Rosneft (RNFTF) on Q4 2016 Results - Earnings Call Transcript

| About: Rosneft Oil (RNFTF)

Rosneft Oil (OTCPK:RNFTF) Q4 2016 Earnings Conference Call February 27, 2017 9:00 AM ET

Executives

Pavel Fedorov - First Vice President

Eric Liron - First Vice President Upstream

Vlada Rusakova - Vice President Gas business

Alexander Krstevski - VP, CFO, Downstream

Analysts

Ronald Smith - Citi

Karen Kostanian - Bank of America Merrill Lynch

Igor Kuzmin - Morgan Stanley

Ildar Davletshin - Renaissance Capital

Operator

Good afternoon, ladies and gentlemen and welcome to the Rosneft Fourth Quarter and Full year 2016 results call. I'll now hand over to the management team to begin.

Pavel Fedorov

Good afternoon, ladies and gentlemen. Thank you for attending this conference call, dedicated to Rosneft Operating Results for 2016. I am Pavel Fedorov, First Vice President. Our speakers today include Eric Liron, First Vice President Upstream; Vlada Rusakova, Vice President Gas Business and Alexander Krstevski, VP, CFO, Downstream. We will make brief presentation after which you will be able to ask us your questions. Please note, that the presentation contains among other things information on future events and projections.

Let's have Slide 3. In terms of the external market environment, 2016 was a challenging year. For the company, average oil price fell by 18% in dollar in 10% in ruble terms. At the same time, quotations show positive dynamics from January, the prices of barrel fell below $30 in late 2016, early '17 the price was fixed at around $55.

Slide 4 please. In a rather complicated external environment Rosneft continued to improve its performance responding to the global challenges. The key priorities remained unchanged, replenish the resource base, build up production within the established strategic targets, optimize refineries, increase sales efficiency and maintain mutually beneficial corporation with our partners.

Last year was quite eventful for the company and the Russian oil and gas industry as a whole. First and foremost we would like to welcome our shareholders, 19.5% is owned by a concretion of Glencore and Qatar Investment fund as a result of the privatization deal, as far the cooperation agreement, we are actively exploring joint participation in Russian international projects. Let me also note that last October, the company became a controlling shareholder of Bashneft. The immediate priority is to monetize the synergies that we estimated at entry to the project at about $3 billion, and in 2017 we plan to realize up to a quarter that amount and the first key event in terms of operating expenses has already been realized. We continue to implement these strategies of strengthening our positions in the global market with access to promising growing regions with first class assets.

Last year we signed a purchase and sale contract for India's Essar 49% business, which owns one of the largest and complex refineries in the world and the major retail chain. This includes not only participation in the growing Indian market, but also the opportunity to create a trading platform in the region and realize the synergies with our Venezuelan assets considering the refineries configuration. We've also signed a binding agreement with ENI to buy 30% stake in Zohr project offshore Egypt. BP our shareholder has also become a part of the project with a 10% share and as a result of Rosneft entered into a large-scale project with low cost reserves and a high rate of return.

In 2016, we attracted a number of foreign partners to join our own project; Indian investors have become minority shareholders in Vankor and Taas-Yuryakh. We’ve signed an agreement with Chinese Beijing Gas. On their entry to VCNG, the total value of these deals, exceeds $6 billion. Further let us take a closer look at the results of Rosneft production operations.

I will now give the floor to Eric Liron, first Vice President in-charge of Upstream. He will tell you more about the result of exploration and production. Thank you.

Eric Liron

Ladies and gentle, let's move to Side 14. As of December 31, 2016 our proved reserves amounted to 37.8 billion of barrels of oil equivalent of the ACC basis, maintaining our [indiscernible] position as a leader among the world's public oil companies in terms our proven hydrocarbon reserve base. This achievement was ensured by a successful exploration efforts, selection and application of our appropriate Rosneft plans for the Greenfield, including our undeveloped areas of the Brownfield. An efficient enhancement of the active well stock productivity and significant progress in understanding the prospects of the tight reserves development.

As a result the company raised the amount of proved reserved by almost 10%, these faced significant slowdown in the oil prices. Our reserve replacement ratio amounted to 148% on investment pro-forma bases. Organic reserves gross reached 2%, was a reserve replacement ratio at a 140%. As of the end of the 2016 Rosneft SEC proven hydrocarbon reserves life stood at 9 years.

