Celanese Corp - Series A (CE) — Q2 2017 Earnings Call Transcript

Thank you, Jamie. Welcome to the Celanese Corporation second quarter 2017 earnings conference call. My name is Surabhi Varshney, Vice President, Investor Relations. With me today are Mark Rohr, Chairman and Chief Executive Officer; Chris Jensen, Chief Financial Officer; Scott Sutton, Chief Operating Officer; and Pat Quarles, President Acetyls Chain. Celanese Corporation's second quarter 2017 earnings release was distributed via Business Wire yesterday after market closed. The slides for the call and our prepared comments for the quarter were also posted on our website, www.celanese.com in the Investor Relations section. As a reminder, some of the matters discussed today and included in our presentations may include forward-looking statements concerning, for example, Celanese Corporation's future objectives and results. Please note the cautionary language contained in our posted slides. Also, some of the matters discussed and presented include references to non-GAAP financial measures. Explanations of these measures and reconciliations to the comparable GAAP measures are included with the press release and on our website in the Investor Relations section under Financial Information. The earnings release and non-GAAP reconciliations have been submitted to the SEC on a Form 8-K. The slides and prepared comments have also been submitted to the SEC on a separate Form 8-K. This morning, we'll begin with introductory comments from Mark Rohr and then open up for your questions. I'd now like to turn the call over to Mark.

Thank you, Surabhi, and welcome to everyone listening in today. We have posted our prepared remarks along with earnings yesterday, so I'll limit my comments and then open the line for questions. First, a few performance highlights. We successfully completed the Clear Lake, Texas site turnaround to repair and upgrade unit operations, on-time, on-budget and injury-free. We also made significant progress with SO.F.TER and Nilit integrations and announced an agreement with Blackstone to form a new European-based cellulose acetate company to better support global customers and technology. In the second quarter, we reported GAAP earnings of $1.72 per share and adjusted earnings of $1.79 per share, both second quarter records. In the second quarter, we returned $237 million of cash to investors, with $172 million in share repurchases. By the end of 2017, we expect to have completed $500 million worth of share repurchases. And as you have probably seen, we just announced a new share repurchase authorization of $1.5 billion. The Acetyl Chain income came in at $132 million, which is 19% higher year-over-year, driven by commercial agility and production flexibility. Product swaps and regular supply chain planning allow Celanese to participate in the market and overtime production limitations at Clear Lake as well as industry supply constraints. Income margin for the Acetyl Chain was 16% driven by pricing improvements. Materials Solutions increased net sales to a record of $709 million in the second quarter, as rapid growth in Advanced Engineered Materials outpaced the decline in acetate tow volume and price. AEM reported a second highest ever segment income of $142 million, 28% higher than the same quarter last year. Volume increased double-digits year-over-year driven by SO.F.TER. and Nilit, organic growth and greater penetration in China. As expected, segment income margin for AEM was 290 basis points lower year-over-year, with integration of recent acquisitions and growth in Asia. The team closed a record of 547 projects in the quarter, allowing us to increase our target for project closures in 2017 by 5% to roughly 2,000. In Consumer Specialties, segment income in the second quarter was $79 million, in line with our previous guidance. Tow price and volume were lower year-over-year driven by reduced industry utilization rates. We expect earnings for the third and fourth quarter 2017 to be around the second quarter level, and for 2018 results would be in line with 2017. For the rest of 2017, there are a number of efforts underway to utilize our unique commercial models and leverage our operational flexibility. Record numbers of commercial projects and strategies to take advantage of raw material volatility will extend the second quarter success throughout the year. We are therefore increasing our expectations for adjusted earnings per share growth to be in the 9% to 11% range for 2017.

Thank you, Mark. I would like to request our callers to please limit to one question and a follow-up. Jamie, please open the line for Q&A.

Thank you very much. This question is for Pat. I would like to gain a clearer understanding of what Mark discussed regarding commercial agility and production flexibility. Can you provide more details on how you managed to reduce the volatility in raw acetic acid pricing? Additionally, how should we view that business in the second half of the year? Earlier you mentioned a potential improvement in the second half; is that still something we can anticipate for acetic?

Let me take the last question. Pat, it's better if you answer Bob's first question, but yes, we are seeing trends that we hoped would reassure us about moving this business forward in the third quarter. So, I believe that the broad trend we mentioned earlier in the year is still valid, which is why we reaffirmed and slightly increased our guidance. Pat, would you like to discuss the commercial agility?

