W.R. Grace & Co. (GRA) CEO Alfred Festa on Q2 2016 Results - Earnings Call Transcript

| About: W.R. Grace (GRA)

W.R. Grace & Co. (NYSE:GRA)

Q2 2016 Earnings Conference Call

August 1, 2016, 09:00 AM ET

Executives

Tania Almond - Investor Relations Officer

Alfred Festa - Chairman and Chief Executive Officer

Hudson La Force - President and Chief Operating Officer

Thomas Blaser - Senior Vice President and Chief Financial Officer

Analysts

Michael Sison - KeyBanc Capital Markets Inc.

Edlain Rodriguez - UBS Investment Bank

Daniel Rizzo - Jefferies & Company, Inc.

Christopher Parkinson - Credit Suisse Group

Robert Koort - Goldman, Sachs & Co.

Christopher Shaw - Monness Crespi Hardt & Co.

James Barrett - CL King & Associates, Inc.

Operator

Good day ladies and gentlemen and welcome to the W. R. Grace & Company’s Second Quarter 2016 Earnings Conference Call. At this time, all participants’ lines are in a listen-only mode to reduce background noise. But later, we’ll be holding a question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, today’s conference call is being recorded.

I would now like to introduce your first speaker for today Tania Almond, Investor Relations Officer. You have to floor ma’am.

Tania Almond

Thank you, Andrew. Hello, everyone and thank you for joining us today on August 1, 2016. With me on the call are Fred Festa, Grace’s Chairman and Chief Executive Officer; Hudson La Force, President and Chief Operating Officer, and Tom Blaser, Senior Vice President and Chief Financial Officer. Fred will start with the highlights, Hudson will review more detail on the operations and Tom will go over the financials. Then we’ll open it up for Q&A.

Our earnings release and corresponding presentation are available on our website. To download copies, go to Grace.com and click on the Investors tab. Some of our comments today will be forward-looking and are made under Section 27A of the Securities Act and Section 21E of the Exchange Act. Actual results may differ materially from those projected or implied due to a variety of factors.

Please see our recent SEC filings for more details on the risks that could impact Grace’s future operating results and financial conditions. We will discuss certain non-GAAP financial measures, which are described in more detail in this morning’s earnings release and on our website.

Reconciliations to the most directly comparable GAAP financial measures and other associated disclosures are contained in our earnings release and website. Our comments on forward-looking statements and non-GAAP financial measures apply both to the prepared remarks and the Q&A.

With that, I’ll hand the call over to Fred.

Alfred Festa

Great. Thanks, Tania and good morning to everyone. We had another productive quarter continuing to achieve good margin improvement and strong cash flow. We grew the top-line sequentially 8% and delivered $96 million of adjusted EBIT or $0.74 per share. We had strong margins in both catalysts and materials as a result of our productivity programs and deflation. We also delivered the expected sequential improvement in our short cycle silicas business this quarter.

Additionally, we completed the acquisition of BASF Polyolefin catalyst business on June 30. Grace is now the global leader in polyolefin catalyst and number two and number two in polypropylene process licensing. We have a broad portfolio of products and technologies and are very excited by the growth opportunities they present.

Late last week, we delivered our first shipment of FCC catalyst to the Takreer refinery. The unit is running and the transition to Grace Catalyst is underway. We expect to be at full contract volumes in the fourth quarter. This is a strategically important step forward for our FCC catalyst business.

We started this journey when we began repositioning our customer portfolio to make room for the [deferred] (Ph) volumes. At that time, we thought we were just a few quarters away from beginning to supply to refinery. While the delay has been [trying] (Ph), it is also caused us to take a hard look at our product portfolio, manufacturing costs and product mix. As a result, our business today is stronger and more profitable.

As for macro trends, slowing growth in China continues to be a headwind and a drag on the rest of Asia. European markets are seeing modest growth, and as for the impact of Brexit on our business, less than 2% of our revenues are sourced from UK customers and less than half of that business is denominated in Pound Sterling.

For the rest of the year, we will continue to build momentum to take us into 2017. Our focus is on sequential sales growth, integrating the polyethylene catalyst acquisition, continuing to implement our productivity and operational excellence actions and delivering strong cash flow to fund growth and return cash to shareholders.

With that, I'm going to turn it over to Hudson to give you some more details. Thank you.