Last year the company carried out a record amount of seismic surveys, including 2D seismic operations at about 12,000 liner km and 3D seismic operations at approximately 36,000 square kilometers. With implanting this extensive exploration program also have exceeded its license obligation targets by more than twice.

2016 Rosneft exploration resulted in discovering certain new fields and 127 new deposits with total AB1C1+B2C2 estimated reserves at 207 million tonnes of oil equivalent. Overall our promotional reserve additions on the AB1C1 basis amounted to 354 million tonnes of oil equivalent.

If we move to Slide 16, in the first quarter of 2016 the companies at our carbon outfit reached a new record of more than 5.8 million barrels of oil equivalent per day. The average daily production rose by 4.1% during the Bashneft integration, Greenfields launching and sustainable boundary line improvements. Excluding the impact from Bashneft acquisition the production grows amounted to approximately 2% including an increase in liquids output of 0.9%.

We continued ramping up the -- let's move now to -- backtrack to Slide 15. We continued ramping up the development drilling with total footage going up by 35%. The number of commissioned new wells increased by 43%, to more than 2,600. With significant jump in drilling activity the share of in house services sustainably exceeded 50%. In 2016, Rosneft acquired 15 new heavy drilling rigs and the Targin service company to support further in the house service unit development. As a result the number of active rigs reached 280 units as of the end of last year. This year we will further increase the development drilling focusing mostly on its efficiency and well completion and improvements.

Slide 17, let me now make a brief overview of our key Greenfield projects. In September 2016, we launched the East Messoyakhskoe field, obligation of modern technological and engineering solutions made it possible to build the field infrastructures within less than three years. The company also started comprehensive technological testing of crude oil production, treatment and transportations facilities at the Suzun field. By the end of last year crude oil production at the East Messoyakhskoe and Suzun field exceeded 1.7 million tonnes. This year we are planning to produce there approximately 6 million tonnes only in the company's share.

In 2017, we plan to launch the Yuganskneftegaz [ph] field with 47 development wells already in place and ongoing construction and installation operations. We expect this field to produce 0.8 million tonnes year, with targeted plateau at about 5 million tonnes reaching it in 2019 to 2020.

In early 2018, we are scheduled to launch the second phase of the Taas-Yuryakh field with the plateau of approximately 5 million tonnes expected to be reaching in 2021, as well as to start a full-scale development of the Russkoye field. We will keep you up to date regarding the progress in these projects throughout next quarters.

And now I hand over to Vlada Rusakova, Vice President of Gas Business, who will talk about our key achievements in the gas business development.

Vlada Rusakova

Good morning dear colleagues. In 2016, a number of key events took place. In Q4, the company became number one in terms of gas production in Russia and one independent producers. Strong operating results enabled us to climb two positions up the world ranking in gas producers and occupied the sixth place from eighth. Gas production by the end of 2016 amounted to 67 bcm, a 7% growth. The main growth driver is our largest growing gas asset Rospan where production increased by almost half. The project is according to schedule and hopefully by the end of '17 the project will be launched to full-scale.

Positive opinion was received from expertise [ph] with selected contractors, construction is underway. Construction is underway in the near future, we will complete a new complex for the treatment of processing of gas and condenses, a railroad overpass with an LPG tank farm, a treatment plant, production infrastructure and we’ll put on stream previously drilled wells. As in previous years, we’re consistently making efforts to increase the level of utilization of APG. The company was able the utilization rate by 2 percentage points reaching 90%. One of the key events was the launch of gas supplies under long-term contracts with [indiscernible]. All our obligations under the existing gas supply contracts are being met in full.

Rosneft continues taking an active part in the development of commodity exchange trading and gas. In 2016, 2.5 bcm of gas were sold on the commodity exchange, 15% of all gas sold on the exchange. Last year was also marked by the companies entering in the International LNG market which will enable us to accumulate and develop new competencies in the LNG trading markets. Active work is underway in Vietnam and Brazil, with Exxon Mobile we’re maintaining corporation to enter into the project in Mozambique. In 2016, we entered into an agreement to acquire a stake in the Zohr project. It will enable to produce 2 bcm to 3 bcm of gas each year starting from 2018 and without obtaining -- and with obtaining of the full capacity in 2020 about 9 bcm. In 2017, the share of Russian Gas achieved 11% until 2020. We will continue consistent efforts to the develop the Gas Business in order to ensure future growth of gas production.

