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Global Partners LP (NYSE:GLP)

Q2 2012 Earnings Call

August 8, 2012 10:00 am ET

Executives

Edward J. Faneuil – Executive Vice President, General Counsel and Secretary

Eric Slifka – President and Chief Executive Officer

Thomas J. Hollister – Chief Operating Officer and Chief Financial Officer

Analysts

Paul Jacob – Raymond James & Associates Inc.

Jerren Holder – Barclays Capital, Inc.

Andrew Stephen Gundlach – First Eagle Global Management LLC

James Jampel – HITE Hedge Asset Management LLC

Elvira Scotto – RBC Capital Markets

Operator

Good day, everyone. And welcome to the Global Partners Second Quarter 2012 Financial Results Conference Call. Today's call is being recorded. There will be an opportunity for questions at the end of the call.

With us from Global Partners are President and Chief Executive Officer, Mr. Eric Slifka; Chief Operating Officer and Chief Financial Officer, Mr. Tom Hollister; Executive Vice President, Chief Accounting Officer and Co-Director of Mergers and Acquisitions, Mr. Charles Rudinsky; and Executive Vice President and General Counsel, Mr. Edward Faneuil.

At this time, I’d like to turn the call over to Mr. Faneuil for opening remarks. Please go ahead, sir.

Edward J. Faneuil

Good morning, everyone. Thank you for joining us. Let me remind everyone that during today’s call, we will make forward-looking statements within the meaning of federal securities laws. These statements may include, but are not limited to, projections, beliefs, goals, and estimates concerning the future financial and operational performance of Global Partners.

Estimates for Global Partners future EBITDA are based on a number of assumptions regarding market conditions, including demand for petroleum products and renewable fuels, weather, the level of market competition and the forward product pricing curve. Therefore Global Partners can give no assurance that our future EBITDA will be as estimated. The actual performance for Global Partners may differ materially from those expressed or implied by any such forward-looking statements.

In addition, such performance is subject to risk factors including, but not limited to those described in Global Partners filings with the Securities and Exchange Commission. Global Partners undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statement that may be made during today’s conference call.

With Regulation FD in effect, it is our policy that any material comments concerning the future results of operations will be communicated through press releases, publicly announced conference calls or other means that will constitute public disclosure for purposes of Regulation FD.

Now, please let me turn the call over to our President and Chief Executive Officer, Mr. Eric Slifka.

Eric Slifka

Thank you, Edward, and good morning everyone. Let me start by saying we are very pleased with our results for the second quarter as Global Partners delivered net income of more than $18.5 million, record EBITDA of $40.8 million and record distributable cash flow of $26.7 million. The second quarter of 2012 was our first full quarter with Alliance Energy, which we acquired in March of this year and helped drive our solid performance.

Our results also benefitted from several other factors, including lower gasoline prices, our recent fuel supply and services agreement with Getty Realty, a more favorable distillates market than a year ago and our rapidly expanding crude oil storage logistics and marketing business. These factors were partially offset by backwardation in the futures market and competitive pricing at the rack, which adversely affected our wholesale gasoline results.

Let's look more closely at the factors that helped drive our performance in Q2. Following the rapid ascent of gasoline prices in the first quarter, prices in the second quarter declined. Gasoline prices on the NYMEX increased from $2.69 a gallon at the end of December 2011 to $3.39 a gallon at the end of March, before returning back down to $2.73 a gallon as of June 30th.

As we have mentioned on previous calls, there is a lag effect in the margins in gasoline distribution and station operations. Rising prices tend to squeeze margins while declining prices tend to expand the margins. In the second quarter, largely as a result of the price decline, margins in the gas station distribution business were strong.

Another key contributor to our retail results was our fuel supply and services agreement with Getty Realty to supply more than 200 of their stations. This agreement broadens our presence in the New York City Metro and New Jersey markets.

In addition, the wholesale distillates market recovered in Q2 from the same period a year earlier due to more favorable buying opportunities and a more favorable futures market. Our continued expansion and oil logistics, including the gathering, storage, transportation and marketing of the U.S. and Canadian mid-continent crude also contributed to the bottom line in the second quarter.

Stepping back, we have strengthened our operations and financial position through acquisitions and organic projects that have diversified our income streams, extended our logistical advantages and increased our vertical integration. Alliance Energy and the Mobil assets acquired in the fall of 2010 are performing at or above expectations.

