Earnings Call: Q4 2018

Jan 29, 2019

Good morning, and welcome to the Celanese 4th Quarter 2018 Earnings Conference Call. All participants will be in Please note this event is being recorded. I would now like to turn the conference over to Chuck Irish, Vice President, Treasurer and Investor Relations. Please go ahead. Thanks, Gary. Welcome to the Celanese Corporation 4th quarter 2018 earnings conference call. This is Chuck Irish. With me today are Mark Rohr, Chairman and Chief Executive Officer Scott Richardson, Chief Financial Officer and Todd Elliott, Senior Vice President, acetyl Chain. Today's presentation includes forward looking statements about expectations for future results. Actual results might differ materially from these statements. Please see our SEC reports for risk factors relating to any forward looking statements. Our discussion today will also include references to non GAAP financial measures. You can find information related to these non GAAP measures and reconciliations to their comparable GAAP measures on our website in the Investor Relations section. Form 8 K reports containing all of these materials are available on the SEC's EDGAR system. Sony's Corporation distributed fourth quarter 2018 earnings release via business wire and posted slides and prepared remarks about the quarter in the Investor Relations section of our website, yesterday after market close. Since we published our comments yesterday, we'll go directly to your questions. We will now begin session. Please limit your questions to one with a single follow-up. Our first question comes from Vincent Andrews with Morgan Stanley. Please go ahead. Thank you and good morning everyone. I'm wondering if you could help us with the A still chain and just obviously a lot of volatility in the fourth quarter after a phenomenal year. What do you think the range of outcomes is this year in 2019? And what are the were the dynamics that would book in that there was a lot of conversation in your prepared remarks about sort of the interplay of methanol and oil and in ethylene, but maybe you could just unpack unpack that for all of us and help us with a framework for modeling purposes. Greg, great, Vincent. Well, let me, that's a huge question. So this is Mark. And I'll kick that off as Todd will make some comments here. Let me start kind of with the beginning. I think a lot of this, conundrum, the world finds itself in a day regarding So the economic environment really relates to the collapse in oil prices that occurred. Really last year and that collapse and oil prices kind of rippled through so many raw materials, petrochemical industry in a broad sense. And of course, That had huge impacts and ripple effects back on, ethylene in China and MTO in China and ultimately methanol. And so you had all these dynamic kind of rolled into that into that. So we saw weakness and we saw a slowdown really as we ended the 4th quarter, the back a couple of months of fourth quarter, in the chain business, we saw some settling with that. And, in that process of settling, we think that that's I won't say run its course, but it seems to be kind of normalizing now, at the level. And we think we're going to see that start to recover as we get into the end of this quarter and next quarter, going forward. The broad dynamics are of that is it was, entitlement. I'll ask you to get some more color this in a second. But it really is around China and the impact in China, that we saw, the pricing we saw in China, And in many ways, it was a little bit contained in that region of the world. So we see and we feel that we have And I'll talk about this more when we talk about earnings and earnings forecast, we think this business is going to step down a little bit this year But we feel very good about the fundamentals of this business and the ongoing earning powers of this business in this range of around $1,000,000,000. So Todd, do you want to provide more clarity perhaps on just what you saw and felt, as we went through? Well, just on the note about global capacity utilization. So the macro fundamentals, we believe, still in place. That is that when you look at the diversity of in uses across S And T yield growing at around 3% per year, stack that up with capacity picture, we still see those macro utilization rates in about the mid-eighty percent range across the whole system. So what what Mark was describing was this end of the year, instantaneous utilization rate change mainly on slower demand. Particularly in China. So as that sorts itself through, as we get into the 1st part of 2019 and kind of March through the quarter, particularly after Chinese New Year, we that will bump up those instantaneous utilization rates into, back up into the 80% range and that'll allow some price recovery over the course of the year. And just as a follow-up, the decision to take the capacity out of Asia as you ramp up new capacity in the U. S. Is the math effectively that the savings you're going to get from doing that, the optimization more than offsets whatever sort of the EBITDA opportunity was there? And And then obviously you also get to take some capacity out of the market, which might help the earnings power of all your other assets. Is that right way to think about it? Yes, I think the what we're trying to convey here in a big sense and it's part of, you know, sort of the ongoing debate about whether people are giving value back to our shareholders for this business. But we can, you know, we're the, to be honest, we're the only company in the world that can take and make these investments at