Ladies and gentlemen, welcome to BOC Aviation Limited full year 2022 results conference call. I will now hand the session to Mr. Timothy Ross to begin today presentation. Mr. Ross, please begin.
Thank you, operator. Welcome everybody to BOC Aviation's earnings call to discuss our final results for the year end of 31st of December 2022. With me today are our Managing Director and Chief Executive Officer, Robert Martin, our Deputy Managing Director and Chief Financial Officer, Steven Townend, and our Deputy Managing Director and Chief Operating Officer, David Walton. Please note that some of the information you'll hear during our discussion today may consist of forward-looking statements, which are subject to risks and uncertainties that may cause actual results to differ materially from statements made today. You should not place undue reliance on any forward-looking statements. You should review our results announcement for full details. Please also note that all currency references in today's call are in US dollars.
A copy of our earnings announcement is available both via the Hong Kong Stock Exchange and in the investor section of our website at www.bocaviation.com. A conference call presentation is also available in the investor section of our website. This call is being recorded and will be available for replay from our website within the next 24 hours, as is a transcript of today's discussion. I'll now turn over the call to Robert Martin for his comments.
Thanks, Tim. Good evening to everyone on the line. Thank you for joining us for our 2022 full year results earnings call, where a robust set of second half results allowed us to retain our record of unbroken profitability since our inception 29 years ago. We've reported a net profit after tax of $20 million for full year 2022, equivalent to EPS of $0.03. Adjusted for the net effect of the write-down of the aircraft in Russia, we reported a core net profit after tax of $527 million for the full year, which included second half earnings 8% ahead of second half 2021. Net assets per share at year-end were $7.50.
Our board has recommended a final dividend of $0.1770 per share, payable to shareholders of record on 7th of June, an increase of 2% on the final dividend paid for 2021. This takes the full year dividend for 2022 to $0.2659 per share and represents a payout ratio for the year of 35% of core NPAT. Our total revenues and other income continued to rise, increasing 6% to more than $2.3 billion for the year. We ended 2022 with total assets at $22 billion. Operating cash flow, net of interest expense, rose 14% to $1.5 billion for the full year, driven by a collection rate of over 100%, in which we recovered payments from previous years.
We finished the year with cash and undrawn committed liquidity of $5.3 billion. Turning to the revenue environment, there are few restraints now to passenger travel attributable to COVID. This has been reflected in travel data in the majority of regions, but most recently in Asia, where passenger traffic amongst the Association of Asia Pacific Airlines rose by over 500% last year. As at mid-February this year, passenger demand in all major geographies have recovered close to 2019 levels, with carriers in all regions demonstrating confidence in the strength of forward bookings, especially in international markets. Now that India has become the world's largest country by population and a top 5 economy by GDP, we've also seen significant recent activity in the form of new orders that will grow the airline footprint in India.
This improvement in travel activity has also been reflected in airline earnings. In the United States, net profit after tax at United, Delta, and American Airlines in fourth quarter 2022 all exceeded the similar period in 2019. In Europe, Ryanair's last quarter for 2022 featured the best earnings in its history. Here in Singapore Airlines' third quarter profit to December 22 was the best in its 50 years of operation, up sevenfold on that reported for the third quarter of the previous year. Rebounding travelers caused significant tailwinds for the industry in 2022, there were macroeconomic factors that provided some headwinds for both ourselves and our airline customers.
These included a strong US dollar, the sharpest increase in US dollar interest rates in the last 40 years, with the US Government Federal Funds rate rising to 4.5% currently from 0.25% a year ago, an 18-fold increase. Inflation in the form of labor costs and jet fuel prices increased, amplified for many airlines by the stronger US dollar, particularly for airlines that have predominantly local currency revenues and may still have deferrals from the COVID period to repay. The improvement in the airline sector's profitability has been translated into demand for new aircraft. A more optimistic outlook for airline industry profitability, combined with rising utilization rates, are supporting expansion. Load factors for International Air Transport Association members rose to 79% in 2022, from 67% in 2021, and are approaching 2019's levels of a record of 83%.