Let me now give the floor to Alexander Krstevski who will tell you about our key achievements in downstream.

Alexander Krstevski

Yeah, thank you very much dear colleagues. Under unfavorable conditions, the company continued to improve the efficiency of its refining units and optimizing the performance of refineries. At yearend, refining throughput was more than 100 million tonnes, including 13 million at foreign refineries, a 3.5% increase. With our Bashneft, the decline was 1.5%, 2.4% in the Russian refineries. In 2016, the light product yield grew by 1.3 percentage points to 56%. The conversion rate grew by 5.5 percentage points to 72%. This became possible thanks to our performance optimization program and constant improvements, the supplies of lighter products and the improve yields of products including new product.

As a result of these actions, the share of fuel oil fell by 15%, diesel fuel €5 increase to a 31.1 million tonnes which is more than 150% more than 2013. We’re successfully continuing our refining modernization program. We completed the construction and started the catalytic cracker at the MTB unit at the Kuybyshev refinery.

Commissioned catalyst regeneration units at Kuybyshev and pressure swing absorption unit in Syzran. Under the import replacement program, the Achinsk and Ryazan refineries started using the catalyst produced by the Ungarsk catalyst and organic synthesis plants. We continue our commitment to diversifying marketing channels, [indiscernible] margins deliveries grew by 8.6% to 43.1% million tonnes. In the framework of corporation with our key partners we make contracts in Q4 to supply oil to Belarus and Germany for 2017. Signed an additional agreement to increase oil supplies to China via Kazakhstan by 3 mmtpa and entered into a new agreement with JX Nippon Oil Energy for the supply BGS during 2017. The main focus in the retail business was to improve operating performance. At the end of 2016, with our Bashneft, small wholesale and retail sales remains at the 2015 level and they grew by 6% including the integration of new assets.

I turn back to Pavel Fedorov who will highlight our financial results.

Pavel Fedorov

Thank you, Alexandra. As I have already mentioned in Q4, we've studied a positive thing -- positive trend in the global market against the background of average oil prices growing by 7%, in ruble terms revenue overall is by amount 20%.

This is also facilitated by efficient distribution of commodity flows and consolidation with Bashneft. The growth of production, recovery of oil prices and positive effect of the time lag contributed to EBITDA growth of 25%, organic 15% and we've seen at the end of Q4, 0.7 percentage point of EBITDA margins to 24%, while profitability grew by 25%. This was largely made possible by controls and costs, growth of production costs excluding acquisitions amounted to 2.5%, way below inflation. EBITDA growth and recognition of revenue from the reorganization lead to an increase in net profit which almost doubled in Q4. Adjusted earnings grew by RUB94 billion to RUB110 billion.

As speaking about last year's results, net profit declined due to the negative effect of exchange rate differences, reduction adjusted net income was negligible. This pattern is typical for most of the Company's global competitors. Moreover some of them showed negative net income by the end of 2016. The growth of capital expenditure in Q4 amounted to more than 40%, taking into account seasonality and integration of new assets. Free cash flow remained positive for 19 consecutive quarter's which is a unique achievement and in terms of SCF [ph] the company remains one of the industry leaders. CapEx for the year grew by 20% as expected, the growth of investment in the production segment exceeded 30%, which was driven by new projects, growing production drilling in West Siberia and Bashneft consolidation.

At the same time the company remains a leader in the efficiency of CapEx in upstream with some $5 per barrel. This year we expect further increase in CapEx despite the fact that a number of global companies, on the contrary, intent to continue reducing investment in the industry, but out model provides comparative costs and we can see some cost-effective opportunities to use our CapEx. Some increase in the net debt is due to the acquisition of new assets and strategic projects. At the same time the company retains its debt burden at a fairly comfortable level, the net debt to EBITDA ratio remained virtual and changed at above 1.5 in dollar terms by the end of '16.

The growth of liquidity is largely due to a specific reserve for potential liabilities related to upcoming that is signed, but subject to closer M&A deals, with a maximum estimate up to $9 billion which includes deals I've already mentioned Essar, Zohr and the completion of a mandatory proposal the Bashneft minorities. The company will also have to do some scheduled work to redeem its obligations where we've prepared ourselves very well to effectively and consistently refinance our debt obligations.

