Reliance Steel & Aluminum Co

Greetings and welcome to Reliance Inc. 4th Quarter and Full Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Kim Rolando, Atto Investor Relations. Thank you. You may begin.

Thank you, Operator. Good morning, and thanks to all of you for joining our conference call to discuss Reliance's fourth quarter and full year 2023 financial results. I am joined by Carla Lewis, President and Chief Executive Officer, Steve Cook, Executive Vice President and Chief Operating Officer, and Arthur Gemmian, Senior Vice President and Chief Financial Officer. A recording of this call will be posted on the Investors section of our website at investor.reliance.com. Please read the forward-looking statement disclosures included in our earnings release issued this morning and note that it applies to all statements made during this teleconference. The reconciliations of the adjusted numbers are included in the non-GAAP reconciliation part of our earnings release. I will now turn the call over to Carla Lewis, President and CEO of Reliance.

Good morning, everyone, and thank you for joining us today to discuss our fourth quarter and full year 2023 results. Before I dive into our performance, I'd like to begin by highlighting today's exciting announcement of our corporate name change to Reliance, Inc. To coincide with this announcement, please note that our website has also been updated to reflect our new domain name, Reliance.com. Over the years, retaining the words steel and aluminum in our corporate name has limited the perception of our company because Reliance has evolved to be so much more than metal. We are a family of companies committed to providing diversified metal solutions and increasing levels of value to our customers, opportunities to our employees, and returns to our stockholders. Reliance has made investments in our business far in excess of our peers while consistently generating industry-leading results. We have become stronger and more diversified, collaborative, and focused as we further differentiate Reliance as a best-in-class company. We believe these developments, as well as our long-standing reputation for credibility with all of our stakeholders, have made Reliance a name that stands alone. We are proud of our 85-year history and 30 years as a public company and will remain anchored to our core business model and values as we move forward into the future. Turning to our results, Reliance delivered strong operational and financial performance in 2023 in a challenging environment. I'd like to recognize and thank our dedicated team throughout our family of companies for consistently executing our resilient business model and providing increasing levels of value to our customers while maintaining their focus on keeping each other safe. These collective efforts led to annual earnings per share of $22.64, the second highest in our history. We increased our volumes through continued market share gains while maintaining our full-year gross profit margin of 30.7% near the top end of our estimated sustainable range due to our strong pricing discipline and significant capital reinvestment to increase our capacity and value-added processing capabilities. Reliance generated annual cash flow from operations of $1.67 billion and invested a record $468.8 million back into our business through capital expenditures. Our CapEx budget for calendar year 2024 is $425 million, with approximately two-thirds dedicated to growth projects that will further enhance our value-added capabilities, upgrade and improve our operating facilities, and fund expansion into new markets. We expect our total 2024 CapEx cash outlay will be approximately $500 million, which includes some carryover projects from 2023 and prior years due to extended lead times throughout the supply chain. We also continue to execute on our capital return priorities in 2023, returning $717.6 million to our stockholders through dividends and share repurchases. In addition to our organic growth efforts, we announced two acquisitions in the first quarter of 2024. On February 1st, we welcomed Cooksey Iron and Metal to the Reliance family of companies. Cooksey is a well-known metal service center based in Tifton, Georgia, with a strong reputation for premium customer service and rapid delivery standards which is in direct alignment with the Reliance model. Cooksey's three locations generated approximately $90 million of net sales in 2023, and their addition to the Reliance family of companies strengthens and expands our position in the fast-growing southeastern market. And on February 14, 2024, we announced that we had entered into a definitive agreement to acquire American Alloy Steel, a leading distributor of specialty carbon and alloy steel plate and round bar, including pressure vessel quality material. American Alloy adds specialty carbon steel plate to our product portfolio, as well as new fabrication capabilities. American Alloy's six locations generated approximately $310 million of net sales in 2023. The transaction is expected to close within the next 60 days, subject to regulatory approval and customary closing conditions. We continue to see a broad array of M&A opportunities in the pipeline, and we'll pursue those that meet our discipline criteria for well-managed companies that enhance our diversification by product and market and geography and are immediately accretive to our earnings. In summary, we are very pleased with our 2023 results that were achieved in a challenging operating environment. Our longstanding and continuously improving business model enables resilient execution throughout economic cycles, including both pricing and end market demand fluctuations present in the metals industry. In addition, the increasing level of collaboration we continue to see across our family of companies creates excitement for our future as we work together to capitalize on the many opportunities in front of us. 2024 is another milestone year for Reliance. We will celebrate our 85th anniversary and our 30th anniversary as a public company. While we are changing our company name and logo, Reliance captures the essence of who we always have been and always will be to our suppliers, customers, investors, and employees. We are more than metal. We are a family of companies. We are industrial strength. Thank you all for your time today. I'll now turn the call over to Steve, who will review our 2023 demand and pricing trends.

