Q3 2020 Otter Tail Corp Earnings Call
[music] good morning, welcome to Otter Tail Corporation third quarter 2020 earnings Conference call today's call is real accordingly.
Got a question answer session. After the prepared remarks, I will now turn the call over to the company for their opening comments.
[music] good morning, everyone and welcome to our call. My name is Loren Hanson and I manage otter tails Investor Relations area.
Last night, we announced our third quarter 2020 earnings results, our complete earnings release and slides accompanying this call are available on our website at otter tail Dot com.
A recording of the call will be available on our website later today.
Give me on the call today are Chuck Macfarlane Otter tail corporations, President and CEO and Kevin Moug Otter tail corporations, senior Vice President and Chief Financial Officer.
Before we begin I want to remind you that we will be making forward looking statements. During this call as noted on slide two these statements represent our current judgment or opinion of what the future holds.
They are subject to risks and uncertainties that may cause actual results to differ materially.
So please be advised about placing undue reliance on any of these statements.
Our forward looking statements are described in more detail in our filings with the Securities and Exchange Commission, which we encourage you to review.
I feel corporation disclaims any duty to update or revise our forward looking statements due to new information future events developments or otherwise.
For opening remarks, I will now turn the call over to Otter tail corporations, President and CEO Mr. Chuck Macfarlane.
Thank you Lauren good morning, everyone welcome.
Welcome to our third quarter 2020 earnings call Otter Tail Corporation continues to support all locations we serve.
Collective efforts to mitigate the spread of Carbonite team are.
Our business continuity plans put the health and safety of our employees and our communities at the forefront and where does that and are designed to help ensure continued electric reliability and operational excellence across our companies.
A majority of our employees now living in areas, where there's been a spike in new COVID-19 cases, we're.
We remain diligent in our precautionary health and safety efforts based on the recommendations from the CDC regional health organizations and state and local government mandates.
Currently 17% of our employees are working remotely since.
Since March we have had 93 confirmed COVID-19 cases across the corporation of which 20 remain active.
We continue to monitor this dynamic about how it is impacting the economy and our electric and manufacturing platforms.
Please refer to slide six as I begin my comments on Q3.
Where the 87 cents per share this quarter compared with 62 cents per share in the third quarter of 2019, yeah.
The increase was primarily driven by our plastics and electric segments.
Kevin will provide more detailed discussion of our financial performance in his comments.
What a brief overview of Q3 results are.
Electric segment earnings per share increased 16 cents, primarily due to increasing investments in our mayor Court wind Energy Center.
And stories station a favorable favorable decision regarding the state jurisdictional treatment a federally approved transmission rates.
Effective cost management targeted at offsetting the impacts of Carbonite team and lower operating expenses.
Our manufacturing segment earnings were flat quarter over quarter, but experienced higher margins due to productivity improvements.
Sales continued to be negatively impacted by COVID-19, However, BTD has seen a rebound in sales to the recreational vehicle and lawn and garden end markets.
Our plastic segment had an outstanding quarter with earnings per share, increasing 11 cents driven by increased volumes and margins, resulting from strong market demand coupled with favorable market pricing.
And our corporate cost increased by two cents, primarily due to increased performance based incentive accruals, resulting from improved year to date results.
Based on our year to date performance and our updated view of the potential impacts on our businesses and Golden 19.
We are raising and narrowing or 2020 diluted earnings per share guidance to be in the range of $2 and 26 to $2.36.
From our previously announced guidance of $2 10 to $2.30 per share.
You will note that the midpoint of our updated guidance is now slightly above the midpoint of our original 2020 guidance.
As noted in the earnings release, we continue to take actions to help mitigate financial risk from COVID-19 impacts on their businesses.
Key impacts to the utility include lower commercial and industrial sales, partially offset by increased residential usage.
We have provision for anticipating anticipated, increasing bad debt expense and wave late fees.
We've undertaken significant on M. reductions and filed for deferred accounting.
The COVID-19 related impacts.
Oh Oh.
Although we continue to see some volume reduction in our manufacturing segment.
Over 90 weak.
We continue to focus on reducing on A.M. expenses to help mitigate those reductions.
Also our revised outlook now anticipates, a stronger economic recovery.
Their end markets for the remainder of 2020.
As mentioned our plastic segment is performing exceptionally well in 2020 with the limited effects from COVID-19.
