Earnings Call: Q4 2018

Mar 8, 2019

Ladies and gentlemen, welcome to the Disco and Co. Q4 twenty eighteen Annual Report. Today, I am pleased to present CEO, Jens Bjornstrausen. For the first part of the call, all participants will be in listen only mode and afterwards there will be a question and answer session. Speaker, please begin your meeting. Thank you very much and good morning to everyone. Welcome to our twenty eighteen Annual Report Presentation. In general, the strong company had a year with a very high activity level and also many future proofing products. We experienced tough competitions in many of our markets. We saw challenging conditions, but we continued to invest and over the year we invested DKK 1,500,000,000.0. We made two bolt on acquisitions. And should I elaborate overall, I would say we had in spite of all that an acceptable year. Revenue was up by 77% to 18,300,000,000.0. We saw a positive full year effect from our recent acquisitions of Bow and Elementa in Ecuador. In general, our companies have kept all market shares and positions without with exception of BioMar in Norway. Our EBITDA increased slightly to $1,580,000,000 and profitability from the companies within our portfolio differs. We also saw some one off impacts during the year. Cash flow from our operations improved to million. We had new companies and high activities, which demands higher net working capital. Net working capital still at a high level, but again high activity in general. And also in some of our companies, we had to compensate long delivery times on important components by stocking more. Capital discipline will be a future focus area and has always been an area within Skovan company. Our guidance for 2019, we expect revenue to grow 10% to DKK 20,000,000,000, EBITDA in the range of DKK1.815 million to DKK1.975 million. However, also we have to remark that IFRS 16 will have a positive effect of around DKK200 million on our EBITDA guidance. We expect CapEx to be around million in 2019 and majority will come from finalizing biomass factories in Australia and also expansion of the biomass factory in Brande in Denmark. We are also doing some new capacity extensions in biomass in Ecuador. So, most of our new capacity investments will come from Biomar. And with that, I will turn to Biomar twenty eighteen, where we saw revenue up with 4% to a turnover of DKK 10,300,000,000.0. It was a 5% increase in volume to 1,200,000 tons in our fully consolidated companies. We also saw a positive full year effect from the acquisition of Elementor in Ecuador, whereas we saw lower volume as expected in Norway due to tough competition and contract negotiations over the year. EBITDA in Biomark came out at a satisfactory level of it was same level as last year, $713,000,000. We saw very good performance in 11 out of 12 companies, strong performance from Elementa in Ecuador and also our EMEA division really performed very strong. Both of them compensates the declining volumes we saw in Norway. Let me just take a few highlights from 2018. As I have elaborated on already, the market conditions in Norway changed. We saw very tough competition and very low and unsatisfactory margin levels. Our Elementor acquisition is fully integrated, very successfully integrated and it's contributing to the development at a very high level. Our CapEx investments in the new Tasmanian factory in Denmark, Ecuador, etcetera are running according to budgets. We saw also a very good and strong development in our non consolidated companies. Our FEED joint ventures contributed with a result of DKK 30,000,000 under the result of tax after tax. We also saw very strong profitability in our Chilean farming company, Salmonis Ausdal, where we have a 23% holding. In fact, on 100% basis, turnover in Salmonis style was DKK1.6 billion and EBITDA was impressive DKK422 million. Looking at the guidance for 2019 for Biomar, we expect revenue to be a little bit over DKK10 billion. We expect EBIT in the range in a range from DKK $820,000,000 to $819,000,000. And again, impact from IFRS 16 will be around DKK €113,000,000 on the Biomar figures. We expect lower volume in Norway also in 2019. We have worked a lot on refocusing our strategy. Norway, we emphasized much more profitability, innovation and partnership and we have decided to decline contracts with too low margins. Our associated companies expect profit after tax in the level of around 80,000,000 We will continue to focus on profitable customers and contracts as well as continue to be innovative and develop functional feet. We will also run strict cost control and we will work on our new strategy in Norway. From Biomar, turning to FibroTex Personal Care. Revenue was up by 8% to DKK2.2 billion. We saw continued growth in Asia, but it was lower than expected. Our Print division, our Print business is in a very good development. EBITDA was as expected reduced from €365,000,000 to $315,000,000 And we experienced, as we also told the market, a negative effect from our raw materials and also currency of around €20,000,000 in 2018. Our start up of print in Malaysia also had a negative impact as expected of around €10,000,000 on our EBIT. We saw a very good performance in our Danish operation despite very tough markets. Few highlights from 2018. The construction of our print facility in