Albemarle Corporation (ALB) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Albemarle Corporation at the JPMorgan Industrials Conference. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jeff Zekauskas, Managing Director of global equity at JPMorgan. Sir, please go ahead.

Thanks very much. I would like to welcome everyone this afternoon to our virtual industrials conference. We changed the format of our 2020 conference to a virtual one in the interests of health and safety, and thank you for attending this afternoon. It's my pleasure to introduce Scott Tozier, the Chief Financial Officer of Albemarle. Scott has been CFO of Albemarle for almost 10 years following the long tenure at Honeywell. Joining Scott is Netha Johnson. Netha joined Albemarle in 2018 to lead the Bromine Chemicals division after years at 3M Corporation. And Dave Ryan, in Investor Relations, is also part of the team. Scott will present. Albemarle's slides are on their website, if you wish to follow along. And then after his presentation, there will be a fireside chat format. Scott?

Thanks, Jeff, and good afternoon, everyone. As just before we start, I would just ask you to reference the first 2 pages, one on forward-looking statements and the second on our non-GAAP measures. As you look at Page 4, Albemarle is an industry leader in 3 competitive businesses across the globe. Each business is really well-positioned to capture growth in great secular trend markets, whether that's the adoption of a new technology, whether that's the growing global middle class, whether that's a regulation that's going to drive something that needs to happen in the marketplace, our products and our innovation are the catalysts that help to drive those secular trends. We are a very, very small portion of the cost of that solution. When you look at those secular trends and the value that our products deliver and our absolute focus on costs, we should drive significant adjusted EBITDA growth over the next 5 years and in 2024, should allow us to generate anywhere from $800 million to $1 billion in free cash flow. Turning to Page 5. For really, for those of you that are new to the story, just a quick recap. We're a diverse business. We're in over 75 countries in every region around the world with different but high-margin secular growth businesses. Each segment has a role in our future, helping us achieve the profitability, growth and free cash flow that we expect over the next 5 years. We've got a strong legacy. To be around for 132 years, you have to be a leader in whatever businesses that you're in. You also need to be -- you need to be able to execute effectively. And third and maybe most importantly, you've got to be able to adapt over and over again. Page 6 goes through our long-term strategy that we rolled out in 2017 and reiterated in December at our Investor Day. But that overall strategy remains intact. But as we've done over 132 years, we've adapted the execution to account for a rapidly changing environment in the Lithium business. And I want to talk about each one of these strategic pillars. First is grow. We remain committed to smart investments in lithium to allow us to capture that organic growth. And the demand outlook for lithium remains robust. We're uniquely qualified to capture that growth. If you look at our resources, we have enough lithium to serve our share of the demand for the next 10 to 15 years. And we're now focused on generating strong free cash flow across our businesses to support that growth and give us the option if and when the economics meet our hurdle rates to buy or build additional lithium conversion assets. The capital intensity of any of those additions need to be lower than what they are today. If you look at maximize, bromine and catalysts are solid businesses in their own right. They possess strong customer relationships. They are market leaders. They have solid profitability, margins, and throw out significant cash flow. We need to expand what we're doing in those businesses to lithium to reduce our operating costs. We've recently implemented an ERP system that should be a game changer for us in terms of the efficiency of our business model. We started an initiative to reduce spending in a sustainable manner by $100 million or more by 2021. And we're in the process of implementing a multiyear plan to reduce our cost and then increase our yields in our lithium manufacturing process. If you look at assessment, I think we've proven that we're active portfolio managers through the actions we've taken over many years to get us where we are today. We actively evaluate our portfolio and review that with our Board of Directors on a regular basis. That review led to a decision recently to pursue a potential sale of 2 businesses, Fine Chemistry Services and our Performance Catalyst Solutions business. There has been strong interest in both of those businesses, but if we don't get offers that meet the valuation that we expect, we'll keep the businesses and run them. Assuming that we do receive offers that meet the valuation hurdle, I would expect those transactions to close sometime in 2020. And finally, invest. We're committed to investing in our businesses, but will remain disciplined in how we allocate our capital. At a very high level, our investment-grade rating and the annual increase in our dividend are critical priorities for Albemarle. We remain acutely focused on organic growth, which has largely been focused on building or buying lithium conversion assets, to position us for