Q3 2020 PotlatchDeltic Corp Earnings Call
Thursday good morning. My name is Lindsay and I will be your conference operator today at this time. I would like to welcome everyone to the same conference call all lines have been placed on mute to prevent any background noise after the speakers remarks. There will be a question-and-answer session. If you would like to ask a question during this time something with the stars and the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. Have a good now like to turn the call over to mister. Jerry Richards vice president and Chief Financial Officer for opening remarks sir. You may proceed.
Good morning, and welcome to Potlatch deltic's third quarter 2020 earnings conference call with me in the room or Mike Covey chairman and chief executive officer and Eric Kramer as president and Chief Operating Officer. I call will contain forward-looking statements. Please review the warning statements in our press release on the presentation slides and in our filings with the SEC concerning the risks associated with these forward-looking statements month. Also, please note that a Reconciliation of non-gaap measures can be found on our website at ww.w.
I'll now turn the call over to Mike for some comments and then I will cover our third quarter results in our Outlook.
Thank you, Jerry and good morning.
Historic third-quarter spotlights the power leverage to lumber prices Timberlands and Wood Products as well as the total company all established new quarterly ebitda records this month. Although lumber prices are currently declining from unprecedented highs. We expect fourth quarter. Ebitda will be higher than third quarters $135 million as a reminder. We expect to close a large Minnesota conservation sale in the fourth quarter. We also believe that strong housing fundamentals point to a solid outlook for lumber prices.
I want to thank our employees whose outstanding execution and all three businesses drove are strong quarterly results. This includes their continued focus on operating safely during this challenging time safety remains our top priority in managing the risks presented by the pandemic requires continued diligence.
I would products business generated $82 of adjusted ebitda on the third quarter. We ran as much overtime as we could in our Sawmills to meet strong customer demand in our Saint Mary's and warmer. Both said quarterly shipping records overall. Our lumber shipments exceeded the top end of the range that we provided on last quarter's earnings call by 11 million board feet.
We ended the third quarter with a lumber order file that extends into early November while it we will be down. Sequentially. We expect Wood Products adjusted ebitda to remain well above trim levels. The fourth quarter.
Timberlands business harvested one point seven million tonnes in the quarter, which is a quarterly record given that about 70% of our Idaho sollog deliveries are indexed to lumber prices on about six weeks leg basis. We expect our Idaho Timberlands adjusted ebitda will remain strong fourth-quarter.
So log pricing remains relatively flat across our Southern markets with little change expected anytime soon.
And our real estate business we continue to expect that the sale of approximately 72000 acres in Minnesota to the conservation fund for about 48 million dollars will close in the fourth quarter off in addition sales activity in our Chenal Valley master-planned Community in Little Rock has fared better than we expected when the Coban pandemic began and we expect to sell approximate 530 residential lots for the year.
Looking ahead housing fundamentals are stronger than at any point since the great financial crisis is sets the stage for continued growth and lumber demand.
Us single-family housing starts continue to increase through the summer and exceeded one point 1 million units in September that single-family alone. This was a 9% increase from August took up 22% compared to last year single-family starts are important to Lumber demand because each single family home utilizes three times more lumber than does a multi-family start.
Many industry experts believe that the new residential construction the new residential construction is on the cusp of a multi-year boom, massive under building since the great financial crisis record. Low impact is of homes for sale historically low mortgage rates and Millennials Millennials entering their prime home-buying years all set the stage.
US housing permits at one point five million units in September home builder confidence at an all-time high and September order growth of 49% reported by for homebuilders last week all suggest that housing construction will remain robust in the near-term additionally a shift from Urban to Suburban living appears to be positively affecting housing demand.
Repair and remodel segment is also expected to continue to grow that view is supported by the age of US housing stock, which is now forty two years on average high levels of home page and the work from home trend.
Grandma the random lengths framing Lumber composite peaked at $955 per thousand board feet in September or 64% higher than the prior nominal wage, which was reached in June of 2018. The record high prices reflected industry inventory drawdowns at the beginning of the cobit crisis combined with strong demand and Kolb related to operating disruptions.
now the
On order file stretch into a seasonably weaker part of the year. The pace of new Lumber orders has slowed down and as expected lumber prices have begun to retreat.
That said underlying under the lumber demand remains strong and lumber inventories are estimated to be at the low end of their historic range.
