Phillips 66 (PSX) — Q1 2015 Earnings Call Transcript

Thank you, Laurel. Good afternoon, and welcome to the Phillips 66 First Quarter Earnings Conference Call. With me today are Chairman and CEO, Greg Garland; President, Tim Taylor; EVP and Chief Financial Officer, Greg Maxwell; and EVP, Clayton Reasor. The presentation material we’ll be using during the call can be found on the Investor Relations section of the Phillips 66 website along with supplemental, financial and operating information. Slide 2 contains our Safe Harbor statement. It is a reminder that we will be making forward-looking statements during the presentation and our question-and-answer session. Actual results may differ materially from today’s comments. Factors that could cause actual results to differ are included here on the second page, as well as in our filings with the SEC. With that, I’ll turn the call over to Greg Garland for some opening remarks.

Thanks, Kevin. Good afternoon, everyone, and thanks for joining us today. We had a good quarter. Adjusted earnings were $834 million or $1.51 per share. Our West Coast refining business ran well and benefited from the significant improvement in cracks. However, on the Gulf Coast, we did not perform to the level of our expectations. We didn’t execute the line's refinery turnaround as planned, and extended downtime prevented us from capturing the full value of improved margins on the U.S. Gulf Coast. On a positive note, our workers at Alliance achieved the safety milestone of 15 million man hours without a lost-time injury. This is terrific. During the quarter, cash from operations was $1.4 billion. In addition, we received proceeds of $1.5 billion from Phillips 66 Partners’ debt issuance and first follow-on equity offering. We invested $1.1 billion and supported midstream growth while maintaining operating integrity in our refining system. Consistent with our commitment to capital allocation, we returned $671 million of capital to our shareholders in the form of dividends and share repurchases. Since we started our share repurchase program, we’ve completed $5.3 billion of the $7 billion authorized. At quarter end, our share count was 542 million. Our midstream growth projects continue to be well-executed. Sweeny Fractionator One is now over 70% complete. And the Freeport LPG export terminal is about a third done. Both projects are on schedule and on budget with startups expected in the second half of 2015 and 2016, respectively. We continue to aggressively grow Phillips 66 Partners. In March, we completed a dropdown of our third interest in the Sand Hills and Southern Hills NGL pipelines, as well as our 19.5% interest in Explorer refined products pipeline system. These assets provide portfolio diversification as well as additional fee-based revenues to PSXP. As we said, Partners is an important vehicle to grow our midstream business. Over the last five quarters, PSXP has executed over $2 billion in acquisitions, demonstrating a continuing commitment to its top-tier distribution growth. PSXP’s goal is a 30% compounding distribution growth rate through 2018. In chemicals, CPChem’s normal alpha olefins expansion project at its Cedar Bayou facility is on schedule for completion in mid-2015. Also, construction continues on a world-scale U.S. Gulf Coast petrochemicals project which is now about 40% complete with the startup in mid-2017. We expect both projects to come in on budget. DCP continues to be an important part of our NGL value chain. As one of the nation’s largest natural gas gatherers and processors, over 10% of domestic natural gas flows through DCP Midstream assets. It’s a must-run business. To derive short-term liquidity needs, DCP Midstream achieved relief on its bank revolver until year-end 2015. DCP has also implemented steps to reduce corporate costs in its capital budget. Spectra Energy and Phillips 66 continue to progress the restructuring of the business. And we anticipate that we’ll be able to share more details with you in the coming months. And with that, I’ll turn the call over to Greg Maxwell to review the quarter’s results.