future growth if and when the economics make sense. Turning to Page 7. In 2019, we conducted a materiality assessment to identify sustainability topics most relevant to Albermarle's strategy and our future. That assessment came from employees and leadership. But more importantly, it came from our customers, our vendors, our shareholders and potential shareholders. And from that feedback, we developed this customized framework that focuses on 4 critical quadrants. First, our people and the workplace, with a focus on safety, diversity, inclusion and talent development. Natural resource management essentially is how do we minimize our footprint and how do we do more with less of the earth's resources. Community engagement means having a positive impact on the communities where we live, work and play. And finally, our sustainable business model, which creates long-term stakeholder value through our commitment to quality, innovation, financial stability, reliability and ethical business conduct. So we're on a journey, and we have a lot more work to do here. But doing the right thing and being profitable and not at odds with each other, we expect to do both equally well. And we're going to continue to monitor these quadrants, and we'll start reporting our metrics -- on improvements of those metrics in our 2021 annual plan. Page 8 gives some highlights of our cost savings initiative. Our sustainable cost savings program is well underway, and we've identified over 100 discrete projects, assigned project ownership and instituted a tracking dashboard. We have included $50 million of anticipated savings in our 2020 guidance. About 40% of the savings will come from selling and administrative costs, about 40% will also come from reduced factory spending and operational efficiency. And the last 20% of savings will come from supply chain activities like procurement and logistics. For example, one program will consolidate the number of freight forwarders that we use across the globe. We are confident in our ability to achieve this milestone in 2020 and reach our targeted run rate of $100 million or more by the end of 2021. Now let's turn to some current events on Page 9, and we'll focus on the coronavirus. I'm going to begin with that and then talk about the impacts on 2020 in our business outlook. Our -- first of all, our thoughts are with the families who have been impacted by this virus. For Albemarle, we've had 0 confirmed cases among our employees. We're diligently managing the situation to protect our employees and the local communities. In Lithium, we continue to operate safely at our China production sites in Xinyu and Chengdu and are back to full operations. To date, we've had -- we've experienced minimal order reductions from our customers and have been able to produce the quantities needed to fulfill orders. However, each of our businesses is experiencing logistics delays, and the potential impact on deliveries to our customers and deliveries of raw materials to our facilities remains an area of concern and one we're watching carefully. Our current view is that global EV production for 2020 will be impacted by 3 to 5 percentage points, and that translates to about 5,000 metric tons of LCEs. The coronavirus has also impacted Chinese competitors, and the supply/demand balance is roughly the same as our expectations coming into the year. There is a risk that the automotive OEM slowdown in China will have further ripple effects. For example, the potential of inventory building up at the battery manufacturers could impact us later in the year as well as the potential for further OEM shutdowns in Europe and North America. As the virus spreads, our lithium hydroxide conversion plant construction at Kemerton in Western Australia, which relies in part on equipment sourced from China, could experience delays. We currently expect about 4 weeks of delay in receiving the equipment that we expect from China. To date, though, we've been able to manage around this through managing our schedule as well as being able to identify some key alternate suppliers. Turning to Catalysts. Our largest risk is lower FCC sales to customers who export fuel into China to the degree that transportation within China continues to be restricted. In the last 3 weeks since our earnings call, we have seen incrementally lower FCC volumes, particularly out of Taiwan and Korea. A secondary risk is that raw materials that we source from China are not available. But to date, we currently have sufficient inventory to cover our requirements well into the second quarter, and I think, at this point, that that's a diminishing risk. In Bromine, the primary risk is related to logistics caused by a shortage of drivers and equipment such as sea containers, ships and trucks. Overall, we expect a weak first quarter in China, and depending on the continued length and severity of the outbreak, our operations could be further impacted. At this time, we are modeling a U-shape recovery and expect to recover any first half earnings shortfalls in the second half. We do expect our first quarter EBITDA to be down by around 25% now year-on-year and our first half to be down around 20%. Turning to our businesses and some snapshots, let's focus on Bromine first on Page 10. The global bromine industry is about $2.6 billion. And in 2019, we were about $1 billion of that, so we're definitely a market leader here. We have strong adjusted EBITDA margins of 33%, and we have an adjusted EBITDA of $328 million. And between now and 2024, we expect this