Hudson La Force

Thank you, Fred. I’m very excited about adding LYNX, polyethylene and polypropylene catalyst to our portfolio. Feedback from customers has been quite positive, they are eager to see how we combine our new and existing catalyst technologies to create even performing products, and our employees are excited too.

Our commercial, technology and manufacturing teams are on-track with their integration activities and strongly focus on achieving the synergies in our acquisition models. We paid $250 million to the business or 12.8 times trailing normalized EBITDA. With our expected costs and capital synergies, the multiple would be 8.8 times. Synergies will begin to benefit earnings in 2017 and will be fully realized by the end of 2018. Tom will give you additional details on how to model the acquisition for the rest of 2016.

Turning to our business performance. Catalyst technology has performed well in Q2 with very good margins. We saw the strong sequential improvement we expected including a sequential improvement in FCC catalyst pricing. Global demand for transportation fuels remain strong with U.S. gasoline demand at record levels. Offsetting this however, is an increase in the refined product inventories, which is leading some refiners to reduce production levels. This did not impact catalyst demand in Q2, but may impact demand in the second half.

As we look at the second half, we are pleased to now be supplying the Takreer refinery. This is an important customer and an important region using one of our best catalysts. As we approach the fall refining turnaround season, we are a bit more cautious on demand, given the increase in refined product inventories. Taken together, total sales volumes will still increase significantly over the first half, which will improve operating leverage and EBITDA margins for this business going forward.

We made good progress with our MTO catalyst in Q2. We now have a solid reference account in China and are marketing our technology to other customers there. Although small this year, MTO has the potential to become a significant growth opportunity for us. In specialty catalysts, North America and European markets are stable, though China is showing some weakness.

With the slowdown in growth there, we are seeing a slowdown in production rates for some of our customers. This reduces catalyst consumption, delays catalyst orders and has delayed some new licensing opportunities. As a result, we have reduced our expectations for specialty catalyst sales in China in the second half.

Despite these headwinds, our specialty catalyst business continues to grow. Our consistent non-phthalate polypropylene catalysts are doing very well. Providing customers the benefit of non-valley owner technology and the ability to make a wide range of higher value differentiated polymers.

Even in China, many customers continue to invest and grow. We successfully started up a new UNIPOL-Polypropylene plant in China in Q2 and we are seeing strong interest by existing Chinese customers to use consistent catalysts to produce differentiated polymers at higher margins.

Our Materials Technologies business also performed well in Q2. We saw strong margins and a solid recovery in Q2 volumes following a weak Q1. Demand in North America and Europe was in-line with our expectations and demand in Asia strengthened considerably confirming our view that the weak Asia demand in Q1was an inventory correction. In the second half, we expect stable silica sales and improved sales in pharmaceutical and nutraceutical intermediates.

With that, I’ll turn the call over to Tom.

Thomas Blaser

Thank you Hudson, before we get into the financial performance, let me do a bit of housekeeping on four items that will help you understand our financial results and guidance. First, you will recall that we filed an 8-K containing Grace’s 2015 adjusted financials to account for GCP Applied Technologies on a disc ops basis.

Our financial commentary throughout 2016 will compare to 2015 on that disc ops basis. As a guidelines, the disc ops presentation has about $9 million of additional corporate costs per quarter compared to our run rate for 2016. These costs were either assumed by GCP at a time of separation or has been eliminated through restructuring or other cost reduction actions.

Second, last quarter, we shared with you that we exited certain products lines in our materials technology segment. You’ll hear me make reference to normalizing for this in our analysis of the results. Third, earnings for the acquired polyolefin catalyst business are expected to be minimal in 2016 as a result of one-time deal and integration cost.

For 2017, we expect a full-year impact to earnings with run rate synergies being reached by the end of 2018. You should note that D&A percentage to EBITDA on the acquisition is higher than our recent historical average by about 20 points.

And finally, in March 2016 the FASB issued a new standard, which changes how company’s account for certain aspects of share based payments to employees. Grace adopted this standard in Q2. There is a $0.02, positive impact on EPS this quarter from the change and a $0.07 positive impact on the year-to-date basis.

Because we can’t predict future stock options exercises, we have not included any future impact of this change in our EPS guidance. Please consider these points in your analysis of our performance and guidance.

Now let’s move to the numbers. Grace’s second quarter sales were $390 million, down 4% versus Q2 last year as reported and down 3% adjusting from product lines [basis] (Ph) earlier in the year. However, compared to the first quarter, sales grew 9% sequentially excluding the exited product lines.