The strong housing and repair and remodel Outlook, coupled with the limited announced Lumber Supply increases suggest that lumber prices should settle at attractive levels Thursday. We are very optimistic about the setup heading into the 2021 building season.
Switching out a capital allocation for a minute. We returned $96 to shareholders in the form of dividends and share repurchases so far this year.
We are committed to Growing the dividend sustainably which we've increased 116% since 2012.
Discretionary Mill capital projects represent some of our Highest Potential returns. We recently added $14 of new projects to the Slate with a weighted average, irr about 35% We plan to complete these attractive projects over the next eighteen months.
Creve Acquisitions represent the Third Leg of our Capital allocation priorities. We are interested in acquiring Timberlands Mills or a combination of the two near our current operating area.
Recently published our inaugural environmental social and governance report in September has a strong ESG story and we're committed to do our part to mitigate climate change and confirm that you are a legacy of responsibility across the Spectrum. We look forward to updating you regularly on our progress in this area.
To wrap up my comments business conditions remain good we expect to report strong results for the fourth quarter as well biological think is well positioned to take advantage of favorable industry funding and our strong liquidity and low leverage provide a high degree of flexibility as we seek to maximize shareholder value on not turn it back to Jerry to talk about the third quarter and our Outlook.
Thank you. Mike starting with page for the slides adjusted ebitda $135 million dollars in the third quarter was $100 higher than the second quarter. The increase was primarily by the historic run and lumber prices and seasonally higher Harvest volumes.
I'll now review each of our operating segments and provide more color on the third quarter results.
Information is displayed on slides five through seven. The segments adjusted ebitda was 59.7 million dollars in the third quarter compared to twenty five point six million dollars in the second month.
We harvested 555000 tons of Saw logs in the north and a third quarter. This is up seasonally from the 303 thousand tons that we harvested in the second quarter.
No.
Log prices were 30% higher on a part-time basis in the third quarter compared to the second quarter.
The higher solid prices were primarily the result is significantly higher prices for index saw logs in the South. We harvested 1.1 million tonnes in the third floor above 15% higher than the second quarter and reflected strong solid demand.
Our Southern Soul out prices were 2% higher in the third quarter compared to the second quarter a higher proportion of higher-priced hardwood volume more than offset slightly weaker Pine-Sol log prices wage.
Turning to Wood Products on slides eight and nine adjusted. Ebitda was eighty one point seven million dollars in the third quarter compared to ten point nine million dollars in the second quarter our average Lumber price real life and increased 55% from $412 per thousand board feet in the second quarter to $637 per thousand board feet in the third quarter.
Note that the effect of increasing lumber prices on our results lags the spot prices reported by random links by roughly 4 weeks due to our record order file link.
To provide context to look at our lumber prices by month our average Lumber price realizations increased about $100 per thousand board feet in July relative to our second quarter average. They increased $500 per thousand board feet in August and then accelerated to $779 per thousand board feet in September. The September average price is 22% higher than the third quarter average.
Lumber shipments increased from $249 million board feet in the second quarter to 291 million board feet in a third quarter.
Higher production hours lead to better fixed cost absorption which more than offset the effect of higher index log cost in Idaho Mills.
Moving to real estate on slides ten and eleven the segments adjusted ebitda was thirteen point four million dollars in the third quarter compared to nine point three million dollars in the second quarter TP increase was primarily due to sail a more rural Acres compared to the prior quarter.
Shaping the financial items which are summarized done flight 12 our total liquidity remains strong at nearly $530. This amount includes $149 of cash availability on our revolver. Which remains undrawn
We did not repurchase any shares during the third quarter the $10 plan that we announced last month becomes effective this Thursday this reflects our ability and commitment to repurchase a shame that attractive prices as part of a broader Capital allocation strategy focused on increasing shareholder value over the long term.
We find a refinance $46 of debt scheduled to mature in December 2020 and have walked the interest rate annual interest expense will decline approximately $800,000 on this debt beginning of December.
capital
Senators were ten point seven million dollars in the third quarter as Mike mentioned we added some high return meal projects to the Slate. We currently expect that. Our Capital expenditures will be forty six to forty nine million dollars in 2020.
Note that the amounts are just mentioned include real estate development expenditures, which are included in cash from operations in our cash flow statement and exclude Timberline acquisitions.