business to grow between 1.5% and 2.5% and have adjusted EBITDA margins between 28% and 32%. One of the unique characteristics of the Bromine business is it is very hard to enter this market. The barriers of entry are high, and with that, we have the ability to limit competitors that come into this market in the future. And on the right-hand side of that slide, you could -- we talk about the markets that we play in. First of all, flame retardants, you can -- key applications in flame retardants include electronics, construction and automotive. We also play in the oilfield market, and that's really around deep-sea drilling and around clear brine fluids that allow the fluids to be weighted down to where the drilling actually occurs. We also have solutions in the pharma and also PET business and many other markets. And what this means is because we're diversified, we're stable, and we're able to produce consistent results. If you look at the growth rates of our markets, you can see that those markets are providing long-term necessary CAGRs for us to deliver GDP-type growth going into the future. So we have an advantaged position. We have stable end markets. And we have strong sustainable cash flow to help the company drive our strategy. We expect 2020 adjusted EBITDA performance in Bromine to be flat to slightly down compared to 2019. Demand for flame retardants and other bromine derivatives is expected to remain stable. However, slightly increased supply across the industry could put price pressure on the second half. We are operating in a sold-out position, meaning we have little to no headroom to make up any price degradation with volume growth. However, we will continue to optimize our sales into markets that provide us with the highest margins. Page 11 goes into another of our businesses, Catalysts. Our refining catalyst business operates with quality margins in the high 20s and is a stable cash flow generator for the company. We have leading position in the FCC catalysts, that's fluid catalytic cracking catalysts as well as HPC, that's hydroprocessing catalysts. Between now and 2024, we expect this business to grow between 3% and 5% and have adjusted EBITDA margins between 26% and 28%. FCC catalysts are primarily used by a refiner to determine what the yields are from that refinery, whether it be chemicals, different fuels, diesel, gasoline. That's the core function of FCC catalysts. One particular strength within that market relate to bottom-cracking. So that's really the heavier feed going into FCC unit. We also have an advantage in FCC catalysts in olefins output. Olefins, whether it be propylene, either C3 or C4, they're either used in making plastics or making alkali, which is used as an octane enhancer for gasoline. Hydroprocessing catalysts are used within a refinery to purify the streams within that refinery, for example, the feed going into an FCC unit or a hydrocracker or the output such as diesel or gasoline or fuel oil for bunker fuel. We have differentiated technologies with high activity, which help our customers be successful within those operations. In 2020, we expect Catalysts adjusted EBITDA to be flat to slightly up year-on-year, with the second half somewhat stronger than the first. FCC catalysts are expected to benefit from strong demand and an improved product mix. However, our FCC units are operating at full capacity, limiting our ability to benefit from any additional volume upside. HPC is expected to be slightly down based on our incumbency mix and a lower year in distillate turnarounds and change-outs. Now let's turn to Lithium on Page 12. At a glance, Lithium is a $1.3 billion highly profitable business, with 41% EBITDA margins, playing in 3 fundamental areas. 60% of our sales are in energy storage. The second is in the industrial market. And these are the same analogues of the many products that are used in energy storage and have a similar chemistry, but very often a different product form that is used in glass, grease and other industrial applications. And then those results can be further derivatized, and Albemarle is the leader in doing this, into metals, organometallic products and the like that are used in a range of specialty applications like synthetic rubbers, pharmaceuticals and ag products. We are vertically integrated with a low-cost resource position, and the fundamentals from a growth standpoint are very compelling because they're based on favorable public policy, particularly in places like China and in Europe. By some estimates, the investment in this area is over $225 billion going into energy storage over the next 5 years. And none of it is possible without lithium, which makes the security of that supply very important to our customer base. Page 13 gives some details around our forecast of energy demand, and we expect that the demand will reach 1 million metric tons by 2025. I want to highlight a few of the key metrics that you see on the tables on the right side of that chart. I think, first of all, you see that overall growth rate is 24% CAGR on a lithium demand basis. That represents a 3x growth over the next 6 years. Specifically, in the lithium that goes into EVs, we're going to be growing from 35% share of demand for EVs, up to 70%. So doubling, and that's a 6x growth factor. Another thing that you'll notice in this table is we've broken it down into real consumption versus inventory changes. And this has been particularly important to do over the last 12 months because we've seen some changes in behavior, whereas the