Q3 2020 DCP Midstream LP Earnings Call
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Thank you good.
Good morning, and welcome to the DCP Midstreams third quarter 2020 earnings call.
This call is being webcast and I encourage those listening.
Give you the supporting slides, which are available on our website at <unk>.
<unk> Dot com.
Before we begin I'd like to point out that our discussion today includes forward looking statement.
Actual results may differ due to certain risk factors that affect our business.
Please review the second slide in the deck that describes our use of forward looking statements for a complete one thing.
Factors, please refer to the partnerships.
We will also use various non-GAAP measures, which are reconciled to the nearest GAAP measure and schedules in the appendix section of the slide.
I think I've been CEO, and Sean or Brian CFO will be our speakers today and after their remarks, we'll take your questions.
Turn the call over to Dr.. Thank you, Sir and thanks, everyone for joining us.
Our team delivered another strong quarter.
Definitely navigate the ongoing challenges 2020.
For my thanks to each and every day.
When it comes to your hard work.
As a result, our multiyear strategic evolution. We started this year strong foundation that has served us very well.
Areas of uncertainty.
Over and above that we make investments to fully integrate our value chain to capture more earnings.
Rightsizing the portfolio to ensure high caliber food brands in the country's premiere basins.
Diligently executed the supply channel I should be short strategy, both optimizing existing assets some functions, but didn't digital transformation established in 2016.
These strategies enable us to be well prepared heading into this downturn, we expect them to accelerate a recovery in both.
Specifically looking to our Q3 performance, we don't wavering focus operational excellence, we have maintained home safety and reliability performance.
Driving emission reductions.
Youre talking about this more later in the call.
Turning to our financial performance.
Results of our disciplined optimization efforts in Q3, our assets generated 331 million of adjusted EBITDA totaling 963 million year to date.
We expect to beat our year over year cost reduction target of 120 million, we have delivered 71% reduction in total capital expenditures year to date.
Started swift an aggressive measures at the onset of this downturn no evolved into a sustainable restructuring or cost basis.
Couple this cost of capital discipline with proven earnings power of our asset base, we have generated 152 million well in excess free cash flow year to date.
We define excess free cash flow.
Distributable cash flow less distributions I'm less expansion capital expenditures.
Deliberately more commitment to de lever the company 156 million of debt reduction in Q3, and then proves bank leverage ratio was 3.9 times.
Despite disruptions in our business and the grown at bars, we remain committed to our DCP, two porno transformation and sustainability efforts, specifically to advancing our sustainability goals earlier this year Bargainer ship when Congress Irish Springs, we launched the largest industry Love Nothing survey in the United States.
Thanks, Tim.
Dexcom repair fugitive emissions within our asset footprint.
We continue to explore and violent dish.
Additional technologies to reduce scope on scope to emissions. These efforts in combination with our sustainability DCP two porno advancements were recently recognized by the World Economic Forum.
DCP midstream was one of the 10, new additions to the World Economic Forum Global line.
Which is a community world leading companies that have succeeded in the adoption fourth industrial Revolution technologies at scale.
54 adult inside the company in the World Economic Forum flight <unk> designation DCP Midstream is one of only five companies in North America and is the only U.S. based oil and gas company to received this distinction this distinction.
So incredibly incredibly proud of routine for dish and all the other accomplishments. This year so not to talk through the details of the Q3 results our financial position and outlook, Let me turn it over.
Thanks, founder and good morning on slide four you'll see that we've had another solid quarter generate DCF from $232 million, representing a 22% increase in DCF your view and driving a $130 million of excess free cash flow, which again is after fully funding $20 million of group capital.
$81 billion of distributions our strong third quarter results were driven by continued commitment to cost discipline supported by our DCP 2.0 efficiencies, which more than offset an adverse $24 million year over year impact from lower commodity prices.
Our risk based prioritization of projects, coupled with no product placement will drive or 2020 sustaining capital expenditures below the low end of our guidance range growth.
Gross capital slightly exceeded the high end of our range in Q3 as a result of cost overruns on the Cheyenne.
Adjusted EBITDA for the L. and EMS segment saw an 8% increase year over year with solid earnings from sand and Southern Hills, offsetting lower NGL marketing results as pricing volatility dampened in Q3.