a very modest level, get this kind of high return on productivity only. So you don't have to have a view that the market's gonna grow or the demand is needed for us to add yet another $100,000,000 to our foundation. So wherever you think that foundation or based earnings of the business, is is plus $100,000,000 to that through these kind of moves and be it that or be it the BAM investments. That's what you see. So this is a way for us to, we think keep balance within the, what we see will be the demand pictures we get out of that period of time with plenty of upside capacity to tackle that in a more EBITDA and return friendly fashion. Yes, absolutely. It's about always looking for another series of value creation steps that add to the foundational level of Ronnie's and acetyl. So this is the next the next wave that we're embarking on. So, you know, it brings significant production ultimately to Clear Lake where we have advantaged integration backwards to methanol soon to be in carbon monoxide when that acquisition clears. I also have other sources as CEO there. First, we have the VAM. Downstream usage there on Clear Lake just expanded that unit by 150,000 tons. So I think very good integration benefit a huge range of operating rate flexibility, more so than we have today, particularly in in the Asian side. So that helps us And to Mark's point, it's largely a productivity measure when we look out on this. So it's a nice, nice combination of value addition steps. Thank you. And welcome back to Chuck. The next question comes from David Begleiter with Deutsche Bank. Please go ahead. Thank you. Good morning. Good morning. Mark, just on Engineered Materials, can you provide a little more color on the 2% operating profit growth in the quarter? Why was it so light? And now, and looking forward to 'nineteen, maybe expectations for that business in 2019? Yes, well, I'll start with the last one. We expect that business to grow, kind of as it has grown 10% kind of earnings contribution year over year. So you plug into your, Indian model. If you look at the fourth quarter, you know, we did see slowdown in this business as well. We were, we were out there pushing pricing a lot to tee up what we thought was a better return for many of our polymers as we entered 2019. And we're doing that in the face of the destocking that was naturally occurring for the reasons that I listed before that. So the real, what we really saw here in the quarters, we saw a good uptick in both volume and pricing, to be offset a lot by, extraordinary costs that roll through our from inventory costs that we had. So we worked down some of our inventory, extraordinary costs with logistics and things like that really it negative way. So it's really more of a cost driven reduction, versus any kind of fall off in your base business. Got it. And just on, I'm sorry. No, sorry, David. This is Scott. Richard. I just want to add there. I think it's important also to remember the project wins that we had in the year, we're right on track with what we've said. So we finished, north of 3200 projects during the year. So the business continues to be on track for those controllable factors that we stated. And we were very clear about the importance of driving price, as raws moved up during 2018, and we're very successful in doing that. And that should yield benefits from a margin of moving into 2019, which can lead to, the growth that Mark talked about, around 10%. Very good. And Mark, just now, you reaffirm the 2020 target of $12 a share, which now implies about 14% EPS growth in '20 versus 'nineteen. Can you provide a bridge given that a little bit of a robust target given a pretty lackluster macro backdrop? Yes, I think there's there's in the fundamental sense, if I look at versus where we, where we think we'll end this year, That's probably another $300,000,000, or so of upside. In a real simple sense, we expect as we're ending this year and starting be moving back into plus $100,000,000 kind of range for the AC business. We that $1,000,000,000, not $52,000,000,000 is pretty much what, is in the car as far as far as there. We expect we're going to add another $100,000,000 in, incrementally in, EM. As we go as we move into, from 2019 to 2020 and that process flat, of course, in, AC, which is essentially flat with our basic strategy, I mean, in Estate tow, our basic strategy that leads to balance the last hundred, we think 50,000,000 from M and A that we've got our eyes set on and the other 50s productivity. The next question comes from Mike Sison with KeyBanc. Please go ahead. Mark, when you think about the FTL chain near term, I just want to make sure I understand, can you maybe walk us through how those utilization rates went through the 4th quarter. And then I think I got the feel that it's under 80 now and what could get that above $80,000,000 as we head into the second half of the year and just want to make sure it's more demand related than supply related? Yeah, I, but I'll let Todd get specific numbers here. But in a broad sense, it is it's not supply related at all. The slowdown in China was just a slowdown. And so we saw industry utilization rates across the board in China well beyond AC drop. And in result of that, actually, we saw less activity in terms of clean sky initiatives and stuff, because actually there wasn't nearly as much industrial production going on as you would normally have. So that, that is the fundamental sense is what And I think we dropped into the very low 80s. Now whether it was whether we touched a 70 or not, we don't know, but certainly