This business, which is included in our gasoline distribution and stationed operations segment, has a number of attractive growth opportunities, including future acquisitions as well as management services and supply agreements similar to the one we signed with Getty Realty. We continue to expect this segment to generate recurring cash flows and contribute about $75 million to $80 million of EBITDA at our annual earnings power in a full 12-months period.

In terms of projects on the horizon, we are moving forward on a new rail-fed propane storage facility in Albany, not far from our crude terminal operations. This will also be a single line haul facility serviced by Canadian Pacific. We believe this storage location which has an initial capacity of $540,000 gallons will be an attractive source of cost competitive mid-continent propane for wholesale customers in the Northeast.

Our wholesale gasoline and distillates business continues to enjoy a strong foothold in the Northeast. As we have said in the past, our terminal assets are critical, non-replicable infrastructure assets. This is a solid based business for us and is complemented by our rapidly developing crude oil storage logistics and marketing business.

Our crude oil business exemplifies the way in which we are levering our logistics and marketing expertise to increase our earnings power. In Columbus, North Dakota we have completed our new 100,000 barrel storage tank and loading facility as part of the development of that location as a hub for the gathering, storage, transportation and marketing of crude oil and other associated petroleum products.

In Albany we have just completed the project to increase our capacity to receive crude and associated products from the mid-continent via rail from 55,000 barrels per day to 160 barrels per day. This expansion allows the terminal to off-load two 120 car unit trains in a 24-hour period.

The location of our assets coupled with the efficiency of our single line haul on Canadian Pacific Railway through less congested quarters provides what we believe is the best virtual pipeline solution to the East Coast for the increasing production levels of North American crude oil, speed and delivery consistency lower costs. They're a critical advantage and a competitive differentiator in Global's rail shipment of crude from Canada and the U.S. mid-continent to the East Coast.

With the location of our assets in less congested areas and the efficiency of our single line haul capability we are averaging only 4 days to 5 days per train shipment and have completed shipments in as few as 2.5 days. From our Albany facility crude can be delivered in less than 24 hours to U.S. East Coast refiners.

Anecdotally we have heard of other companies that have moved unit trains of crude to the East Coast and they are counting their turnaround times in weeks as opposed to days. Turning to our distribution, we are pleased that last month the Board of Directors of our General Partner approved a 5% increase in our annualized distribution from $2 to $2.10 per unit.

With that now let me turn the call over to Tom for his financial review. Tom?

Thomas J. Hollister

Thank you, Eric. You will notice a big turnaround on our income statement with a $19 million swing from last year's net loss of approximately $1 million to net income of $18.5 million in the second quarter of this year. This improvement was driven by a $46 million year-over-year increase in our gross profit, offset by $27 million increase in expenses.

Margin results for our segments are reported on a net product margin basis before depreciation. The gross margin is simply the net product margin minus depreciation. Depreciation was $4 million higher for the quarter compared to a year ago, reflecting the addition of the Alliance assets.

Consequently, as you will see in our 10-Q our total net product margin for the quarter was up $49 million from $51 million a year ago to $100 million this year. As a reminder, we have three business reporting segments, first our wholesale operations, second our gasoline distribution and station operations, which consists of our Mobil assets and Alliance Energy, and third our commercial segment.

Let me touch on the net product margin for each segment. $11 million of the $49 million increase in net product margin was in wholesale operations. Within the wholesale segment results for other oils and related products were up $22 million, due to the improvement, as Eric mentioned, in the distillates markets from a year ago, as well as our new crude oil logistics business. Partially offsetting this was an $11 million decline in the wholesale gasoline and blendstocks due to a challenging futures market, as well as intense competition in terminal rack sales.

Turning to our gasoline distribution and station operations segment, our Mobil and Alliance assets contributed to strong margins. Within this segment, the gasoline net product margin was up $29 million from $15 million a year ago to $44 million this year. This dramatic increase was largely due to the first full quarter with Alliance, but also to the exceptionally strong retail margin environment, Eric described a few moments ago. Also within this segment, the addition of Alliance helped to increase the net product margin of station operations, which consists of rental income and C store revenues by $11 million.