Thanks, Carla, and good morning, everyone. I would also like to express my gratitude to the entire Reliance family for a strong finish to the year and for prioritizing safety at the forefront of our strategy. Our performance was also made possible by our valued customers who rely on us for quick deliveries of high-quality products, as well as our suppliers who continue to support us through all market cycles and remain instrumental to our growth initiatives. I'll now turn to our demand and pricing trends. Our fourth quarter tons sold were up 4.9% from the prior period within our expected range of up to 3.5% to 5.5%. For the full year, tons sold were up 3.7% compared to 2022, reflecting solid underlying demand in several key markets, including non-residential construction, aerospace, automotive, as well as contributions from our organic growth activities across carbon plate, structural, and flat roll products. We were particularly pleased with the market share we captured in 2023 by growing our tons sold by 3.7% annually, well in excess of the 1.5% increase reported by the MSCI. Our fourth quarter average selling price per ton sold of $2,466 was down 3.4% from the third quarter, which came in slightly better than our expected range of down 4% to 6% as carbon steel and aluminum prices stabilized. Next, I'll turn to an overview of the trends we saw within our products and key end markets. Carbon steel tubing, plate, and structural, our three largest product groups, represented about one-third of our fourth quarter sales. All these products experienced strong growth and outperformed industry shipment levels compared to the prior year quarter. For the full year, sales volume growth in carbon plate and structural products fueled by strong non-residential construction activity supported our industry outperformance. We are cautiously optimistic non-residential construction, including infrastructure, activity will remain at healthy levels in the first quarter of 2024. And in the medium to long term, we believe industrial reshoring efforts and new public infrastructure projects under various federal and state programs will support continued non-residential construction and infrastructure demand. Aluminum and stainless products represented approximately 30% of our total fourth quarter sales, with aluminum and stainless aerospace products comprising about 10%. Stainless steel prices and volumes continued to decline in the fourth quarter of 2023, both sequentially and year over year. However, our fourth quarter 2023 shipments of aluminum products increased compared to the prior year as prices stabilized on strengthened aerospace demand. We are optimistic aerospace demand for commercial military, defense, and space will remain healthy in the first quarter of 2024. We primarily service the automotive market through our toll processing operations, which, as a reminder, are not reflected in our tons sold. Our tolling business processed 7.5% more tons in 2023 compared to last year on increased processing demand from the automotive market and our continued investments to increase capacity. Our fourth quarter shipments improved modestly year over year, as demand quickly recovered after the UAW strike concluded in late October. Our first-core outlook for the automotive market remains positive. We sell a wide range of products to diverse sectors in the general manufacturing market, including industrial machinery, consumer products, and heavy equipment, among others which collectively represent one-third of sales. Shipments improve modestly year over year driven by strength in heavy equipment, We expect demand in the broader manufacturing sector will remain at healthy levels in the first quarter of 2024. Sales to the semiconductor industry declined year over year, but stabilized sequentially in the fourth quarter. We are excited about the growth prospects we anticipate rising under the CHIPS Act, as well as reshoring activities that give us confidence in our long-term outlook for this market and further justify the investments we are continuing making to increase our capacity to support active, and anticipated opportunities. Please refer to our earnings release for additional commentary on our end markets and product diversification. I will now turn the call over to Arthur to review our financial results and outlook.