Saw an increase in NGL pipeline, you are really driven by increased ethane recovery short haul volumes and southern Hills extension and the front range and Texas Express pipeline expansions.
Adjusted EBITDA for the GDP segments on a 5% increase year over year. Despite a decrease in overall GP volumes over the same period of time.
Our GNP performance is the result of increased higher margin wellhead volumes in the DJ Basin, and Permian and continued cost discipline throughout our footprint.
Moving to slide five you'll see our solid financial position as we continue to strengthen the balance sheet through the cycle we.
62% of our earnings coming from our logistics and marketing segment, and 83% up on margins either fee based or hedged our footprint is fully integrated with stable cash flows.
We achieved a $130 million or 70% reduction year to date cost compared to 2019.
We believe that the vast majority of this reduction in sustain couple.
A couple of more cost and capital discipline with our strong portfolio of assets favorable contract structures and strategic hedging program, we generated $152 million of excess free cash flow year to date.
This has enabled us to lower our debt by $175 million and 2020 and improve our bank leverage ratio to 3.9 times better than our 4.0 times target for the year.
With continued solid liquidity of $1.3 billion, our top financial priority is to utilize our growing excess free cash flow to continue de levering the company.
On slide six I want to provide additional color on our Q4 EPS.
First our Q3 volumes have been in mind, our second half expectations with a slight sequential decline impacted by planned maintenance in the Permian and on the discovery asset and so.
We anticipate a sequential increase in GMP volumes as rig and Frac crews work within our footprint and we exit the Q2 Q3 loans of the downturn.
In line with our outlook on the Q2 call throughput on our NGL pipes is expected to decline as commodity prices force increased ethane rejection as.
I mentioned earlier the team has worked incredibly hard to control, what we can control and reduce costs. This year more than offsetting the impact of production declines.
The prices.
With that being said, we do expect both increased cost and sustaining capital in Q4 as deferred projects are reprioritize.
Growth capital for the remainder of the year is expected to be minimal as we finalize expenditures from Cheyenne connector and the lead them to all.
Finally, we expect commodity prices to be at or above our targets for the remainder of the year.
We've evolved are focused on operational excellence to encompass a broader set of environmental social and governance calls, which enhance our sustainability.
We've had strong commitment to sustainability for years, including auto emission targets in every single DCP employees compensation. Since 2007, our team have sort of form of 2020 call to action, while the energy with vigor and innovation, we've made step change improvements in our emissions.
Launched the country's largest industry Latin methane survey, but we know we must look beyond the overused G.
We've also published starting an overall sustainability report establishes sustainability council and I inclusion and diversity Committee.
Continue with our engagement and investment in our communities and maintain top safety performance and more.
Simon with our sustainability efforts, we remain dedicated to further optimizing our business Biolytic, new technologies, and ultimately leading to midstream industry and innovation through our DCP to board our transformation.
These initiatives combined with our multi year evolution to become a fully integrated midstream service provider and are substantial cost restructuring efforts set the company up extremely well for long term success.
Moving forward, we will maintain a laser focus on our best in class best in class costs and capital disciplined so we transition to a lean manufacturing model prioritizing returns Robert and capital growth.
As a result, we're generating sustainable access free cash flow, which is being utilized to improve our elaborate strengthen our financial flexibility and stability.
Reduction is artful capital allocation priority and we have line of sight to Delever, our balance sheet and hit our mid three five spanked leverage target all what we're offering a competitive distribution to our investors.
And all our strategy to build support for having company, creating long term value and driving increased unitholder reserve and with that I want to say. Thank you again to all of our employees for their hard hard work until all of our investors for the continued commitment to GGP, we'll look forward to taking your questions.
Does that Latif why don't you kick us off.
Sort of as a reminder to ask a question you will need to press star one on your Touchtone telephone to withdraw your question press the pound key again that star one on your Touchtone telephone to ask a question. Please stand by while we compiled the Q&A roster.
Our first question comes with a lot.
Jeremy it's on at all J P. Morgan your question. Please.
Hi, This is Joe on procurement.
Wanted to start around some of the upstream consolidation recently.
That impacting your business at all and also do you think midstream could.
Follow upstream footprint and we could see some mid.
Midstream consolidation.
I'll also at some point.
Hey, Joe let me take that long.
I think you're absolutely right on my policy consolidation.