So in sum, the net product margin was up $49 million, $11 million from wholesale activities, $39 million from gasoline distribution and station operations, offset by a small $1 million decline in our commercial segment. Operating expenses increased $26 million year-over-year primarily because Q2 was the first full quarter with Alliance results. There were also some smaller increases in organic project development costs and incentive compensation. While it is not evident in our consolidated results because of the Alliance acquisition on March 1, we have achieved our previously announced expense reduction goal for 2012. Through the first six months of this year, core expenses are running approximately $11 million less on an annualized basis than the same period last year.

Interest expense was $1.5 million higher due to the $192 year-over-year increase in the revolving credit facility, primarily related to the acquisition of the Alliance assets. The balance sheet as of June 30 shows total, excuse me, total assets of $1.9 billion, down nearly $200 million from March 31. The decline is concentrated in inventories and accounts receivable for two reasons. First, the absolute price of our products are down from the first quarter, which affects dollar carrying values. And secondly, we are purposely managing to low levels of gasoline inventories given the carrying costs associated with the backward market.

Maintenance capital expenditures for the quarter were $4.5 million, thus combined with $1.1 million in the first quarter of this year. We are tracking maintenance CapEx right within our expected range for the year of $10 million to $12 million. Expansion CapEx for the quarter was $10.1 million, primarily related to three projects, our new tank and our translating facility in North Dakota, the expansion of the Albany rail facility and our new propane storage facility also in Albany.

The outlook for our business remains positive. As we have said previously, on a pro forma basis with a full year of Alliance results and normal markets, our EBITDA should be between $130 million and $150 million. Consistent with the comments we made on our first quarter 2012 conference call, for the full year 2012, we expect to generate EBITDA in the range of $110 million to $130 million. While still a significant increase over last year’s EBITDA of $86 million, the target for this year is below our normalized range because it reflects the effective warm weather and tighter gasoline margins in the first quarter, one-time closing costs related to the Alliance acquisition and only ten months of Alliance results.

As we have said previously, market forces will affect our quarterly results from time to time. In Q3, we do not expect our performance to match the excellent results for the second quarter, primarily for two reasons. First, the wholesale gasoline market continues to be backward. As we had explained in the past, in backward markets, the cost of hedging our wholesale gasoline inventory has increased, which squeezes our wholesale margins. Secondly, after declines in the second quarter, NYMEX gasoline prices rose approximately $0.30 in the first three weeks of the third quarter, which squeezed our gasoline distribution and station margins.

Our guidance is based on a number of assumptions regarding market conditions including demand for petroleum products and renewable fuels, better credit markets and the forward product pricing curve, which will influence our quarterly financial results from time to time.

With that, we are ready to take your questions. Operator?

Question-and-Answer Session

Operator

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Thank you. Our first question is coming from Paul Jacob from Raymond James. Please proceed with your question.

Paul Jacob – Raymond James & Associates

On the Bakken hub just was wondering if you could provide some color surrounding your efforts to gather crude oil in that region. I mean, is this primarily going to be a trucking venture or are you looking to put up pipelines? And then could you touch on whether or not you have any contracts in place to service capacity production?

Eric Slifka

Hi, Paul its Eric Slifka. We are obviously looking to take advantage of every opportunity that exists out there, and to solidify the loading facilities’ positions in the marketplace. So we're looking not only at gathering via truck, but also trying to make agreements with producers and other pipelines to make sure that we have as much efficiency as possible built into the system out there. And what was your second question Paul?

Paul Jacob – Raymond James & Associates

I think you’ve touched on a little bit, whether or not you have contracts in place to service production?

Eric Slifka

And if you would just, short-term contracts basically, just short-term.

Paul Jacob – Raymond James & Associates

Okay. And would you be using if you did build out a trucking fleet, would that be third party? Or would you potentially rent or own your trucks?

Eric Slifka

We currently we use third-party trucking. We use third-party trucking primarily for all of our business. So I think that’s probably the direction that we would continue in.

Paul Jacob – Raymond James & Associates

Okay. And then lastly related to your Albany facility, I know that you guys are building out your unit train offloading and capability up to 160,000 barrels per day. When do you anticipate the volumes might reach that level? And could you touch on the competitive difference that allows you to move crude more rapidly to that terminal, versus your competition?

Eric Slifka

Sure, I think, first of all, I think it will take a little bit of time to get up to those kind of volumes. The facility was just recently another piece of it was finished, allowing us to take in those 120 unit train cars. So that will take a little bit to build that business up overtime. But the bottom-line here is we think we're the most efficient supply to the East Coast, because we're on single line haul with Canadian Pacific. Canadian Pacific has two ways of getting to the East Coast.

