Ladies and gentlemen, thank you for standing by, and welcome to the Arconic Corporation Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions]. I'd now like to hand the conference over to your host today, Mr. Shane Rourke, Director of Investor Relations. Please go ahead.
Thank you, Liz. Good morning, and welcome to the Arconic Corporation Fourth Quarter and Full Year 2020 Results Conference Call. I'm joined today by Tim Myers, Chief Executive Officer; and Erick Asmussen, Executive Vice President and Chief Financial Officer. After comments by Tim and Erick, we will have a question-and-answer session. I would like to remind you that today's discussion will contain forward-looking statements relating to future events and expectations.
You can find factors that could cause the company's actual results to differ materially from these projections listed in today's presentation and earnings press release in our most recent SEC filings.
In addition, we've included some non-GAAP financial measures in our discussion. Reconciliations to the most directly comparable GAAP financial measures can be found in today's earnings press release and in the appendix in today's presentation. With that, I'd like to turn the call over to Tim.
Thank you, Shane, and good morning, everyone. Welcome to our fourth quarter and full year 2020 earnings call.
For those of you who would like to follow along with the presentation, the slides are posted under the Investors tab on our website. The fourth quarter capped off a challenging year that demonstrated the company's agility and solid performance in the face of pandemic-driven lower demand and uncertainty. In April of last year, we completed the launch of Arconic as a stand-alone company and focused on becoming a stronger and more dynamic organization.
As we look forward to 2020 and beyond, we see multiple paths to growth on both the top and bottom line through driving asset utilization, debottlenecking operations, maintaining permanent cost-outs and capturing productivity-driven cost savings.
Let's begin with a review of the financial highlights for the quarter. Revenue in the fourth quarter was $1.5 billion, up 3% from prior quarter and down 14% or 12% organically year-over-year. The decline in revenue was primarily a result of continued softness in aerospace and was partially offset by the strength in industrial and packaging sales. The company recorded a net loss of $64 million, primarily as a result of an after-tax charge of $108 million related to a partial annuitization of our U.S. pension plan, which we executed in the fourth quarter. This can be the case with accounting, no good deed goes unpunished. This annuitization derisks the balance sheet of the company by $240 million with no current cash cost to the company. Adjusted EBITDA was in the center of guidance provided in November of $151 million, and adjusted EBITDA margin was 10.3%. Free cash flow for the quarter also fell within guidance with the use of $49 million, primarily due to U.S. pension payments that were deferred during the year as permitted under the CARES Act. We ended the quarter with a cash balance of $787 million, net debt of $504 million and total liquidity of approximately $1.5 billion.
Now turning to Slide 5 and full year 2020, I would like to highlight financial results and then walk through a few key takeaways for the year. Revenue for the year was $5.7 billion, down 22% from the prior year or 17% organically, reflecting the impact of the global pandemic and production declines due to delays associated with the Boeing 737 MAX. The company recorded a net loss of $109 million, which included after-tax charges of $156 million related to partial annuitizations of our U.S. and U.K. pension plans, which were executed throughout the year as part of our strategy to reduce legacy liabilities. Adjusted EBITDA was $619 million and adjusted EBITDA margin for the year was 10.9%. Free cash flow generation from Q2 2020 to Q4 2020 was $161 million. It's worth noting that included in this number is the funding of approximately $350 million for pension, OPEB and legacy environmental liabilities over this period.
Our cash generation, absent these funding requirements for legacy issues, exceeded $0.5 billion over 3 quarters.
Looking back on 2020, we accomplished much over our first 9 months of the company, not only managing the pandemic, but building a foundation for increasing profit and cash generation as we look to the future. After launching the company on April 1, we immediately took actions to conserve cash, manage working capital more efficiently and preserve operational flexibility as the pandemic continued to adversely impact the global economy. We've implemented $260 million of cash conservation actions or $60 million more than our original target of $200 million. Approximately $40 million of the structural cost actions implemented as part of the program will benefit our 2021 run rates and are included in our 2021 guidance. In the weeks that followed our launch, we optimized our capital structure through new debt offerings and a new credit facility. The new capital structure created greater financial flexibility and improved our liquidity.
We also took steps to make our financial results more transparent and in line with peers as we eliminated the use of LIFO inventory accounting and began adjusting metal lag out of our EBITDA definition.