Airbus and Boeing delivered a combined 955 single-aisle aircraft, which exceeded 2019 levels. They announced net new orders for 1,078 and 774 aircraft respectively, their best combined tally in any year since 2017's record of more than 2,000 net new orders. This should provide personal leaseback financing opportunities going forwards. China optimized its epidemic control policies from 8th of January of this year. This has already provided momentum to the world's passenger demand growth in 2023. For the Chinese domestic market, passenger numbers during the Spring Festival that ended in mid-February were up 39% on last year and were at 76% of pre-pandemic levels.
In international and regional markets, airlines serving China have increased their scheduled capacity by nine times for the second quarter of 2023 compared with the same period last year, and this recovery should continue to build into the second half. During the year, we welcomed two new directors, Mr. Dong Zonglin and Madam Chen Jing, who joined the board, while Mr. Liu Chenggang and Madam Zhu Lin stepped down. Our Chairman, Mr. Chen Huaiyu, stepped down from the board in February 2023, and our Vice Chairman, Madam Zhang Xiaolu, will act as Chairman until a replacement has been appointed. We thank Mr. Chen, Mr. Liu, and Madam Zhu for their efforts and contribution on behalf of all of our company's stakeholders. We have continued building out our management team.
We welcome Tom Chandler, who joins us as Deputy Chief Operating Officer, and Wu Jianguang, who has been appointed Deputy Chief Financial Officer. I'll now hand the call over to David to speak to our operations and business development, and then Steven will take over for a more detailed review of our P&L and balance sheet.
Thank you, Robert. Here's the operational report for 2022. We delivered 34 aircraft to airline customers, of which five were purchased by the customer at delivery, giving us 29 net new aircraft deliveries for the year. Our total fleet stood at 633 aircraft, comprising 392 owned and 35 managed aircraft, with an order book of 206 aircraft. Our new deliveries were primarily narrow-body aircraft, although we were delighted to add nine Boeing 787 aircraft to our balance sheet in the second half. All of our new deliveries were fuel-efficient, latest technology aircraft, including those 787s, as well as four Airbus A320neo family and 13 Boeing 737 MAX family aircraft, all of which were added to our balance sheet. Manufacturer delivery delays continued to impact our CapEx.
Five aircraft that were scheduled for delivery were delayed into 2023. A number of our deliveries came later in the year than expected, delaying our revenue. We believe that supply chain and labor issues will continue to impact our OEM partners this year. We've now adjusted our planning for these expected delays. We closed out a narrow-body RFP process that we started back in 2021 by placing two separate orders, one with Airbus for 80 A320neo family aircraft, and a second with Boeing for 40 737 MAX family aircraft, securing the company's future CapEx and revenue pipelines. Our new aircraft deliveries highlighted the global nature of our customer base as we delivered aircraft to customers that included American Airlines, Turkish Airlines, and Scoot, Singapore Airlines' low-cost subsidiary. Looking ahead, all of our 2023 order book deliveries are placed with airline customers.
During the year, we transitioned 21 used aircraft to airline customers. Our used aircraft deliveries included the transition of one owned and two managed aircraft that we repossessed from former customers in Russia during the first half of the year. We're really proud of the team's effort to take possession of the aircraft, find new customers, complete the transition work, and get the aircraft back earning revenue. Investor demand for our aircraft with leases attached remained solid. We sold 17 aircraft from the owned fleet during the year. The weighted average age of our owned portfolio was 4.4 years at the end of December. Once again, one of the youngest in the aircraft operating leasing industry. We also continue to have one of the industry's longest weighted average remaining lease term for our owned portfolio at 8.1 years.
We ended the year ahead of our stock exchange ESG KPIs. If we compare 2022 with 2019, we reduced our CO₂ emissions per average headcount by 40%. We cut our paper usage per average headcount by more than 65%, and we reduced electricity consumed per headcount by more than 50%. Our operations in 2022 were 100% carbon neutral for the third year in a row as we offset our direct emissions through projects in China and Kenya. We continue to improve our fleet by taking delivery of new technology aircraft onto our balance sheet. Our own fleet is now 71% latest technology by net book value of aircraft, up from 66% in 2021, and 100% of our order book is comprised of latest technology aircraft.