One is through Canada, one is through the Northern Tier of the U.S., so we have backup, upon backup of getting there, and obviously that northern route is a less congested route. So in terms of efficiency and time, we think we're best positioned efficiency time and cost to move those barrels to the East Coast.

Time is money, you pay for your railcars, your railcars cost us a certain amount or have a certain value. And then on top of that, if you can turn them and as many as three times in a month that's you're getting a lot more efficiency out of it and that I’d say ultimately be the goal. And not only that, but you're also then barging it down and the barges can get there and get to the refineries in day, right, so we think it’s the most efficient way out there to supply the East Coast market, including by the way pipe.

Paul Jacob – Raymond James & Associates

Okay, great. Thank you.

Operator

Thank you. Our next question is coming from Jerren Holder from Barclays Capital. Please proceed with your questions.

Jerren Holder – Barclays Capital, Inc.

Hi, good morning. Is there any update on the Getty agreement? Is that agreement still in place or are you guys supplying to more gas stations than initially?

Eric Slifka

Yeah. It’s a lot of stations. The agreements there, it’s going to go up and down depending on what happens with each site, but we’re very happy with the agreement that we have and they’ve been a great business partner.

Jerren Holder – Barclays Capital, Inc.

Okay. Great, thank you.

Operator

Thank you. (Operator Instructions) Our next question is coming from Andrew Gundlach from First Eagle Global. Please proceed with your question.

Andrew Stephen Gundlach – First Eagle Global Management LLC

Oh yeah, good morning. Could you just touch a little bit more on Albany? Is some of your expansion there taking ethanol and gasoline storage and in effect converting it to crude?

Eric Slifka

So essentially we started out. We when we partnered with Canadian Pacific several years back, we partnered with them on building the facility out to take in unit trains. That concept was primarily backed by the idea of bringing ethanol in on unit trains. Last fall, we made an investment to take the facility and be able to expand it to do both crude and ethanol. We did that on our own. So we had already tanks that were in ethanol.

We then expanded and we took two tanks, some around 200,000 barrels to take crude into the facility as well. And obviously that came out of our existing portfolio of tankage. Now the good news is when we purchased the facility back in 2007, it was about 750,000 barrels, they had somewhere around 700,000 barrels of tanks that were not being used. We decided to put those tanks back into service and it’s those tanks that are servicing our ethanol and crude business.

Andrew Stephen Gundlach – First Eagle Global Management LLC

I understand. And then just are you taking inventory of that crude as you deliver it to the refineries?

Eric Slifka

We’re doing all of the above. We’re providing a fee for service just throughput. We’re also buying and collecting and aggregating out in these EMP areas and then we’re putting it on our own railcars that are leased and we’re shipping it into the facility and then barging it back down to the refiners.

Andrew Stephen Gundlach – First Eagle Global Management LLC

I see. So this business and this performance will be highly dependent on the Brent WTI spread unless you contract it in longer term fashion. Is that correct?

Eric Slifka

I don’t look at it that way. I think if you believe that you would say at moments in time barrels shouldn’t come to the East, but they always do. I think it’s much more complicated than that because in fact you have not only large increases in production going on there every day, but you also have alternative markets that pull and push barrels around, right.

So I think to look at it as one dimension is not covering nearly enough ground because it’s really much more complex than that. At the end of the day, it’s my opinion that if you’re a producer and you’re increasing your production by, 10%, 20%, 30% a year, and you have lots of it, you need to diversify where you put your barrels and what price exposures you have because it’s going be impossible to always pick the highest market all the time.

Andrew Stephen Gundlach – First Eagle Global Management LLC

I would agree with you. I wasn’t thinking so much of that and I was thinking of perpetual overcapacity in Europe and their propensity to dump excess gasoline in pad one?

Eric Slifka

Yeah.

Andrew Stephen Gundlach – First Eagle Global Management LLC

Which is obviously not happening today?

Eric Slifka

Yeah.

Andrew Stephen Gundlach – First Eagle Global Management LLC

But let me actually mention one other thing on Albany and then I’ve just one last question after that. Buckeye mentioned on their call increased market share in ethanol and gasoline, in effect taking back lost market share and an improved competitive environment for them. Is that related to your focus more on crude? Or what’s going on in Albany that makes it somehow competitive and up for grabs where you’re growing, they are growing? Who are the losers there?