Thanks, Greg. Good afternoon. Starting on Slide 4, our first-quarter earnings on an adjusted basis were $834 million or $1.51 per share. Cash from operations was $1.4 billion, including $500 million in positive working capital changes for the quarter. In addition, Phillips 66 Partners' debt and equity offerings provided $1.5 billion of cash this quarter. We reinvested $1.1 billion in the business and we returned almost $700 million to shareholders in the form of dividends and share repurchases. At the end of the first quarter, our adjusted debt-to-capital ratio, which excludes Phillips 66 Partners, was 26%. After taking into consideration our ending cash balance, the adjusted net debt-to-capital ratio was 11%. Our annualized adjusted return on capital employed was 12%. Excluding special items, the adjusted effective income tax rate for the quarter was 34%. Slide 5 compares first-quarter adjusted earnings with the fourth quarter on a segment basis. Overall, quarter-over-quarter adjusted earnings were down $79 million, with increased earnings from refining being more than offset by reduced earnings in our other segments. I’ll cover each of these segments in more detail as we move forward. Starting with midstream, the transportation business continues to be a source of stable earnings. DCP is aggressively addressing the challenges associated with the lower commodity price environment. And as Greg said, the NGL Fractionator project is on track and is over 70% complete. Annualized 2015 year-to-date adjusted return on capital employed for this segment was 6% based on an average capital employed of $5.3 billion. The returns for this segment reflect the impact of lower NGL prices as well as increases in capital employed from the significant investments we’re making in midstream that are still under construction and not yet producing returns. Moving on to the next slide. Midstream’s first-quarter adjusted earnings were $67 million, down $30 million from the fourth quarter. Transportation earnings for the quarter were $65 million. The overall increase of $12 million compared with the prior quarter is largely due to the write-off of a deferred tax asset in the fourth quarter. DCP Midstream had losses in the first quarter that were comparable with what we saw in the fourth quarter. NGL and crude prices were lower in the quarter, but this impact was mostly offset by the lack of hedging losses experienced in the fourth quarter. And our NGL business had lower earnings mainly due to seasonal propane and butane storage-related benefits in the fourth quarter as well as inventory impacts. Included in the transportation and the NGL results is the contribution from Phillips 66 Partners. During the quarter, PSXP contributed earnings of $19 million to the midstream segment. Moving on to Slide 8. In chemicals, the global olefins and polyolefins capacity utilization rate for the quarter was 87%. This reflected a full quarter of operations in Port Arthur, partially offset by turnaround activities in Cedar Bayou and the CPChem joint venture facility in Qatar. Results for both O&P and SA&S were impacted by lower margins. The 2015 annualized year-to-date adjusted return on capital employed for our chemicals segment was 16% and this is based on an average capital employed of $5 billion. As shown on Slide 9, first-quarter adjusted earnings for chemicals were $203 million, down from $270 million. In olefins and polyolefins, the decrease of $65 million is largely due to lower olefins to polyethylene cash chain margins for U.S. and international operations, along with turnaround activities. Specialties, Aromatics, and Styrenics earnings were in line with the prior quarter, with lower margins being partially offset by reduced costs. Moving on to refining. Realized margins improved this quarter to $12.26 per barrel, largely driven by strong market conditions in the West and Gulf Coasts. Refining crude utilization and clean product yields were both at 84% during the quarter. Annualized 2015 year-to-date adjusted return on capital employed for refining was 15% on average capital employed of $13.5 billion. Moving to the next slide. The refining segment had adjusted earnings of $495 million. This is up $173 million from last quarter. Before I dive into the regions, I wanted to point out a change in reporting from previous quarters. We have realigned our refining business to move results that were previously included in other refining into their respective regions. Along with this change, we have recast 2014 quarterly information as well, and this can be found in the supplemental pages to the earnings release. Overall, the improvement this quarter was due to higher realized refining margins, including the benefit of lower crude cost on secondary products, partially offset by lower volumes. Regionally, the Atlantic Basin had lower earnings mainly due to plant maintenance at the Bayway refinery and foreign exchange losses of about $30 million due to a strengthening U.S. dollar. The Gulf Coast was up from last quarter, reflecting higher crack spreads and improved secondary product margins in the region. Reduced volumes from a downtime at the Alliance refinery partially offset this increase. The Central Corridor was flat compared to last quarter, as improvements in secondary products were mostly offset by lower volumes due to plant turnarounds at the Ponca City and border refineries. Western Pacific had the largest improvement driven mainly from significantly higher gasoline cracks. First-quarter gasoline cracks for the Western Pacific region were $20.21 per barrel compared with $7.46 last quarter, resulting in record earnings for the region. Let’s move to the next slide on market capture. Our worldwide realized margin was $12.26 per barrel versus the 321 market crack of $15.26, resulting in an overall market capture of 80%. The overall configuration to produce roughly equal amounts of diesel and gasoline reduced our realized margin as the improved market crack this quarter was largely driven by the strength in gasoline. Improvements from the feedstock advantage more than offset secondary product losses, which were significantly lower in this crude price environment. The other category mainly includes costs associated with rents, product differentials, and inventory impacts. A regional view of our market capture is available in the appendix. Moving on to marketing and specialties. Annualized 2015 year-to-date adjusted return on capital employed for M&S was 28% on average capital employed of $2.8 billion. Slide 14 shows adjusted earnings for M&S in the first quarter of $194 million, down from the high levels we saw in the fourth quarter. In marketing and other, the $112 million decrease was largely due to lower global marketing margins this quarter compared to strong margins that we realized last quarter. The fourth quarter benefited from the timing effects of steeply falling gasoline and diesel spot prices. The decrease in specialties was primarily related to our lubricants business, where lower base low margins were partially offset by increased volumes. Moving on to corporate and other. This segment had after-tax costs of $125 million this quarter, a $25 million increase over last quarter, mainly due to higher interest expense and lower foreign tax credits. The corporate overhead bar includes restructuring costs that were taken during the quarter. Next, I’ll talk about our capital structure. With the additional debt and equity financing that Phillips 66 Partners took on for its recent acquisition, we thought it would be helpful to show our capital structure both on a consolidated basis and excluding PSXP. As shown on the chart on the right, our debt balance was reduced in the first quarter largely due to the repayment of $800 million of senior notes that matured in March. Excluding Partners, we ended the quarter with an adjusted debt balance of $7.8 billion, an adjusted debt-to-capital ratio of 26%, and a net debt-to-capital ratio of 11%. The next slide shows our cash flow during the quarter. Starting on the left, excluding working capital, cash from operations was $900 million. Working capital changes were a positive impact of $500 million, due largely to a benefit from timing of foreign excise taxes and a U.S. tax refund associated with late 2014 regulation changes. During the quarter, we added $1.5 billion of cash from PSXP’s debt and equity issuances. We also repaid $800 million of maturing notes. We funded $1.1 billion of capital expenditures in investments and distributed about $700 million to shareholders in the form of dividends and share repurchases. And we ended the quarter with a cash balance of $5.4 billion. This concludes my discussion of the financial and operational results. I’ll now cover a few outlook items. For the second quarter, in chemicals, we expect the global O&P utilization rate to be in the low 90s. In refining, we expect the worldwide crude utilization rate to also be in the low 90s, and pre-tax turnaround expense to be about $150 million. In corporate and other, we expect this segment’s after-tax cost to run about $110 million to $120 million for the second quarter. And company-wide, the effective income tax rate is expected to be in the mid-30s. As for 2015 capital expenditures, our original $4.6 billion guidance remains unchanged.