Sure. Hey, Bob. As we entered the second quarter, we had several priorities to focus on. Our top priority was ensuring the turnaround process didn’t negatively impact our operations. We brought on over 1,200 new contractors to assist with the maintenance work, and we take great pride in the fact that the team at Clear Lake returned home safely every day. This turnaround is a significant achievement. Secondly, we aimed to fulfill our commitments to our customers as a leading player in the global Acetyls market. We successfully achieved this despite the turnaround by employing various sourcing strategies and managing our supply chain effectively. As Mark mentioned, we formed agreements with co-producers to secure necessary products, and at times, we had to move products from China and Singapore to meet customer demands in the West, even if it was not cost-effective. The $30 million impact in the second quarter stems from our dedication to meeting customer needs, and we managed to navigate that without any issues. Looking ahead to the third quarter, we're well-positioned for improvement as we won't be dealing with the ongoing work at Clear Lake or the inefficiencies associated with moving those materials to meet market demands.

And Chris, could you tell us what the tax assumption is for second half earnings?

Yes, right now, we are assuming it will be the same as what we were using today, which is the rate used in the quarters to regular expectations for the year.

So just to be clear, following this result of 106 million in AI in Q2 you are expecting continued improvement in Q3. Is that correct off to that number?

You got it, Frank.

I thought I read last night that you believed the negative impact of the Clear Lake turnaround was close to 30 million, is that right?

Yes, that's correct. The direct impact is 15, and the indirect impact, as Pat mentioned, relates to the inefficiencies in our system. You might also consider an additional 15 in that context.

Alright, so that result in Q2 was constrained by that amount. Terrific. And obviously AEM had nice results there. How would you compare the organic growth of Celanese to the growth from the mergers and acquisitions you undertook? Can you break down the growth between those two?

Scott, would you mind jumping in on that?

Yes, sure. Frank, if you think about what we did in Q2, I mean for the broad performance, we have M&A contributing, organic growth contributing. Organic growth is still contributing much more than M&A, certainly even more than our affiliates did. So, if I had to break it out to give you just a good view of it, and you look at organic volume growth, again Q2 '17 versus Q2 '16 was about 10% organic volume growth.

You guys have done a great job in the AEM business, it's become an envy in the chemical industry. So, what drives this success? Can you talk about your $75 million of R&D, corporate R&D? How much of that goes into this division and how much of that goes towards new product versus application R&D?

Yes, P.J., this is Mark. Well, let me back on this how about the success with the high low for just a minute, and Scott probably would watch the wedding on this as well. What I would say, we've done extremely well as we’ve really married the technology and commerce with our customers. So, we look at that having sort of multiple people in that box that are making decisions on a real-time basis when we pursue. And we have a lot of flexibility within our technology and sales groups to make sure that we are putting all the resources that accompany behind delivering on those things we say we are going to do P.J. So imagine the full force and the weight of selling these whenever we commit to the project A, B or C for our Ford or whoever we are working with, then we get it done right now. And so I think that’s the power, the inherent power, the model. From a technology point of view, most of our technology goes into in the AEM, mostly spinning the floor behind and it's largely developmental spending. So, I think if you use the industry standards, 85.15 or 90.10, there’s a small portion that’s going in futuristic work, but most of it is addressing contemporary things before us. Scott, do you want to add something to that or?

Yes, Mark, I mean the only thing I would add to all that, permanently correct. I would just say that P.J., our go-to-market strategy is quite differentiated and we are really able to drag a lot of complexity out of customers and handle all these projects and find solutions that they might not otherwise be able to find, and certainly can’t find from a single supplier, and move that complexity to our side of the house and manage it well, and that really is the competitive advantage.

Thank you. And after acetate goes into this JV with Blackstone, what is the long-term future of the acetate into immediate business, Mark? And would you be looking to do a similar back the efficient deal in the future, if an opportunity comes?