Thanks, Steve, and good morning, everyone. Our fourth quarter 2023 non-GAAP diluted earnings per share came in at $4.73, with some benefit from a lower than expected tax rate and a higher than expected LIFO income. Adjusting for these items, our non-GAAP earnings per share would have been $4.04, surpassing our guidance of $3.70 to $3.90. Better than anticipated pricing and gross profit margin resilience, along with solid execution on all fronts, including effective inventory management, further contributed to the outperformance. We finished 2023 with $14.8 billion in sales and $22.64 in earnings per share, both representing our second highest historical results. We successfully outperformed industry shipment levels across nearly all products and grew sales volumes in both fourth quarter and the full year compared to 2022. We maintained gross profit margin of 30.6% in the fourth quarter and 30.7% for the full year, near the high end of our sustainable range, mitigating some of the impact of declining prices prevailing in 2023. Our long-term investments in value-added processing capabilities were key to these outcomes, as value-added processing gross profit margins are less susceptible to compression in declining price environments. In 2023, we performed value-added processing on 50.6% of sales orders, up from 50.2% in 2022. On FIFO basis, which is how we monitor our day-to-day operating performance, which excludes the effect of our LIFO inventory valuation method, our gross profit margin improved by roughly 30 basis points, to 28.8% compared to the third quarter of 2023 due to improved alignment between inventory costs and replacement costs, particularly in carbon and stainless steel products. Our use of the LIFO inventory valuation method benefited both our gross profit margin and earnings in 2023. We recorded LIFO income of $59.5 million in the fourth quarter and $164.5 million for the full year, exceeding our $140 million annual estimate. We ended the year with a LIFO reserve of $579.3 million in our balance sheet, which will be used to generate LIFO income and reduce the volatility of our gross profit margin and earnings if metal prices trend lower in 2024 or future periods. We currently estimate LIFO income of $80 million in 2024. As always, we will update our expectations quarterly to account for actual inventory costs and metal pricing trends. Moving on to expenses. Our full year 2023 non-GAAP same-store SG&A expenses increased by $55.2 million or 2.2% over last year from incremental variable costs associated with higher ton shift, which were partially offset by lower incentive-based compensation resulting from lower profitability. As a reminder, our model normalizes expenses by right-sizing incentives as profits trend down. This decline in incentives is partially offset by increased headcount to support organic growth in the business. On a per-ton basis, Our expenses decreased slightly compared to last year due to better operating leverage and were relatively stable compared to the same quarter of 2022. I'll now switch gears to our balance sheet and cash flow discussion. Our inventory turn rate based on tons came in at 4.7 times in 2023, meeting our company-wide goal of 4.7 times compared to 4.4 times in 2022. Our healthy inventory turn rate not only helped lessen the impact of declining prices on our gross profit margin, but also contributed to strong cash flow generation of $1.67 billion in 2023, the second highest level in our history. For the fourth quarter, operating cash flow of $525.6 million, funded $110.2 million in capital expenditures, $58.8 million of cash dividends, and $240.3 million of share repurchases, resulting in a 1.6% reduction in common shares outstanding. On February 13, our Board of Directors increased our regular quarterly dividend 10% to an annual rate of $4.40 per share, marking the 31st dividend increase since our 1994 IPO. We have paid regular cash dividends for 64 consecutive years without reduction or suspension. Our strong balance sheet, consistent cash flow generation, and recently announced $1.5 billion share repurchase authorization allow us to be opportunistic. We are very proud of the fact that our strong financial position has enabled us to invest back into our business to support growth while concurrently returning approximately 45% of our net income and 58% of free cash flow to our stockholders over the past three years. I'll conclude with our first quarter outlook. Overall, we expect underlying end market demand will remain relatively healthy in the first quarter of 2024. We also expect shipping volumes to increase 9% to 11% sequentially in the first quarter, consistent with typical seasonality. On the pricing side, we expect our average selling price per ton sold for the first quarter will increase slightly, up 1% to 3% compared to the fourth quarter, based on stabilizing pricing trends for many of our products. Based on these expectations, we anticipate non-GAAP earnings for diluted share in the range of $5.30 to $5.50 for the first quarter of 2024. To close, I'd like to thank the entire Reliance team for its collaborative efforts to drop industry-leading performance in 2023. This concludes our prepared remarks. Thank you for your participation. And at this time, we'll now open the call to questions.

Operator?

Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you'd like to ask your question, you may press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Katja Jancic with BMO Capital Markets. Please proceed with your question.