Hey, good afternoon, guys.

Good afternoon.

I look forward to the update on the DCP restructuring, and I appreciate if you don’t have any comments, but I’m wondering if you could share generally what PSX wants to achieve in the restructuring and your willingness to take commodity exposure in the structure beyond DCP’s exposure.

So, Evan, just kind of reiterate what we’ve previously said maybe about DCP; it’s a great asset. We think that we like their positions in the value chain. We like the areas where they compete. And so we view it as a strong asset. Unquestionably, the lower commodity prices put some stress on that. And so we’re working to correct that. What I would say is I think that both Spectra Energy and ourselves are in agreement on the path forward and that we’re executing that. And we don’t want to get out in front of the activities that are ongoing. So I would just say we’re in process. We’re not at the beginning, but we’re also not at the end of that process. So we’re working through it.

Great. That’s fair. My second question is on refining. And the fourth quarter and in the first quarter of 2015 witnessed a heavy Gulf Coast turnaround. So, I mean, are you largely complete for the year? And any color - exiting that heavy turnaround period we should expect any kind of capture uplift or otherwise enhancement?

So I mean, we’ve guided that 2015 is going to be a heavier turnaround year than 2014. I mean, normally, we’re kind of $400 million-ish on turnarounds. I think we’ve guided $650 million or so this year. And Greg just gave guidance for $150 million turnaround expense in the second quarter. So it’s going to be a heavy year for us all the way through in turnarounds. I don’t know if anyone else has any color on that but - okay.

And any capture uplift exiting on the back of that? Is it just standard maintenance or is there any kind of enhancement exiting a heavy maintenance period that the system might emerge more flexible, profitable?

Well, so this is mostly maintenance turnarounds but there are activities going on where we’re doing some debottlenecks to push more lightweight crude. We’ve done it at Alliance, we’ve done it at Sweeny. And we’ll continue to work our way through the system at Bayway and other places to be able to handle those lighter barrels. And we’re probably up $100,000 today, over what we were say two years ago in terms of our ability to handle lightweight crude across the system today. So we’ll continue to do that. But this, by and large, the bulk of the activity is more just routine maintenance.