Slide 11 provides an updated view of the annual revenue impacts by customer class for the utility.
The current view.
We estimated overall utility sales impact.
For 2020 related to COVID-19 is a negative five to seven cents per share those impacts are included in our revised guidance.
Otter tail power along with many other utilities suspended disconnects for late payments waived late payment fees from residential and small business customers. During this pandemic.
And as expected this will have a negative two cents EPS impact related to increased bad debt expense.
Disconnect processes were reinstated in north and South Dakota in mid September.
As shown on slide 12.
Filed our Minnesota General rate case on November 2nd our last Minnesota rate review was filed in 2016.
Investment in cleaner energy generation as the primary driver for this request.
Airport Wind Energy Center, a 150 megawatt wind generation facility in North Dakota.
In a story of station 245 megawatt simple cycle natural gas combustion turbine in South Dakota.
A part of our plan to meet customers future energy needs.
And our new customer information system, which focuses on enhancing customer experience is also a driver for the request it allows customers more access and options related to their energy use and the company's services.
We propose to increase revenues from Minnesota rates by 14.5 million or approximately 6.8%.
We also requested approval to implement decoupling.
Customer bills to stabilize revenue.
Third from energy sales.
If approved this will go into effect with final rates.
Even with this increase otter tail power will continue to have some of the lowest rates in the country.
Otter tail power continues to grow through capital investments in generation and transmission technology projects.
Lets look shown on slide 13 right.
Rate base was expected to grow at an annual rate of 8.6% between 2019 and 2024 in a constructive regulatory environment.
On slide 16 construction continues on the American <unk> Wind Energy Center, the largest capital project in Otter tail powers history.
Project is scheduled for completion by the end of December 2020.
Well, there is a risk associated with supply chain and construction labor due to COVID-19.
All 75 top towers have been erected and topped out with commissioning underway.
The first turbine was energized on October 14 pretty.
Producing the first megawatt of energy of the new wind farm.
On Slide 17 stories station construction remains on time and on budget.
Major construction milestones were reached in the third quarter with all major equipment onsite and in place.
The gas interconnection complete and the generator, Thailand complete.
The project is moving into the testing and commissioning phase despite.
Despite probing 19 construction labor risk, we expect it will be commercially operational in Q1 next year.
In mid June Otter tail power submitted their response to the Minnesota Public Utilities Commission request for projects to potentially help the state in coal with 19 economic recovery.
As shown on slide 18, the company submitted 12 projects with a total cost estimate to be in the range of.
Honored and 53 to 173 million.
With construction or completion dates that would occur in the near term if we obtained authorization.
Approximately 30% or $50 million of those investments are outside of our current capital expenditure plan.
The projects proposed include solar generation infrastructure, and reliability improvements and outage management system.
Accelerated vegetation management and electric vehicle infrastructure and rate pilot.
Generally this would be an advancement of projects that were previously in some stage of consideration.
On slide 19.
<unk> power announced in September the 60 million dollar Hoot Lake Solar project.
This is a 49 megawatt project, we plan to build on land around Hoot Lake plant and Fergus Falls, Minnesota.
Object will include up to 170000 solar panels and will generate enough energy.
The power approximately 10000 homes each year.
This project offers us a unique opportunity to reuse or existing hoot lake transmission interconnection.
Along with substation and plant land after retiring the Hoot Lake coal plant in 2021.
Solar generation has several advantages that make this the right energy resource for us to implement at this time and at this location.
Over the past few years the cost of solar energy has significantly decreased while efficiency has increased.
Construction may begin as early as 2021.
Once the project is completed up to 35% of customers energy will come from renewable resources.
Slide 20 outlines an opportunity to grow rate base and increase earnings self fund is the election by the MISO transmission owner in this case otter tail power.
To fund the initial network upgrades associated with new generator interconnections.
Recover the investment from those interconnection customers through a monthly revenue requirement over 20 years.
The company has secured 28 of 33 facilities service agreements and approximately 90% of the construction has been completed to date.
Key risks continue to be weather and potential COVID-19 impacts.
We continue to monitor progress of the federal regional haze rule process in North Dakota.
North Dakota Department of environmental quality the Q.
And the state of North Dakota have many milestones to reach before the state summits its implementation plan to the environmental Protection Agency.