I would like to specially note the positive changes in the dividend policy, you might remember that the BOD approved an increase in the minimum payout ratio to 35% and the frequency up to two times a year.

In the second half of the year the company will decide on the first interim payment. Growing profitability of a shareholder's and strong company value remains our priorities for our management.

Thank you for your attention, we will now proceed to Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question today comes from Andrey Pulusuk [ph]. Andrey, please go ahead.

Unidentified Analyst

First, I'd like to confirm about your refining, your plans. You said part of the assets might be sold, could you tell us more about that? And number two about dividends, how are you planning to pay your dividends by the end of this year? Same as last year's level or there will be a decline?

Vlada Rusakova

Thank you very much for your questions. As regards to refineries we are actively working to complete the modernization program, and even in today's conditions we can see the priorities defined by the four party agreements and the test to improve the profitability of the business. So it is clear that the company is working to implement a number of promising projects to modernize and upgrade its refineries.

We have no plans to sell any refining assets. We are now in active dialogue with the relevant regulatory authorities to ensure the necessary profitability of our investment where we have issues regarding the environment, a number of our subsidiaries and this includes those geographically in remote areas. But we will find the solutions and we are working to improve their efficiency. It is clear that to a great extent the final decision will depend on the forms of implementation of the new initiatives we have today because as long as this becomes clear we will adjusted our decisions one way or another.

This is my answer to the first part of your question. As regarding to dividends, we're planning today, looking at the market, 35% of IFRS profits and you know what it is by the end of the year, you know the factor, 35% is fairly obvious. So arithmetically you can calculate the dividend. Thank you.

Operator

Our next question is from Ronald Smith from Citi. Ron, your line is open. Please go ahead.

Ronald Smith

I've got handful of questions. Let's start off with one about tax breaks. At this point what are the latest on the proposal for high water cut tax breaks for somewhat lower and a couple of others smaller fields?

Alexander Krstevski

Thank you, Ron for your question. As part of a comprehensive privatization deal, one of the initiatives that was discussed and is now in execution is tax incentives, investment incentives for high water cut fields in West Siberia. On the part of the company we fully welcome such initiatives because the economic rational is fairly obvious. These fields are in well explored areas with all the infrastructure, manpower accessible for immediate implementation of new investments. So in our view such tax incentives, investment incentive will have maximum economic effect.

Speaking about the argumentation that we defined in our dialogue with the federal authorities, on our side we’ve stressed our willingness to invest significantly in new oil wells in Samotlor, which is about 3,000 new wells for the next 8 to 10 years, where thanks to increased drilling and the investments incentive we could increase, for the long-term, oil production and create additional commercial industrial reserves with an overall effect of more than RUB240 billion.

As of today, in the last one and a half to two months, since we've had new investors joining us these initiatives were articulated and now I understand this is being reviewed in the Ministry of Finance of Russia. We’ve had a number of productive discussions where we’ve shown high multiplication, multiplier effect and no losses for the government budgets and a positive effect in greater investment activity of the company infields where monetization and development reserve will be economically unprofitable and economically will make no sense. So, hopefully in the next few months there will be full understanding in this issue. Thank you.

Ronald Smith

Wonderful. May I follow up for the second question about the different subject, and that would have to do with import substitution that was mentioned during the presentation. Would any of that or how much of that could involve refining additives. Looking to the accounts Rosneft spent about $650 million on additives in 2016, which is a lot of money, but still less than what was spend in 2015. How should we be thinking of that line item going forward?

Eric Liron

I would like to refer this question to Alexander Krstevski the CFO for Downstream.

Alexander Krstevski

Thank you for your question. We have had a lot of efforts into our independent in terms of imports of additives and one of the synergies with Bashneft by the way helps us to implement those initiatives in particular with supplies of the MTBE. As mentioned already, certain additives we start manufacturing on our own, and we have several projects about the tax. And my feeling is that 60% to 70% is amount of volume by which we are independent in terms of that. So, hopefully once we have finished the projects that’s right now ongoing we will be fully self-sustained here.

Operator

Our next question comes from Karen Kostanian from Bank of America Merrill Lynch. Your line is open. Please go ahead.