I will now provide some high-level Outlook comments. The details are presented on flight 13.
Harvest volumes in the North or planned to be seasonally lower in the fourth quarter compared to the third quarter. We expect Northern solid prices to increase significantly in the fourth quarter do prior to higher index prices as well as higher Cedar Salon prices.
Harvest volumes in the South or expected to decrease seasonally in the fourth quarter. We expect Southern solid price has to be comparable to the third quarter.
We ended the third quarter with a lumber order file that stretched into early November our average Lumber price thus far in the fourth quarter including orders booked but not yet shipped is approximately 7% higher than our third quarter average Lumber price.
We expect the long order files will dampen the sequential decline in our fourth quarter realizations relative to print prices.
As a reminder at $10 per thousand foot change in Lumber price equals approximately 12 million dollars if Consolidated ebitda for us on an annual basis.
We find a ship 262 270 million board feet of Lumber in the fourth quarter.
Shifting to real estate 73,000 to seventy four thousand acres of land and approximately 60 to 70 Valley Lots in the fourth quarter month. We still expect to close the previously-announced 72,000 acre, Minnesota transaction in the fourth quarter.
Overall, we expect fourth-quarter total adjusted ebitda to be higher than the third quarter, which would establish a new quarterly record for the company the amount of the sequential increase depends upon the level at which prices settled the primary risk to achieving our fourth-quarter Outlook Remains the pandemics potential to disrupt our Mill operations. We're encouraged by industry fundamentals, and we believed that we are well-positioned to grow shareholder value over the long term that concludes our prepared remarks Lindsay and now like it to open the call for Q&A. This time. If you'd like to ask a question, please press star one on your telephone keypad will pause for just a moment of a Q&A roster.
Our first question comes from the line of Keaton man trial with your line is now open.
Good afternoon, Mike and Jerry and congrats on the strong quarter.
Thank you. Thanks a first question. Maybe just start off on that some of the projects that you are highlighted on. The lumber side can just clarify how much of that money will show up in 2020, you know versus maybe 20 21 and if you can just highlight, you know kind of, you know, maybe one or two kind of big projects within that and what you are doing there.
Yeah. So keeping this is this is Eric is is Mike and Jared mentioned we're going to we're going to pull forward about $14 of capital projects into our into our current thinking of that 14 million roughly six million will get spent this year 5 million will get spent in 21 and then about four million is going to get spent in 2022 summer projects that we've got at our whole list Sawmill. We're going to put in a green Sakura a new stacker right now that Mills production volume is constrained by the stacker and by adding the New Jersey soccer which will happen early next year. We expect our production volumes to increase that medal of some milk. Another key project for us is also this will happen in Q2 12/31. But I heard of Bemidji Mill we are going to put in a new auto trader as you probably are aware our recovery, excuse me are grave.
At our sub Mills are really important and help us serve our home center of customers. So that new auto grader is going to is going to increase our high grade studs that we produce at that busy song.
Those are just some examples.
That's very helpful. And then just turning two number realization and I was I was a little bit surprised that you know pointing to them and just down quarter-over-quarter given for the Lindy order files and given how much prices continue to go up through Q3. Maybe just help provide some sort of a color on what are the leaders of the offsetting things or some, you know other things that that I may be missing.
Yeah, so for Keaton, you know our price and Q3 was around, you know, 6:37 is our price. We are expecting prices to fall into for Mid single-digit kind of like if you look at what we see is thinking if you look at what FDA is thinking, you know, they're talking about, you know, fifteen twenty percent kind of drops for for lumber prices in Q4. So, you saw a gap in Q3. It looks like the index did a lot better than us over the lag and and and prices but now it's going to reverse as we get out into Q4 and while you know, we were shipping off in August and September out into October November, you know, there is going to be a December price and that December prices, you know, who knows where it's going to settle out it but it bring you down in the $500 kind of range. So that's going to that's all the average down for the quarter. But like I said, we expect to do much better than the the index for the for the quarter.
So did I hear you correctly that you said you expect your realizations to be down sort of mid-single digits on a percentage basis in Q4.
That's correct.
Got it. Yes, and then just final question from my side before I turn it over on on Capital allocation net Leverage is down to just left lower two times in a restaurant water from a standpoint. Just four of you know, I'm just curious to talk understand how you are thinking about, you know, whether it's in terms of Leverage Target or do you you know, sort of feel comfortable building some sort of cash considering the volatility in in lumber prices.