Hi, thank you for taking my question. In 4Q, your gross profit margin was at the higher end of your sustainable range. I would assume that in a declining pricing and volume environment, it would get at least a bit compressed. Is it fair to say that in general, your sustainable gross profit margin is moving higher?

Hi, Katya. Thanks for being on the call this morning. So it is our intent to continue to drive our gross profit margin higher as we're continuing to invest in more and more advanced processing equipment, doing more for our customers. We're able to drive our gross profit margin higher. We also benefit. from being on the LIFO inventory costing method with being able to hold our margin more sustainable. But it certainly is our intent, and I think if you look back over the past 8 to 10 years, you will see our sustainable gross profit margin at a steady improvement. We continue to see a lot of opportunity with our customers to do more with them, for them, which is why we're continuing to invest in CapEx. And so it is our intent to drive that higher, but I know all of you ask us to try to quantify when and how much, but we can't do that, but we do want to continue to move higher in that. Arthur, do you want to add anything?

Yeah, sure, Katya. Fourth quarter typically has the annual kind of LIFO catch-up, and when we talk sustainable margins, we we refer to that on an annual basis as on a quarterly basis, you could have certain, you know, uh, bumps that, um, move the margin up or down. So on an annual basis, we're still, you know, 30 and a half. Um, I beg your pardon. Um, we were above 30%, you know, 30.7. So yeah, your point's well taken. And, you know, a reminder that LIFO for us effectively, um, resets cost of sales, um, to replacement costs, so it effectively takes out inventory gains and losses from our results. So it's a better metric of operating results, at least that's been our view, and it actually helps us navigate pricing cycles and takes out the volatility from our operating results.

And maybe just to follow up on this, because Arthur, as you said, this year the gross profit margin was at 30.7%. I think last year it was around the same level, 30.8%. And this is at a higher end of the range, right? What would you have to see to be comfortable to really raise it above current level?

When the time comes, Katya, we'll let you know.

Okay, one more, if I may. Can you remind us what is your exposure to aerospace?

It's roughly 10%.

Of sales. Perfect. Thank you so much. You got it. Thanks, Katya.

Our next question comes from the line of Phil Gibbs with KeyBank Capital Markets. Please proceed with your question.

Hey, good morning. Good morning, Phil. Good morning, Phil.

Did you provide any color on what you expected 2024 CapEx to be and also how much do you have left on the buyback?

Our current 2024 approved CapEx budget is $425 million. Those are projects we'll initiate this year. Because of lead times, we probably won't have all of that completed. But we do have carryover from prior years. So from a cash spend, we're estimating about $500 million going out the door for prior and current year projects. A lot of that, most of that is growth related as it has been the last several years. As I just mentioned with Katya, we continue to find more ways to provide value to our customers. go into new green fields in new geographic areas, broaden our products and processing capabilities. So we see a lot of opportunity to continue to do that. And then on our share repurchase, we've got $1.4 billion, Arthur?

Correct, $1.4 billion.

Thank you.

And unusually, the OPEX levels, at least in my model, were up sequentially in the fourth quarter, which is not seasonally typical. Did you have some accrual catch-up? I think we're just trying to figure out what the right baseline is.

Yeah, so good question. Normally, it's a little bit of a decline, but as we talked about, we've been growing the business organically in, you know, fourth quarter. volumes shipped, well, yes, they decline sequentially. There's over 4% growth year over year. So some of that is just our organic growth. And I think if you look at it, the sequential increases in terms of absolute dollars is a relatively small amount.

So nothing unusual in terms of catching up from the rest of the year. You're just probably building a little bit more infrastructure? Correct. Okay. I did have one more in here. You did make a couple of deals recently, and I know just generally speaking given history that a lot of deals don't contribute right away given mark to markets in the first quarter on inventory, but would you expect these to start being accretive in the second quarter?

Yeah, well, so one of our criteria for acquisitions are that they're immediately accretive. Reliance's strategy on acquisitions hasn't changed that we buy good, well-run, profitable businesses. So we expect them, and hopefully they're listening, we expect them to be immediately accretive based on their past results. We have no reason to think that that would not be the case. We're excited about welcoming them to the family.