Well the producer side I think we're going to see consolidations midstream side. The question is what is that.
And a half.
If I look at general at why are some of that consolidation has impacted us I look at it from a producer point of view as a as a positive for US you would see here. The TJ basin for instance, you get larger producers I think that can bring some efficiencies too.
Two what is a great basin. So that's not the producer side I look at it as a.
As a good thing I think from a midstream point of view, we've been talking about the need for this industry to consolidate for years, we expected got at 15 and 16 it didn't happen.
My expectation virtually yes, it will happen here the industry. The midstream industry is kind of built in an infrastructure in many cases for about 14 million barrels 50 million barrels a day of crude oil production.
Tragically hits 13. This year, we went down to time that we're probably going to add some work around 11, and I don't think that's going to change massively and in the next year. So yes, the midstream industry needs to consolidate needs to come together I think it needs to happen the way it happens on the producer side right now so it's low to know pray.
And find good deals stock for stock units for unit. So that all the synergies you create really flow through to the respective shareholders.
I think from our point of view, if you think about our strategy that we've had for the last couple of years, we've had a strategy it'll be supply long capacity short. We believe you were going to come to the end of the Super cycle of growth that we have for 10 plus years and that that's what's going to change. So we do have one on the last pipelines lost fractionator the last.
Gas processing plant. So that's why we would be doing a number multimode smaller things. We started working on what I would call a lean manufacturing type of profile.
DCP two four now our digital transformation, we have a leading digital platform, which would lend itself really really good and then I think if you look at what we've done this year and what the team has accomplished from a cost point of view.
Bleakly restructured our cost basis, we are a low cost operator and.
A lean manufacturing kind of digital digitally enabled local platform lends itself I think really really well in the consolidation cycle.
Okay, that's very helpful.
And then I also wanted to ask I'm Atlanta rejection, and just I guess what are you seeing currently around at Dana recovery for the fourth quarter does.
Does it seem consistent with the level of in the third quarter.
And also kind of I guess are you seeing any impact.
From that day, and cracker outages due to hurricane.
Yeah, Hey, Joe Sean O'brien, eight we are seeing.
Little bit of a reduction in the recovery levels. So obviously, an increase of rejection as we head into Q4.
Not driven heavily by.
Some of the disruptions more so the frack spread the frack spreads tightened a little bit.
And where C.
The good news is it's not full rejection I think we were somewhere around 35, a day on the rejection side in Q3, just to remind you from our portfolio standpoint, we're in the nineties day range your previous quarters, so quite a visual it came off quite a bit.
I think we think we're going to head back up a little bit in queue for that's what we're seeing so far this year more so driven by Frank spread stronger gas prices, we're all rooting for Epee, which many times correlates with the gas start moving up and then we will see that backhaul. So what we're calling it is sort of.
Partial rejection or partial recovery whichever where you are looking at it but definitely less recovery Q4, so far.
Got it that's helpful. Thank you that's all for me.
Thanks.
Thank you. Our next question comes from store Gratuity UBS. Your question. Please.
Hi, good morning, everyone.
Maybe to start off here.
Wondering if we can go through Colby volume cadence.
On your system.
Originally the expectation was the second half volumes would exceed second quarter four quarters down a little bit.
It was it more about the shape that it was supposed to be in <unk> is it the maintenance items that you just sort of venture the prepared remarks, and maybe as part of the question.
If you can give us an update on where you see riggs on your footprint.
By based on what you're seeing in terms of.
Completion cruise and so forth just kind of wondering if we can get a little bit more color of that.
Yes, good morning, Cheniere, let me start and I know about or has been in contact with a lot of our CEO of of our producers maybe dark recounts a little bit.
But in terms of the trend I think you are on it we definitely had a Q3 some maintenance specifically in the Permian.
We saw some of that coming but that definitely in fact that some of the volumes obviously, they're not long term. We're in N out everything went as planned also on the discovery system, which would in fact, the south we saw some maintenance there is a little bit of shape I think thats, what you were alluding to a stronger queue for.
My written remarks, I gave a little bit of color that we do see the G&P side.
Strengthening a little bit Q4, and then let me give you some other stacks that I think are important if.
If you think about ergative raised to exit right I know, we're looking at a lot of average queue to the average Q3, but if you look at the exit right I E coming up September versus coming out of June.