last 6 years, there's been this progressive buildup of inventory. And in the last 12 months, we've seen some drawdown and that will continue into 2020, and that has an effect on the apparent demand that we've seen in the market. And then a couple of metrics on the bottom of the table that highlight EVs, we see electric vehicle penetration going from around 3% share of new light vehicle sales in 2019, up to 18% in 2025. Page 14 talks about our strategy in Lithium. First, let me talk -- we'll continue to manage the world's best resources, and that means continuing to drive sustainable practices, which we're already a leader in. It means continuing to keep the geographic diversity. We already have that built as a foundation, and it means continuing to drive best practices to get cost out of those resources and get the lowest cost possible. The second is expanding capacity with discipline. That means reducing our capital intensity. We're working on how we can reduce that intensity now, and it means building to customer commitments. We're not going to overbuild. We will build when the customer commits to us, and it means through that, that they're providing a strong return. But that's the denominator of the return calculation. The numerator comes from the next 2 strategies, and it comes from how we operate our conversion plants, driving the best cost position and operational excellence in those lean, low-cost operations, operating every one of those plants on a world-class standard that's consistent across the world and sustaining our leadership in quality, reliability and sustainability. And then finally, everything rests on the foundation of our customers and it's those long-term relationships, differentiated offerings that we can bring to them. All of this is guided by our company values and is rooted in sustainability and safety. Page 15 talk about our growth. Between now and 2024, we expect this business to grow between 12% and 17% and have adjusted EBITDA margins between 40% and 45%. And about that margin, 40% to 45%, it's important to note that we can get to that level without price improvements. We've given a company-based -- our bottoms-up view of what we can do. And we believe 2020 is a trough for us. From that trough, we can get into that range of 40% to 45% without any improvement in price over this period of time. It comes from volume, filling out our plants on the capacity plans. It comes from cost, the significant cost reduction that we're going to do through operational excellence. And it comes from differentiation. We have segments we sell into that are less price-sensitive. We have new innovations. And in all, we believe we'll be able to outperform through this period of time, even in a low pricing environment. 2020 will be a pivotal year for Lithium. EV growth in Europe is expected to accelerate driven by fleet-wide CO2 reduction targets. Growth in China is still uncertain. We saw the market begin to stabilize at the end of 2019 and expect growth to return in 2020. However, it will be impacted by the coronavirus, and obviously, that adds a measure of uncertainty on how exactly the year will play out. Although we anticipate the total lithium demand to increase by about 45,000 metric tons now and inventories to begin to tighten by the end of the year by mid-2020 or by the -- or mid-2021, our own volume growth will be around 3% in 2020 and will be limited until we commission the La Negra III, IV, lithium carbonate expansion in early 2021. We have reached agreement with all but one of our contracted customers, and we are sold out on battery-grade materials. Although the prior inventory buildup and additional supply availability put pressure on pricing for 2020 versus our prices in 2019, we believe that market pricing has stabilized. Our unfavorable pricing will be partially offset by lower costs as a result of reduced tolling volumes, higher operating rates, lower royalties in Chile and the impact of our cost savings program. And consequently, we expect a year-over-year decline in adjusted EBITDA in this business of about 20%. On Page 16, highlights our guidance, and this is our 2020 guidance from our latest earnings call and the 2024 outlook from Investor Day in December. As you look at the total company, you can expect a 5-year revenue CAGR for the total company around 6% to 9% and in 2024, EBITDA margins between 32% and 36%, resulting in an EBITDA between $1.5 billion and $1.8 billion. That's a 5-year CAGR of 21%. EBITDA will generate free cash flow, and we're expecting that it will hit $1 billion in 2024. So while 2020 is going to be a challenging year, I am very confident in our team's ability to face those challenges, strengthen the company through operational excellence and deliver on our commitments. And finally, on Page 17, let me talk about how we prioritize spending our cash flow. Our first priority for capital allocation is to grow our dividends, and a close second is to maintain our investment-grade credit rating to ensure we have financial flexibility. Third is reinvestment, growing our lithium capacity to meet the market demands and accelerating our productivity effort. Fourth, we focus on growth through M&A and joint ventures that will accelerate and strengthen our strong global positioning and deliver on our strategy. And finally, as our last priority and when there's excess balance sheet capacity, we will return cash to shareholders through share buybacks. And now I would like to turn the remaining time back over to Jeff for the fireside chat.