Coyote station owners continue to analyze the data and and decisions that will impact the plant and our employees customers and communities.
We'll know more in early 2021, when the DQ begins the public comment period regarding its recommendation on Coyotes stations compliance strategy.
The DQ is scheduled to submit the North Dakota State implementation plan to the EPA in July 2021.
Each of the owners is uniquely positioned to serve its stakeholders today and in the future.
Our shared priorities are continued to serve customers with reliable low cost electricity.
Turning to our manufacturing segment. We are encouraged the BTD has seen an uptick in sales in the recreational vehicle in lawn and garden end markets as Oems start to rebuild their depleted inventories.
Display overall sales lower overall sales BTD is improved their margins through productivity enhancements.
Our plastic segment, we continue to benefit from a strong residential construction market.
Through the end of September New housing starts were up 11% compared to a year ago.
They have also benefited from a tight market, resulting from major pipe converters reduce production in the second quarter of 2020, while the residential construction market remains strong.
There has been limited.
Back to construction efforts from Carbonite team.
To resin suppliers and booking force majeure, which positively impacted PVC pipe sales prices.
Concerns over Hurricanes, creating limited availability of PVC resin supplies and increased global demand for PVC resin.
These results. These factors resulted in higher quarter over quarter sales volumes increased pipe prices.
I would also like to recognize Steve Laskey recently retired as president of the plastic segment.
Steve has had an outstanding career with Otter tail Corporation, and as a leader in the PVC pipe industry.
Steve joined Otter tail with the acquisition of biotech in 2000.
And as president of the business.
Nine Steve was promoted to president of the plastic segment.
Driving great results for the group, Steve developed a very strong reputation for driving operational excellence and leaves the business well positioned with a long developed succession plan.
We have estimated that over 4.3 billion pounds or the equivalent of nearly 150000 semi truck loads of PVC pipe were produced from both pipe facilities under his leadership.
We were Steve well in his retirement.
Looking ahead, we continue to enhance our balanced electric generation mix, we anticipate by 2023 otter tail power customers will receive 35% of their energy from renewable resources and our carbon emissions will be at least 30% below 2005 levels.
All while keeping residential rates well below the national average.
With growing investor concern about companies generating more than 25% of revenues from thermal coal.
Sure thing to know Otter tail corporations percentage of revenue from coal assets significantly below that threshold.
The percentage of consolidated revenues from our coal assets was 14% in 2019 expert directed to declined to 11% by 2022.
We continue to execute on our strategic objectives to grow our businesses achieve operational and commercial excellence and develop our talent.
And we maintain our long term target of 5% to 7% annual EPS growth.
2019 base.
Now I'll turn it over to Kevin for the financial perspective.
Thanks, Chuck and good morning, everyone.
Our third quarter financial results were outstanding given the ongoing business and economic challenges we face.
Revenues were up.
3% with earnings increasing over 45% driven by a strong performance.
And in our plastics and electric businesses.
Please refer to slides 26, and 27 as I discuss the quarter.
The electric segment net earnings increased $7.1 million quarter over quarter.
This increase was driven by.
Increased Minnesota, and North Dakota, renewable resource rider revenues related to the Mirror Court wind Energy Center.
From the generation cost recovery rider in North Dakota in conjunction with the construction of the story of station.
Were increased Minnesota transmission cost recovery revenues.
Due to a favorable decision regarding the state jurisdictional treatment of federally approved transmission rate and so much.
Increased retail revenues related to increased residential kilowatt hour sales due to favorable weather impacts.
The offset in part by lower kilowatt hour sales to commercial and industrial customers, mainly due to COVID-19 related impacts.
And favorable weather positively impacted earnings by three cents a share compared to the third quarter of 2019.
Other items favorably impacting electric segment earnings during the quarter were.
Decreased on M. expenses due to an increase in the proportion of labor costs capitalize from ongoing construction activity.
And a decrease in other expenses due to cost management initiatives to address the impacts of COVID-19.
These decreases were offset in part by an increase in bad debt expense, mainly due to the adoption of Covidien related service suspensions and debt collection policies.
Other positive impacts include transmission service revenues due to an increase in facility service agreement revenues related to transmission upgrades to accommodate independent generator access to transmission grid.
Andy AFUDC revenues on the history of station project related to the Minnesota share of the construction work in progress.