it's down 3 or 4 turns. Think on capacity utilization, on a short term basis. We also believe that that's largely run its course. The business seems to have settled in. And this has happened in a very short period of time, but it seems to have settled in. And, and we have a fair degree of confidence that Chinese New Year's ends and some of these other problems get cleared up, we're going to see it march right back up. But Todd, do you want to maybe give some specific numbers? I mean, you think you'll see the caps at 15,000,000 tons of global demand, $82,000,000 capacity that's about 83%. And this is these are numbers we talked about before. VAM is 6,000,000 tons of demand, 7,000,000 tons of supply. That's about 85% utilization. We think those big macro numbers are still in place. There have been little to no additions to that supply base. So this is really, as Mark described, and end of the year, 1st part of 2019, demand slowdown for various reasons. Oil prices falling up north prices falling, sentiment, trade, fill in the blank. Now that can quickly reverse itself with customers start buying again. And this is particularly acute in China. That was really what we're describing here. If you look at our order books, elsewhere in the world in Europe and the Americas. And also when we extend beyond just an acetic acid discussion in the vinyl acetate or emulsion, order books are actually pretty good to start the year. So this is really a short China out in the near term and that really speaks to that instantaneous dip under the mid-eighty percent range, pick a number probably high 70s or something for a few weeks, here at the end of the year, start of the year, but that, again, once inventory dry out once demand kicks back in, that can quickly, start to come back into balance, which we expect it will. Great. And then shifting gears to E. M, the new projects continue to roll. And what type of organic growth do you think EM can generate this year? And then is the pipeline for acquisition still pretty robust to build on that as you go forward? Yes. Mike, we expect to get back up into the mid to high single digit type volume growth, as we work our way into the 2019. Now, Q1, we think we'll be a little bit softer, on that, but we do expect to be able to grow. So we may be in the low single digit year over year growth level, in Q1. But as we work away to the balance of the year, as we see this destocking work itself out, we continue to be very, we see the pipeline being very favorable for us. And we saw that play out even towards the end of the year as our growth that, for example, in automotive was around 3% whereas the industry declined. And so, the controllable projects and the things we continue to work with our customers are there. And that's going to get us, get us back into what think is going to be really good positive volume growth numbers in 2019. The next question comes from Robert Koort with Goldman Sachs. Please go ahead. Talk about how much capital you had to spend or you did spend on the thin glass plant in Clear Lake and is that a future strategy to be get backward integrated? I guess I don't see the merits of that, but if you have better uses of your capital elsewhere and I To answer your question, I'm not going to give you the exact number, but, it'll be public for too long, but, that's a legacy asset that actually selling these owned. Years ago, it was kind of embedded in our asset. And of course, we had the opportunity to acquire that. If you look at in terms of reference to a new unit, it's probably it's It's a fraction of the cost of a new unit. So it presents very favorable economics for us, as we look at expanding the city capacity production there. So that's how that's how it plugs into it. So that unit wasn't supplying you currently? It was, but air products now, Lindy is, is building a new unit. So old Lindy had lost their their, had lost that contract with us. And you guys obviously got more aggressive in the market. You talked about being up saying that we're going to be able to make sure that we're going to be able to get half twenty nineteen and twenty twenty that you should be buying quite a bit of stock here in the 1st part of the year as well? Yes, we have $700,000,000 still available to us between what we promised to you guys we'd buy and what's authorized, to buy. So we will continue to be opportunistic with that. Got it. Thank you. Thank you. The next question comes from Ghansham Panjabi with Robert W. Baird. Please go ahead. Hey guys, good morning. I guess back to the $100,000,000 sort of productivity boost as part of your acetic acid network adjustments, can you sort of break that out between savings, in logistics? And is it just not as important going forward to be as diversified from a feedstock standpoint? Yes, we think it is very important to be diversified from a feedstock standpoint. The economics associated with the asset bases that we have in the U. S. And then this next incremental investment in there is stunningly good. And so good that it overcomes disadvantage you would normally see in logistics and things like that. So it's a unique opportunity us to restructure reconfigure, as Todd says, and drive just on constant volume and net lower cost base of approximately $100,000,000. And the important message for you in that is you can present value that back today if you'd like to do that because it is a, it is a set $100,000,000 not dependent on the CD caps of pricing, you know, or those sorts of things, to achieve. So that's the message that thematic trying to get across. We can take