Trecora Resources' (TREC) CEO Pat Quarles on Q4 2020 Results - Earnings Call Transcript

Trecora Resources (NYSE:TREC) Q4 2020 Earnings Conference Call March 9, 2021 10:00 AM ET

Company Participants

Jason Finkelstein – Investor Relations-The Piacente Group, Inc.

Pat Quarles – President and Chief Executive Officer

Sami Ahmad – Chief Financial Officer

Conference Call Participants

Rosemarie Morbelli – G. Research

Bill Dezellem – Tieton Capital

Mitchell Sacks – Grand Slam Asset Management

Operator

Good day and welcome to Trecora Resources’ Fourth Quarter and Full Year 2020 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded.

And at this time, I would like to turn the call over to Jason Finkelstein from The Piacente Group, Inc. Please go ahead, Jason.

Jason Finkelstein

Thank you, operator. And good morning, everyone. Welcome to the Trecora Resources Fourth Quarter and Full Year 2020 Earnings Conference Call. The earnings release was distributed over the wire services after the close of the financial markets yesterday afternoon.

Presenting on our call today will be Pat Quarles, President and Chief Executive Officer; and Sami Ahmad, Chief Financial Officer. Chris Groves, our Corporate Controller, will also be available for the question-and-answer session, which follows management's prepared remarks.

Before we get started, I would like to review the Safe Harbor statement. Statements in this presentation that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon management's beliefs and expectations only as of the date of this teleconference, March 9, 2021.

Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks as well as others are discussed in greater detail in Trecora's filings with the SEC, including the company's most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued after the close of financial markets yesterday afternoon.

This webcast is accompanied by a slide presentation, that is available on the Investor Section of company's website, www.trecora.com.

At this time, I'd like to turn the call over to Trecora's President and CEO, Pat Quarles.

Pat Quarles

Good morning everyone. And thank you for joining us today. Like many of you on this call, I'm pleased to turn the page on 2020 and optimistic about the year ahead. Around this time last year, despite the extraordinary challenges that were beginning to unfold, we communicated a set of goals that we pledged to fulfill during 2020. I'm pleased to say were able to meet all of our commitments. The completion of the sale of our non-core AMAK investment at the end of September, not only simplified the company by narrowing our focus to specialty chemicals, but meaningfully strengthened our balance sheet. The sale resulted in net cash proceeds, that allowed us to reduce our bank debt by $37.4 million and meet our target leverage ratio of between 1.5 and 2 times. This brought our year-end debt to its lowest level since 2014.

With our cash balance at the end of December at approximately $56 million, our significant liquidity allows us to continue our focus on growth opportunities.

A year ago, we launched our diversified portfolio of growth projects to deliver sustainable organic growth. This resulted in better-than-expected value creation of $4.5 million in EBITDA in 2020. At year end our funnel had 14 projects focused on delivering new products or entering new markets, 17 projects focused on driving asset utilization with revenues that don't require significant capital, and four projects focused on improving productivity and reducing costs.

In 2020, we successfully completed four commercial trials with a further two trials being executed in the first quarter of this year. We expect many of these to result in sustained custom processing revenues beginning in the second quarter.

Turning to our financials, Trecora’s 2020 operating results reflect the resilience of our business in spite of widespread challenges from the pandemic.

Net income for full year 2020 was $31 million, which includes the net gain from the sale of AMAK of $26 million. This compares to the net loss of $15 million in 2019.

Adjusted EBITDA from continuing operations for 2020 was $21.6 million compared to adjusted EBITDA from continuing operations of $31 million for 2019. While prime product sales volume for the year were severely impacted by the pandemic, declining nearly 10% from 2019, fourth quarter prime product demand increased from weakened levels in the second and third quarters and exceeded sales volume of fourth quarter of 2019. The growth was driven by solid demand in the polyethylene and expandable polystyrene markets.

Also, in the fourth quarter, wax sales volumes increased approximately 14.5%, or over 1.1 million pounds, from the fourth quarter of 2019.

As we start the year, we are very encouraged by the continued recovery in the economy and in our end use markets. As the year progresses, we expect pent-up demand and the strength of our end users to show growing momentum. This, combined with our robust growth portfolio, has given us the confidence to initiate our recently announced $20 million share repurchase program. This program, which has been authorized through March of 2023, reflects our commitment to maximize stockholder value through the continued prudent allocation of our capital.