D. J was up 5% coming out of September versus June the Permian was up 3% to 4% and that was even with some outages and then this one is pretty strong the south again predominantly driven by the Eagle was up 10% coming out in Q3 versus queue to mid continent is these kind of on an actual decline and it wasn't impacted.
As much by the shut ins all those other three year is word which is why you see some of those upticks so by and large.
Think as we exited Q3.
We're in line with what we thought I think we think things will get a little bit stronger in queue for lapsing I mentioned before I handed over Nevada for some of the rig rig stuff.
Remember that.
Obviously, what we're seeing some of the growth.
Some of the areas that we have the better netback some of the areas. The producers have the better netback. So you solid in our our margins are G&P margins performed quite well, that's because of the deep deejays performing well in the Delaware there are higher return areas and they're also the higher return areas for the producers.
Yeah, maybe share Walter here, just got a couple of thoughts on what we see.
But our various producers I think.
For most of the producers him like there tends to be a bit of a story and like Hey, we hope that we can keep things flat year over year from 2020 to 21, but it also a little bit too soon to tell depending on what is going to happen with the economy, what it's going to happen with recovery, what's going to happen with vaccines and the Corona virus.
I would say that a lot of our producers I would say are cautiously optimistic we have seen some people bring back.
We have seen people break Max condition cruise so.
At the same time I think it's it's a bit of a wait and see still here and I think we're getting a lot more clarity here in the coming months.
Okay fair enough.
Maybe two to follow up on the last question.
I hope I coins.
Your praise correctly here digitally enabled lean manufacturing.
Just kind of curious.
Is that your view that that is the way to basically.
Increase or sustainability ratings, and that's kind of the the sustainability focus with a company and.
It seems like you've built quite a a best in class mousetrap in terms of reducing costs of optimization optimizing capital does that become a strategy for you to pursue M&A at some point.
Either whole companies or acquiring some assets here and there.
Obviously, once you leverages and check I'm, just kind of curious how you are sort of thinking about that about a holistic basis no I think in general generic like you paraphrase really really well like this has been a strategy for.
Long time, we believe that industries upstate go through a major growth cycle you tend to go into consolidation cycle, you are going to be ready for that so hopefully be doing over the last number of years on the one hand is find prudent growth even though we did what are we wanted to be supply lung capacity short. So let's go after all piece of.
Growth and at the same time built that lean manufacturing digitally enabled platform, but it's really when you get into consolidation cycle or a cycle of last growth.
Get as much of your asset base as you want so that is absolutely parallel we've been advancing these two pathways.
And.
Obviously I kind of look at it if you think about consolidation on like you got to have the right to consolidate correct. You got to have the right to think whatever you have and build a better mousetrap versus company Center stand alone that I think there is absolutely no doubt about it but we have done with this team has gone over the last four to five.
Five years roughly.
You don't transformation.
Best in class and our industry again.
It's not just the world's economic forum, where hate the only use base oil and gas company that is really apply fourth.
Australia.
Digital tools fourth industrial Revolution digital tools to tune our business model. Unlike so I think there's a lot of great that the team has done is great. If you keep the company spent malone and keep going to survive and thrive Standalone and I think it is also a great model to partake in in a controlled.
<unk>.
Oh really really appreciate the color on that thank you very much.
You're welcome.
Thank you. Our next question comes from Spiro Lewis of Credit Suisse. Your line is open.
Hey morning, guys.
One of them wanted to start out with buybacks, which.
Obviously trending these days amongst your peers.
The last time, we oughta sounded like deleveraging was really the only thing on your mind to the next 18 months or so sounds like that's still very important for Ya. We're here are kind of bloke four times at this point I'm just wondering if that's still the case and I guess what are you looking forward to maybe change that view and increase your appetite to do something like a buyback.
Spiro a couple of things right off the bat I think your assessment is accurate.
I'm incredibly pleased and impressed with the company's ability to generate excess free cash flow. We've stayed true to our our plan and strategy of Delevering. We've taken 175 off I still think there's some work to do their spiro, but the good news is we are well on our way we are generating a lot of it is free cash.
Hello, I see that growing next year and I want to make sure that we stay focused on that approach.
And I think that's going to keep the company going in terms of a strategy for foreseeable future into 2021 for sure.