Our board and employee base remain one of the sector's most gender diverse, with the board featuring three female board directors out of a total of 11 directors and including the Deputy Chairman. Our board adopted gender diversity targets between now and end of 2025 for us to maintain at least teo female directors and at least 45% of employees being female. At year-end, 50% of our employees were female, and during the year, the majority of new appointments to heads of department were also female. We increased our efforts to contribute positively to our local communities with teams from each of our five offices participating in 15 events. We continued to support Airlink humanitarian aid to Tonga and Afghanistan and more recently, Turkey, following the earthquake. During the year, we cleaned up coastal and riverside waterways in Singapore, Dublin, and London.
We packed food for the needy in Singapore, collected litter in Tianjin, and tidied parks in New York. More than half of our employees participated in the Orbis Virtual Race4Sight, recording a combined equivalent of 51,000 kilometers of cycling. Meanwhile, we increased our commitment to Orbis, which raises money to combat avoidable blindness by becoming a corporate sponsor. With that, I'll turn it over to Steve.
Thank you, David. As Robert outlined, we reported a core NPAT of $527 million for the full year 2022, equivalent to earnings of $0.76 per share, and we recorded a second half net profit after tax of $333 million, up 8% on $307 million in second half 2021. If we turn first to the revenue side of the business, total revenue rose by almost 6% to $2.3 billion and reflected a broader range of sources than in previous years. Lease rental income dropped 4% to $1.8 billion, impacted by the termination of leases of 18 aircraft with Russian airlines and the pace at which we could return aircraft undergoing transition maintenance to revenue service.
Our gains on aircraft sales were predominantly in the second half, with total gains on sale up 46% to $64 million. This reflects ongoing secondary market demand for young aircraft with well-structured leases and sound airline counterparties. We registered a significant increase to $223 million in income arising from lease terminations, up from $74 million in 2021. All of it recorded during first half 2022. Other income rose to $99 million from $23 million, primarily due to income arising from the release of unutilized maintenance reserves and security deposits collected in prior years. Interest and fee income, which includes finance lease contributions, amounts to $137 million, compared with $177 million the previous year. The decline was primarily related to lower contributions from predelivery payment financing.
Turning to the cost side, our two largest expenses accounted for 90% of the total. Depreciation, which remains our largest expense at $796 million, rose only 3% relative to 2021, reflecting the growth of our fleet to 386 aircraft from 374 aircraft in 2021, and the removal of the depreciation amounts in the second half for the aircraft that remain in Russia. Finance expenses, our second largest item, rose by 3.9% to $484 million. This was mainly due to a higher cost of debt of 3.1% per annum in 2022, compared with 2.9% per annum in 2021.
The decline in net lease yield across the year to 7% from 7.6% in 2021 was partially attributable to the higher cost of funds and the number of aircraft not generating revenue while transitioning between lessees. The rise in interest rates occurred primarily in the second half of the year, but was matched by an equivalent increase in our lease rate factor in the second half as we successfully pushed through higher interest costs in our leases. For the full year, we wrote down the value of aircraft in Russia by $791 million. In addition, we recorded an asset impairment of $65 million related to the carrying value of 14 aircraft, all of which were wide-body aircraft. The growth in international travel that Robert mentioned earlier should see the values of wide-bodies now begin to improve.
Impairment losses on financial assets were negligible in 2022, amounting to just $1 million as collections improved to 101% from 97% last year. For the balance sheet, we ended the period with total assets of $22.1 billion, funded by debt of $15.2 billion. Total equity decreased to $5.2 billion compared with $5.3 billion. This was mainly attributable to payment of dividends amounting to $182 million, partially offset by profit for the year and unrealized gains recognized in our hedging reserve due to rising US dollar interest rates. Our debt level fell $1.6 billion compared to end 2021, driven by our strong operating cash flow and gross debt to equity improved from 3.2x- 2.9x .
Rating agencies S&P and Fitch remained supportive in 2022, with both maintaining our A- credit rating. We raised $900 million in new financing, comprising $300 million from the debt capital markets with a further $600 million drawn from banks. Combined with robust internally generated cash flows, we were able to fund our CapEx and repay $3.3 billion in maturing bonds and loans. This included the prepayment of $750 million of loan facilities as part of managing the transition from LIBOR to SOFR. We have $2.4 billion in debt obligations scheduled for repayment in 2023, which together with our anticipated CapEx, can be funded from our cash flow and our committed liquidity of $5.3 billion.
Finally, excluding the effect of the write-down of aircraft in Russia, our tax rate was little changed at 11.8% in 2022 compared with 2021's 12.1%. Now I'll hand back to Robert for his final comments.