steps to increase and lift that floor, that foundation, whatever you may happen to, may happen to feel that it is, and still position ourselves in as this business grows as capacity utilization tightens up, which we fully expect to happen. Have yet again more capacity available to drive the market around the world. That's helpful. And then Mark, in your prepared comments, you mentioned some of the U. S. Customers seem a bit more optimistic looking out to 2019. Can you sort of expand on that And then maybe generally, can you touch on Europe as well? Thanks so much. Yeah, yeah, I think when you really, when you talk to, as we do, we're privileged to have a great customer base and we're busy with those folks all the time. I think there's, I mean, ways are shocked or surprised with sort of the global anxiety that exists as we are. I'll say our U. S. Customers everybody's gone through a little bit of a stutter step here in the fourth quarter, on average, are quite optimistic. They don't, they see the fundamentals as being very strong. See the consumers largely in areas where we are still in there. We've lived through a rationalization and slowdown in auto capacity and things like that. But when you look forward, they're not expecting that that to continue, expect those things to reverse a bit. So there's a good bit of enthusiasm there. And as Todd said, the order pattern seemed to reaffirm that. That we're seeing right now. If you go to Asia, I'd say it's the same thing. China went through this stutter step. It's, a lot of it's tied to anxiety over trade that's there, as well as normal seasonality, which has been missing there. So they're in there waiting for Chinese New Year's den and with an anticipation that somehow we'll find a way to moderate some of the anxiety with trade. So they're not overly pessimistic. And when we look at fundamentals there, we think, indicates that if you look at like at at auto, which is probably the most public example, we expect in that business to not slide further, but to actually rebound a bit as rendered this year. So So the our Chinese customers are not overly anxious or overly frightened right now. I'd roll that into if I looked at Europe in Europe, we talked largely Germany. There's a fair amount of pessimism there. And it's saying Zadi over the exit of, you know, Brexit, Brexit is, is an anxiety point. I think political pressures in country air anxiety point. And they also feel like they've been impacted somewhat by Chinese. Trade, so in the Ron River. So you had all those things in. I think we see more pessimism on average out of Europe and very German centric when I say that because most of our, a lot of our big customers are in Germany. So I think what we see is we see Asia in some ways leading us out a bit, leading the world out of this kind of anxiety. We don't think the U. S. Is going to be impacted very much. And we think as Asia to recover, you'll see, we'll see Europe stabilize and start to recover as well. The next question comes from Duffy Fischer with Barclays. Please go ahead. Question just around the strategy, in acetic acid, you know, coming back to you. I think the permit you filed last month showed a $425,000,000 capital tag. So one, is that a decent number? And 2, how should we think about that impacting the overall capital spend to Celanese over the next 3 years? Yes, it's in the range of the right number as what I would say. And those are numbers. We're required to put in preliminary kind of numbers when we present the sort of permanent application. So yes, it's directionally correct. I'm sorry. What was the second? Just in the last one? Yes. So, $3.50 to $400 this coming year, I think, in CapEx, moving up as we get as we get out, into 2020 2021, where you'll see most of this being spent. So Yes, so we'll be moving above $400,000,000, I think as we enter into the next several years beyond this year. Okay. And then in the U. S, you're still net short methanol, even though you're getting some from your JV partner, as you bring on this acetic acid, does that drive you to want to own more methanol? What's strategy integration there. And the Syngas plant, will you be net short Syngas in the U. S, even if you were short methanol? I'll start this and Todd, you hop into this as well, please. We really, we have a wonderful partnership with Mitsui, with methanol there, world's most efficient a methanol plant and highly regarded as such. I'll let Todd talk about options there that the guys are looking at to span and to grow. On the Syngas, it's a really good fit with the 1st phase of capacity we announced, with its expansion of acetic acid. So Todd, do you want to Yes, Duffy, the run rate operating rate out of the methanol unit has exceeded original design capacity. So we're pleased with that progress. So that's that's contributing. We're still a buyer net buyer. So that that remains unchanged. We are looking with our partner looking at options, in conjunction with the just announced reconfiguration and expansion in the U. S. For methanol options looking ahead. Nothing to say at this point, but that's just a part of our ongoing work together with our partner Mitsui. So we will look at options there. It could actually take the shape in 2 different phases, but more to come on that one. On your CO question, we were not integrated before. So we're we source CO from our partners there. Mark mentioned, Lindy, of course, as well as their products. The other new partner will be here going forward who's constructing a unit as we speak. So this is a step into integration through a very