On an overall basis, our adjusted gross margins expand to more than 44%, up 280 basis points, compared to the prior year quarter. Adjusted EBIT for the quarter was $96 million, up 17%. Adjusted EBIT margin was nearly 25%, up 440 basis points over Q2 last year.

Adjusted EPS for the quarter was $0.74 per diluted share, up 45% from last year. Adjusted free cash flow for the first half was nearly $133 million, which compares to $146 million a year ago and represents more than 50% of our full-year expectations.

Our adjusted EBIT return on invested capital on a trailing fourth quarter basis was 22.7% as reported and 26.7% excluding the polyolefin catalyst acquisition completed at the end of June. This compares to 24.3% at the year-end 2015. ROIC will continue to improve as we lap the disc ops effect and realize the earnings potential of the recent acquisition.

Looking to our business segments starting with catalyst technology sales were down 4% versus last year and earnings grew 1%. Adjusted gross margin was up 290 basis points, compared to last year to more than 46% reflecting combined productivity improvement and lower cost input partially offset by lower volume. On a sequential basis, sales volumes grew 6% and earnings were up 12%.

Moving to materials technologies, sales were down nearly 5% from a year ago period and flat excluding the exited product lines. Earnings were up about 18% on lower manufacturing costs and productivity improvements. On a sequential basis, sales were up 10% and earnings were up 35% reflecting very leverage and stronger product mix.

As expected after completing the polyolefin catalyst acquisition, our leverage ratio is approximately 2.8 times EBITDA, which is outside our target range of two to 2.5 times. As previously communicated, we intend to revert back to that range in 2017.

In the second quarter, we spent $20 million on share repurchase and total first half repurchases of 35 million. Today, we announced our quarterly dividend equaled to $0.17 per share with payment expected on September 14.

Let’s review our 2016 outlook and then we can open the call for questions. We are tightening our full-year guidance for 2016 adjusted EBIT to be in the range of $400 million to $405 million, adjusted EBITDA in the range of $500 million to $505 million and adjusted EPS to be in the range of $3.05 to $3.10 per share. These ranges represent strong double-digit growth over 2015 and assuming average exchange rate of 1.10 to the Euro for the remainder of the year.

Heading into the second half, we have good momentum and incredible line of sight to sequentially increasing sales and earnings. Specifically, in catalyst technologies, we anticipate improved sales volumes in FCC, growth of new product sales and licensing timing in specialty catalyst and good visibility to increase demand in ART.

We expect catalyst earnings to increase low to mid-single-digits for the year reflecting a slower start for Takreer. This includes an expectation of minimal contribution from the polyethylene catalyst acquisition this year as we digest deal and integration related costs.

Turning to materials technologies. While we expect quarterly sales to continue at Q2 levels for the remainder of the year, we have seen improving margins through mix shift towards our fine chemical business and new product launches. After adjusting for the spend and exit of certain product lines, we expect double-digit earnings growth year-over-year in this segment.

In the second half, we expect sales and profit growth to accelerate sequentially, this will happen as we reach the full run rate of supplying Takreer, improved mix in materials technologies, integrate polyethylene acquisition and realize additional productivity benefits.

Regarding Q3, on a sequential basis, we expect our earnings to grow low to mid-single-digits and adjusted EPS to increase similarly excluding the effect of the standard adoption in Q2. For full-year 2016, we continue to project corporate cost between $65 million and $70 million and pension expense to be about $12 million. We expect interest expense for the full-year to approximate $82 million.

We would also continue to project capital investments for 2016 between $130 million and $140 million this guidance range includes the capital required to achieve certain synergies from the polyethylene catalyst acquisition. Our guidance remains unchanged for 2016 adjusted free cash flow to be at least $250 million including the favorable impact of our low cash tax rate.

In closing, we remain committed to our rigorous and disciplined approach to profit growth, cash generation and capital allocation management through which we expect to continue to deliver the increasing value to our shareholders.

With that, we will open the call for your questions.

Question-and-Answer Session

Operator

[Operator Instructions] We will be taking our first question from the line of Michael Sison from KeyBanc. Your line is open.

Michael Sison

Hey good morning guys. Nice quarter.

Alfred Festa

Hey Mike, thank you.