Okay, and this is this is Jerry in terms of of Leverage. Our overall goal is to keep leverage, you know kind of under four times through a cycle and certainly, you know, it's moving towards one as as we've talked to as we've discussed wage publicly recently. So Leverage is really low and certainly you know, you look at it on a relative position that gives us a lot of strength and a lot of financial flexibility as we think about, you know, allocating capital A shareholder value over time. So we're not going to borrow money just for the sake of you know, keeping a rich, you know higher in the range, you know within the range of our our Target. In fact, we're getting ready to to refinance that but certainly don't have any near-term plans to borrow if we were at most likely be because there was an attractive large acquisition. So the short answer is I think it's most important to do to take the excess cash in the right type of return opportunities as opposed to putting it to work, you know near-term and given a high valuations on the meal side as well. As you know, kind of like Thursday.
Tivity on the Timberland side. I think it's fair to say that we probably will hold a bit excess cash for a bit. But you know, we are very excited about the opportunity to look for opportunities to put that cash to work.
All right. That's very helpful. I'll turn it over.
Hi, next question comes in the line of it Steve Sheer Cover with d a Davidson your line is not open.
Thanks. Good morning everyone. So I wanted to start with Minnesota. Once you've completed the landfill there. I think you'll be down to about 30,000 acres in the states. So I would assume that that's barely operational scale. So does the residual land there consists of HBU?
Yeah, so so what's going to happen after we sell large number of acres to the conservation fund here in the fourth quarter. We're still going to have some residual Lakers leftover, maybe twenty thousand or so, I don't forget the 16 of those are already contracted for again with TCF and what we call the plan B transaction not half of that is going to go and twenty twenty one and half of that's going to go in 2022. There's going to be a couple thousand acres left over once we're we're we're done here that are unspoken 4 and we continue to believe will sell those out probably in 20 21 if I had to guess.
Got it. Okay. Thanks for clarifying there. And then I want to talk a little bit about the Saint Mary's Sawmill. I mean that's I think it's a hundred eighty-five thousand feet long. Can you tell us how much would that is Cedar? Cuz then you Cedar is still got a head of steam and it looks like it's going to be really good for twenty twenty-one.
Yeah, see we don't produce any cedar at our Saint Mary's Sawmill. We do produce a lot of Cedar going about 10% of our Idaho sollog Harvest each year is theater in Cedar continues to perform very well prices were up about 20% in Q3 and we're looking for about another 12% here in Q4. It's either demand is really driven by a lot of the repair and remodel work that you that you hear about. So we're we're continuing to be optimistic about Cedar we sell those logs to we sell those logs to you know, half a dozen customers and Northwest and they process them. I got it. Okay. Thanks for that clarification. And then, you know given your optimism for 20 21. Maybe you can Hazard a guess of what your 2021 tax rate might be.
Steve we will we will come back to you on that one. Once we go through our budgeting process. So not prepared to give any sort of 2021 guidance on this call. Will he will do that on the Q4, I can't blame us for trying. Okay. Thank you.
Thank you. How can I ask a question, please? Press star one on your telephone keypad. Our next question comes from the line, Parkland with RBC Capital markets your line is now open.
Okay, great. Thanks guys going to call later. I sort of missed some of the front and stuff that I just curious as to your mean obviously balance sheets in a great spot and it looks like going to improve going forward. But what here at Capital allocation priorities at this point.
Well, this is Mike. We spoke to that a little bit earlier. But you know so far this year. We have done a combination of in returning cash to shareholders a share repurchase that we executed on in the first half of the year as well as obviously the dividend continues with the cash that we have on the balance sheet and growing we're certainly in a meaningful position you an acquisition if one should come along that is either Timberland or Timberland and Mills that are adjacent to our own property that continues to be one of our priorities for kind of geographic compatibility with them. We already are we stepped up and accelerated a little bit pulse and capex this year and Wood Products business just $14. It's kind of above and beyond the normal amount on some attractive high-return projects. So I think in some and you probably can infer the the balance sheets and solid shape. We've we've got the the data in a position where we're really dead.