unique opportunity to present it itself a part of the Linde Praxair merger. So it's a small step forward, but also complimentary as we think about the longer term plan, for the, the expanded acetic acid footprint in clear light. So it fits to that integration and nothing all is good news so far and more to come on that as we investigate alternatives. Great. Thank you, guys. Thank you. The next question comes from John McNulty with BMO Capital Markets. Please go ahead. Thanks for taking my question. With regard to the Asteal expansion and the economics on it, it looks like it's pretty compelling. At the same time, should we be reading anything into the need to necessarily close in the Asian capacity with regard to how you're thinking about the long term growth in that region etcetera, because that's certainly an area that you've been growing out historically, versus cutting out capacity? No, I think these this is a reconfiguring. It doesn't forgo. It doesn't imply anything in terms of our beliefs around growth. In Asia, if that makes sense. It's a way that from a static sense, you're going to give yourself more optionality. And, and, yeah, so we remain very bullish on Asia and, we remain bullish with opportunities with the assets we have there, and other assets when we put there in the future. So I wouldn't look at it that way at all, John. It is it's simply a step change to up our base level of earnings in the company and give ourselves more optionality in the future. Got it. And then just a question on the longer term outlook for in China in particular around some of the environmental issues. I know that was it's been a topic certainly last year. It seems to have cooled off a little bit. But are you starting to hear anything or any are there any changes in terms of how to think about some of the potential capacity closures as we look to kind of 2019 and beyond? Yes, it's we keep track of this continuously. The earlier policy, I guess, revealed or updates that came out of Shandong and Unan provinces, we're studying those. We don't see a direct impact into the acetyl business so far in terms of specific units that would need to come out. There's actually one BAM unit on wheat products think has got a circle around it that might be removed. That's about 100,000 ton unit. We just saw some news come out from Hubei Province And this is, in conjunction with the Yangtze river, changes. So the proximity to the river, so Quebec Province issued chemical plant relocation list, I think, on December 13th. And there's like 480 plants that are mentioned there that are that are on the list review. So it continues. I mean, it's a real, real subject. It continues to be drawn out and information published from respective provinces. We look at those and as we see direct line to specific operating units, we'll update as we go. The next question comes from P. J. Juvekar with Citi. Please go ahead. Mark, you go in detail to describe how MTO production, how it connects C1 and C2 chemistry and the impact in China, and you were able to increase your acetyl spreads over methanol. I'm wondering, did you flex down your production in China or Singapore to do that? And if not, what exactly did you do to increase your margins? Well, I think I think really what just, you know, and maybe I've spent too much time on that in the, in the little written script, but, I want people to understand how those economics work, but I also want to make a point that as you As you, from a legacy point of view, there certainly was a strong tie between methanol price in China and acetic acid price in China. As you go up in capacity utilization, that starts to diminish. And you start to see a break away. And then as you look at the global optionality that we have and the way that, Todd Allian Company run this business globally we're able to find ways to further disconnect those 2 things. So a lot of independent actions, rather than disconnect, buying and reselling, including how we operate our units around the world. So I wouldn't read anything special in that. Look at whether we what exactly we did for that. We did the same thing we always do, which is drive optionality to create the most value for our shareholders. Okay. And then secondly, Mark, you guys at Salomeans have really good read into China with your business intelligence there. And you say that weakness was due to geopolitical issues and not fundamental. So in your mind, at what point do the geopolitical issues become fundamental issues? Do you care to comment on that? Well, I don't know if I'm going to quite answer that question. I guess, when you go through a period of growth like the world has gone through the last several years and certainly settlements has gone through a lot of last years, you develop what behavior mechanism And so that behavior is that you, you covered inventory, you do things like that because the world's kind of on fire. And if somebody says to the crowd, to the masses, say, not so fast, pump the brakes, you know, the brakes get pumped. And, and when that happens, you have a ripple effect that rolls through. Now ripple effect has a lasting feeling to it, a lasting feeling being, 3, 4, 5 months. But it's kind of the stack up of inventory. It's a production planning process. Delivery cycle all gets interrupted. And that's kind of what we're in today. So I think when I, when I say when you pump the brakes, what does it mean? It means a couple of quarters of this stuff. It's kind of what it means, just because of the, again, the lag time and cycles, that you get into. So I think the