Now, let me turn it over to Sami to discuss the specifics of our fourth quarter and full year results.

Sami Ahmad

Thanks Pat. And good morning to everyone. Let me start with a discussion of liquidity, debt and cashflow, and then I'll discuss our fourth quarter and full year performance in some more detail.

As Pat mentioned, in 2020 we reduced our bank debt from $83 million at the end of 2019 to $46 million at the end of 2020. The debt reduction, as you know, was funded by the proceeds from the AMAK sale.

Our leverage ratio under our bank credit agreement declined to 1.65 times at the end of 2020, compared to 2.2 times at the end of 2019.

Total debt, including our PPP loan, stood at $52.2 million at the end of 2020.

Our cash balance at year end was $56 million, which includes proceeds of $6.1 million from the PPP loans. In addition, our revolver remains undrawn with availability of $52.4 million. A few comments on the PPP loan. We believe we qualify for full forgiveness based on the SBA criteria. All of our PPP loan funds were segregated from our operating funds and we specifically used them solely for payroll and benefits, thus preserving employment at our sites. We expect to complete the forgiveness application process in the next several weeks and received determination on forgiveness later this year.

We also received partial federal income tax refunds as a result of the tax law changes under the CARES Act.

In the third quarter of 2020, we filed refund claims totaling approximately $16.5 million. In November, we received about $14.6 million, including interest from the IRS. Our final refund claim of $2.4 million is still outstanding and is included in taxes receivable on the consolidated balance sheet. We expect to receive this final refund later this year. The approximately $15.1 million increase in deferred income tax liability on our balance sheet from 2019 reflects this realization of deferred tax assets, specifically our net operating losses.

Our 2020 full year operating cash flow from continuing operations was $29.6 million.

Full year 2020 CapEx spending was $13.4 million compared to approximately $10 million in 2019. CapEx spending at South Hampton in 2020 was up nearly $4.4 million from 2019, this increase was primarily maintenance spending for the Gulf State Pipe Line at South Hampton, which is part of a multi-year capital plan to rehabilitate and upgrade the feedstock pipeline. CapEx spending for the Specialty Waxes segment was $2 million.

Free cash flow for 2020, which is cash flow from operations, less CapEx and less required debt amortization was approximately breakeven. We were able to fund all of our CapEx and mandatory debt pay down with operating cashflow, while preserving liquidity in a challenging business and operating environment.

In 2021, we anticipate capital expenditures of approximately $13 million to $14 million. 2021 CapEx spending is primarily driven by continued feedstock pipeline work as well as higher level of planned maintenance spending at South Hampton.

Now let's take a closer look at our fourth quarter and full year performance. We reported net loss in the fourth quarter of 2020 of $0.1 million or a $0.01 per diluted share, compared to a net loss of $19.7 million or $0.80 per diluted share in the fourth quarter of 2019. Net loss from continuing operations in the fourth quarter of 2020 was $0.1 million or a $0.01 per diluted share compared to net loss from continuing operations of $18.7 million or $0.76 per diluted share in the fourth quarter of 2019.

Adjusted EBITDA from continuing operations was $4.8 million for the fourth quarter of 2020. This compares with adjusted EBITDA from continuing operations of $7.1 million in third quarter of 2020 and $6.4 million in the fourth quarter of 2019.

Gross profit in the fourth quarter was $6 million or 10.3% of total revenues compared to $8.3 million or 13.5% of total revenues in the fourth quarter of 2019. Gross profit for full year 2020 was $28.7 million or 13.7% of total revenues compared to $38.5 million, or 14.9% of total for the same period in 2019.

G&A expenses for fourth quarter were $6.2 million, compared to $5.9 million in the fourth quarter of 2019. Full year G&A expenses were $24.9 million, compared to $24.4 million in the same period last year. G&A includes plant level, general and administrative expenses as well as corporate expenses.

Interest expense for the fourth quarter was approximately $0.3 million compared with a $1 million in fourth quarter last year. Full year was approximately $2.5 million compared to $5.1 million in 2019. The $2.5 million reduction in interest expense is due to debt reduction combined with lower interest rates. Our effective interest rate for the full year was 2.63% compared to 4.56% in 2019.