Offsetting these increases were higher depreciation and property tax expense associated with rate base additions and interest expense associated with higher long term debt levels associated with financing or rate base growth.
The net earnings for the manufacturing segment slightly increase quarter over quarter.
The key items impacting these quarterly results.
We're at BTD revenues decreased $5.4 million driven by.
$4.1 million decline in mirror material prices.
Which were passed onto the customer and a $1.3 million decrease in sales volumes.
The decreased sales volumes resulted from lower part sales to construction and industrial equipment manufacturers.
But were partially offset by increased parts sales to recreational vehicle and.
Lawn and garden end markets.
The increase in revenues related to favorable pricing was offset by lower tooling and scrap revenues.
We also had a reduction in cost of goods sold for.
In the lower material costs passed onto customers and lower sales volumes along.
Along with increased productivity more than offset the lower revenues, resulting in an increase in net income quarter over quarter.
And the TL plastics, the revenues and earnings decreased due to lower sales, mainly as a result of softness from COVID-19 related impacts on their end markets.
Our plastic segment earnings increased $4.9 million due to a 21% increase in pounds of pipes sold and widening pipe resin spreads.
The higher sales volumes were attributable to increased sales to distributors, who rebuild inventory levels in a tight pipe market.
After lowering inventory levels last quarter due to the uncertainty of COVID-19 related impacts on sales.
Cost of goods sold increased $5.1 million due to the increased sales volumes.
Partially offset by a 6.3% decrease in the cost per pound of pipes sold.
And our corporate costs net of tax increased approximately $1 million, primarily due to increased performance based incentive accruals driven.
Driven by our improved financial results.
And for the nine months ended September Thirtyth 2020, we.
We delivered a 13% increase in earnings per share compared with the same time a year ago.
This has been driven in large part by our large rate base projects in the electric utility and favorable business conditions and our plastic segment.
And all of our operating companies have performed admirably this year, given the cobot health and economic crisis facing our country.
We continue to generate strong cash flow from operations and have the appropriate levels of liquidity under our credit facilities.
To support our business operations.
As of October 31, 2020, the total amount available under both facilities was $286 million.
During the third quarter, we issued the remaining tranche of $40 million senior unsecured notes under a delayed draw from the 175 million dollar private placement notes that were issued in October 2019.
And we also raised approximately $8 million in equity under our at the market dividend reinvestment and employee stock purchase plans.
Since the fourth quarter of 2019.
We have raised $55 million or approximately 73% of our equity needs.
Expect to issue up to an additional $20 million of common equity under these programs into 2021.
Depending on conditions in the equity capital markets caused by Cold 19, Pat pandemic or other factors.
And now let's move on to our business outlook on Slide 34, and review our updated 2020 annual earnings guidance.
We are raising and narrowing our 2020 overall diluted earnings per share guidance range to $2.26 to $2.36.
Based on our year to date financial results and an updated view of current business conditions, and our plastics manufacturing segments.
Also the impact of COVID-19 on our electric segment has been less than originally expected.
Our 2020 diluted earnings per share guidance also includes three cents of dilution associated with the planned issuance of common equity to help fund construction projects and otter tail power company.
The following items contribute to our revised earnings guidance for 2020.
Moving on to the 2020 guidance for our electric segment.
Key items include.
Capital spending on the Mirror Court and the story is station rate base projects of 177 million and $81 million respectively in 2020.
Americorp project has rider recovery mechanisms in all three state jurisdictions. These stories station project has rider recovery mechanisms in South Dakota in North Dakota.
And this project earns if you see in Minnesota.
And is expected to be recovered through the rate case in Minnesota and has already been approved in our integrated resource plan.
We also expect increased revenues related to 25 million and anticipated capital spending for self funded generation generator.
Interconnection agreements.
We do not have any major planned generation plant outages for 2020.
There were $3.1 million of plant outage costs in 2019.
An additional items expected to positively impact our 2020 electric earnings include the decision by the Minnesota Supreme Court ruled in Otter tail power companys favor relating to.
To maintaining the incremental return earned on FERC jurisdiction transmission lines.
This estimated.
Estimated impact of this decision was an increase 2020 earnings of approximately five cents a share.
On a go forward basis, the positive impact of this decision.
Is on an annual basis is a penny a share.
We have updated our Minnesota transmission cost recovery rider filings new rates incorporating the results of this decision.