Great. Thanks, guys.

Good afternoon.

Hey, Jeff.

I was hoping you could talk a little bit about Gulf Coast crudes. We’re seeing LLS has been trading close to parity with Brent and Houston pricing has been depressed relative to St. James, and now Cushing is weak and perhaps pushing more barrels south on MarketLink and Seaway. Could you talk about how that market’s evolving and how it’s influencing your Gulf Coast feedstock procurement?

Hey, Jeff, it’s Tim. Yes, I think that structurally LLS Louisiana remains tight logistically. And so I think that when you think about logistics out of, say, Texas and Louisiana pipe or ship, we’ve got a lot of constraint there. So I think that supports that differential couple of dollars. And then ultimately, there is the import option. And so I think that that presents kind of a cap on the LLS in terms of working separately. But that said, you would - if you can’t get those lighter crude in Louisiana for competition, it will continue that issue will keep Texas discounted and Cushing discounted relative to Cushing. And ultimately, we’re working the solutions to look at how do we logistically get more of those crude options into Louisiana. We’ve talked about a pipeline out of Beaumont into Louisiana that we’re working and some other things. So I think that those take more time but it is part of what we work on.

Are you seeing Cushing barrels being priced more attractively into the Gulf Coast market, be it heavy or light?

I think you looked at the break over inventory this month. And our view was that at some point, if the crude production of light continues, it’s got to move to the Gulf Coast for storage. And so I think you’ve seen some of that. You’ve also got more connection out of West Texas to grip into the Gulf Coast. And all those things impact that. But given the storage situation at Cushing, I don’t think it’s surprising that you’ve seen movement now out of that region. The real input is going to be how much crude production continues to flow out of the Permian and the Midcon into the system.

And secondly, could you provide opportunity cost associated with first corridor maintenance?

It was about 8% of production was maintenance, about 6% was unplanned downtime, and about 2% was planned downtime. So I mean normally what we do is we would take that and multiply it by the margins as they lay. So for instance, we think our end planned downtime is in the neighborhood of about $80 million across the system.

Thanks, guys. I’m not going to push the DCP issue too much, but I just wondered if you would respond to one issue. There’s been some speculation that PSX might be prepared to inject capital but without the need to consolidate DCP and without Spectra contributing any capital. Would you care to comment on that, or would you prefer just to leave it alone for now?

Yes, I’d let that one lay for right now, Doug.

All right. I thought I’d try, sorry about that. Just to have a quick run because I figured that may be a quick answer. Could exports, Greg, not your opinion so much on good exports, but your opinion on what it could mean for the MLP in terms of opportunities if indeed we did see a relaxing of that rule. Are you exploring any opportunities on those lines at this point? And I’ve got one final follow-up, please.

I think in terms of optionality, that’s one of the things we liked about Beaumont; it certainly gave us a footprint and one that we can certainly expand in terms of optionality around crude exports with MLP. So I think that that’s a potential we certainly think about. I still don’t see short term lifting of the ban on crude exports. We’ll see. I mean, it’s a political decision, as everyone knows. And certainly the volume is being turned up in many quarters around exports. And we continue to support lifting the ban on crude exports as a company. We think it’s the right thing to do. We’d like to see a broader conversation around energy in our country to include being able to build pipelines and a conversation around Jones Act ships so that we can effectively not be outcompeted by moving crude around from the Gulf Coast to East Coast refineries. But at the end of the day, I think we have some optionality in our portfolio that would play well under the act if that happens.

Thanks, Greg. My last one is a little cheeky, really. It’s a bit more conceptual, but I guess I’m kind of asking you to do our job for us to some extent. When we were on the road, we had this discussion, I just wanted to get your latest thoughts on it. The value of your GP in the midstream and I guess in the MLP units as well, how do you think about getting recognition of the GP in particular in your stock? And internally, do you think about your ownership on both those species on a pre-tax or a post-tax basis? Do you think the market should be pre-tax or post-tax? I’m just trying to kind of resolve an issue we’re trying to get to the bottom of here.