Now let me walk you through our business segments, starting with specialty petrochemicals. Adjusted EBITDA for specialty petrochemicals in the fourth quarter was $6.4 million, compared to $8.5 million in the third quarter and $8 million in the fourth quarter of last year. Adjusted EBITDA margin for the fourth quarter was 13.1% for the specialty petrochemical segment compared to 21.6% in the third quarter and 15.2% in the fourth quarter of 2019.

Specialty petrochemical volumes in the fourth quarter of 2020 was 22.1 million gallons compared to 17.9 million gallons in the third quarter and 20.3 million gallons in the fourth quarter of 2019. Full year volume in 2020 was 75.1 million gallons and this compares to 84.8 million gallons in 2019.

Prime product sales for the year were severely impacted by the pandemic, declining nearly 10% from 2019. This was due to lower sales to the polyethylene and use markets as well as lower sales to Canadian oil sands customers. Sales to other end use markets were also generally weaker compared to 2019 due to the pandemic. However, fourth quarter prime product volume increased to 17.6 million gallons from weaken levels in the second quarter and third quarter, and from fourth quarter of 2019 of 16.3 million gallons. Volume growth was driven by solid recovery and demand in the polyethylene and expandable polystyrene markets.

For the full year, specialty petrochemicals net income was $14.9 million in 2020 compared to net income of $25.6 million in 2019. Adjusted EBITDA in 2020 was $26.4 million compared to $39.2 million for the same period a year ago. Gross margin decreased from 17.7% of gross revenue in 2019 to 15.8% in 2020. The decrease in gross margin was driven by significant decrease in byproduct margins, which were impacted by lower component prices and partially offset by lower operating costs.

Benchmark natural gasoline feedstock prices increased from $0.42 per gallon at the end of second quarter to $0.86 per gallon at the end of third quarter, and a $1 per gallon at the end of the year. Going into the first quarter, January's average natural gasoline price was a $1.20 per gallon, while February's came in at a $1.36 per gallon.

The trend in market pricing of natural gasoline has shown for you on Slide 8 of the earnings deck. As you can see in the slide, feedstock pricing has basically rebounded back to 2018 levels. Recall that the sharp decline in feedstock prices in the first half of 2020 led to a negative earnings impact of approximately $5.5 million due to the consumption of higher cost inventory. The second half of the year saw an equivalent reversal as feedstock costs rose sharply in third and fourth quarters leading to a $5.4 million positive inventory costing impact.

Now moving on to byproducts. Byproduct sales volume grew to 4.5 million gallons in the fourth quarter from 3.1 million gallons in third quarter and this was in conjunction with the increase in prime product sales. For the full year, byproduct sales volume declined 19.4% versus 2019, primarily due to lower prime product production. Byproducts are produced as a result of prime product production and their margins are significantly lower than margins for our prime products. Byproduct spreads declined to negative $0.04 per gallon in the fourth quarter of 2020 from positive $0.10 in the third quarter and positive $0.25 in the fourth quarter of 2019. The sharp drop in byproduct spreads was driven by lower byproduct prices, resulting from lower prices for the aromatic components in the byproduct street.

Let's move on to specialty waxes. The specialty waxes segment had adjusted EBITDA of a negative $0.2 million in the fourth quarter compared to positive $0.1 million in third quarter and positive $0.2 million in fourth quarter last year. Specialty waxes segment generated revenues approximately $9 million in the fourth quarter, a $0.5 million increase from the third quarter and roughly flat from fourth quarter last year.

Revenue in the fourth quarter included $7.1 million of wax product sales. Wax sales volumes increased approximately 2.3% from the third quarter and 14.5% from fourth quarter last year, which was impacted as you recall by wax feed supply disruptions. We continue to be sold out on wax and we pursue opportunities to upgrade the value of our wax product mix in order to further increase profitability. Processing fees which were approximately $2 million in the fourth quarter of 2020 decreased 31.6% or approximately $0.9 million for the fourth quarter of 2019. And this was due to reduce customer demand for custom processing services driven by the pandemic.