Lastly, we identified several opportunities that are expected to drive volume growth and increase market penetration to continue to deliver value creation. We're continuing to ramp up incremental capacity for automotive and industrial products at our Tennessee facility.
We expect to benefit from tailwinds in the industrial market through 2021 due to favorable outcomes in the common alloy aluminum sheet trade case. We're also in the process of reentering packaging in several markets, following the expiration of a noncompete agreement at the end of October. We're bringing our Tennessee can sheet facility back online and are executing multiple qualification runs with packaging customers to support new volumes in 2022 and beyond.
Our timing is good as surging aluminum demand has -- packaging demand has driven multiple recently announced capacity additions by North American can makers, resulting in increased demand for our can sheet.
Turning to Slide 6, I'll provide a little more detail on how we performed across the markets we serve. Ground transportation sales increased 5% from the prior quarter, due to ongoing growth in commercial transportation, which continues to benefit from increasing heavy-duty truck builds. Year-over-year sales declined 5% organically. The solid retail demand in the automotive market was offset by the Ford F-150 model changeover that suppressed volume. In total, ground transportation made up 38% of our total revenue, which is slightly higher than our historical levels. Sales in the industrial market increased 14% from prior quarter and 7% organically year-over-year despite broader economic challenges. Sales benefited from the continued ramp-up at our Tennessee facility as well as the early impact of U.S. trade actions.
As we stated last quarter, tariffs on imports from the relevant 18 countries became subject to cash deposits in October.
As a result, we saw imports from the 18 countries steadily decline through the year. Sales in the building and construction market were down 6% year-over-year but were flat with prior quarter. Sales in the packaging market increased 7% organically year-over-year and were flat with the prior quarter.
As a reminder, packaging sales continue to represent only our operations in China and Russia and the noncompete agreement, which restricted sales growth expired late last year. We're now exploring opportunities in the U.S. and elsewhere previously unavailable to us as demand for can sheet continues to increase globally.
Finally, our aerospace sales further decelerated in the quarter to a decline of over 60% year-over-year on an organic basis. Large commercial aircraft build rates remain soft as uncertainty in the airline industry continues to curb demand.
As a result, elevated inventory in the supply chain and subsequent destocking is driving the decline in our sales, and we anticipate destocking to keep our sales depressed year-on-year through the first half of 2021.
Now I'll turn it over to Erick to discuss fourth quarter results in more detail.
Thanks, Tim. On Slide 7, you'll see a summary of our fourth quarter performance. Revenue in the quarter was $1.5 billion, down 14% from the fourth quarter of 2019 or down 12% organically, primarily due to weakness in aerospace, partially offset by year-over-year growth in industrial and packaging sales.
As a reminder, during the third quarter last year, we changed our inventory cost method to average cost for all U.S. inventories previously carried on LIFO.
We also changed our definition of adjusted EBITDA to exclude the impact of metal price lag and included a reconciliation in the appendix of this presentation to provide more clarity on this change. The reconciliation in the appendix also highlights that our pre-separation carbon accounting included nonservice pension costs in adjusted EBITDA and after a separation of benefit plans from the foreign parent, these costs are in other income and expense as indicated in the reconciliation of net income to adjusted net EBITDA.
Turning to the fourth quarter results, adjusted EBITDA was $151 million, driven by a combination of pandemic-related demand reduction, partially offset by our cost actions.
Our net savings programs are on track and our cash conservation efforts delivered approximately $40 million of the $55 million of net savings in the quarter, and we implemented $260 million in cash conservation actions above the original target of $200 million.
Turning to Slide 8 to provide more detail on our segment performance. Starting with our Rolled Products segment, revenue was $1.1 billion, reflecting continued weakness in aerospace and a modest decline in ground transportation due to model changeovers, partially offset by industrial and packaging sales. Segment revenue was down $174 million or 13% or 11% on an organic basis year-over-year and essentially all volume and mix related. Adjusted EBITDA was $139 million and adjusted EBITDA margin was 12.2% as our cost actions partially offset adverse impacts from lower volume and weaker mix. Revenues in our Building and Construction Systems segment in the fourth quarter were $236 million, down $27 million or 10% or 13% organically year-over-year, primarily due to disruptions continuing to delay construction projects. Adjusted EBITDA was $30 million, flat year-over-year as volume declines were offset by cost actions in the quarter. Adjusted EBITDA margins were 12.7%, up 130 basis points year-over-year as a result of structural changes we've made to improve the mix in this segment and other cost actions. Revenues in our Extrusions segment in the fourth quarter were $85 million, down $45 million or 35% year-over-year or down 28% on an organic basis. The decline was primarily driven by aerospace weakness, which is typically the largest market for the segment. Adjusted EBITDA was a loss of $4 million versus a loss of $3 million last year.