Thanks, Steve. 2022 saw a global airline industry recovering from the challenges of COVID, but then hit by the extraordinary impact of events in Ukraine in February and actions related thereto. This created a significant unexpected workload for our employees for most of last year. With the efforts of our colleagues and the Board and the support of our business partners and investors, we retained our unbroken record of profitability. We would like to express our sincere thanks to everyone for their hard work and support. We start our 30th year since inception with strong momentum rebuilt during the second half of 2022. The normalization of travel and the full year effect of relaxed border controls globally will continue to propel growth in demand for travel and our aircraft in 2023.
We maintain strong liquidity, and with the orders that we made last year, our company is well-positioned to generate long-term, sustainable asset revenue and earnings growth. By the time that we pay our dividend in June, we will have been listed for seven years and will have paid a total of $1.2 billion in dividends to our shareholders since our IPO in 2016. This concludes our review of the industry, our company's financials, and our outlook, and I'll pass the call back to Tim.
Thanks, Robert. This wraps up management's formal commentary. We now have time for Q&A and out of fairness to others, request that each participant restricts themselves to one question unless time permits for additional queries. I'll hand the call back now to the operator for the Q&A session.
Thank you. We will now begin the question and answer section. In the interest of time, participants are limited to one question each. If you have any follow-up questions, please join the queue again. Participant with a question to pose, please press star one one on your telephone keypad and you will place in the queue. To cancel the queue, please press star one one. Once again, star one one on your telephone keypad now. Our first question is from Michelle Ma from Citi. Please go ahead.
Hi. Thank you for giving me this opportunity. This is Michelle from Citi. Congratulations on the profit for the full year. My question is, if we compare the order book guidance and the total committed CapEx guidance for 2023, compare with the information disclosed during the interim results. As management just mentioned, because of the manufacturing issue, we expect less delivery. I noticed this decrease is quite notable. From previous 47 number of aircraft to currently just 24 aircraft. You also mentioned that you would like to finance the $2.4 billion debt this year through your own cash and the capital.
My question is, our strategy this year is to deleverage because of the delivery issue. At the beginning of the presentation, also mentioned maybe there is opportunity with lease and the lease and sales back business. Is this a direction of the business of the year? Can you talk more about the strategy this year? Thank you.
Thanks Michelle. It's Robert speaking. I'll deal with the big picture, then David and Steven will add some comments after that. First of all, what are we as a company going to focus on this year? We just finished a board meeting, so it's still fresh in my mind. The two big things from my perspective are, first of all, we want to get back to balance sheet growth. You're correct to mention the number of deliveries this year that we have in the present order book is lower than we would have liked due to a number of issues. One of which was the manufacturer delays. The second thing I want to get back to is focused on the net lease yield and pushing that back upwards again.
We had a number of aircraft where we had to transition them last year between customers, and because of problems with both labor and with spare parts, the maintenance facilities that we basically were using, those aircraft stayed on the ground much longer than we'd have hoped. We want to make sure that we have high utilization of our fleet this year, which will help drive net lease yield as well. Obviously, as Steve mentioned in his presentation, to also pass through any increases in interest rates through our leases as we put them in place during the year.
I would just add to what Robert has said, by adding a bit of color on the order book activity. When we placed our order with Boeing in December, we took that opportunity to re-profile some of our 2023 and 2024 scheduled deliveries to put them a little bit further out into the future in time periods when Boeing felt more confident in its ability to deliver the aircraft in the scheduled delivery months. I'm sure you're aware that both Boeing and Airbus, as well as the engine manufacturers, are having trouble with their supply chains, they are working with customers to try to re-profile delivery streams. I mentioned Boeing, but I would also add we did a little bit of that with Airbus as well.
We moved some delivery positions from 2024 into 2025. We're just trying to work with our OEM partners to make sure that the delivery profile and the planning can be better aligned.
Michelle, it's Robert again. Just to add one thing. Because of all these delays, not only to our deliveries, but of our airline customers and other lessors, we have seen this tighten significantly the situation in the narrow body market in particular, where we've seen rates being pushed up by up to 25% over last year when we're placing used A320ceo family and used 737 Next Generation family aircraft.
Okay, thank you. Oh, sorry. I'll go back to the queue. Yeah.