For the full year, the specialty wax segment had adjusted EBITDA of $2 million compared to negative $0.2 million in 2019. Wax sales volumes in 2020 increased approximately 6% from 2019 and our feed supply increased in 2020 relative to full year 2019. Custom processing revenues for 2020 were nearly $11 million or approximately 9% higher than in 2019. That concludes the financial summary.

Now I'd like to turn the call back to Pat and then we'll open the line for your questions.

Pat Quarles

Yes. Thanks Sami. Before we take questions, let me make a few comments on how we see the market looking at the first quarter and other items related to our results in the quarter. We're in the midst of managing the impacts from the widespread utilities’ failures in Texas, which were created after cold front brought record low temperatures, snow and rolling blackouts across the state, creating disruptions for our suppliers, our customers, and at our own facilities. The impacts have been unprecedented to the industry in terms of the breadth of the outages and damage to facilities, mostly due to freezing.

At Trecora, we brought our plants down proactively in order to prepare them for the cold. At South Hampton, we were fortunate not to experience a loss of electricity or natural gas. We're out of operation for one week. During that time, we were able to repair most of the damage to our equipment, which is largely related to water handling equipment. We avoided any supply disruptions to our customers.

At Trecora Chemical, we lost both electricity and natural gas. Operations at TC were down roughly two weeks. And again, we've been able to complete most of the repairs to damaged equipment. In the first quarter, we're going to see the costs associated with our repairs as well as impacts due to loss of supply from some suppliers and loss of demand from customers in the Gulf Coast area. We don't yet have a full estimate of these impacts, but we expect they could range from $2 million to $3 million.

In addition, our maintenance activities for 2021 at South Hampton are largely occurring in the first quarter. These expenses will be about $1 million higher than the fourth quarter.

Lastly, we discussed in the fourth quarter, we were surprised by the high demand coming from Canadian oil sands that demand was not sustained in this quarter and has returned to low levels.

Looking beyond the impacts of the storm, we are enthusiastic about the direction of our business in 2021. Demand from our core end uses continues to grow. One indication of that strength is our successes on prime product pricing. We noted last quarter, the successful implementation of a $0.10 to $0.12 per gallon price increase of our prime products in November. We implemented a further $0.15 per gallon increase effective February 1 of this year. And our customers engagement with the company on our growth projects is greater than it's ever been.

In closing, I'd like to take this opportunity to note that Joe Tanner, our Senior Vice President of Commercial will be retiring in March. Joe's contributions to Trecora have been significant and meaningful. Our commercial organization's execution has been upgraded considerably during the two years he was with us. As part of our planning for his transition, Joe will continue to be retained as a consultant. I'm thankful for Joe's service to Trecora and wish he and his family all the best following his retirement. And now we'd like to open up the phone line to questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Rosemarie Morbelli from G. Research. Your line is now open.

Rosemarie Morbelli

Thank you. Good morning, everyone.

Pat Quarles

Good morning, Rosemarie.

Sami Ahmad

Good morning, Rosemarie.

Rosemarie Morbelli

I was wondering Pat, if you could give us a few more details on your growth project, the type of projects, the type of the end markets you are targeting and what is the potential on the top line?

Pat Quarles

Sure. So, our focus has been, given the kind of the wave of capital investment, the company made several years ago. We've got excess capacity particularly around our new hydrogenation and distillation units at TC at Trecora Chemical, and as well as the ability to process prime products and [indiscernible]. Our focus is on the quickest way to leverage those operations to higher revenue and higher profitability. And that leads us to putting most of our effort behind custom processing activities here, where we can utilize kind of the unique capabilities, particularly of the hydrogenation distillation units to meet other – meet our customer's needs for kind of specialty chemical processing. The nature of those is that they're confidential. So, we can't really talk about specific chemistries or products and markets that they're focused on.

But what I would say is, kind of consistent with the customer mix that we have in custom processing for our legacy custom processing businesses. These are major chemical producers where we're taking unique streams from them and adding value to them across the capabilities of these units. And we'll do that. We would expect to be able to do that as we go through our commercial trials, which we've been discussing in these last a couple quarters, and then we'll convert that into long-term sustainable custom processing revenues, and we're optimistic that that will begin to build up as we get into the second quarter. I said previously that these are singles and doubles. We're not out looking for big home runs that are going to suddenly transform the asset and we'll be incrementing our way up. And we'd also expect a bit of a benefit there from a diversification of those both products and markets that they're going into to help us over time as well.