We continue to implement structural actions in this segment and improving the financial performance of the Extrusions segment remains a priority.
Now turning to Slide 9, I'll update you on the balance sheet.
As you see, we have $1.5 billion liquidity with no debt maturities before 2025.
Our leverage remains very low, and we have no drawings on our asset-based lending facility. In the fourth quarter, we implemented annuitization a part of our U.S. pension obligation. The annuitization reduced our gross pension obligation by approximately $240 million and did not require any current contribution to the pension plan, and resulted in an expected annual savings of approximately $5 million of administrative cost to the pension plan. Also, subsequent to year-end, we accelerated our 2021 U.S. pension contributions into January and funded $200 million to be opportunistic on capitalizing on investment arbitrage using our balance sheet cash. In the appendix of the presentation, we provided a table of future funding of our legacy pension and OPEB obligations. Further, it's worth noting that the company is planning on additional annuitizations, and we expect to continue -- expect to complete another in the first half of 2021. With that, I'll turn it back over to Tim to talk about our expectations for markets we serve for the full year 2021.
Now let's discuss our full year 2021 projected market demand on Slide 10.
While uncertainty in the global economy remains, our 2021 outlook is based on current internal and external projections of build rates and leading indicators in the markets we serve.
First, we expect ground transportation sales to increase 25% to 35% year-over-year. The range is a little wider, reflecting uncertainty on how quickly the automotive and commercial transportation supply chains recover from the shortage in semiconductor chips. Automotive sales are expected to increase due to a combination of recovery from soft 2020 levels and strong consumer demand, particularly for light trucks and SUVs as well as a continued increase in heavy-duty truck and trailer sales. Industrial sales continue to be a bright spot, and we expect revenue to increase 15% to 20% year-over-year.
As we've said before, these sales are benefiting from the one-two punch of increased capabilities and capacity in Tennessee and stronger domestic pricing and volume demand due to the ongoing U.S. trade actions.
Our building and construction sales are expected to be flat in 2021.
However, segment adjusted EBITDA could be down modestly for the year as mix and higher metal prices impact margins. Global macro uncertainty has continued into 2021 and continues to pressure nonresidential construction, which makes up the vast majority of our sales in this segment.
We expect packaging sales to be roughly flat year-over-year in 2021.
As a reminder, our facility in Russia was operating at near full capacity in 2020 to satisfy strong global packaging demand.
Although our noncompete expired in the fourth quarter, the qualification and negotiation process is expected to take several quarters before we recognize meaningful revenue and margin impact from domestic packaging production.
We expect to see domestic packaging production contribute to results in a significant way starting in 2022.
We expect our aerospace sales to decline 25% to 30% from 2020, which is approximately 50% below pre-pandemic 2019 levels as continued destocking impacts the entire aerospace supply chain.
As we've said previously, this impact will continue through the first half of 2021 and should return to year-over-year growth sometime in the second half of this year.
Turning to Slide 11, I'd like to walk again through the increased capacity opportunity that we discussed last year.
We are increasing network capacity by approximately 600 million pounds in North America that requires minimal incremental capital investment. That capacity will service the automotive, industrial and packaging markets, all of which are benefiting from secular growth trends. In the automotive sector, the lightweighting trend is continuing, and the expansion of electric vehicle platforms will continue to drive additional adoption of aluminum products. Today, light trucks and SUVs are driving aluminum auto body sheet growth well in excess of production rates.
Third-party estimates predict roughly 900 million pounds of additional demand growth over the next 5 years in North America.
Next, demand for industrial aluminum sheet products in the U.S. is benefiting from the trade action we've discussed over the last few quarters. The current U.S. trade case received an affirmative preliminary determination from the bipartisan International Trade Commission, which is a critical step to leveling the playing field for U.S. manufacturers of common alloy sheet. The International Trade Commission will render a final determination of antidumping and countervailing duties next month. If this trade case produces a similar result to the actions levied against China in 2018, we expect imports to decline by more than 1 billion pounds.