U. S, a million investment is well on track. We expect to operate in Q4 Q1 twenty nineteen. And we continue to have very strong focus on developing new and higher value and innovative products. Our guidance for 2019 will be a revenue of about 2,300,000,000.0 growth. EBITDA is expected in a range of DKK320 million to DKK340 million. And here, we see very limited effect from the IFRS 16. Capacity investments in all markets where Fibrofix Personal Care is present creates a challenging and competitive landscape. We have been working a lot on streamlining and efficiency initiatives and that will be ongoing also in 2019. From there to Fibrotech's nonwovens. Revenue increased 11% to €1,600,000,000 despite continued tough markets. We saw a positive development in our U. S. Operations. And also here, we experienced effects from our recent acquisition our acquisition of Gucci in Brazil. EBITDA decreases from 179,000,000 to 160,000,000 and comes out at a disappointing level. Especially, Q4 was a disappointment for us, But we also had to see that raw material prices was challenging throughout the year and had a negative effect compared to 2017 with €20,000,000 and it was very difficult to pass these effects on to our customers. One off costs also in FibroTec's nonwoven in 2018 on restructuring our setup in India had a negative impact of 10,000,000. 2018, we were we started the industrial scale production of our nano products and advanced filtration media. We intend to become a leading player with in the global filtration industry and just started up. Our Brazilian company was fully and successfully integrated. We acquired at the beginning of 2019 a new factory in Greenville, U. S, investment of DKK140 million. This investment is not expected to be profitable before 2020, but it's a opportunity to increase capacity and state of the art in U. S. Where we are expanding. Outlook for 2018 revenue of around DKK 1,650,000,000.00, EBITDA in a range from DKK 165,000,000,000 to DKK 185,000,000,000. Also here limited effect from IFRS 16. We expect some start up costs from our new U. S. Factory and reshuffling of product portfolio. We have initiated a full blown strategic review of FibreTix And on those, we have ambitious plans for optimizing our operational model and also rationalizing our factory footprint and drive our cost base down. From there to GPV, revenue was up 6% to €1,200,000,000 We were satisfied with the growth, but we also saw a few large customers experience lower demand. Order intake is still on a good track. EBITDA in TPV was up to from DKK107 million to DKK115 million. And here, interesting to look into what I call the original or old part of DPV, which delivered very solid results because we had a negative impact on our EBITDA from starting production facility in Mexico of €25,000,000 and also acquisition costs of the CCS acquisition of around €10,000,000 in 2018. Few highlights also from 2018. Our Mexico operation showed progress but still lacks top line. Our factory facilities in Thailand extended to secure capacity and improve efficiency. And then the big thing for GPV in 2018, we acquired the Swiss based company CCS, an acquisition or investment of 800,000,000. And by that, we create a very strong and leading European EMS company. We have a lot of strong plans for integrating CCS into TPV. CCS has a very strong customer base in what we call the DAC Region. And we are now working on finding synergies, which we expect will come from sourcing global footprint, etcetera, etcetera. 2019 guidance, we have a lot of integration going on in 2019. We see a little softer demand in our semiconductor related business, especially at our DACH Region customers. But however, revenue expected to be in the area of DKK2.7 billion, DKK2.8 billion. We guide an EBITDA range from DKK 190,000,000 to DKK $210,000,000. Here, we also have an IFRS 16 effect of DKK 13,000,000. 2019 will be a year where we will integrate CCS into TPV. A lot of things will be going on. We expect one off restructuring integration costs of around €15,000,000 They are included in our guidance. So we expect 2019 really to be a year where we have to learn to know to get deeper into our new company and get these two companies integrated. Still a very positive long term view on this new company. We expect also that what we call the DAC Region as of the CCS acquisition will over time have similar margins as what we mentioned, d o GPV. From GPV to Hyperspecma, which had a very strong year with a revenue increase of around 11% to billion 2 was really a milestone for HydroSpecma to reach a DKK2 billion turnover. We saw continued strong momentum in main segments out of Denmark and Sweden and also had a strong order intake and a very good backlog also into 2019. EBITDA increased from €148,000,000 to €175,000,000 We expected we had expected increase in cost of future proof and grow the business, so we have also invested in future. We had a difficult year on component prices increasing. It was difficult fully to compensate, but again strong efficiency overall in the company gave good earnings. In 2018 highlights, we were finalizing the construction of our new large facility in Poland and we expect it to be full operating in Q1 twenty nineteen. We started up production of complete hydraulic systems for wind turbines in China. We started