Sorry, Steve, to just answer your question on leverage. Sorry, we forgot that bit. Steve?
Yeah, sure. Sorry, Michelle. Yes, you're correct that we did delever last year, because we had the strong cash flow, and we didn't have the CapEx coming through. I think our target leverage still remains somewhere in that sort of 3.5 x rather than the 3 x, and we'll look to move back up to that as the growth does come through.
Okay. How about the sale and lease back?
What that gives us right now is plenty of scope to grow where we see opportunities. I think there is a reflection of the strong balance sheet that we've managed to come through the last three years with.
Okay, thank you.
Thank you, Michelle. Our next question from Shashank from Somerset Capital Management, please go ahead.
Hi. Thanks for the call. The question is on the cost of funding. If you can just tell us what your current cost of funding is, and in terms of the net lease yield, do you think that it has bottomed now? Thank you.
Hi, Shashank, it's Steven. I think, you know, what we are starting to see is that the net lease yield has come down. We believe that it has bottomed, as you and I have spoken about previously. I think it's a couple of things that affect us. As Robert's already talked about, getting the aircraft back up in revenue service that were on the ground is an important part of that. Also being able to pass through the increased funding costs in terms of the new leases that we write. By far, the majority of the committed leases that we already have in place for future deliveries do adjust for interest rates through to the point of delivery. So we are covering that off.
There's always going to be a little bit of a lag as we get to see interest rates moving as quickly as they did do in the second half of last year. I think that pace of change will slow now as we go through this year, and it's more a question of just how long do they stay at the higher rates rather than them going up in the same sort of fashion as we saw last year.
Shashank, it's Robert. I'd just like to add just on the wider perspective, it feels like we're back in 2006 again. Interest rates have just sort of touched where they were in 2006. Just as a reminder, in an industry like ours, we have two core sources of revenue. One is obviously the margin we're making from our leases, which Steven has addressed. The other, though, is the gains on sales that you'll make from eventually selling the aircraft in our portfolio. Bear in mind, today, compared with 2006, our portfolio is seven times the size. As inflation picks up, then that will also have the impact of increasing your gains on sales over time.
We've seen a bit of that happening fourth quarter last year, I think Cirium put it best earlier this week when they spoke at the ISTAT conference in San Diego and confirmed that in their view now, current market values are just under 10% above base values, which means that sort of narrow body value is recovering quickly and that the wide body values have passed the bottom and those are picking up as well. Always bear in mind, we make money in two core ways. Whilst the margin may see some pressure at the moment, we should see the positive impacts of inflation coming through.
Thank you.
Thank you, Shashank. Our next question from Deepak from HSBC. Please go ahead.
Thank you for the presentation. My question is about Slide 23. I see there that the fixed rate leases have, as proportion of the total portfolio, have increased slightly, but the fixed rate loans have dipped. Is that because of a reflection of the rising interest rate environment that you chose to have a floating exposure, or is there something else which we should reckon on that? That's it.
Steve's the best guy to handle this one. Over to you, Steve.
Yeah, of course. Okay. Hi, Deepak.
Yeah.
I think there's a few things at play here. Firstly, as you know, we don't aim to completely match fund. That has never been what we're trying to do here because we aren't managing a static portfolio, and because we've constantly got aircraft coming in and out. In terms of the specific dip down that you saw there, actually the bulk of that was due to some of the things that we're doing around the transition from LIBOR to SOFR. We were prepaying some loans, and some of the things that we had to do to prepare for that.
What you will, or what you will see is that number start to tick back up again this year as we've already put in place some new arrangements to address that. I think the other thing that we will probably also start to see, and this has been again related to the LIBOR-SOFR transition, is that on the asset side, we wrote very few, if none, floating rate leases during the last two or three years because we didn't know what benchmark was going to replace LIBOR. I think we will also start to be writing some of those again as that transition has now worked its way through and we know what benchmark will replace it. You'll see this balance up from both the liability side and the asset side of the balance sheet.
Perfect. That explains very clearly. Thank you so much.
Thank you, Deepak. We have a follow-up question from Michelle Ma from Citibank. Please go ahead.