As we discussed before, aluminum manufacturing is versatile and common alloy manufacturing is typically one of several products produced in a rolling facility. That said, CRU estimates roughly 15% of global world product capacity installed here in the United States. In the trade case against China, combined with this new U.S. trade case on 18 countries, effectively covers roughly 80% of the remaining global world product capacity.
Finally, consumer preferences towards infinitely recyclable aluminum packaging as a more environmentally friendly alternative to plastic is driving a boom among can makers in the U.S. and abroad. This is also a green opportunity for Arconic, which will allow us to further increase our already high aluminum recycling rate. There are currently several greenfield can-making projects underway in the U.S. that will only serve to increase demand for can sheet in the coming years. One third-party analysis shows that domestic can sheet capacity is already at a shortage of more than 1 billion pounds versus demand. Meanwhile, that same analysis shows that can sheet is expected to grow by more than 1 billion pounds over the next 5 years. The 3 opportunities I just dimensioned in these markets amount to more than 3 billion pounds of incremental domestic aluminum sheet demand over the next few years. We only need to capture 20% of this opportunity to sell an incremental 600 million pounds to new customers, and we're already capturing some of this benefit with the automotive and industrial customers while we requalify our capacity in the packaging market.
Let's move to Slide 12 for closing comments.
As we begin 2021, our first priority is to keep our employees safe and our operations stable and efficient through the ongoing pandemic. We remain encouraged by positive trends in the majority of the markets we serve. We see opportunities to drive volume growth, increase market penetration and continue improving our operating and financial results.
As previously mentioned, over the next few years, we expect market tailwinds to be favorable to our endeavor to deliver another $300 million of EBITDA above pre-COVID levels. The opportunity is comprised of 3 levers: increased shipments of 600 million pounds; maintaining the $100 million of permanent cost out measures implemented in 2020; and securing additional shop floor productivity driven cost savings.
Our automotive, commercial transportation and industrial sales are all showing signs of returning to pre-COVID levels or better due to a combination of better economic activity, increasing share and improved pricing.
As the economy stabilizes post-pandemic, this organic growth will continue to add to our base, and our position is strong in both aerospace and building and construction segments as those markets begin to recover. And on the horizon, we're positioning ourselves for reentry into packaging in North America. In 2021 and beyond, we will continue to actively manage our legacy liabilities through a variety of strategies.
As Erick mentioned, we accelerated the 2021 U.S. pension contributions into January, and we plan another pension annuitization in the first half of this year. We believe deleveraging these liabilities significantly derisks the company and will improve our cash generation profile moving forward. I'll close with our 2021 outlook.
We expect full year 2021 revenue to be in the range of $6.6 billion to $6.9 billion. Adjusted EBITDA for the year is expected to be in the range of $675 million to $725 million, an increase of 9% to 17%. Free cash flow for the full year is expected to be in the range of a use of $50 million to positive free cash flow generation of $50 million.
Our cash flow guidance includes funding of approximately $350 million to legacy pension, OPEB and environmental liabilities as we continue to derisk the company's balance sheet. Also, our free cash flow guidance excludes any cash costs associated with future pension annuitizations, including the one we plan to execute in the first half of 2021. The free cash flow forecast also reflects working capital investments necessary to support the growth opportunities we have in front of us. We're looking forward to leveraging these opportunities to build on our momentum and further strengthen our company as the recovery continues into 2021. I appreciate you joining us today. And at this time, I'd like to open the call up for questions.
So I'll turn it over to Liz to help facilitate those.
Our first question comes from the line of Chris Terry with Deutsche Bank.
I had a couple. Tim and Erick, just in terms of the guidance.
You've obviously given the full year number, and there's a lot of moving parts in that.
Just wondered if you could comment a little bit on maybe sort of first half versus second half split or some of the quarterly progressions? Just trying to think about the timing of the aeros in the second half, the near-term impact from autos in the first quarter and then also, in that full year number, what do you have included for Tennessee? Is there something in that for the last part of the year? Or is that excluded from '21?
So thank you for the questions. I would say, first of all, I would expect the first half of 2021 to outperform the second half of 2020.