to build a new logistics center in Finland. And we developed a strong Scandinavian cooperation with Danfoss in 2018. Outlook for 2019 revenue, again, about billion euros EBITDA in a range from $210,000,000 to €230,000,000 IFRS 16 effect of around €30,000,000 We will, in 2019, continue to improve efficiency, but we will also have strong focus on reducing net working capital within the Height spectrum. Last company, BAW Automotive, we had revenue of almost DKK 1,000,000,000, same level as 2017. However, volume increased 8%. In BAW, we experienced soft demand in Q4. Destocking seems to be an industry trend. Speaking to others in the industry, we see that. But again, we still have a strong and a leading market position within Borg, which we confirmed over the year. EBIT increased to million, but we also have to say that in '17, EBITDA was negatively impacted by PPA regulations of €53,000,000 So looking at both earnings in 2018, it was slightly disappointing due Q4 to development. Also, we have to say that we saw a negative impact from regulation of what we call costs, and that was quite a huge impact on the earnings around difference in 2017 of DKK 25,000,000. We are seeing consolidation going on among large customers, and that increases our bonus payments to some of them. However, it also gives long term opportunities to increase sales to these customers. We are working on establishing a new production facility for Breitcalibus in Lublin in Poland. We have a strong transition for production in Poland. We have a lot of initiatives going on, on developing what we call new mechatronic products and also a project on digitalizing our entire value chain and customer relations. 2019 revenue expected of around DKK1 billion. We see an EBITDA in the range from DKK140 million to DKK150 million, IFRS 16 effect of around DKK11 million. And the guidance is also based on that we expect soft demand uncertainty to continue some months still. We see large customers destocking and we also see some uncertainty and nervousness in the market due to what's going on, on the Brexit side. We have a lot of interesting new products in our customer pipeline and we are also running a strong cost out and efficiency program overall in the company. So, let me wrap up and finalize into 2019. We still see challenging markets, but also interesting opportunities. We have our strong market positions. We have capacity ready, so we are going to use that. We expect to grow in 2019. We are working on what we call our 2019 general mindset, profits before growth. We are, of course, going for volume, but we see 2019 as a year where we also will work on reducing our CapEx, let our assets switch. We expect, I said from the start, revenue of around DKK 20,000,000,000. EBITDA is expected in the range of DKK 1,815,000,000.000 to 1,975,000,000.000. And here, we have an IFRS 16 effect of DKK $2.00 5,000,000. So, all companies will have strong focus on profitability. And still, also, we are future proofing our companies. We do not accept to supply customers where we are not able to have a reasonable margin. We will manage our costs carefully. And as I mentioned, we expect lower CapEx investments. So with that closing remark, I would open up for questions. Thank you. And the first question is from the line of Claus Elmer from Nordea. Please go ahead. Your line is open. Thank you. Just a few questions from my side. The first, yes, is for BioMar. The wording you have in the annual report is a extreme competitive situation, competitive market. I think that's a more harsh description of the market than we've seen in the past. Maybe we'll put some more color to to to this and also what you said during the presentation and we also have in the report that you will give priority to the long term earnings. How will that play out in 2019? That will be the first question. Yes. Thank you, Claus. Yes, I think we have to when we are talking Biomar, we have to answering extreme competition, so we have to refer to Norway. Of course, there's competition globally, but it's Norway in particular. We have strong positions in all markets, but Norway has over the last years changed and margins and prices have really declined. And we have decided that we need to refocus our way of doing business in Norway and not just running after volume at whatever margin and decided to decline contracts where we don't see margins that will be able to support our innovation costs and our future proofing. So, it's we on a transforming strategy in Norway. We have changed management. We have changed a lot of things there. And 2019 will be a year of change in Norway. But you don't see so should we then expect stable margins but a volume impact? Or how will these considerations play out this year? Yes. The considerations here will Norway, we will see and expect volume down, and we expect to stabilize margins. We expect Norway to be profitable in 2019, but we have decided that we are not going for large volumes with uninteresting margins, so volume will be down. You mean volume will go down? Stable margins volume Yes, will volume go will down. That's part of our guidance that volume is down, yes? Sure. Then my second quick goes for M and A activity. Also, comments you made that Fit is going to have a full blown strategic review, as I heard you, does that also imply