Karen Kostanian

I have two questions. First, to clarify on Slide 25, you gave a range of CapEx. So, I want to understand what’s the lowest the number and what’s the highest number potentially for 2017 CapEx. And what amount of that CapEx would be in downstream for 2017. And my second question is about Zohr project, could you please offer more rationale for the investments in such a project. On the one hand you sell shares in your Siberian project which are your core assets. And then you potentially invest in European Gas Markets which is currently a non-core market for you. So you see a high return on capital there compared to East Siberia, or do you see a potential for a gas market developments in Europe? Thank you.

Pavel Fedorov

Karen, thank you for your questions, in terms of CapEx and investment program the situation is quite clear. We are talking about the nearest future 2018 and the plans there, and I've already mentioned today the uncertainly in different tax developments. So we're targeting RUB1.1 trillion, so that’s our plan for 2018 and this number could change plus or minus 10%. And depending on the long-term tax scenarios becoming clear, the pay set's which the larger tax maneuver will be implemented and other factors including whether or not the incentive for high water cuts fields will be there. So those are the prospects for this year.

And again, this year as in previous year we have been looking at our CapEx program at great detail and I believe that our existing investments governance frame work helps us say that these investments have quite reasonable returns in terms of the global oil and gas industry.

In terms of the CapEx breakdown and any details there, the majority of that number relates to upstream, I would say some 80% of our CapEx would go there and the balance would first and foremost be attributable to downstream, I think the numbers would be in the range of RUB150 billion to RUB200 billion. And then there will be some other tail projects as parts of those overall targets. In terms of the gas market, I think that it's certainly for us, we see the good promises in the projects internationally that we undertake. You were asking specifically about Zohr, well there we see a very good potential in terms of resource base and also a potential for partnership with strong world-class global operators that will make the project successful and I think that Vlada can offer more comments about that.

Vlada Rusakova

Yes building on what Pavel has already mentions, we see that this project is very promising. It has a long term take or pay contract and in terms of the shares that we sell, gas monetization there is for the longer term.

Operator

Our next question is from Igor Kuzmin of Morgan Stanley. Your line is open. Please go ahead.

Igor Kuzmin

I have a couple of questions. First, I would like to understand the investment plans that have just been mentioned as part of the presentation and as part of the response to the previous questions. So whether these numbers include investment's into Zohr, that project. And secondly, the new shareholders that Rosneft has acquired recently, I would like to understand whether they have a special any priorities in terms of strategic development of the company and the strategic direction for the company that you could share with us at this stage. Or the direction that has already been discussed reflects the overall development trajectory that the other shareholders share as well?

Pavel Fedorov

Thank you for your question Igor. Responding to that to that will clearly have a business plan that has been presented does include the numbers for Zohr project, so that we had a shared understanding here. For 2017 and for further years we are not giving any guidance at this points for that project and CapEx there. Then in terms of corporation with the recently added shareholders and investors, we will be basing our efforts on mutual cooperation and it's quite obvious that the new shareholders share the vision for the company with the existing shareholders and that by the way was one of the reasons or prerequisite for the investment.

But in addition to that we certainly want to maximize the synergistic effect from working with the new partners and from world they bring into the partnership. Glencore is obviously one of the largest global commodity traders and the more global the company becomes, the more we see potential for regional trading hubs for swap transactions. The potential here is quite significant. And also, given the growing footprint in upstream and the potential international footprint in refining, so we will continue to actively corporate with Glencore in these areas and improving the quality and monetization of our products.

In terms of the Qatar Investment Authority, QIA. This is apparently one of the most prominent investment firms globally and they are interested in both working with Rosneft and also implementing some joints projects across our value chain. This is a dialogue that has been ongoing with our partners and I think and it's not very different from the dialogue that we have with our other strategic partners. So the project is currently being in developments and perhaps it’s a bit premature to be talking about results, it's only been slightly more than a quarter, but I think as we move on we will be able to share more and more details on that.

Operator

Our next question is from Ildar Davletshin of Renaissance Capital. Your line is open. Please go ahead.

Ildar Davletshin

I have one question regarding your financial depth. The financial depth has been going down, but also taking into account the prepayments. The total of financial debt plus the prepayments remains broadly unchanged over here. And my other question is, in terms of 2017 with 1.1 trillion CapEx which is your guidance, so how do you see the situation with prepayments and financial debts with the company. So do you believe that it could even go up, if anything, even without -- especially if the oil price doesn’t demonstrate any significant growth.