So we'll see momentum as we go through the year.
I think additionally, I would anticipate that the second half of 2021 will be stronger than the first half. And furthermore, I would expect the first half of 2022 to be stronger than the second half of 2021 because we're seeing a continued ramp in several markets. Certainly, I would anticipate aerospace being at the trough, fourth quarter, first quarter of this year, looking very similar. Hopefully, we'll start to see that lift off still down year-on-year in the second quarter. But sometime in the second half, I would expect aerospace to start showing some year-on-year growth.
Additionally, we did pick up a relatively significant amount of share in the automotive space. That's being impacted right now by the semiconductor issue. Most of what we've heard and read talking to other companies is that, that's going to sort itself out over several quarters. And obviously, there's pent-up demand out there.
So as that recovers, I think that's probably one of the biggest uncertainties we have in our outlook is how much -- how quickly does that recover. And does it have any impact on the calendar year. But I would expect that, that will get better moving forward. And then we continue to ramp up the industrial volume in Tennessee.
So as we continue to qualify more customers, we still have the tolling arrangement with Ta Chen associated with our divestiture of the facility that we had in Texarkana. That's going to run through in the first half, and then we'll start to see more third-party products going into the Industrial segment in Tennessee. And then I think your final question was on packaging. I don't think that there's going to be a significant amount of revenue or margin in 2021 associated with packaging. We're currently going through multiple requalifications with packaging customers. We've got more than a dozen trials lined up in the second quarter. That is typically a 3-phase kind of a qualification, Chris, so typically, we'll deliver a couple of coils.
The second phase, they want to see a couple of hundred thousand pounds; and the third trial, they want to see about 0.5 million.
So it's not going to be meaningful volume as we kind of queue up and get ready for the contracting season for 2022, and then we would expect to see that incremental margin in Tennessee next year.
Okay. And then just on the free cash flow guide, are you able to say what you've allowed in there as a range for working capital? And maybe just when through the year that's likely to impact cash flow the most?
So Chris, the -- as you're ramping revenue, which is we'll say, the first quarter, first half will be the largest part of working capital hit.
As you can see, the revenue growth year-on-year is clearly going to put pressure. We rightsized the working capital in 2020.
So I think the working capital pressure will be a use that's in the guidance, and the pressure is going to be in the first 2 quarters as you really ramp up, that you see the ramp-up that Tim just described.
And then it's important to note we'll have a back-end for packaging, depending on the timing of packaging ramp.
Yes, Chris, as Erick pointed out, we rightsized working capital. It was a generator, a source of cash this year. We took $300 million of working capital out of the business over three quarters.
So I think we've got our inventory stores in the right place, but we are going to see a ramp-up in AR, and that's going to consume cash.
Okay. And then the last one for me, just on the pension.
So if I understand this correctly, you've already paid the $200 million, which is what you've guided for the contribution for 2021.
So for the rest of the year, it really comes down to whether you do the annuitization or another annuitization in the first half that you maybe mentioned. Is that correct?
Yes, but for non-U.S. and OPEB.
So -- and we put a schedule on Page 23 of the earnings presentation, which gives you that full picture of the global view. But essentially, you're correct. We'll say, the details on OPEB would spread throughout the year, $37 million and other non-U.S. pension, about $17 million that'll spread through the year.
Our next question comes from Curt Woodworth with Crédit Suisse.
Yes. Look, I think your performance in the fourth quarter was pretty remarkable, given your aerospace business is down 60% year-on-year, and you had the Ford F-150 Range Rover, so to keep. EBITDA relatively flat year-on-year, I think, is a pretty good accomplishment. And obviously, a lot of the OpEx reduction contributed to that.
So my first question is in terms of the $260 million of cash conservation and some of the ongoing cost reduction targets, can you comment on what the kind of incremental cost down for the business on a net basis looks like this year? Because I assume some of the variable components will come back as the business experiences recovery.
So let me hit it.
I think in 2020, we captured $210 million from the program. $50 million of that was the capital expenditure, which -- that won't recur.
We will go back to between 2% and 3% of revenue in 2021. And in fact, probably be closer to the high side, closer to 3% than 2% on CapEx.
So that one was a one-timer. It's behind us. And then that left $160 million in cost savings. About $60 million of that was structural.