a possible divestiture? Or how should we understand this comment? Not at all. It's a comment on that we have now been buying and building ahead that strategy and developed a global platform over the years. And also, we have experienced tough market conditions and so on. So we need to look into our factory footprint setup and our investment platform. So we intend to strengthen our business on what we call added value products and move up on the product assortment and change our product mix. But let's see what comes out of this strategy review, something going on over the next months. Okay. You mentioned strategic review in many of the divisions. And if you look at return on invested capital, for all of your division for the last four, five years, we have actually seen a decline. Is is how how you know, that obviously is not satisfying, but it's mostly due to the investments you have made? Or should we be more concerned about this declining trend? That will be the last question. I think if you look into the figures, Klaus, you will also see we invested a lot into capacity. And I think also that's a comment that I make that if we look into twenty nineteen, twenty, we think we have capacity to that we can utilize. So, it's huge investments. We also tie up, as I mentioned, and we have done that for some years, too much net working capital. We are really working hard on that. It's been a tough year on that in 2018 because of severe lack of components, long delivery times, etcetera. But investments and net working capital are main reasons for the decline in the return on invested capital. Okay. Thank you. Next question is from the line of Jonas Grubow from Danske Bank. Please go ahead. Your line is open. Yes, good morning. My first question would be on Biomar also and the big contract that you was going to renegotiate with Leroy at the 2018 as far as I remember. Could you tell us how the negotiation has gone here and if it's extended? Yes, thank you for the question Jonas. We have decided not to enter the Leon contract because the margins we were offered on prolonging the contract is unattractive and is not part of our new strategy in Norway. So, as I said at the beginning, we have refocused Norway. We have for some years built market share, built volume, etcetera. And we can see now that just running after volume is not profitable for us. We see another way in Norway, we think we can be even more profitable by looking at contracts in any way. So in our guidance and in the way we view Biomar in 2019, it's without volume to Leroy. But let's see what the year ends with. Sure. And is it am I right in remembering that this contract was a couple of 100,000 tonnes a year? Around 170,000 tons. We will have some volume this year. But we will overall, as I also said at Claus' question, we will be down on volume in Norway. But we will have some volume this year. The large and big volume we have declined we are declining. Okay. Okay. And it is in your guidance? It's in our guidance. And to be very open, we also think it's time for rethinking Norway because we have been struggling to get sufficient margins in Norway over some years. It's a very important market for us because that's where we do our innovation and a lot of things. But sometimes you also need to say, okay, can we go to the market in a different way? Sure. But is it too early to then talk about how your customers is reacting to this new approach? Yes. It's much too early. Yes. Yes. It is. Okay. Good. Good. Then on non loans and the strategic review here, it is planned for 2019. I can see will it end with some kind of an announcement? Or will it be the result will it be published in connection with the half year results? How should we see this? We are not announcing any results. We will I will elaborate on that as it goes along, maybe also on Q1, what have we seen. It takes time. So maybe at a half year announcement, we will elaborate on it and say, okay, now we see the strategy for Fibrotechnical and Wound, what will we are going to of course, we will when we are commenting on it here, it's also because we are going to elaborate on it later. Devin. Sure, sure, sure. And one thing that pops up within Finn continuously is the loss making unit in South Africa. I remember we talked about it in the past that you had to kind of get it to breakeven because the close down cost for this part of the business is attractive compared to the loss run rate you have? Yes. That's right. We are running a project now I forgot the name, but we are running a project in South Africa closing down. We have reduced costs, administration, etcetera. We are closing down one line. This line, Line two as we call it, will be transferred to our new site in U. S. To the Greenfield factory we just acquired, the space for that. And we are lagging capacity in U. S. And U. S. Has developed very, very strongly for us the last years. And that's part also of what we call our global strategic review, where do we put our capacity, etcetera. So South Africa, there is a strong plan going on. We expect really to see a lot of improvements this year. We already see it. And now when we have closed down this line and so on. So that's the plan and I will elaborate on that also at the coming announcements. Okay. And is it fair to assume that you are expecting breakeven in