Thanks very much for a very complete summary of Albemarle today, Scott. Albemarle was in the process of searching for a new CEO. Are there particular characteristics that Albemarle was looking for or particular capabilities in the new CEO? Or is it a much more wide-open search?

Well, Jeff, I mean, it's a good question. I mean we have, obviously, our purpose and outlined our strategy in our investment -- our Investor Day this past December, and I kind of hit some of the highlights from that in our -- in my prepared remarks. And really, we need an individual to move forward with that outlined strategy. Likely, that someone is going to be more operationally focused, who has the ability to see around the corner, build that into the strategy and is consistent with Albermarle's values and culture. And I think seeing around that corner is important because lithium is still developing as an industry. And there's going to be more changes to how things happen, and we'll need some -- the CEO to be helping us ask the right questions around that. Clearly, someone's got to be able to communicate our strategy, right, at all levels. And so ultimately, I think Luke plans to retire in June. If we find someone before then, then he will retire earlier, and he obviously will stick around to help with the transition. So...

If you're aware, Scott, have you narrowed down your list of candidates? Or are you still in the search process and looking for new candidates?

Yes. So we're actually using Spencer Stuart for this search. And we're looking at both internal and external candidates. So more to come as we develop that slate.

Okay. In -- turning to Lithium, in 2019, Albemarle had various usual production outages. Can you remind us what was the cost of all of the different outages and turnarounds and events and how they might compare to a possible performance in 2020?

Yes. So if you remember, we actually, in 2019, we had the rain event. So we had some significant rain in Chile in the first part of the year, and it affected our first half production by around 3,000 metric tons of carbonate. And then further, we had some equipment issues in the third quarter that affected our operations in the range of 1,500 to 2,000 metric tons. So basically, around 5,000 metric tons of, call them, like you said, unusual production outages. As you look at going into 2020, I mentioned that our volumetric growth in Lithium is 3%. And so that would tell you that we should be at around 3,000 tons worth of growth, 3,000 to 4,000 tons worth of growth. However, if you look at our own production, so internal production, it's actually closer to 10%. And we've reduced the amount of tolling that we're doing outside, and we've done that because tolling is very much more expensive than internal production. And so as a result, even though volume's only up 3%, we'll actually see benefit from that mix change in our EBITDA in 2020.

I know that you've -- we've had the benefits of an expansion of capacity at Talison that are really quite significant. Why can't the Talison rock be used to push your lithium volumes forward faster in 2020?

Yes. It's really a question of how much demand is out there and to a small extent, what the price is. And so we will, along with our partner, Tianqi, operate the Talison mine to meet the shared demand from the 2 partners. You should not be thinking of us. We -- first of all, we do not sell spodumene into the market by agreement. It only can go to Albemarle and to Tianqi. And further, the 2 partners are required to convert it before it gets sold into the market. And then secondarily, even though we have that expansion, the conversion capacity isn't there yet. And so we have to continue to build out our conversion capacity because, ultimately, that's where Albemarle's bottleneck is. If you look at our resources, that's going to be Talison, Nevada, Chile. We're only operating at about 25% of the available annual capacity of those resources. Our constraint is the conversion plants that are required to convert that material. And we'll bring those online, like I mentioned, when we have customer commitments and we feel we have good returns on those projects.

One of the complicating factors in China has been changes in their subsidy system for electric vehicles, in that some people think that the weakness in 2019 electric vehicle sales in China stemmed from lower subsidies. Is your view that, over time, subsidies will be eliminated in China, however, slowly? Or do you believe that they will be increased? How do you see the subsidy system there going forward?

Yes. It's interesting. I mean, I think, several years ago, China announced that they were going to stop -- they were going to start reducing the consumer subsidy that a consumer gets when they purchase a vehicle. And they started that 2 years ago. They've put that on hold in 2020, in part to try to stabilize demand. The -- my expectation -- and to be honest, Jeff, there's more than just that consumer subsidy that's behind what's going on in China. There are production -- there's production quotas. There's requirements in order to -- there are requirements to push to use high-nickel capacity batteries. There are provinces and cities that have benefits in place if you buy an electric vehicle or a new energy vehicle, as they call them, versus an internal combustion engine. So the consumer subsidy is only one part of what's going on. So our belief and my belief is that if you put all of those together, China has a vested interest and continues to show that they are going to support the electric vehicle or new energy vehicle and the battery industry in China to the point where they can start to export vehicles to North America and Europe. And I think that's really what's behind what they're trying to do. So while the form of the subsidy or the support that they're giving may change, I -- we do believe that they're going to continue to drive to be able to take advantage of their first-mover position to become the electric vehicle supplier to the world.