So that's the primary focus of these growth initiatives in the short term. Longer-term, we are introducing and developing some technology for new product introductions, but I think that will be some quarters in front of us before they'll reach fruition. And then of course we always have a base level of productivity projects that we're looking at and just overall enhance our competitiveness. Those started last year, and we'll continue to bring benefits as we get into 2021.

Rosemarie Morbelli

Thank you. What type of – so I am – I would assume that between the improved mix and the higher volume coming out of those plants? What type of gross margin do you think you can reach over the next, let's say couple of years?

Pat Quarles

Well, we believe over time. I mean, this needs to be a high teens type EBITDA margin business particularly at TC, given the specialty profile of that business. This is a situation TC where as we said before, we have a fixed cost overhead kind of structure there with these underutilized assets. So, on the increment kind of these projects bring tremendous margin but then that needs to be applied across the base of costs. But we sum it all up. We need to be driving toward high teens EBITDA margins at TC.

Sami Ahmad

I was just going to add to Pat. When these investments were made, the Pat referred to the capital investments some of the fixed costs are a lot of the fixed costs was installed as part of those investments. So, the real focus is on incremental utilization as a result of these growth projects. So, as you can imagine, the gross margin – variable – gross margins and variable margin should be both significantly higher than our base levels.

Rosemarie Morbelli

All right. Thanks. And then lastly if I may, you talked about the impact from the cold front in Texas if I can call it that in the first quarter, do you think that you can recover all of the shortfall in the second quarter or will it take all year or some of those volumes will not come back?

Pat Quarles

Yes, that's the question we're asking ourselves right now, honestly, Rosemarie. It's – as you said, going into it, we were seeing a robust demand growth has started strongly for us in the fourth quarter. Business remained positive entering this year and everything that we see if not continues that and maybe accelerating it particularly with the recent government action on further stimulus. So, at the macro level, that gives us a lot of confidence in the direction of the market. And you see some indications of that commodity pricing, right? Obviously natural gasoline pricing, having significantly reversed course, that generally is a positive indicator for our business is going to go. So, I do think that's why I made the comment about the pent-up demand. I do think as these plants resume operation there'll be in a catch-up mode.

It's been remarkable to me. I mean, being in this business 30 years to see the extent of these impacts if some have said it's like a category five hurricane excepted span from Corpus Christi to Louisiana. We've seen impacts on the world scale assets that are certainly holding back the business right now. We expect that to be largely behind us as an industry by the end of March. And that should set us up for a strong demand into 2Q, but we need to see that develop.

Rosemarie Morbelli

Okay. Thanks. Good luck.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of Bill Dezellem from Tieton Capital. Your line is now open.

Bill Dezellem

Thank you. Two questions related to prime product, if you could please. First of all, relative to oil sands, I think you'd mentioned that was strong in the fourth quarter, but it did not continue or has not continued into Q1. Would you talk broadly about your prognosis for volumes with oil sands in light of the $65 oil price? And then I'd actually be curious that your outlook for just prime product volumes in total outside of the oil sands, if you would please?

Pat Quarles

Sure. Yes. So, I think we've had two drivers probably going in two different directions on oil sands, as it relates to us. On the one hand is the trend that's really frankly been there for us for two to three years now, which is the continued focus on their efficiency drivers, which has certainly reduced their underlying demand. If you want to say it on a per barrel of crude basis. And we've been talking about that now for some time.

On the other hand, as I mentioned last quarter, we are seeing, the Canadian government release a relief excuse me, relieve the constraints on crude production out of Alberta. And our expectation is that they will be moving toward higher production and we did see some of that in the fourth quarter.

So, what we see today, I think, as always with our customer there, we see very large inventory swings. So, we had a big event in the fourth quarter where they took a lot of inventory in. They have told us they turned that down now, so they are in an inventory consuming mode here in the fourth quarter. We are aware of some maintenance activities that will be there in the coming several weeks. So, I think on the backside of that, we could expect a resumption of reasonable business there, but I always caution people. I don't see it really ever going back to where it was a couple of years ago, just because of the efficiency programs they have.