Eric Slifka

I don’t know what Buckeye said. I can tell you specifically that obviously as you are building a facility out, sometimes you have to manage your existing business maybe a little bit differently, until you get that facility exactly up on stream and running the way that you want to. And so at the end of the day, we think we're now in a position to do all of the businesses that we want to do in the volumes that we want to do through the Albany facility.

Andrew Stephen Gundlach – First Eagle Investment Management LLC

I understand. My other question is when I look on in your, you touch a little bit about this in the report today, but also you did in May in your thorough review of your business. You had a graph if you remember of the East Coast and all your facilities. And as the price of propane in the Northeast falls below the price of propane on the coast you have to believe that there will be a conversion of fuel oil into propane at some level. And I'm just curious what facilities you have that might be repositioned to help you grow this crude business and move away from the traditional storage of winter inventory?

Eric Slifka

Yeah, I mean for us, it’s really a story about, I'm not exactly sure of your question. So I'm going to give you a broad answer. I really believe that you need to think about how products are going to move in the future and where imports used to play a much bigger role in your business, now I believe that products are really going to move really from the center of the country and out or even from the Gulf Coast and out.

And you've seen it already happen in the Gulf Coast, but I think that's going to become a much bigger trend. So the way you supply your business versus let's say three to five years ago is going to be very different. And you need to make sure that the facilities that you have are put in a position to take advantage of that change in supply. That and I'd say that change and what we hope is a lower cost supply, right?

Andrew Stephen Gundlach – First Eagle Investment Management LLC

Exactly great, okay, thanks so much.

Eric Slifka

Thanks.

Operator

Thank you. (Operator Instructions) Our next question is coming [Lynn Chen] from HITE. Please proceed with your question.

James Jampel – HITE Hedge Asset Management LLC

Hi, guys. It's actually James Jampel.

Eric Slifka

Hey, James. How are you?

James Jampel – HITE Hedge Asset Management LLC

Fine. How are you?

Eric Slifka

Good.

James Jampel – HITE Hedge Asset Management LLC

Can you quantify how much more efficient you think it is to move Bakken crude single line CPs, all the barge down to sort of the Delaware River versus the single line rail, but very slow? What kind of a percent advantage do you guys think you have there?

Eric Slifka

Well, what do you mean single? Well, first of all, so our business is on a single line haul, right, which means we're on Canadian Pacific for the entire beginning to end.

James Jampel – HITE Hedge Asset Management LLC

So let me revise it, not multiple line for the other carriers.

Eric Slifka

Yeah, I mean, I think, I think…

James Jampel – HITE Hedge Asset Management LLC

Only by rail...

Eric Slifka

Yeah, I think multiple lines are much more expensive because you have two people who have to negotiate an agreement as to what their piece of the pie is going to be, right? And so I think that adds complexity. The fact is, is they also have to hand the train off and it has to go to a different company with different crews and different unions, with different work rules. And I’m not saying that it’s impossible, but it just adds some complexity.

But more important than that, right, you’re talking about other locations that have much more congested lines. And so to deliver large quantities in multiple locations consistently is going to be difficult, right. And we happen to be in the fortunate position where Canadian Pacific has two lines, one that’s in the U.S. and one that’s in Canada. And they’re not as congested as more as some of those Southern lines are with other carriers.

James Jampel – HITE Hedge Asset Management LLC

But in terms of like a percent advantage you might have, it looks like 10% better or 20% better?

Eric Slifka

Yeah, you know, I can’t tell, I don’t know the exact dollar amount, but what I know is we have a facility that we had already begun to build out to carry ethanol. And the amount of dollars that we had to spend to convert that facility, because we were already ahead of the curve and we are ahead of all of our competitors in our ability to deliver, is much lower than what it appears to be for some of these other guys. And it’s taking them a long time to even get there, right? So I think we’re advantaged by a bunch.

James Jampel – HITE Hedge Asset Management LLC

Okay. And can you talk a little bit more about the single line propane haul that you mentioned early on as a project? How big could that be and exactly how does that work? And who is that competing with? Is that competing with pipelines?