Michael Sison

You had mentioned some customers wanting in the refining side to reduce production in the second half of the year. What was impact for that in your guidance? Does that kind of take away from the high end as you look into the second half of the year?

Alfred Festa

Yes, I mean you are talking the comment that we made on the FCC side of it?

Michael Sison

Yes.

Alfred Festa

Yes. We have put a little bit of caution into the second half. We just want to be prudent having seen some of these high inventory levels. But I don't think it's an overreaction, I think it's just being prudent. When you look at what has changed really from the last time in April when we talked, we are going to have the Takreer for what we believe is one solid quarter of volume on that side of it.

We did take down our specialty catalyst sales related to China, fairly dramatic in the second half, you know, we did those orders through the six months out and that business has slowed. That’s almost or more than $5 million of earnings, and the good news is, those are all our licenses. The good news is they are just not running as hard, so that volume will come back, but that’s primarily yet a quarter to Takreer, we’ve taken out the China volume in the second half a little more prudent on the FCC. That’s about the change here.

Michael Sison

Great and then, I think you noted that ART should look better in the second half of the year. Could you give us a little bit of a color on why that should start to improve?

Alfred Festa

Yes, this is Fred again, we’ve got good visibility, I’ll tell you the hydrocracking business is strong on the order side of it then hydrocracking for diesel, we’ve partnered with Chevron and Wellness on that side of it and we’ve got very good visibility. You know going into the year, I think we said it would be a roughly flat, I think maybe by the end, we may be up a little bit on that side of it and feels good about going into 2017.

Michael Sison

Great, and last one on [STC] (Ph) pricing was up sequentially, do you see more momentum as you head into the second half of the year in FY 2017?

Hudson La Force

Mike this is Hudson. We do see another sequential improvement from Q2, Q3, it will be small again, but we’re continuing to focus on executing that strategy.

Michael Sison

Great, thank you.

Operator

Thank you. Our next question comes from the line of Edlain Rodriguez from UBS. Your line is open.

Edlain Rodriguez

Thank you, good morning guys. Maybe a quick question, so those inventories you talked about being high, so how long do you expect that to continue. I mean when do you expect customers who went back?

Hudson La Force

Edlain this is Hudson again. It really depends on the production decisions that our costumer make. We’ve started to see some news over the last week or two that some customers are starting to reduce production rates in the second half. It’s certainly not true of every customer at this point. So it’s a function of their production decisions. This is a percentage point change, it’s not a 5% or 10% type change, but on the size of this market, it can add up to be numbers for our customers.

Edlain Rodriguez

Clearly, another quick one. Oil prices have been trending down recently, do you see that as positive or negative for you or doesn’t really matter that much to you?

Hudson La Force

Well the demand for transportation fuel is clearly affected by the price accrued and by extension of the price of gasoline and diesel. And so the pattern that we’ve seen over the last, I guess it’s close to two years now, lower crude prices, lower prices at the pump, higher demand for transportation fuel, I think that sustains as long as crude prices are low and that obviously translates into higher catalyst sales. So the mitigator on that is it puts pressure on our customers P&Ls, catalyst is a part of their production cost obviously, they are looking at efficacy of their catalyst. That creates opportunities for us as well. So it’s a balance, Edlain it’s a balance.

Edlain Rodriguez

That makes sense. Thank you very much.

Operator

Thank you. Our next question comes from the line of Laurence Alexander from Jefferies. Your line is open.

Daniel Rizzo

Good morning. This is Dan Rizzo on for Laurence.

Alfred Festa

Good morning.

Daniel Rizzo

You just said that Takreer are product production costs. Do you have roughly your percentage of that overall?

Alfred Festa

It’s pennies per barrel, I’m drawing a blank on the exact percentage, but we talk about it as pennies per barrel.

Daniel Rizzo

Okay, thanks. And then with material technology being somewhat stronger than we expected. What products are doing better than others, well I guess what is leading in that segment?

Alfred Festa

I’m sorry. Catalyst technology?

Daniel Rizzo

No in material.

Alfred Festa

Oh in MT.

Hudson La Force

No. if you think about it, MT has got a broad range. Our coatings, our silica going into coatings has been very strong this year. On the negative side, our silica related to oil and gas. And the final processing on that side has been weaker. Consumer at the regional split, consumer in Asia going into beer and so on has been down. Some of the architectural side is been up.

