline into in December .
And we have release of working.
Receivable is really therefore, I would say I guess I would attribute to just to forecasting.
Conservatism built.
I'd say about that.
Thank you.
Ladies and gentlemen, this does conclude today's conference call. Thank you for participating you may now disconnect.