Too much more with a with a weighted average cost of debt of about 2.3% I think so, there's really not a lot of opportunities there. So really it comes down to acquisition opportunities growing the dividend and you know, if if we see our stock Falls significantly below what we think is fair value, then we'll buy back our stock through a 10 b51 program. We just put in place which goes effective this Thursday.
Okay, that's that's great. And then just talking about the m&a opportunities. I think you referenced high valuations at the middle side. Just wondering a high those are and what the expectations on that General outside for a lot of resistance.
Well, the Timberline acquisition pipeline is it's been pretty quiet for the whole year but it's starting to see a little bit of of Life. We've seen a couple of properties that have come to Market through Thursday best food bankers and others. So there's they're starting to be a little bit of activity on the Timberland side and the at least in the US South and on the meal side. There's not been a lot of transactions, but certain age based on the cost of some of these new construction projects, which I think are north of $600 per thousand board feet. You have to think that the valuations on the mill cider are pretty high and obviously off buying at the top of the cycle has never been a way to measure success.
All right. That's all I have like a thanks. My next question comes from the line of Mark Weintraub with Seaport Global your line is open. Thank you. One more on the capital allocation in particular. How would you be thinking about the dividend recognizing? It's a board decision. It's been a couple years since since you made a move on it. What what sort of would have changed in terms of the the cash generating capability that would support a type of move in the dividend and there's any sort of directional sense you could share that be appreciated.
Well, the you know, we always use the word sustainable and dividend in the same sentence. We we've tried to make dividend increases that are sustainable and we don't want to have to go through a period of either suspect or lowering it, you know in the recent events that have given us a bit more confidence. Certainly the Delta Kappa position is I think we've exceeded the Synergy expectations that we had their largely on the backs of em, really strong a lumber Market in a really strong real estate market on that property that we didn't really foresee. That's done better than expected. I think that would be one thing we point to say the dividend can be supported by a stronger business there than we thought the Idaho sollog price recovery since the great financial crisis has been really exceptional to Cedar markets part of that and that's tended to be I think a sustainable increase in a stepwise that's made a difference the higher-return wood products projects, you know, those can come and go with the vagaries of the lumber Market, but those are those are a couple of things that that we point you and I think dead.
And we're gaining confidence that especially with the cash balance that we have that raising the dividend on a modest amount is pretty low-risk proposition. And as well substantiated by the strength of the business off. The only thing that I would add to what might just said Mark is, you know, the fundamental underlying demand for lumber remains pretty positive the story does you think about where housing starts are headed we've seen a lot of people are forecasting starts are headed back to 1617 over the next few years repair. The model markets are incredibly strong. So we've got a generally pretty bullish outlook on life. And is Mike said it's you know, there's not a lot of new Mill construction right now and you know, it's costing over six hundred bucks a thousand the capacity to build a new Mill, you know, what it takes two years to get it done Thursday to see people stepping up to make those kinds of Investments. So we have a fundamental favorable outlook on on Lumber.
All make sense. Thank you. Just one quick follow-up to on the the lumber you had mentioned shipments to 6 to 270. And then when you gave the up 16% you noted that that included shift plus already booked roughly how much of that to 60 to 70 might or might effectively have been included in the the plus 7% That's Thursday. We have handy. Yeah, I have that handy mark That's about 90 million feet. And that's a combination of shipped to date but plus also priced and still in the in the order file. Okay. Thank you.
Our next question comes from the line of Black Horn with Raymond James hairline is open. Hey, thank you, I think you mentioned it off maybe dive in a little further. If you can add any additional color on on just the state of how you guys C Lumber inventories in the supply chain right now in terms of the kind of the standoff between buyers and sellers at the moment with these extended order files and and you know, maybe it's a little speculative. How do you think some of this resolves itself? And and do you think that God, you know, you're going to see more buyers in anticipation of what's probably going to be a very robust spring selling season for home building and repair remodel next year. Is there a need to restock inventories maybe above Trend ahead of that or or you know, how do you think you know this the supply chain plays out over the next couple of months?
Yeah, I think that's a great question. But so so our view is that inventories in the in the supply chain are relatively low levels. It kind of makes sense. When you step back and you think about it who would who would want to overbuild their inventory levels when we're selling for eight nine hundred bucks. Mm. There's not a not a lot of lot of people want to do that people were ordering just to meet immediate needs is our view and so they completed their existing inventories to very low levels knowing that they're seasonal weakness in the fourth quarter almost every year as you get into, you know, wintry weather and construction slows down for lumber tends to come off and prices tend to tend to come off. So we think Lumber inventories are very low throughout the supply chain. And today most meals are probably a living off of length order files from when prices were were sky-high. There will be price Discovery. There is price Discovery taking place now as we speak especially in in southern yellow pine prices are strong.