So we’ve got a really good materials position and it’s geographically diverse and product diverse. And what we’re very excited about going into the second half is, you are going to see basically same amount of revenue, but a better mix of business, because of our find chemical orders, as well as nutraceutical orders in the second half. So we’re encouraged by that.

Daniel Rizzo

Okay. And then, a final question just with nutraceuticals in general that can give be somewhat lumpy candidate, I mean you have a big order than it’s nothing for a while, am I thinking about that the right way?

Alfred Festa

Yes, you are. I mean, we’ll have the second half of the year will be substantially better than the first half.

Daniel Rizzo

All right.

Hudson La Force

I’ll add if I may. It might be nothing within single customer.

Daniel Rizzo

Right.

Hudson La Force

But we have enough in customers at the business, it’s exhibit some lumpiness. But it’s not as extreme, it’s all or nothing for the whole portfolio.

Daniel Rizzo

Got you. All right. Thank you, guys.

Operator

Thank you. Our next question comes from the line of Christ Parkinson from Credit Suisse. Your line is open.

Christopher Parkinson

Perfect. Thank you very much. You just said on this a little, but sticking to the materials technology side. Your commentary was a little mixed on a regional basis. So give us a hit on what you are specifically seeing in Asia given your comment on APAC versus China. And then also it appears LATAM was actually getting a little bit better. Just any color there based on end market would be greatly appreciate it? Thank you.

Hudson La Force

So Christopher, this is Hudson. Specifically with Asia, we saw significant inventory correction in Q1 as you may recall. January and February were incredibly weak for us in China. As we went through March, we saw China getting much better and we read that as a good demand indicator for Q2.

And for us as we went through Q2, the China business, the Asia business performed pretty much in-line with what we expected. And the biggest part of our business there is coatings. We do some chemical process, but the biggest part of our business there is coatings, a little bit of consumer as well.

Christopher Parkinson

Perfect. And you also mentioned at your release, turning back to the SEC side. You saw a little bit of accelerating volume growth throughout the quarter. Can you just give a little more color on some of the volume trends you are seeing in the back half, specifically excluding to Takreer just on a regional basis that will be much appreciate it? Thank you.

Hudson La Force

Sure. So at Takreer, what we’re expecting is good continued demand for transportation fuels on a global basis. How that translates into catalyst demand will be a function of customer production decision as we said a few moments ago. When I break that down by region, we expect demand to be good in North America, demand has been better than we would have thought six or nine months ago in Europe that's been consistently true for the last few quarters. Demand for us in Asia has been okay, we see a little weakness there compared to last year, but nothing significant.

Christopher Parkinson

That's great. Thank you.

Operator

Thank you. Our next question comes from the line of Bob Koort from Goldman Sachs. Your line is open.

Robert Koort

Thanks. Good morning.

Alfred Festa

Hey Bob.

Robert Koort

I was wondering if you guys could talk - I mean it's pretty apparent what is happening in crack spreads in North America and understand your comments there, is it similar in Europe and then the developing world?

Hudson La Force

It is Bob, this is Hudson. We're seeing customers in Europe and the Middle East and Asia all experiencing compressed crack spreads.

Robert Koort

And on your BASF comments are not contributing. Am I reading it right writes that you are being fairly conservative and that’s sort of a GAAP approach, because it seems like absent so the one-off post closing issues you would have from accretion there. Is that correct?

Tomas Blaser

No, Bob it's Tom. I don't think we are being conservative, I think we've included a portion of the integration costs and the deal costs. We have only got a half year's worth of earnings and as you know we're increasing the utilization of that throughout that the year. So we do a small earnings impact reflected in the second half.

Robert Koort

And can you give us some sense, I know you mentioned ramping Takeera into the second half of where you see your overall FCC operating rights progressing through the rest of the year and into 2017?

Alfred Festa

Bob it's Fred. I think we'll exit the third quarter around 90% and I would expect us to exit the year in the mid 90s and that's a good rate for us going into 2017.

Robert Koort

And then last quickly if I may. Has there been anything around your customers and catalysts their product mix and preferences that will be causing much in the slate that you offer to those customers or do you think we are in a pocket where you have some consistency in terms of the factors they are looking for in terms of product choice?