South Africa in 2019? EBITDA breakeven, yes, it's fair Okay. To expect, And then my last question is on GPV. And sorry, there's a lot of numbers here, but you made an EBITDA of 115,000,000 this year with a drag down of 25,000,000 from Mexico and 10,000,000 from transaction costs in CSS. Then if we're we're adding the 125 from c s CCS in in in 2019 and, of course, takes out the the restructuring cost you have announced and the write down of the inventories at the IFRS impact, then I get to somewhere around €250,000,000 in EBITDA, but you're guiding significantly less than that. How come? Yes. And the numbering is right if you look into it. But we still see Mexico running with a loss in 2019, not at the size we saw in 2018. We are still on the way of building Mexico up. We expect some of the CCS customers to go to Mexico also. But we are in the guidance, there's a loss of Mexico. And then, of course, we also, to be open on that, build in some kind of uncertainty in such a big integration job that we are going to. We have to look into CCS. We are also prudent on factory footprint, etcetera, etcetera. So but in a year like this, you cannot just add all numbers on top of each other. But of course, we have taken some caution into these figures, definitely. Okay. Very clear. Thank you very much for your answers. Yes. Thank you, Jonas. Next question is from the line of Magnus Kjerga from ABG. Please go ahead. Your line is open. Good morning, Jens. Thank you for taking my question, and I hope your journey to Copenhagen was well. I have three topics that I'd to address. Let's take the first one first with in regards to operational leverage. Let's take CCS first, which just had the previous caller talking into, where you mentioned in your opening statements that you want to source footprints between CCS and GPV. And in addition, you mentioned in the opening statement that you are working on this operational model leverage to build up cash flow in 2019. Could you take us through sort of the operational leverage that you want to find in GPV or in TTS to bring it up to level of GPV? Yes. Thank you very much, Lars. We are not commenting 100% on the factory footprint yet because a lot of things is going on. And you also know you have to scrutinize every unit carefully and there's also a lot of things when do you announce to employees, etcetera, etcetera, what is going on. So it's part of our review. Will carefully review it and we have what we call a best cost country philosophy in the new setup. So we have to evaluate carefully. But things there will be things restructured and let's see when we get out of 2019. If we are looking at driving cash flow both in the GPV and in general, we have a lot of initiatives going on sourcing where we expect to if we take GPV to start that as one of the first things. That's what I call the easiest low hanging fruit is to look into suppliers, stocks, prices, etcetera. So, that's one thing. And then in general, in strong company, in all companies, we are pushing our net working capital hard. We are looking into how can we operate in a different way, etcetera. But it takes time. And sometimes, are hit by the market with long delivery times on components, etcetera. But there's still room for improvement. Just a follow-up question there. You mentioned in the opening statement that you want to lower CapEx or at least have conservative CapEx for 2019 and let your assets sweat. And here, you're also pushing your net working capital here. Could you just say are you making many reviews in 2019 in GPV, in fintech, in nonwovens here? So making the reviews and then perhaps spending the money next year in 2020? I don't it's difficult, of course, to be too precise in 2020, but I don't see any huge investments in the coming two years. But of course, things can happen. But we have a capacity platform that can grow. And we've seen that before. Sometimes you need to ramp up capacity and then you say, okay, now we are here. Let's take a time where we really let the assets sweat and sometimes also scrutinize your customer portfolio and say, do we supply segments or customers with too low margins? And it's a good exercise sometimes to store up and do. That's very clear. Just a last question here. On Page 17 of your new report, you talk about this macroeconomic sensitivity for nonwovens GPV and hydropasma, whereas at football and Biomar, these are more affected by the Brexit risks. You talk us through like when you're guiding how are you guiding on these sort of macro uncertainties that you and I have basically no idea about? Yes. I think, of course, the basic macro, we don't have any idea about. But we can look into some segments with which we know will be affected from the global macro economy, that is the automotive industry. Ball is supplying into although it's spare parts, etcetera, but supplying into the automotive industry, Fin of Fibrotection and Bolt, a big supplier into automotives, etcetera, HyderSpegma supplying Volvo construction equipment, etcetera. So it's these kinds of industries we know that if things happen and we see soft demand, small recession, they'll be the first to be hit. So that's in the way we plan. But overall, are you quite conservative going into 2019 with all these troubles that we're basically reading about? No, I think we are very