To find the floor we think and so this will this will continue over the next month six weeks eight weeks and then you're going to see dealers have to step in and and build inventories to support the coming season, which is you mentioned looks like it's going to be pretty strong next year between new housing starts, you know, Mike mentioned those new home builder orders up 40% pretty spectacular continued strength in our and our both both the resy and FDA have indicated. They think our our markets are going to continue to be strong next year. So sick of you is that dealers are going to step back in and have to rebuild inventories as we get out into the first quarter and that should help support industry pricing.
That's that's exactly what I was hoping to get. That's really helpful. Thank you so much for that and maybe also makes me switch gears on to the the timber harvesting site are there any items or or things that are moving around that could affect harvesting margins from you know going from the third quarter to fourth quarter, whether it's you know, it's diesel fuel or anything else that that we should keep in mind in terms of harvesting margins sequentially.
No.
You know the largest cost item for our our Timberlands businesses are are harvesting in our hauling we call it logging Hall and those those costs are relatively flat year-over-year. They have been for several years a little bit of inflationary creep. I suppose this year prices are a little bit lower perhaps because of lower diesel prices, but not a lot of movement there.
Okay, perfect. All right. Thank you guys. Thank you.
My next question comes from the line of John. I'm with Bank of America your line is now open this actually may just be a solid volume and the movement that you're expecting from 3 to 2:40 with that largely seasonal or is there anything else to be mindful to?
Yeah that the real big affect their John is is as you probably recall we index about 70% of the price of our saw logs in our Idaho business and we have it on about a six-week lag. So I know we have a pretty significant price move on Idaho saw logs Q4 to Q3. That'd be the other hand side wondering about volume seven months.
Yeah, so in terms of volumes, it's just easily down, you know, so we were at one point seven million tons and in Q3 and you know, we've guided a range of 13214 and it's just a seasonally lighter part of the year with other thing is we had pretty favorable Harvest conditions for the most part early in the year. So we were able to get a large part of our Harvest complete. I'm going into the fourth quarter that plays a role and then as you probably recall, you know, we do expect our Southern Harvest will be lower than plan this year. And that's largely, you know, the co good disruption that occurred early in the year that we've said we're not going to make that volume up.
Okay, and then just quickly on the dividend does the board need that in December? Am I remembering that correctly? The board does need an early December? Yes.
And then, you know just the last person I was just wondering, you know with the large land sale that you have and real estate, you know, this this upcoming Court of the Minnesota Timberlands. They're dead. Could you give any sense as to whether you could. We'll still be out by excluding that mantle
well, even. For Real Estate excluding that land sale no, no overall. So the short answer is no I mean, you know that sale is about a $48 sale and Thursday we have is a situation where that particular transactions effect on ebitda sequentially will outweigh, you know, the the lumber price decline and the and the volume decline that we've talked about wage on the Harvest and the one more shipment side.
Our next question comes from Caitlin Torah with the line is now open.
Thank you Jenny. If I may on the Northern soul of prices, you said a couple of times to be up substantially. I also know there is thus offsetting drag impact damage from density. Is there a way to sort of Fame it you know sort of its high single digits on a net basis low double-digits. Can you have that a guess in terms of kind of like it actually what it could be?
Yeah, so Keaton.
This is this is this is there. Yeah, there is going to be a little bit of density Dragon fourth-quarter. It's about five six percent but more importantly those High lumber prices that we saw particularly in September a really going to work in our favor as we get out into Q4. We expect our Northern Soul our prices to be up about 40% and 2 4 versus to 3.
And this is Nick of the density or this is without the density. This is the density.
Night of the density got it.
Got it. I'll turn it all. Thank you.
At this time I'm showing there are no more questions. I'll give him a call back over to Jerry Richards.
All right. Thank you Lindsay and certainly appreciate everybody's interest in Potlatch deltic available for the detailed modeling questions the rest of the day and look forward to catching up on our next next quarter's earnings.
Concludes today's conference call you may now disconnect 6lack.