Alfred Festa

Yes, especially on the FCC side the slates have stabilized, we're seeing that across our customers in the specialty catalyst side on the positive we're seeing a lot of customers really aggressively wanting our phthalate free catalysts. We're sold out in that and unfortunately we've got a plant turnaround this quarter to get a little bit more rate up, but that will come on very strong here in the next couple of weeks. And related to China, China is just the standard catalyst for our specialty side and that's just a matter of how hard they are running those units and they aren’t running them that hard.

Robert Koort

Got it. Thanks for the help.

Operator

[Operator Instructions] Our next question is from the line of Chris Shaw from Monness Crespi. Your line is open.

Christopher Shaw

Hey good morning everyone, how are you doing?

Alfred Festa

Hey, Chris.

Christopher Shaw

The MTO catalyst opportunity, I was wondering is that something that I mean that you can get into existing plans are already up in running in China or is it sort of more in-line on being expected to some of the new ones that are starting up?

Alfred Festa

Actually both, actually both. Chris we’re very pleased with the trials that occurred in the first delta customer, he has allowed us to take those trials, they are in the marketplace now and in the short-run, we think that’s a $250 million market opportunity, MTO catalyst. That’s got to take a few years to develop, but we’re well positioned, we have a MTO catalyst manufacturing operation on the ground in China and it also integrates well with our polypropylene licenses in China and that sits on the back-end of the plant. So we’re optimistic about it.

Christopher Shaw

Curiously the plants that are up in running there are already aren’t using your technology, I mean are they captive ones or is it something that it will actually have a pretty big MTO product at this point?

Alfred Festa

No, they are actually Chinese made, primarily Chinese made catalyst and it’s just like on the FCC side. Better technology gets better yield and better product out and you know as you present these catalysts and run these catalysts through, we think technology wins in this space, very keen to the FCC side of it.

Christopher Shaw

Alright, thanks and I might have missed it there, but are you saying that the buybacks are going to slow a bit here to sift over to debt repayment.

Thomas Blaser

No, it’s Tom, we’re pretty comfortable with our programmatic approach we have been taken over the last couple of quarters.

Christopher Shaw

Okay. Great, thanks.

Operator

Thank you. Our next question comes from the line of James Barrett from CL King & Associates. Your line is open.

James Barret

Good morning.

Alfred Festa

Hi Jim.

James Barret

Tom a related question on the cash flow statement. Now that the BASF deal has been consummated and closed and giving your plan to delever it back into your target area in terms of debt. Should we conclude from that, that acquisition activity, the visibility on that looking forward intermediate term is muted?

Thomas Blaser

Well first from a business perspective, we’ve got very active pipeline of that since we are continuing to attract and look at it. From a cash flow perspective, I think that we have got the firepower necessary to be able to actually queue to transactions as we see fit.

James Barret

Okay, and then my second question was could someone detail specifically the anticipated synergies from assimilating the BASF polyolefin catalyst business.

Hudson La Force

Jim this is Hudson, they fall really into two categories, the first category is manufacturing cost reduction as we bode the new plants into our network and closely related to that is improved operating utilization of those assets. It’s a combination of those two things that are driving 95% of the synergies.

Alfred Festa

Hudson, I will comment on the commercial side, that’s why your guys were excited around the polyolefin.

Hudson La Force

Good, good. It’s a great point Fred. Jim and for everybody, we have not assumed any commercial synergies in this, in our models. But the reality is, there is a substantial opportunity there. We’re bringing together the existing grades, product technology both on the polyolefin side and the polypropylene side with some good technologies that we’ve acquired from BASF. And I’ll give specific example, there is a LYNX polyolefin catalyst, this is bigger than other catalysts that fills a whole in our product portfolio, we’re excited about that.

As we’ve gotten into this deeper over the last four or five weeks. We are seeing opportunities to learn from each other. We know how to do things in our labs, in our plants that the BASF team did not know how to do. And vice versa, they are teaching us and thanks about a product performance and manufacturing operations that we didn’t know and this is exciting for us.

James Barret

Thank you very much.

Operator

Thank you. Ladies and gentlemen, this now concludes our Q&A session. I would like to turn the call back over to Tania Almond for closing remarks.

Tania Almond

Great. Thanks Andrew. We just want to thank everyone on the call for joining us today. If you have any follow-up questions, you can reach me at 410-531-4590. Thanks very much and have a great day.

Operator

Ladies and gentlemen, thank you again for your participation in today’s conference. This now concludes the program and you may all disconnect at this time. Everyone have a great day.

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