Yes, that answers your first question. When we consider merging these two businesses, we will have a setup that can effectively address the significant changes occurring in the tow industry. Much of this involves promoting the use of advanced tow materials, specifically cellulose acetate, along with new technologies aimed at finding applications for cellulose acetate, which we are quite enthusiastic about. Our partners at Blackstone share this enthusiasm, and the combination of these elements provides us with the opportunity to establish a truly sustainable business model. We anticipate that this model will continue to drive earnings for Celanese, along with maintaining high levels of free cash flow generation. At some point, we believe it could operate as a standalone entity, possessing all the strengths and capabilities expected of such an entity. Would we do that again? Absolutely. We already consider ourselves to have three leading businesses, and if there's a way to integrate additional assets within the chain business to facilitate growth at the pace we envision, we would definitely pursue that.

Two quick questions. One for Scott, on that 10% organic growth, the incremental margins on that, is that keeping pace with segment average?

Yes, hi Duffy, and it is. I mean if you boil it down and you take out affiliates and you take out M&A, you would actually find that our margin in Q2 of '17 is a little bit better than our underlying margin in Q2 of '16. So, it's absolutely keeping pace.

And then just a second one, on the commodity side of the acidic. How do you guys see the cycle today, I mean, it's been a long time that we have been at a relative trough? Next three years, is there a chance that we can start getting some tighter operating rates and actually start to see a cycle in acidic acid?

Now, Duffy, you know we don’t talk about the business as the commodity business.

Yes, as I have always said, China, we know, China is structurally over supplied in such a large way. So I'm not going to tell you, you are going to have this global tightening. And what we have to do to manage between the differentiations that we have in our cost structure between the three acid units around the world, and tie those together in a way in which we can capture a value as it presents to itself quickly. And that’s how we have to do it, Duffy. I am not going to tell you that demand is going to certainly overcome or the supply coming out of China. It's not going to unfold that way. We are working hard in China to try and drive conversations and outcomes that might put the supply side in a more sustainable position. But that also is a complicated process given the nature of China.

Mark and Pat on the same issue on China. I see you just announced some price increases earlier, I guess last week in China. Is that a sign of any underlying strength in the Chinese market or maybe you can comment on the reasons for that Chinese price increase in acid deals?

Yes, thank you. Building on my earlier comment, there are some interesting developments happening in China that present opportunities for us to create value. Regarding our VAM business, I mentioned last quarter how high ethylene prices affected our competitiveness against carbide suppliers in the first quarter, which led us to step back from the market. However, that situation changed as we entered the second quarter, allowing us to re-engage. Currently, in addition to improved competitiveness, we are also facing some supply disruptions. Heavy rainfall in central China is making it challenging to transport products to the coastal market, creating additional opportunities for us to generate value. We are ready to take advantage of these situations as they arise. Similarly, we are closely monitoring the supply dynamics in the acid market, and when opportunities appear, we will act on them. They may not persist for long, possibly not even for a quarter or a month, but as long as they are available, we will seize them.

And Scott just in your business, how do you stand in the dynamic of price versus raw in your business is AEM?

David, I mean, we are raising price in some specific areas and having some success at doing that. I mean you know, go back to my earlier comment that there was actually a little bit of margin expansion taken out of M&A and affiliates and so forth. But I mean we are able to do that and we specifically have been successful at raising price in China on some of our larger products.

In AEM, you talked about margins being lower year-over-year largely from acquisitions. Was there any squeeze from raw materials or were you able to kind of offset those with pricing?

Yes, so Mike, and this is Scott. We do have that margin decline when you drive in all the M&A, that’s really what we’ve reduced it some. There is a little bit of margin squeeze going on, but we have been successful at raising prices in certain areas particularly in China, in preference to my previous comment. So, I mean we are able to come back that and that’s why you don’t see a squeeze in the underlying business.

Let me start by providing some background. We feel optimistic about our pipeline. While we anticipated finalizing a couple of deals, those discussions fell through as the owners decided not to sell. This has set us back slightly, but we currently have several prospective offers that we are negotiating to try and close some deals soon. We are dedicated to this effort, and it's important for us to continue expanding our business profile, market reach, and access to sustain our growth. We are working diligently and feel confident about our pipeline, but we are not quite in a position to make any announcements just yet.

When you described your acetate tow joint venture with Blackstone, you talked about it being accretive by $0.50 or $0.75 a share a few years down the road. Did those accretion calculations assume that there are no divestitures?

Yes, they assume no divestitures.

Okay. And second, your AI business did really nicely on a sequential basis maybe in EBITDA you are up 23 million. Can you talk about whether that came from Europe or the United States or Asia and/or what the weight for sequentially? And was it more of a VAM phenomenon or acid phenomenon, can you give us some color?