So the balance of that was temporary.
As we wind into 2021, we'll capture the additional $40 million. Most of that, if you think about it, we started the program in May of last year.
So we'll get -- by the time we get to the middle of the second quarter, we should see that $40 million come through. And then there will be about another $10 million because our aerospace facilities, in particular, we've still got 6 facilities that are impacted by aerospace, and they're in various degrees of still having some temporary cost savings until we see demand come back.
Okay. That's great. And then for aero, in terms of the guide, is it fair to say that the first half of the year is, looking down, more like 50% to 60% and then back half of the year, you're thinking it's going to comp up moderately to get the full year at the down 25% to 30%?
So if you're comparing year-on-year, this will end up being the trough, the first quarter. And the reason for that is the first quarter of last year was still very strong for us for aerospace. It was -- we had a backlog coming into the year.
So even at that time, we were just looking at the 737 MAX impact. And we started to see the impact of the pandemic at the end of the quarter.
So our sales will be down year-on-year more in the first quarter than they were in the fourth quarter. And I would think about it maybe being relatively flat sequentially, and then we should start to see some improvement sequentially in Q2.
Okay. And then last one for me is the latent capacity of the 600 million pounds. I mean, it seems like at least on the industrial side, you're going to see some good leverage here and then packaging more in '22 and then potentially auto, I would think, late '22 or '23. Could you just maybe dissect how you see the cadence of that? And then in terms of your initial discussions around packaging contracts for '22, can you give any color on kind of the margin profile you're seeing?
So let me start with the 600 million pounds.
We have automotive, which it's being impacted by the semiconductor issue. And the reason I bring that up is I could probably take more industrial on, but we have requirement contracts for automotive. They come back.
And so we'll be taking some spot opportunity, but the automotive and industrial volumes that sit inside of that 600 million pounds, we're going to be at the run rate to capture our target of that before we exit this year. And I think as soon as the semiconductor issue sorts itself out, we should see the kind of full benefit of that sometime in the second half of the year.
Regarding packaging, yes, we are seeing a lot of interest.
As I said, we've got more than a dozen trials lined up.
You know the way that, that works is they qualify can line by can line. And as you've probably read, the packaging market is just white hot for the can makers. And for them to make the commitment to interrupt those lines 3x each, shows you the level of interest that they have in warming us back into the market.
We are seeing pricing consistent with what we thought it would be.
So the pricing environment in packaging looks to be what we hoped it was going to be. And we're looking forward to being back in the segment.
Our next question comes from Josh Sullivan with The Benchmark Company.
Just on the aerospace outlook, is there any defense contribution in that expectation? Is that a strong leg in the outlook? You mentioned your expectation for kind of a second half recovery on the commercial side hasn't moved that much.
Just curious if the aero OEM announcements about a month ago changed that outlook at all? Or if we were already just at a point in destocking where it just doesn't change your outlook?
So from a defense perspective, we have some presence on the Joint Strike Fighter and a lot of the land-based vehicles, good content and great differentiation. The problem is those land-based vehicles, you got to build an awful lot of them before you get the same content that we get out of the single-aisle aircraft.
So it doesn't really offset what's happening with the single-aisle aircraft segment. We've also been picking up content in business jet. Nice business, but again, those aircraft are much smaller and they don't build as many of them.
So we're still very much wed to both Boeing and Airbus' supply chain. And as they start to deliver aircraft and start to produce, we're looking forward to them starting to pull again. But I think it's going to be a few years before we see pre-pandemic levels in our aerospace segment again.
Got it. And then just on the environmental expense this year and the free cash flow outlook. What should that step down to in 2022 at this point?
You should see a meaningful step down so...
Somewhere in that...
We are -- you can see the derisking on the balance sheet, the K will be out tonight. But essentially, you should see the $60 million or $70 million step down year-over-year depending on the timing, as you can imagine. It's all related to that one project, which finishes up early- to mid-next year.
So it will essentially be a big step down from year-over-year as we look. Because at 2020 and 2021, we're 80% of that funding.
We're showing no further questions in queue at this time. I'd like to turn the call back to Tim Myers for closing remarks.
Okay. Thank you, Liz, and thanks, again, to all, for joining us on the call today. We'll look forward to giving you another update next quarter. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating.
You may now disconnect.