My other question is on dividends. We understand that 35% of IFRS is what you have already incorporated. As for the future, do you intent to make any adjustments say for paper losses such as FX effect losses that historically you have in your results and actually, your actual net income seems to be higher than what's reported. So do you intend to adjust it for dividend payments? Thank you.

Alexander Krstevski

Thank you, Ildar. Our established corporate track is that we don’t give any financial guidance. So it's difficult for us to comment the net debt to EBITDA metric and how it evolves over the year. It would depend on the oil prices and the exchange rates and customs policies and many other factors. So, it’s a quite difficult for us to get at the moment.

At the same time, we are quite clear with our policy in terms of the capital structure of the company which is 1.5 net debt to EBITDA and that’s one of the best metrics that we have in the industry. We have strong liquidity position and we look at -- and we believe that the company has a very robust and solid financial standing whether in global comparison or in comparison with Russian competitors. We are confidence that we are quite conservative on the capital structure side.

The numbers that we see for 2016, they includes the transactions that have occurred at the end of the year. So, they do not the full effect in terms of financial performance consolidation and Bashneft transaction is a good case and points. We only consolidated it in the fourth quarter, but we paid the full price for it last year and it apparently translated into our results. So, we are quite confidence in terms of our approach to capital management. And I don’t think we should have any concerns here. In terms of net income, we have our Board of Directors which has recently approved the dividend policy and they are quite clear about the framework and the basis is net income under IFRS. There could be an argument about whether or not that’s paper -- that includes any paper losses or not, but we will stick with that policy. We do not intend to change it.

Ildar Davletshin

Follow up question from the analyst. For 2017 for deliveries against prepayments. So what’s the extent, how much do you expect to increase the share in the total export of crude oil delivered against the prepayments or do expect it to be at the level of 2016?

Let me hand over to [indiscernible] Kareem of Head of Trading and Commerce to comments on this.

Unidentified Company Representative

Good afternoon. We do not disclose this. This is after all a commercial secret of the company. We do have contracts with prepayments terms and whether we keep them or whether we discontinue them will depends on the number of factors and the macroeconomic environments. So, we cannot disclose information at the moment. In terms of repayments they are smooth and according to schedule. So, that will remain at the currencies level.

Operator

We have a follow up question from Ronald Smith of Citi. Ron, your line is open. Please go ahead.

Ronald Smith

Roughly 10% of life products are put over the next several years. Can you give us a newer term target for life product output say for 2017 and 2018?

Pavel Fedorov

Thank you, Ron for your question. Alexander Krstevski, CFO of Downstream will comment on that.

Alexander Krstevski

Thank you for your question. As Pavel has already mentioned in 2017 and 2018, the company is implementing the most efficient refining upgrade projects. And so based on those projects the light product yields in 21017 is expected at the level of 2016 because most of the units will not be put on stream. But in 2018, that will be 3% up at 68% and in 2019, we expect some 60% of light product output once the project that are being implemented complete.

Ronald Smith

A quick follow up, how are your plans going or if you could describe somewhat your plans to optimize your refining portfolio, in effect potentially transforming some other refining load to the Bashneft refineries to maximize their life product output, in exchange for a lower output say in some of the Rosneft less efficient refineries?

Pavel Fedorov

Thank you for your question Ron. This work is ongoing and when we talk about the synergy with Bashneft this is one of the metrics or parameters that's we refer to. In terms of comprehensive optimization, I think that's following the results of the second quarter, we will have some primarily results in terms of any unlocking the synergies. And then we will be able to discuss the performance of refineries and obtaining economic effect of these initiatives. It will be too early to be talking about it now, but hopefully when we discuss the first half result we will be able to demonstrate how we will monetize the synergy that we have discussed.

If there are no more questions collogues, thank you very much for your attention. We're always happy to answer your question, so I suggest that we continual the discussions offline. The company has quite an active program of working with investment community and we look forward to meeting you and also happy to meet you here in Moscow. Thank you and good bye.

Operator

Ladies and gentleman, thank you for joining Rosneft fourth quarter and full year 2016 results call. It is now come to close, we hope you enjoy the rest of your day. And you may now disconnect your lines.

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