Well, we did hear just a little bit. I mean our business predominantly from a profit value point of view is on our just side of the Atlantic. So, generically speaking, that’s where the really value equation is driven. So, it’s almost always a case. We’re seeing the biggest uplift in that area. Pat, you want to comment just broadly directionally on how you saw that unfold?

Sure, yes. Jeff, I think acid and VAM both went in the right direction obviously to get that result, almost equally, globally. Mark is right, of course, we do make most of our money in the west. We did have a change in the circumstance for VAM specifically from Q1 to Q2, which I have mentioned earlier right. So, we did reenter and versus second quarter we did better in VAM than we did in the prior quarter. That was a sequential kind of a differential market driven improvement. Otherwise, I would say you just had that environment because of what we were doing in the market and impact to the outages that allowed general market inflation throughout.

Just want to follow up on the discussion about the competitive dynamics in China and the degree to which they are being disciplined being forced on them by weather-related issues. In the past you have suggested that there may have been an emerging trend of better just competitor discipline in the region. Are you still seeing that or is that reversing?

Yes, I'm not certain I can address that regarding supplier discipline. Previously, we discussed indications that some units are structurally impaired due to being oversupplied, and the margin challenges are prompting people to explore options for rationalization or consolidation. However, it’s difficult to execute that in China, but it's a starting point. If individuals have social obligations beyond just financial ones, it alters our perspective. They need to navigate through these issues. That’s what I referred to in the last call. I believe those challenges still persist; it's just a lengthy process. Currently, the impact of weather and similar factors reflects the nature of our business, which relies on our ability to continuously operate and meet market demand amidst the shifting economics in China, and our capability to adapt to capitalize on that volatility.

Is the average size of the project shrinking?

Lawrence, this is Scott. The average size really isn’t coming down that much, but what I will say is that with the acquisitions you do find that they have an initial smaller size project going into there. So, it's possible that the number comes down for a while, right. But then we get the cross synergies we pick up other projects, so it's sort of a temporary phenomenon, it's not a major concern.

Your implied back half guidance doesn’t seem to be all that different from where consensus is at the start of the year, in spite of having a pretty good first quarter and second quarter? Or is there a key risk that you want to highlight for the second half of the year?

I believe I've addressed your point, John, and you are likely correct mathematically. However, we are optimistic about increasing our guidance and earnings for the second half of the year, which aligns with our initial expectation of more significant outages. A key concern, however, is the possibility of business weakening unexpectedly in the fourth quarter, which is difficult to forecast. This remains a risk when you look at the trends, but we believe the 9% to 11% range is reasonable. From our perspective, this indicates an improvement compared to our previous outlook.

Just a question on consumer specialties. You had a little bit of a downtick there. What’s the new outlook for the remainder of the year and next year? Have you found potentially a baseline there? Thanks.

Yes, Arun, we believe where we are now is roughly a baseline and of course we went through it as we had advertised that step down, it was going to occur in the second quarter so you have seen that. We will continually work to try to tune that up a bit by ways we can impact those earnings, and we’ll need to be a little bit to be flat year-over-year. But we expect that run rate that you're seeing now as those good numbers ending to run out through this year.

And then as a follow-up, I mean methanol costs potentially could be coming down in the second half. It’s already come down a little bit. How does that affect your ability to go out and get price in some of the derivatives? And what gives you the confidence that pricing will continue to go up in that environment? Thanks.

Yes, this is Pat. The pricing of methanol is likely to be volatile, and it's particularly challenging to make a strong prediction for the second half of the year. We've been discussing the methanol-to-olefins (MTO) plants starting in China, which are expected to create an additional 3 to 4 million tons of methanol demand annually, competing with ethylene and polyethylene alternatives. As these developments unfold, there's uncertainty regarding their impact in the coming months. One thing we expect is continued volatility, so we have positioned ourselves to respond effectively to shifts in operations or pricing, allowing us to maximize the benefits from this volatility. It will be interesting to observe how these dynamics evolve in the upcoming months.