Oh, okay. Okay, thank you. My, my second question is about the utilization rate. I think during interim analyst briefing, we expect it will return to a higher level. Because of the labor issue and the capacity issue are still around 96% level. Just wondering, like, is it because of like capacity or we continue to see some leases, some aircraft off lease and for all the aircraft off lease, have we placed it to new customers? Can we have more color on this utilization rate? Thank you.
Sure. Michelle, this is Dave. You're right. We're a little slower getting that utilization rate up than we expected. That was mainly driven by the fact that our transition of aircraft that were off lease in 2022 was delayed because of some of the same supply chain issues that you're seeing in the OEM space, you know, with delays with parts, labor issues at maintenance organizations. We especially had difficulty with engine maintenance, just taking longer than we anticipated. We are getting those aircraft back on lease very rapidly. You know, we don't expect to see anything like 2022 again.
Maybe I can just also take this opportunity just to mention that the demand environment that Robert and Steve have been talking about, we're also seeing on our lease roll-offs. If you look ahead to 2023, we didn't get into detail in the commentary. We've placed on lease all but one of our expected 2023 lease roll-offs, and that one airplane is coming in November. You can see the demand environment is really strong. You're seeing that in not only us getting our AOGs back on revenue, but in the lease roll-offs in 2023.
Okay. Thank you.
Thank you, Michelle. Our next question is Karen Wu from CreditSights. Please go ahead.
Oh, yeah, sorry. Just a follow-up question on that fixed versus floating rate debt question, because I didn't really understand the point on why the transition from LIBOR to SOFR will affect what we lead to increase in your floating rate debt in 2022. Do you mind expanding more on that?
Hi, Karen. It's Steven again. I think it's a couple of different things. There's a challenge around, if for example, you had loans in place and hedges on the back of them, and you have, the banks unable to take certain types of SOFR, which you then can't hedge on the other side. What we had to do in one or two cases was actually to prepay the loan facilities which enabled us to separately terminate some of those hedges to then put new facilities in place that could replace that we could easily hedge.
It was a number of technical issues around that transition, which of course has some challenges, you know, because not all banks, for example, can easily do either one or other of Term SOFR or SOFR in arrears, whereas the derivative market is really only focused on the SOFR in arrears side. All this should, all this will have played through by the time we get to the middle of 2023, and so it should all just normalize again.
Okay, got it. Thank you.
Thank you, Karen. We have follow-up question from Shashank from Somerset Capital Management. Please go ahead.
Hi there. Thanks again. On the aircraft age, I noticed that it has increased from 3.9 years to now 4.4 years. Is that a function of you're not being able to get new aircraft? If the delivery schedule improves, could we see some of the older aircraft being sold in the near future? Related to that is in terms of the wide body, we know narrow body valuations have improved, but what's the market situation for the wide body valuations? Thank you.
Okay, it's Robert. I'll try and handle both those. Firstly, just go back to basics. If you have a fleet where you don't add any aircraft at the start of the year and you don't sell any, you'd expect the average age to go up by one year. We went up to 4.4 years, and you're correct. It's because the number of aircraft that we're taking delivery of. Bear in mind, we calculate it based on average net book value. Because of the some of the pre-delivery payment financing we've done in dollar terms, those aircraft that were new didn't add a lot of net book value to the, to the calculation. Basically, yes, it's a matter of mathematics.
You know, on the older end of the portfolio, we sold some aircraft out, but obviously you don't want to sell a lot out at the bottom of the cycle. As good stock investors like everyone on the call is, you will know that you don't sell at the bottom. We limited the amount that we sold last year. It's a combination of those two things. You asked about valuations on wide body aircraft. Cirium earlier this week confirmed wide body values are moving back upwards. They think they're now up to about 91% of base value. Still there's obviously room to move, but that's because international traffic hasn't picked up. One important statistic to bear in mind is the world has grown since 2019.
GDP during that period has grown by much more than 10%, Yet the number of aircraft flying is not back to the level that it was back in 2019. We can clearly see there's pent-up demand that will need to be dealt with, particularly on the international side as we move through the balance of 2023 as China opens and into 2024.
Thank you, Robert. Ladies and gentlemen, this is all we've got time for today. Operator, I'll hand the call back to you. Before I do, I'd like to thank everyone for joining. Please, if you have a question that wasn't answered on the call, or as it occurs to you, please contact me at Timothy.Ross@bocaviation.com, or on my mobile phone, 98379873. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Thank you. Have a good evening.