And just as a reminder, we did record the effect of this decision in the third quarter as we discussed earlier.
The favorable impact of two cents a share of weather on 2020 compared to normal.
And these items have been offset by.
Reductions in commercial and industrial demand related to the negative impacts of COVID-19.
Some customers and our jurisdictions have had either completely shut down or curtail operations given reduced demands for their products and services.
We also expect to incur increased costs of bad debts personal protective equipment and the loss of late fee revenue.
Total estimated impact of these items ranges from six to eight cents a share.
Otter tail power company continues to work on obtaining regulatory relief to mitigate the impact of COVID-19 on its operating results. Our current electric segment guidance does not assume recovery of any of these items in 2020.
We also have increased expenses caused in large part by a decrease in the discount rate used.
For the pension plan and a lower.
Rate used for long term rate of return assumptions.
Higher depreciation and property tax expense due to large capital projects being put into service.
Increased interest costs related to the issuance of the $175 million of debt financing completed in October of 2019.
And this updated guidance also assumes for planned contribution to the Otter tail power Company Foundation of two cents a share.
We are also raising and narrowing our guidance range for the manufacturing segment.
We now estimate an increase of five cents a share from the midpoint of our August Threerd 2020 guidance.
This upward revision is driven by stronger than expected recovery in the second half of the year compared to our previous assumptions.
In backlog.
The manufacturing segment is approximately $63 million for 2020, compared with the $56 million.
One year ago.
We are raising and narrowing our earnings guidance range for our plastic segment.
Sales volumes in 2020 are now expected to be approximately 5% higher than 2019, given the strong year to date results and our current market conditions.
Market conditions continued to improve during the quarter due to the limited effects of COVID-19.
We saw two resin suppliers in book force measures, which positively impacted PVC pipe sales prices.
Concerns over Hurricanes in the Gulf Coast created limited availability of PVC resin supplies.
Significant global demand for resin and having limited PVC pipe inventory across the country.
We've also included now in this updated segment guidance a plan contribution by the plastics group to the Otter Tail Corporation Foundation three cents a share.
And our corporate costs net of tax are expected to be higher than 2019.
In our previous 2020 guidance due to increased employee benefit costs, resulting from the significant increase 2020 earnings plan contributions to otter tail corporations foundation of three cents a share.
Both our strong year to date financial results and current business conditions position us to achieve our updated earnings per share guidance range of $2.26 to dude to $2.36.
All of our operating companies are performing well in this challenging business environment.
Longer term, we remain focused on executing our strategic initiatives to grow our business and achieve operational and commercial excellence.
Otter tail power company plans to gross rate base, and very supportive regulatory environments, and an 8.6% compounded annual growth rate over the next five years.
Driven by investments in renewable and natural gas generation.
Acknowledging and infrastructure and transmission projects.
We expect the electric utility will provide approximately 75% of our overall overall earnings overtime.
Manufacturing and plastics segments will also provide organic growth over the long term. These two segments are expected to provide around 25% of our earnings over time.
With this we expect to be able to deliver total shareholder return of 810% over the long term consisting of two components first our earnings per share are expected to increase at a 5% to 7% growth rate.
Secondly, our current dividend yield of approximately 3.6%.
Looking forward, we would expect to grow the dividend along with the earnings per share growth of 5% to 7% compounded annual growth rate.
And maintain a dividend payout ratio between 60 and 70%.
Our company is on solid footings with a strong balance sheet ample liquidity to support our businesses and investment grade corporate credit ratings.
We're now ready to take your questions.
Ladies and gentlemen, if you have a question. Please press Star then one are you touched on the telephone. If your question has been answered or you wish move yourself from queue. Please press the pound key.
The Q and HLC will return with a few closing remarks.
Our first question comes from Chris Ellinghaus with Stephens. Your line is open.
Hey, guys how are you.
Hi, Chris.
Have you got to.
The three cents donation that you talked about is that a fourth quarter event.
Yes.
Yes. The other thing you were taught.
Talking about the.
Accrual catch up in the quarter on the transmission if you got a dollar amount for that.
Are you referring to that Minnesota Supreme Court Yeah.
The dollar amount Chris for the quarter I think it was right around $2.5 million.
Okay.
And.
Can we is there any reason that we should be expecting that the.