So we’re doing some of the parts, guys, here, so we always think in terms of some of the parts as we’re doing analysis around the asset, around the portfolio. I think this point the GP cash flows are so small they don’t matter at this point in time. When we get to $1 billion of EBITDA in PSXP, then I think it does matter. And so we’ll see. I think that we’re prepared to consider many options around how do you get that recognized out there. But today, it’s small but growing. And in terms of the - I mean, we had a conversation around pre-tax. I think the multiples are kind of on a pre-tax basis as people look at it. But does that change over time? I just don’t know the answer to that. I don’t know, Tim or Greg, do you have a view on that?

I think the market comps are pre-tax. And I think that’s the relevant measure when you think about other GPs or you think about the LPs. It’s a pre-tax basis and I think that’s the fair way to look at that.

I guess where I’m getting at, Tim, is when we think about how that should translate to the PSX share price on a pre-tax or post-tax basis.

I think we think about it in terms of the EBITDA multiple, and as you value those streams, and that translates into that EBITDA, and that’s how we think about some of the parts basis. So it really is on a pre-tax basis when we think about that uplift, yes.

Doug, this is Greg Maxwell. We did have that discussion while we were on the road. And I will say it’s an interesting discussion. We’re continuing to look at it. So obviously we’d like to have some ongoing dialogue with you as we work through this.

Great, thanks a lot. Good afternoon, gentlemen. Maybe if I could start with maybe a two-part question on CapEx and cash return to shareholders. If we look at - we know that this is a peak CapEx year in 2015. How should we think about the potential decline in CapEx year-on-year into 2016? And maybe as a follow-up with that and looking at the amount of buyback in the quarter, you’ve targeted a 60-40 split between capital spend and cash return to shareholders over a multiyear period. Should we expect to hold that same split here in 2015, or do you think that will be a little bit lighter on the cash return this year and heavier on the cash return next year?

Okay. So let’s start with CapEx. And I think we’ve consistently said we view that this is the heavy lift year for us, peak year. We’re still working through ’16 budgets and obviously need to go through our board approval process. But we’re thinking the range is in $3 billion to $4 billion for ’16 in terms of capital. And the 60-40 allocation, we remain committed to. And that’s an average of the essentially the ’14, ’15, ’16 timeframe if you want to think about it that way. What I would say is in any one quarter, you shouldn’t look at that quarter and expect that you can annualize that across the year. On the other hand, if you think about $4.6 billion of capital expense, you think about $1.1 billion or so dividend expenses here, then you can take your pick on cash. But you also have to roll into that equation the drops and the cash we get back from the drops and the PSXP as part of the funding vehicle, then you can kind of back into - share repurchase can be in the range of $1 billion to $2 billion this year.

Great. Maybe if I could just do one quick follow-up on the chems business, fees in the first quarter clearly are going to be better this year than I think what the fees were as we approach the latter part of last year. But can you give us an outlook at this point in terms of kind of a chemicals outlook for the rest of the year in particular as crude prices are going to be ticking up a little bit?

Sure. Yes. I’ll let Tim take a stab at that.

Yes, sure. I think that in the first quarter, we saw the readjustment, the lower energy complex and the margins have come in. Particularly in the olefins chain, they’ve stabilized; you think about the pricing in terms of the feedstocks and the margin. And we’re seeing increased demand. As the energy prices come up, I think it’s actually encouraged people to begin their buying. So we’re seeing demand up really across the world, so Asia, Europe, U.S., and I think that supports that margin. So I think we still remain convinced that the chemicals business is going to continue to perform well. Margin is still less than ’14 based on the current crude price outlook but still a pretty business model from a fundamental demand standpoint.

Great. I’ll leave it there. Thank you.

Thank you.

Hey, guys.

Hey, Paul.

Hopefully, just have a quick question. Greg, do you guys have an outlook you can share in terms of the CapEx for 2016, 2017? I think at one point you guys were talking about this year being the peak and you moved towards the $3 billion to $4 billion mark. Is it to be assumed that next year you will get all the way to $3 billion or that it will take a couple of years before you get down there?

Well, I think, yes, we’re looking at somewhere between $3 billion and $4 billion for 2016, Paul. Obviously, we need to get that through that board and get that approved. And we’re still thinking about it. But it’s definitely going to be down from the $4.6 billion level this year, and in that range of $3 billion to $4 billion next year.

And should we assume that after next year, it will really on a more sustainable basis you guys would be more in the $3 billion than the $4 billion, or that is still unclear at this point?