Eric Slifka

That’s competing both with pipelines and other current providers. This facility is about 540,000 gallons. It’s not as large a business certainly as crude or some of the other products but we like the position that we have in it because it is an efficient way and cost effective way to supply barrels into this marketplace. So we think we’re uniquely advantaged and once again I think we’re ahead of the curve in terms of how this business gets filled out and gets marketed.

James Jampel – HITE Hedge Asset Management LLC

This propane is coming from the mid-continent, what…

Eric Slifka

That’s the concept. The concept is take it from the mid-continent or from Canada where population is low, supply is high. And in the summer time, it’s hard to move it. What do you have to pay for it and then move it into your facilities and we think it’s a cheaper, a cheaper place currently for sure to supply the market here.

James Jampel – HITE Hedge Asset Management LLC

And you think in the long run it will be cheaper than Marcellus propane?

Eric Slifka

There’s a lot of debate around that. The good news is we are on rail and we can always supply it out of Marcellus as well if we choose to, but our believe is that we think it's going to be cheap with the current logistics that are set up out there. We so think it’s going to be the cheapest source of supply.

James Jampel – HITE Hedge Asset Management LLC

Okay. And last one for me, given you that sort of the importance of the moves of crude, and now propane from the mid-continent into the Northeast as a part of your business. When could we expect to see a segment breakout of that so that it's not also not sort of drowned out by what's going on in the wholesale product segment?

Thomas J. Hollister

Yes James. Although we don't break out the performance of the crude business specifically, it is included in the other oils and related products category within the wholesale segment. Year-over-year this category was improved both by favorable buying opportunities in distillates as well as the increased crude oil activity.

James Jampel – HITE Hedge Asset Management LLC

So we’ll see that in the Q?

Thomas J. Hollister

Yes. In fact the Q, we think it will be out later today if not tomorrow.

James Jampel – HITE Hedge Asset Management LLC

All right, thank you.

Operator

Thank you. (Operator Instructions) We do have a follow-up question coming from [Lynn Chen]. Please proceed with your question.

James Jampel – HITE Hedge Asset Management LLC

Yeah, if no one else is there. Can you talk a little bit about the decision to increase the distribution by quite a bit all in one quarter, as opposed to going sort of a more sort of monotonically increasing pattern? Are we going to see the start of quarterly bumps from here on in, or should we expect more sort of larger steps annually?

Thomas J. Hollister

Well James, I don’t think I’ll comment prospectively, because as our Board will look at it from quarter-to-quarter. It was a big jump, but as you know, we've made a couple of good acquisitions with the Mobil assets and Alliance both of which are accretive. And we’ve had some headwinds in the last four or five quarters. So now that we see it playing it out that we expected, I think the Board felt it appropriate to pay the unit holders the additional $0.10.

James Jampel – HITE Hedge Asset Management LLC

All right, thank you.

Operator

Thank you. Our next question is coming from Elvira Scotto from RBC Capital Markets. Please proceed with your question.

Elvira Scotto – RBC Capital Markets

Hi. Good morning. Just to follow-up on the distribution question. Can you remind us how you think about distribution coverage?

Thomas J. Hollister

I think Elvira, we’ve said in the past that we might run a distribution coverage ratio slightly higher than the industry because as you know we’re merchants and our quarterly results will go up and down a little bit, but so 1.25 ranges sort of a comfortable target area.

Elvira Scotto – RBC Capital Markets

Okay. And do you have for some of these projects, what sort of the latest sort of growth CapEx number we should be using?

Thomas J. Hollister

Well through the first six-months this year, which you'll see in the Q shortly, we spent $10 million in Q2 and $4.1 million in the first quarter. So that’s $14.2 million through six months. That will not quite conclude our big three projects. You may see a little bit more in the third quarter on both the North Dakota tank and piping and so forth, akin the Albany rail expansion and the propane facility as we get into the third and fourth quarter. And that will tail off towards the end of the year, but we have lots of interesting organic projects coming so we'll keep you posted as it unfolds.

Elvira Scotto – RBC Capital Markets

Great. Thank you.

Operator

Thank you. There are no further questions at this time. I would like to turn the floor back over to Mr. Slifka for closing comments.

Eric Slifka

This concludes today’s call. We look forward to updating you on our progress. Thanks for joining us this morning. Have a good day everyone.

Operator

Thank you. This does conclude today’s teleconference. You may disconnect your lines this time and have a wonderful day. We thank you for your participation today.

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