The revenue splice between these two deals is largely in carbon or mixed amongst metals?

Yeah, primarily carbon. And just a reminder, Cooksey, we did already close February 1st, so they come into our numbers. They're in our numbers now. American Alloy has to go through regulatory approval. So that is not yet closed, and at the time that we are able to close that, we'll make an announcement, and then their numbers would begin rolling in then.

Okay, perfect. Thanks so much. Thank you.

As a reminder, it is Star 1 to ask a question. Our next question comes from the line of Martin Englert with Seaport Research Partners. Please proceed with your question.

Hello, good morning, everyone.

Hey, Martin.

Question on sequential volume guidance at the high end of the range. I think that it implied that it would be down marginally year on year with volumes and market commentary was generally positive in the release and prepared remarks. Could you just touch on where that weakness could be year on year or am I misinterpreting that?

No, you're a very good question, Martin. As you may recall, last year, our first quarter increased sequentially from the fourth quarter was unusually strong. And we called it out as we had some demand pull forward in the first quarter from rising carbon flat roll prices. So going from Q4 of 22 to Q1 of 23, our tons increased almost 18%. And then Sequentially, as we navigated the rest of the year, there were declines which were sort of a little atypical from a seasonality perspective. So when you look at it from Q1 of 24 to Q1 of 23 perspective, you're going to see a little bit of that decline, which is, again, due to that unusually really strong Q1 of 23.

Yes, I would say it was more buying patterns of some of our customers. And just want to make sure we're not implying weakness. We still see healthy demand in Q1 2024.

I guess following on that. OK, so there was noise in the comparison year on year in one queue and some atypical seasonal trends after that. But based on what you see today. Would you expect, I guess, more fundamental underlying demand to be exhibited in the volumes in the remaining quarters, meaning if it was comparing negatively marginally in one queue and you're rather positive on these end markets, meaning we should expect some growth in volumes year on year.

I mean, that's certainly our intent and what we're pushing for. You know, we've been making investments to continue to grow organically. And our teams out in the field did a great job in 2023. We outperformed the MSCI shipment levels. That was strategic. It was because of investments we've made, because of our companies going after smart, profitable business that's out there. And they were very successful in doing that. We think underlying demand at this time We are positive. We think there are a lot of good tailwinds coming through the infrastructure, the chips, the reshoring and nearshoring. That is all still out there. So, you know, we only give guidance a quarter out, but we are positive about the opportunities that are out there that we expect to see in 2024, but we've also been in this business long enough that we know there are certain things we can't control. But we're excited and we're positive at this time.

Thank you for that. That's very helpful. Can you touch on the corresponding volumes to the sales of the two acquisitions? And I understand one of them is pending, but what you saw in 2023 for each one.

Yeah, I mean, we've disclosed their sales numbers, Martin, but nothing beyond that, nothing on volumes at this time. And it won't be, you know, overall. They're important businesses, important additions to the family, and we're excited about that. But it's not going to materially move our tons.

Are you able to qualitatively comment on the gross margin profile relative to Reliance?

Yeah, I mean, we don't, you know, we do not typically talk about individual companies unless it's, you know, a very material transaction. But I will say that they're good, performing, profitable businesses. But we do see, we're excited that there, we do see some opportunities there. to help expand their gross profit margins from where they are currently. Some of the expertise we have throughout the Reliance family in value-added processing, we think we can bring to the companies and really help them work on that and pricing disciplines. So we think there's upside to their already solid profitability levels, but we're not going to give specific numbers.

Okay, that's helpful. If I could, one last one on the repurchases. The average repurchase price is lower quarter on quarter in 4Q. The volume repurchase increased to $0.9 million versus half a million, and I think earlier in your pair of remarks, you did highlight you typically opportunistically repurchase, but how are you thinking about repurchases looking ahead both in the near term and 1Q with more of the share prices today?

Yeah, so Martin, we look at share repurchases like all of our capital allocation buckets where we try to opportunistically you know, be active in each of those buckets. And we don't have any one holding back another one. You know, the fact that we have announced a couple of acquisitions doesn't change. We're in a financial position where that doesn't impact our ability to repurchase shares or how we view that. So we expect to continue to be active when we think it's the right timing to in the market, which is consistent with Q3, Q4. A lot, you know, depends on how the stock trades during that period.