realistic. Thank you for my questions. Thank you very much. Next question is from Lars Heindel from SEB. Please go ahead. Your line is open. Yes. Good morning, gentlemen. Also a few questions from my part. Firstly, Volvo, I don't know if you can give us a little bit more insight into how much you actually factored in in terms of impact from potential Brexit in the guidance there? That's my first question. Morning, Lars. Thank you. We have not factored nothing. Of course, we have been a little cautious on to trade that way on our guidance. But it's so difficult to factor anything precisely in on Brexit. But we have to be realistic that we have a production setup in Birmingham close to Birmingham where we import parts and we sell a lot in U. K, of course, also. And U. K. Is the biggest single market in bulk. So, of course, there is some uncertainties, but it's very difficult to be too precise on. But we have factored some cautiousness into the guidance, yes. Okay. And then a little bit about Biomar. I know I'm not going ask you about the Libre contract again. But in general, now we've been talking about this for quite a while, the changes in the recipes and that you want to deliver sort of more value added services and more functional foods. Can give you us a status on how that is progressing and how that has been received among your customers? Yes. It's progressing quite well. It has been received very good. But of course, also there are two things to remember. One thing is you always need to have a basic feed and to supply to your customers. But the larger volumes, the more you are squeezed on margins, etcetera. So you need to look into a full package service, added value products, basic feeds, etcetera. So that's what we are doing. And also, again, don't participate in the big competition on these volumes where you squeeze, squeeze, squeeze. So I think we will see a changed way of going to the market in Norway. And also, our functional fleet is today a significant percentage. We do not disclose it, to be honest, on our sales in Norway and also in the entire Zalman division. Okay. And you I know you say you're not going to disclose that, but can you give us a range maybe, so we have an idea how much is what you call sort of pace feed and how much Functional feed is, of course, a lot of things. It's high energy, it's energy boosting, it's diseases for cataract and things like that, but it's plus 30% of our turnover. And there's a lot of things going on, on nonfunctional feed also, hatchery feed, freshwater feed, etcetera. So it's a significant part of our volume and value. Yes. Okay. All right. Thank you. And then last one regarding M and A. Now the numbers, of course, this year is affected. So at least the end balance is affected by the acquisition of CCS in Switzerland. And now you have the IFRS, which at least is going to change the headline numbers. I don't know if it's going to change your view and your M and A approach going forward. But I mean, do you have room for more? And do still have appetite for more? And now I'm thinking particularly regarding growing further into Biomar. We are always on the look for something interesting in Biomar. But it's difficult to find attractive acquisition targets. It's part of the strategy in Biomark is to grow. You also we came big into shrimp now with the acquisition in Ecuador. So, of course, we are looking on how we can expand that and to create a very strong shrimp global shrimp division. We are looking. But it's difficult not easy to find interesting targets. On M and A, in general, of course, we are always open for opportunities. But as I also said, I think twenty nineteen-twenty twenty will be a period where we will focus on running the platform we have, drive costs and efficiency, but also being innovative and using our capacity as good as possible. Okay. Thank you very much. Thank you. And next question is a follow-up from the line of Jonas Guldborg from Danske Bank. Please go ahead. Your line is open. Yes, thank you. Just a follow-up. You said in the in your start that you will focus on net working capital in 2019. And we've also seen a growth in working capital. And as a percentage of sales, working capital is now 19%. What how should we think about this? How big is the opportunity here in driving cash out of working capital in the coming years? Jonas, I would like to give you a figure. And I know you would hunt me on that figure for a long time, but we are very ambitious on it. We have not we don't have a precise figure to be honest, but we are ambitious and we think we can do a lot there. And but it's a tough work and you need to change mindset all over because you have had a mindset now on growing and securing components, etcetera, etcetera. So, there's a lot of things going on and we are very ambitious So if you gave me a number, it would be a big number? Not that big. There's room for improvement, definitely. Yes. Okay. Thank you. And there are currently no further questions registered. So I will hand the call back to the speakers for any closing comments. Please go ahead. Thank you very much. And just a very short comment. Thank you to everyone for listening and for questions, and good weekend to everyone. Thank you. This now concludes the conference call. Thank you all for attending. You may now disconnect your lines.