Mark, you talked a bit about the margin erosion on the AEM side of things and obviously not surprisingly it’s coming on the back of some of these acquisitions that you have made. My question basically is that again in your prepared remarks you talked about recovering some of that margin erosion from synergies. So, I am just trying to figure out where we’ll end up in terms of run rate margins, once those synergies are captured? Should we think mid 30s, high 30s, mid even back to 40% plus levels?

Well, with several 100 basis points from a dilutive effect of this which it will come into portfolio, we were very open about that process. These companies we are buying have margin levels of roughly half of ours. So our strategy is to oversee the times to get those levels up to our existing levels. So, you expect if we did any other acquisitions relative to push that margin back up over some period of time. If on the other hand, we are continuing to roll in acquisitions like this on an annualized basis, I think you are going to see numbers more like where we are now. In other words, if there’s always a dilutive impact on a new term basis that we haven’t recovered, you won’t be able to push it out. So, I think somewhere between where we were and what we are today, is the long-term average for our company, but near term is going to be closer to this level.

Understood, understood. And then as a follow-up, you’ve talked about at least in the near term your expectations for some volatility in methanol pricing. As you look at your portfolio now, I know back in the day you talked potentially about another methanol plant. But seeing some of this recent volatility, the influx of some of these MTO plants in the Lake, where do you guys stand now with regards to your global position in methanol? Would you sort of consider another methanol plant particularly as your cash flow continues to improve?

Well, I think it's not a priority for us to invest our money today. We appreciate high methanol prices and also the volatility associated with methanol, and we believe the coastal MTO facilities contribute significantly to that volatility, which is beneficial for us. Currently, we are observing the market rather than taking a position. If we were to consider another investment, we would likely rely on our company to make that decision, but right now, it's not very high on our agenda.

Can you talk about the process with the JV? You referenced that you are preparing to carve some assets out in preparation for that joint venture and making your contribution to it? How long do you think that process might take? And can you give a ballpark for when you think that deal might close?

I think, Jim, we understand with given some specific dates, we're just really getting started in this process. So, I think if you'll be a little bit patient, we will share more of that probably in October timeframe after we're fully in it and have the ability to maybe get a sense of the pace people are working out and things like that. The carve-out process is just some of the many things we have got to do to prepare our assets, I mean, to prepare ourselves as this transfer our assets into the new JV. So that process is a multi-month process and it will probably take us to the end of this year or the next to complete.

Hey, Jim, this is Chris. Let me just add to that. When we said carve-out in this particular transaction, this is not complicated from a physical asset separation perspective. We are really talking about systems, processes, and legal entity and tax structures.

And could you give us an update on your thoughts on portfolio management? There are a lot of global assets for sale, under what circumstances might you consider some transformational M&A? And in the context of that, do you consider the Acetyl Chain core to your business?

Well, like we said outline, our purpose here is to create shareholder value, so we don’t look at ourselves as being constrained in any way to do that. We also said we are not going to do anything that’s coactively stupid or anything that destroys shareholder value. So, if you look at the deal we just did, as a sad part of that if selling these taken a position to sell those assets, let's say, the net of that probably would have been about the level of this dividend that we received. So, we've structured the deal in a way that's going to have tremendous shareholder value creation as a result of it net, net. And you are taking what was already arguably one of the best, if not the best cellulose acetate business in the world, and you're making it even better by combining those two great businesses. So that kind of structure, would we do that again and again? Sure, we would. It’s not easy to do but we certainly would. We believe that Materials is best-in-class in terms of the solution base formulas that we have. We have more bandwidth on our molecules than anyone else in that space and we have ways to continue to grow that. We would like to do a bigger deal in that space absolutely if we do find one to fit. If you look at the chain business, the chain business is awesome. At a time where no one can look at the industry metrics and believe you are able to generate this kind of margin off of that business, we continue to do it because of the unique nature and differentiated nature of that business. There are also ways we can expand that. So I think what you're happy about is you have a leadership team that’s fully driven to create shareholder value, and we don’t feel like we have constrained anywhere to do that. But we don’t want to do just bust down for the sake of buying it, nor sell something just for the sake of doing it. It’s got to really translate in incremental shareholder value or we can’t do it.

Even more specific follow-up on this line of questioning. Mark, you've referenced you said last year I think at a conference said, if you were to separate the business unit, there would be I think a $125 million to $150 million of business synergies specifically from raw materials and logistics. And you went on to say that the tax implications would be more substantial, which I took to mean more than $125 million to $150 million. So could you just update us, if those are the right numbers to think about?