Beyond that, and the other end uses thinking about polyethylene, polyisocyanurate foams, those we have great deal of confidence. And the U.S. market continues to be highly competitive on a global basis. And those assets are running when they are available to run at very high rates. And that's been positive for us from a demand perspective. And on polyiso again, what we've seen with the application of these flat roof installations if you think about the Amazon warehouses, that's kind of the main driver for their growth. We've got visibility there on new plants that they are building, that we have contractual obligations to supply. So, we've got some visibility on that demand.

And I should say on the polyethylene side with the new assets that are coming into the market over the next two to three years, similarly we have contractual obligations that give us some visibility to growth. Now you add all that up, I don't think it's double-digit growth, but it should be, solid, single digit type total growth for the portfolio in prime products.

Bill Dezellem

Great. Thank you for that perspective.

Operator

Thank you. At this time, I'm showing no further questions. Pardon me, actually, our next question is from Mitchell Sacks from Grand Slam Asset Management. Your line is now open.

Mitchell Sacks

Hey guys we just talked about a single digit growth in prime products, that's off of the 2019-base, not off the 2020-base, I'm assuming, correct?

Pat Quarles

Yes, thanks for the clarification. That's right.

Mitchell Sacks

Okay. And then, I think, you had mentioned the call you guys would put through a $0.15 price increase back in February on prime. Is that formula customers, or just for spot, which part of the business is that?

Pat Quarles

Yes, that's for the market negotiated pricing. So, we're going to refrain from calling it spot anymore, because it's really not spot business. I mean, most of this business is business that we do month in and month out, but it's on a negotiated price basis. So that's where we instituted the price increases for November as well as the beginning of February.

Mitchell Sacks

Okay.

Pat Quarles

That's about a third of our portfolio on the volume metric basis for prime.

Mitchell Sacks

Okay. And then getting back to the by-product again, I may have missed a little bit. I know you were talking about it a little bit earlier can you just talk about product – sorry by-product margins and kind of where they are relative to where things were prior to COVID?

Pat Quarles

Sure. So, if we take 19 as kind of the reference level for by-product values, I think, we ran about roughly $0.25 spread at that time. Last year, it was horrible is the use of word, describes it with benzene and toluene prices, very depressed given the upsets in the market there. And we saw recovery heading into the end of the year on benzene pricing, but at the same time, of course, after gasoline started running. So, we got back up to kind of positive spreads at the end of the year for co-products for – excuse me, for byproducts, which frankly, with all the disruptions going on along the Gulf Coast right now, it's hard to take a data point today and suggest that's where the market is headed, but benzine has kind of blown out in the current month, I think, it closed at settled from March at 248, I think.

Sami Ahmad

It closed at 250.

Pat Quarles

Yes, close to 250 which would get us back to those 2019 levels. But I can't tell you that's going to be sustainable. I think there's just so many disruptions on the supply and the demand side right now with all these assets out. I read a headline this week that styrene in Europe sold for historical record price. We saw a historical record price for propylene a week ago at a $1.24 a pound, which is just completely unprecedented. So, you've got a lot of imbalances right now. And I think we need to let – frankly, I think, we need to let March kind of run out and get all these other assets back up and running and see where the market shakes out in early second quarter.

I think it's going to be better it's certainly going to be better, I'm very confident, much better than 2019, excuse me, 2020. But exactly what that level is going to be, I think, we need to let things settle down to see.

Mitchell Sacks

Okay, cool. Thank you very much.

Pat Quarles

Thank you.

Operator

Thank you. At this time, I am showing no further questions, I would like to turn the call back over to Pat Quarles for closing remarks.

Pat Quarles

Thank you. And thanks for those questions and interest in Trecora. I want to reiterate what an important time this is for our company and how excited we are to be executing on our growth plans. 2020 was a transformational year for our company on many fronts. And we look forward to sustaining that momentum in 2021 and beyond.

I always like to end with a thank you to our team. While the impacts from the winter storm in February are going to be expensive, they actually have been much broader than just business impacts. Almost everyone in our company had some dislocation or damage to their home. And despite this, we came together to safely repair the damage at our facilities and meet the needs of our customers. It's just another demonstration of the dedication our people have. And I thank them for that. Thank you again for your participation,

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.