Your history is to sell lithium carbonate equivalents under long-term contracts. And for a period of time when the lithium market was very tight, the -- I think Albemarle's interests and the interest of the buyer really coincided. They were able to get the product that they needed at a reasonable price without very much inflation over a longer period of time. And then as the market became more adequately supplied and volume growth slowed down, the dynamics shifted a little bit and what you did was you conceded some price for 2020. Do the customers of Albemarle want that same long-term contract structure? Or are there different contractual demands that they have? Or are there longer-term contractual demands altering or evolving?

Yes. So I would say that what we did in 2020 is the long-term contracts are still in place. All the components of that volume commitments, the pricing commitments are in place. And we did agree in 2020 to give a price concession for the year of 2020. And the overall outcome of that is that our pricing, on a year-over-year basis for the Lithium segment, will be down around in the mid-teens. And we saw -- we've seen carbonate and technical-grade material down further than that and hydroxide down less than that, just to put it all in perspective. And part of the reason we gave the concession for 1 year is so that we could better understand how this market is going to develop. One of the things that we've learned is that a one-size-fits-all contract is not going to work. It's not -- it's really not appropriate. They're -- every customer, and we're only talking around 10 to 15 customers here, but each of the customers have different requirements. Some of them are price-sensitive, right? So they're going to -- they will trade-off other qualities for price. Some of them want long-term surety of supply. Others want a reliability or product quality. And others want the latest and greatest material that's out there, so they can have the latest and greatest batteries. So we've got to recognize in our contracting and how we participate in this market those differences and start to build that into the way we sell. And it's very much like bromine, Jeff, and you know bromine well. I mean there's no one-size-fits-all. You're selling -- even though you might be selling exactly the same product, what you're selling to the customer is so much more than just that product. We need that same thinking in Lithium, and we're using 2020 to get ourselves there. I would just add too, Jeff, that ultimately, our pricing -- that the concessions that we gave, we're still selling in 2020 at a premium above the bid price that's out in the market. So I think another factor that we've learned is that Albemarle does and the customer does value Albemarle enough to pay a premium to work with us.

Is there any way to roughly describe that premium? Is it very small or large or in between?

I would say, it's double-digit percentage. How is that?

Double-digit percentage. Okay. Maybe a question on bromine. Key markets for bromine are electronics and oilfield services. Are you seeing a difference in pricing and demand in those 2 markets?

Yes. So Netha, maybe you can take that. So in electronics and oilfield services, are you seeing a difference in pricing and demand in those 2 areas?

Yes, we'll talk on the demand side first. Right now, we're seeing pretty stable demand in electronics and in the oilfield. I mean if you look at what's happened here, what the 2 major economic impacts with the virus and then the recent one with the oil pricing, that has not affected our demand. What's different is in the supply chain logistics on the electronics side and flame retardants side is a little bit different. We're seeing some impact there. And that's a shortage in drivers, to containers and those types of things in logistics that are going to have a slight impact, a little bit more than we expected in Q1. On the oilfield side, that drop in pricing, we see no impact throughout the calendar year. And that's just because where we fit in these projects, typically, they're down to the last 5% of spend before we get engaged. So they're going to spend that in 2020, they're not going to close those projects out. It's the projects in 2021 and 2022 that are going to be impacted by the price of oil if there's a long-term reduction in that. And we typically lag about 12 months, and we see impact there. 12 to 15 months is we will see impact in our business results there. On the flip side, we do see a tailwind though. When the oil prices go down, about 30% of raw materials are oil-based, so we should -- if those prices stay down, we should be able to get a nice tailwind on the raw material side.

Okay. All right. Thank you very much for a very complete presentation. That will close our session. Thanks very much.

Thanks, Jeff.

Thanks, Jeff.

Okay. Bye now.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.