Spiro, maybe maybe to add just a little bit to that.
I think by bad buybacks as a strategy or as a capital allocation toll does make sense for certain companies on our priority right. Now is two Deleveraged company, we have delever and year to date already $175 million and that's going to grow here in the fourth quarter and it's going to grow next year so for us.
Getting the balance sheets of quality three in the mid three cycles leverage ratio is going to be the key priority.
One thing that I think is interesting you should look over the last 10 years.
Our industry has been criticized by south side.
By side of this by investors in this industry by Generalists investors. It has all been about hate us industry is nugget and allocating capital.
And that is a key criticism 48.
Back to make sense, but buybacks makes sense when you have a balance sheet strong and b yields is high.
If one of those is not there.
Absolutely not the right time, it is not derived capital allocation strategy and so for us having a strong balance sheet. The most important thing right now it's good for equity holders. It's good for debtholders and in my mind, it's an absolute no regret move for DCP to continue to strengthen the balance sheet at historical.
Home.
Understood.
To your your discipline there.
Second question just on the guidance I think last quarter, you talk about maybe being closer to the low end.
And so I'm sorry, if I missed in your remarks, just around the fourth quarter and the trajectory there, but it just seems like that's a fairly conservative quicker at this point, even the midpoint of your guidance would wouldn't apply down quarter over quarter. So just give us a sense of where you are in that spectrum right now.
Well I appreciate that that's cool I'm, sorry, I, just want to kind of take people back a little bit to get this year at such an interesting are in so many things have happened. So we re issued are original guidance, so not a coma lower guidance on our staff irregular.
Issues are original prisco pre op agricole back plus pre global pandemic guidance, just three months ago, and we are to your points are well and welcome track. So I think if you look at the end of the year.
We're approaching and they're kind of the midterm.
EBITDA I think if you look at the end of the year, we're going to be well above the midpoint DCF.
At the end and even currently at this very moment.
If you think about extra street cashflow, we have already surpassed the low end at this moment nine months in and obviously shoulder.
The advantage of looking at October as well, so we feel really really good after fees as well and the answer I think before doing it's all about controlling monthly get control I think teams executed tremendously strong we were out and engage very fast south altamonte things and you are seeing that that and all the number so if you.
Got a three lines the clock kind of a year ago, and you could say that.
You are going to be at or above most of your guidance items.
World Why are you hot negative crude oil prices for awhile, but are you had hoped that could help a plus doing some interesting things to U S production and you have a global pandemic the first one and probably the side.
Last century.
Are going to do what we're doing here right now as a team I think you are pretty happy.
Yeah, now certainly impressive given that contacts that last one if I could just have a quick follow up the snares question with regards to <unk> being a highly valuable tool for M&A do you have a sense on where you are and turns over here where to purchase someone else's processing plants run of the mill kind of average.
And you start running in integrating it and overlaying D. Two point I want it on day. One are you starting out with I don't know, 30% lower costs, how do we actually think about your advantage over the average once something is overlaid with DCP to point out.
[laughter].
That's a tough one that's very that's a good question that's fair I appreciate you.
Answering as I think I'm gonna be I'm going to choose to be alone <unk> Robbins, we have built a mouse trap that is a very good monster Amp you have seen our safety getting better and you've seen a reliability getting better it will see our emissions getting lower all while doing working and execute against with last people with better service for.
Our customers clearly something is happening and working here that is working quite nicely. We have third party companies come to us and think about taking you help us with this.
I spoke at the World Economic Forum.
A small feet and like that as a global they look globally, not Houston oil and gas companies. They look at every single company industry in the World people, who are actually making a difference and we clearly make a difference and we're going to continue to to move forward with to execute on that and to continue to lean the system out.
And be more efficient.
Can we do that to other people with together with other people for for other people or with other People's assets. The answer is absolutely yes spot.
We'll see how it played it up.
Yeah Fair enough appreciate you taking a stab at it thanks guys.
Zero.
Thank you. Our next question comes out of alignment of a virus scotto of RBC capital markets. Your question. Please.
Yeah, Hey, good morning, So just to follow up on the upstream M&A impacting midstream.
I understand that having a large embattle better capitalised customer base is a positive but I think it affects.
Midstream in terms of upstream.
Alright.
Contracting power I guess for lack of a better word.