Yes, so we continue to work on pulling those numbers down a bit. But on a gross level, the way I would look at it is, it has a negative present value somewhere between $1 billion and $1.4 billion, if you look at it from an impact to cash flow kind of basis. And, Chris, I don’t know if you want to add anything more to that?

Yes, Vincent, I would tell you the number Mark just threw out there and what we have talked about on run rate basis does include tax impacts. And we have done a lot of work over the last couple of years to actually minimize what those otherwise would be.

Good morning, thank you. You provided overall profit guidance for the consumer business. Could you give us some thoughts separately on your outlook for pricing and volume? Do you have any visibility on either one of these components?

Well, I mean look as Mark said, right, we think that there is a baseline that we sort of hit and you should see that going forwards. So there is likely to be fairly consistent volumes going forward a little bit of potential price degradation that we are able to offset here going forward. It is still a really competitive industry. But net, net earnings sort of stabilizing.

And question for Pat on methanol. I know you mentioned your prior view of tightening methanol market with essential projects. Why did that tightness not happen? And what is your, I guess, longer-term view? You mentioned also more volatility in the near term, do you think as we look out next 12, 24 months, do we still have a tight market or somewhere in the balanced region?

I think we made from what we are anticipating. We are absolutely seeing the new demand coming. I mentioned about 4 million tons in new demand associated with MTO on the China coast. So that is they are structurally. But the volatility dynamic now is the choices that they make economically between their ethylene and by ethylene alternatives. So that’s why structurally I think the market is in a better place than it used to be. And yes the volatility is going to be the principal driver because we have so much demand now tied to basically the ethylene or C2 chain versus just a straight Q1 chain. And that’s a new dynamic for this business.

This is actually Mehul Dalia sitting in from Ghansham, how are you doing? In AEM, you are increasing the number of projects to 2017. Is that particularly due to the cost pollution from recent acquisitions? Or is there any particular end market that is perhaps doing better from an adoption standpoint than you thought initially?

This is Scott. Look, I mean, it's really not about a specific end market, right. As an example Q2, we grew business in every single end market, it's more about improving the business model, getting more out of the organic business, continuing to enhance the acquisitions that we made, so it's very broad-based. It's the best way I can answer that question. So this is Scott again. There's really no significant change to the guidance we provided earlier, but we are closely monitoring the situation. Acetyl is certainly approaching the upper limit, and engineered materials will also reach that limit. We are working diligently to remain within the guidance we previously shared.

My question relates to Ibn Sina. I think you are in the testing phase there on the incremental POM capacity in the second week of June. Have you transitioned to commercial production? And related to that, would you give us an update on the likely timing of the step up in your ownership interest to 32.5% please?

Sure, Kevin. This is Scott. Yes, we really moved beyond the testing phase. We are in commercial start-up now. We have made some material. It's not fully running at commercial rates, so there is still a little bit more work to do here in the third quarter. Well, I won't give a specific time on our equity interest step-up that will be some time in the period of the fourth quarter just too contractual lag effects that happen. There is still some milestones to go with getting fully in commercial production at POM.

Great. And then with regard to your AEM segment as a whole. What’s your stand on end-use market mix particularly automotive mix in the wake of your two acquisitions? And maybe you could speak more broadly about how you would expect end-use market mix as well as geographic mix to evolve over the next year or two?

Yes, so this is Scott, right. I will start with the geographic question first. I mean we are growing in Asia much more rapidly than we are growing in the Americas and Europe, though the Americas and Europe are both growing. So one day that’s going to mix out to sort of one-third, one-third, one-third, it’s not quite there yet. In terms of the market segment, I mean auto is still our largest market segment but as we said before, it’s come down quite a lot. I mean you can think of it in the range of a third or just over. There are other segments that are growing more rapidly forth. We are growing in every single segment but if you look at energy storage, consumer products, and particularly medical, that’s where we are seeing some of the higher growth rates.

Yes, building on that, if you look at the numbers, there has been a 10% drop in Germany quarter-to-quarter, but we are still observing an increase in our volume in those cases. We focus more on the applications and technology rather than the markets. That’s how we continue to thrive.

Thank you, Jamie. And thanks everybody for your questions and for listening in this morning. We will be around, if you have any further questions after the call. Jamie, I will turn the call back to you now.