Minnesota interim would be effective at the end of the year.
Chris The interim we filed November 2nd and if the filings deemed complete interim would go in.
At the first of the year and 2021.
And then the final rate request is.
14.5 million at the interim rate request is $13.6 million.
But given the Cove is there any reason or is it even statutorily possible for them to delay the.
The interim rate.
You know it is possible we look at this rate.
In Minnesota, it's a it's a formulaic interregnum interim rate.
So.
You know if the filing as deemed not complete for some reason.
Would be the.
Issue.
And with with Cove, it be considered an exigent circumstances that they could bring up.
You know, it's it's possible, but we don't feel that that's likely.
Okay.
All right. Thanks, guys that was a wonderful quarter appreciate it thanks.
Yes.
Thank you. Our next question comes from Sophie Karp with Keybanc. Your line is open.
Hi, good morning, guys.
Congrats on the quarter.
Thanks.
A couple of questions from me if I may so with the.
Your new guidance correct me, if I'm wrong, but you actually Bob.
The initial 2020 guidance that you had pretty Covance Hello, that's.
It was pretty impressive could you maybe give us a sense of what kind of trajectory you envision and going into 2021.
No and some of the which of the moving parts here that are preparing this guidance now above the original expectations. Despite what we haven't.
Yes, that's right macro backdrop could be so things may be on a pro forma basis as opposed to just being won all trends.
Thank you.
Yes. So let me this is Kevin will come out with our 2021 guidance in February with our connection with our year end.
Earnings release, I mean, one of the things to point to would be.
Our our long term stated EPS growth goals of 5% to 7% off the 2019 base earnings of 2007, $2.17 a share sorry.
I think as you look at just the business is high level.
Chile, we continue to see rate base growth invest.
Investments in earnings from the electric utility as a result of those investments that we're we're making.
And then as we look at the assumptions around the the manufacturing and plastics certainly plastics is probably not been impacted by cobot is we perhaps thought input.
On manufacturing, we still would be under this view of its this.
Slower some.
Some referred to it as a solution type recovery.
In manufacturing, we the assumptions in the third that we had for the third quarter. They were actual results were a little stronger than where we were but we aren't seeing a.
Any significant change in that slow recovery in our manufacturing segment.
I think we have to recognize that the manufacture the plastics earnings this year are going to be a record earning ernie.
Earnings year for US there are certainly some conditions that.
We see here.
In the in the business today that.
We're trying to work through to see just what we think.
Looks like and how they move into 2021, so I think we have to be.
Cautious there with plastics as we head into 21, but those are some high level thoughts that hopefully help you.
Yeah.
Well thank you.
A question I had was on the Minnesota rate case I.
I guess aside from the Ivory, which is always debated.
Do you see a new point, there that you expect to be contentious with other stakeholders. So we took that down.
Straightforward right gauge how are you.
So for me. This is Chuck it's largely a capital driven rate case, which is the Minnesota portion of the store you.
Gas plant.
Which has been approved in there our IR Pea we.
Yes.
Built it.
In the time described and under the costs described so.
So that accounts for more than half of the increase.
Requested the.
The customer service information system is another.
Probably 10% to 15% of the request with some on EM growth and are are we.
Levels rounding out the case, so we're viewing it as as largely a capital recovery gain.
Based on.
Thanks.
Majority of which have been through regulatory Prudence review.
So nothing a controversial about this.
Okay.
We don't believe so.
Thank you that's all for me.
Thank you once again, ladies gentlemen, if you wish to ask a question at this time. Please press Star then one are you touched one telephone.
And I'm currently showing no further questions at this time I turn the call back over to Chuck.
For closing remarks.
Thank you for your questions and interest in Otter tail Corporation.
With continued execution on our rate base growth opportunities at the utility and emphasis on operational and commercial performance at our manufacturing platform. We remain confident in our ability to deliver long term shareholder value.
And although many challenges and uncertainties related to COVID-19 remain our employees remain diligent and determined to address those challenges.
Based on our strong third quarter and year to date performance and our updated view of potential impacts from Carbonite team, we are raising and narrowing our 2020 and diluted earnings per share guidance to be in the range $2 and 26 to $3.36.
Our previous guidance of 210 to 30.
Thank you for joining our call. We appreciate your interest in Otter tail Corporation, and we look forward to speaking with you next quarter.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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