geopolitical pressure has to happen several of those cycles, but really to set into some like the R word or something like that. It takes a lot more than that really to drive a country and economy at the negative growth levels. So our view is that this has been just a pump of brakes brought on by different levels of anxiety. People in China are quite concerned about the they're quite concerned about the relationship with the U. S. And I feel concerned about trade They think that's just an indication of a relationship. So our relationship with China needs to get better. And I see a lot of signs with that starting to happen. In spite of some of the you know, the, political and legal actions that are underway today. I mean, I think fundamentally it's a little bit better and hopefully the trade this week will add to that. In the case of Europe, I, I think it's a little bit more, it's more of a question of, of what's going on with, trade relative to the EU and, and Britain, because people just don't know the uncertainty relative to that ripple effect of that and whether it's going to have a bigger play throughout Europe. So my belief is, is we popped the brakes for a couple of months. I don't think, which is how long it took oil price to drop I don't think, I think we'll see the sales start to come out of that. There's no reason fundamentally for it to change. The only way it stays like this is if the political situation gets worse, versus getting better. I think it's going to get better. Great. Thank you for the detail. Sure. The next question comes from John Roberts with UBS. Please go ahead. Thank you. And, Sigtoy, you continue to take kind of tactical actions to improve the business like the shutdown in Mexico. There any strategic actions still on the table that you're thinking about in CTO over time? There are. We're having trouble making those happened just yet, but we are working. We'll continue to work those. And I think it's only a matter of time before, you know, something services there because it's such an obvious need on the part of, not only the, the, producers, but also, customers out there that won't still want very reliable supply and expect it to. No one's asked the question on tow relative to the quarter and we fell off a little bit in the quarter, which really was related to fixed costs rolling through that were very unusual for us. And we should have done a better job anticipating to communicate to the street, which we did not. And well, we missed several orders just we just logistically couldn't get them out. Those things, certainly the orders reversed themselves, we would expect to be back in the mid-60s as we get into into the first quarter. And then on the supply chain correction in the Engineered Materials segment, do you have any primary data on where your customers inventories are or how much contained plastics there is down the supply chain? Or are you just basically triangulating between what you're seeing and market data about end market growth versus what you're selling into the channel? We're doing a bit more triangulating today. I think my comments on this year's earnings really relate to kind of a view that we have at very high level what's going to happen and we'll be able to update that more in April. Hey, Gary. We'll make the next question be the final question for the call. And that question will be from Kevin McCarthy with Vertical Research Partners. Please go ahead. Yes, good morning. With regard to your acetyl rationalization plans in Asia, Mark, could you comment as to whether you're dismantling capacity in either China or Singapore? Just trying to get a feel for whether you're rationalizing capacity or production plans or both? Well, the way we to answer your question, we're not fully committed to any one site to make that happen just yet. There's options in value, different values slightly depending on which we would go with that. Our intention is if we rationalize capacity, it's rationalized. So that means it's not available. Okay. And then with regard to the Syngas plant acquisition, what impact would you expect that to have on your acetic acid margins or your segment margins? And can you comment what happens with the hydrogen coming out of that unit, whether or not you need any internally or wheel it back to a gas supplier? Yes, I think the marginal impact is It's actually a return on capital impact is where you get it because you avoid any capital investment. And then on a variable cost basis, it's the same. Going in there and I haven't really sat down at work through the actual return you get, but you see it in lower levels of invested capital to and return on that capital to produce the acetic assets, how you're going to see it. I don't know if you want to take this one. It fits Kevin with the expanded, but rent, right? When you think of the three sources that we'll have, it fits there and creates a wide range of operating rate flexibility, much more than we have today when you think about our Asian footprint. Fits with future tons and therefore, requirement for CO and then operating rate flexibility, which we like as a part of our network process as we consider different decisions. And then the hydrogen reference, we do not have the need for it internally. That would be packaged up in an arrangement with an industrial gas supplier or partner. Okay, great. Thanks, everyone, for the questions today and for listening in. We're available today after the call for any, further concerns or questions you have. The conference is now concluded. Thank you for attending today's presentation.