Well, I think that we’re going to have a, what I would say, is an aggressive growth profile at PSXP. So as you think about on a consolidated basis, most of that capital spend will start moving to PSXP. As it gets scale, certainly, it can stand on its own feet. It can co-invest in a lot of these projects, ultimately invest in these projects. And so you may see consolidated capital up at that level. But at PSX, in the level of PSX, we expect that to go down more to a maintenance level type activity. Well, we might see the West Coast this quarter. But, fundamentally, our long-term view of West Coast hasn’t changed. We think it’s really a challenged place to do business. And we think we have kind of - we have good assets, but we think they’re average compared to that portfolio. And so we’ll continue to work the thick strategy around the West Coast as we look at more optionality around getting the advantage crude into those assets, so kind of cost structure, etc. around those assets. But I would say, there’s nothing that’s changed our fundamental view on West Coast assets today.

And on the second quarter, the maintenance, can you give us some idea that with the concentration going to be by region?

We typically won’t give guidance there.

Okay. Not even by region, saying that is maturity in the West Coast maturity in Gulf Coast, so anything right there?

No. We probably just don’t want to disadvantage our commercial folks.

Well, I think on Europe, I think it is a combination of some turnarounds; as I held - looked to the season right now. Clearly, with grant moving down, they were able to capture some margins well. And then we’re seeing stronger demand out of the Middle East, particularly on gasoline and some of West Africa. So I think that’s helped support the demand side from a European standpoint. So I don’t know how long that goes on. But that was certainly the dynamic that we see in place in the first quarter and continuing right now. On our system regarding gasoline demand, we typically expect certain figures, but overall, our wholesale and branded marketing network is experiencing increased volumes. There are significant variations throughout the system. However, a couple of observations on demand indicate where it stands. Whether this trend will last is uncertain and will require additional time to assess. Nonetheless, it has certainly bolstered the gasoline segment. Diesel demand has been steady to slightly down, primarily due to seasonal planting and some energy impacts. Still, the diesel market remains quite robust. Gasoline demand has been the most surprising aspect.

Hey, good afternoon, guys.

Good afternoon.

So there’s a lot of talk about a crude glut translating to a product glut in the refining markets but then increasing utilization in response to strong margins and spreads we’re seeing out there. Just curious what your guys' thoughts are on that risk and how you see that as a participant in the market.

So product inventories are at, as you know, at the high side of five-year range. We haven’t seen that develop and everything continues to push the run side. You’re entering a strong season now on demand. So I don’t think that’s something that we anticipate. There’s less storage opportunity on the product side. So if it does develop, I think you’d see runs reduced. And then of course we keep an eye on what’s happening globally with the new supply. And as that comes on, that can have an impact as well. But right now, we just haven’t seen that as an issue.

And the other big macro debate that we’re having, Tim, just a few weeks ago on the last call was the risk that Cushing fills and we finally got that draw earlier this week. But curious on that front, what your thoughts are in terms of accrued storage in Cushing and then in Pad 2 and 3 generally, and is there enough takeaway that you’re not concerned about a broader crude problem.

Yes. When we analyze the situation, we believe we are still observing the production aspect. There needs to be a solution for storage, and Cushing is relatively close. We anticipate that the storage needs will be met there. The Gulf Coast has ample storage capacity, which is where we expect some of the excess to go. There's still time to determine how inventory builds will compare with production in the exploration and production sector. Moving forward, it may be necessary to increase medium imports or find ways to manage displacement. However, we still have some time before reaching that point. We have seen inventory levels in Pad 3 for crude increasing, indicating movement from imports and inputs from specific locations, including Cushing.

And last question is just around capital allocation. Buyback and dividend, you bought back $400 million in the quarter. So curious how you think about that on a go-forward whether that’s a reasonable run rate to use. And then on the dividend, you’ve talked about double-digit being the growth target in ’15 and ’16. Obviously, a lot of financial commitments in 2015. But anything you could do to help us benchmark where that dividend growth should be anchored to.

We maintain our guidance for double-digit dividend growth in 2015 and 2016. As long as the intrinsic value remains favorable, we will continue to purchase shares. I want to emphasize that one quarter should not be viewed as a trend. We actively participate in the market every day, buying shares on some days more than others. Overall, we expect the total share repurchase this year to be between $1 billion and $2 billion.

Thank you.

Thank you very much for participating in the call today. We do appreciate your interest in the company. You’ll be able to find the transcript of the call posted on our website shortly. And if you have any additional questions, please feel free to contact me or Rosy. Thanks very much.