That's a good question I think it's it I would say it defense I think it depends on what basis do you play what alternatives to.
Who produced task I think in general and I think this is by.
<unk> that is very important I said earlier that you have an industry that may be billed for.
14, 50 million barrels a day of capacity and all the infrastructure is kind of line up to that so you have overcapacity. So if you are in a place where you're dealing with a larger customer and there is Michigan overcapacity, there probably is going to be pressure range. When there is a renewal and so I think that's all.
<unk> got a continued lean your company out to thank all stopped so that you can then so you can work with that.
Also think that overall consolidation has got to be a markings. Because you are going to be able to have gotten direct gas and most efficient us estimate.
Thank you that's very helpful and then.
Appreciate all the comments that you made on.
Lowering emissions and your methane emissions survey.
A little bit more around energy transmission to outside of lowering methane emissions, how do you see PCP participating in the energy transition.
Is there any potential to repurpose some of your assets I mean is there potential <unk> to to to do carbon caps or just kind of thinking a little longer term yes.
I think the last two that you're talking about the answer is yes, yes, and we're looking at a variety of different different ways around our footprint to deal with that I think one thing that's really really important novara is that you can't just sit here and think about hate as asset base.
It's got to be gone shortly I know that people are talking about terminal values, which is a really really strange concept.
Concept to me, we are into natural gas business and natural gas will be around for decades, and it's going to be around either for Camilla direct electrification or it's going to be around as it back up to a growing renewable energy mix. It is going to be around as a lot of our industry rely on our products to think about the chemical.
Go in the Street think about a slew of other different industry. So did businesses absolutely going to be around for a long long time. So our focus has to be the best operator be safe reliable and continued to reduce your environmental footprint.
I highlighted for almost 15 years I'd like a decade and a half every single employee within DCP Ministry has a missions performance as part of their paycheck and it's something that we have never spoken about but it's something that we always look at so this is kind of inherent it's the same way as safe for the change.
Eight and a half or longer people get paint on being making sure that you are the changes company out there. So we I spoke about the largest.
<unk>.
Space studying if we're doing on focus too.
Keep basically.
<unk> emissions within within the bike within the compressor within the gas processing plant. So our focus is to be on.
Is keeping it out of the air not keeping it in the.
The ground I think that is the key thing to focus on the industry is going to be around.
Be a major player and we believe that the oil and gas industry is going to be a major player in actually solving for climate change and I think dcp's going to be as strong as a strong role of end up for years and years and years to come.
Ladies and gentlemen, again to ask a question. Please press star one on your Touchtone telephone again, that's star one on your Touchtone telephone to ask a question are.
Our next question comes from the line of Tristan Richardson of tourists Securities you're lying is open.
Good morning, Mrs Bronx in on for Tristan.
You guys have talked about your contracts and G&P mitigating risk, which was a meaningful benefit and two two during the commodity volatility.
Where some of those revenue for features of benefit to CMP and three two.
And just given your expectations for lower C. Two volumes and four two should we expect some of those revenue course, perhaps kicking or be a benefit here and G&P and before Cupid as well.
I think what you're talking about.
Some of the incentive simply gauge for people to say our systems those were very temporary incentives have.
Have we seen the benefits of though.
Literally I'd like one of the.
<unk> suddenly gave that incentive to we extended our contract for multiple years. So there is a long term benefit doing the right thing for your customer we strongly believe that.
Is there going to be gone ebay Q through our queue for ongoing.
In fact of that noted program was really.
Focused on maturing I would say May June timeframe.
Customers were looking at taking.
Wells offline and I think we're won't be able to touch right now yeah bronze and just add a little more color. It was exactly tied to the Chevy an environment that we saw.
A lot of producers were trying to figure out, which wells were profitable, where where where they are going to shut in while they were adjusting to lower demand. So two things have happened. Since then obviously the demand has come back to some level.
And we were very helpful with some of those producers during that period to try and make sure that our assets.
Received volumes and kept running during that time period, but we're beyond that obviously demand has come back as I mentioned in commodities also strengthened some since then as well.
Okay. Thanks, that's helpful.
For us.
Okay.
Thank you at this time I'd like to turn the call back over to Sarah Sandburg for closing remarks now.
Great. Thank you for joining us today, if you have any questions. Please don't hesitate to reach asked me and have a great week.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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