And Martin, just a quick reminder, we refreshed our authorization back in October to $1.5 billion, and we have $1.4 remaining on that authorization. So in our prepared remarks, we provided some information three-year historical figures on total returns, which was roughly 58% of free cash flows over the last three years. Does that mean that's the number that we're guiding to going forward? No. As Carla said, we kind of look at that largely opportunistically, and we have the authorization and the balance sheet and the cash flows to be able to act on that when the opportunities present themselves.

Is there any, well, that might not necessarily be the target where the last three years have trended. Is there some lower bound that, I guess, lower bound to the framework as a minimum that you would like to return by dividends and repurchases or not necessarily it's really based on the best opportunity set?

Yeah, Martin, because as I just mentioned, you know, we, We try to be opportunistic in all of our capital allocation buckets, whether it's acquisitions, organic growth, dividends, share repurchases. We don't set formal policies because we are selling into cyclical markets. So we want to have the flexibility to allow us to do what we think is the best use of capital at the time. So we don't have any formal policies established for that. other than, you know, trying to be a good capital allocator and reward our stockholders and grow our company.

Okay. Thank you for all the detail and congratulations on the results and all the progress.

Thanks, Mark. Thank you. Our next question is a follow-up question from the line of Phil Gibbs. Please proceed with your question.

Thank you. Broadly speaking, what are you seeing in the automotive market right now? Because I know there was a lot of volatility in the headlines in the back half of last year from the auto strike.

Yeah, hi, Phil. So, you know, we service the automotive market predominantly through toll processing, where we do not take ownership of the metal, which we like servicing that market that way, taking out any metal price risk. for us and we're processing, inspecting, delivering, storing the metal. Typically, our customers in that business are the mills selling to the automakers. And our companies that do that are very good at what they do. They've done a great job servicing the markets, also shifting to be able to process aluminum as there's more and more aluminum content. We've been continuing to invest in those companies. And last year, our processing volumes in our toll processing businesses, which are about 65% automotive related, were up 7.5%. So it was a good year for us, again, partly because of our investments for growth, but also because even though there were a few stoppages and it was a little erratic for certain periods during the strikes, It didn't hit us on a broad basis. It was typically one customer, one platform that would be down. So it wasn't too broad based for us. A lot of our customers were anticipating the strike coming. And so we worked with them to try to build up a little more inventory for them prior to that. And it came back pretty quickly when the strike ended. You know, we didn't see a big impact from that. And, you know, we continue to be busy. We're continuing to invest to increase capacity there. And we're positive on automotive going forward.

Thank you. And then just a question for Modeling Clarity. The other income was pretty robust in Q4. Does that capture largely the interest income on your cash balance?

That's correct, Phil. And there's some life insurance income in there, but the vast majority of that is interest income on our cash.

Perfect. And then I could sneak in one more just on SEMI's infrastructure. I know you've made some good investments there the last couple years. Are you starting to see some of that spending come back, or is that not a market that you're looking for growth in 2024? Thanks.

Yeah, Phil, I think for the year 2024, We would look for some growth. Our smaller investment in a new facility in Texas, they're ramping up now. They're in production mode, but with where the industry is right now, they're starting a little slower. The equipment side of the business is more negatively impacted than the construction project side of the semiconductor business. Our larger... facility capacity expansion in Texas is not yet live, so they're still in build mode. So we haven't seen anything out of that new investment yet. But we did see in Q4, you know, the semiconductor industry really, they're still busy, but there was a bit of an inventory buildup, so they've been working through that. And We're positive going into 2024 that we'll start to see some improvement. A lot of it, though, on the construction side is dependent upon the pace that our customers build because there have been some stops and starts on some of the projects.

Thanks very much. Thanks, Phil.

That concludes our question and answer session. I'd like to hand it back to Carla Lewis for closing remarks.

Thanks again, everyone, for joining our call today. And before we close out the call, I'd like to remind everyone that we will be in Florida later this month presenting at the BMO 33rd Annual Global Metals Mining and Critical Materials Conference. And we hope to see many of you there. Thank you again to all of you for your continued support of Reliance.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.