GATX : Fourth Quarter

2019 Fourth Quarter Conference Call

Operator:

Good day, and welcome to the GATX Fourth- Quarter and Full-Year 2019 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Shari Hellerman. Please go ahead.

Shari Hellerman:

Thank you. Good morning, everyone, and thank you for joining GATX's Fourth-Quarter and 2019 Year-End Earnings Conference Call. I'm joined today by Brian Kenney, President and CEO; Tom Ellman, Executive Vice President and CFO; and Bob Lyons, Executive Vice President and President of Rail North America.

Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements. Actual results or trends could differ materially from those statements or forecasts. For more information, please refer to the risk factors included in our release and those discussed in GATX's Form 10-K for 2018. GATX assumes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.

I'll provide a quick overview of our 2019 fourth- quarter and full-year results, and then Brian will provide additional comments on 2019 as well as our outlook for 2020. After that, we'll open the call up for questions.

Today, GATX reported 2019 fourth-quarter net income of $56.6 million or $1.59 per diluted share. This compares to 2018 fourth-quarter net income of $49.2 million or $1.30 per diluted share. 2019 fourth-quarter results include a net casualty gain of $8.1 million or $0.23 per diluted share related to an insurance recovery for a damaged vessel at American Steamship Company. 2018 results include a net benefit of $17.3 million or $0.46 per diluted share related to Tax Adjustments and Other Items.

For the full-year 2019, GATX reported net income of $211.2 million or $5.81 per diluted share. This compares to net income of $211.3 million or $5.52 per diluted share in 2018. The 2019 and 2018 results include net positive

January 23, 2020

impacts of $10.9 million or $0.30 per diluted share and $11.5 million or $0.30 per diluted share, respectively, associated with various Tax Adjustments and Other Items. These items are detailed on Page 13 of our earnings release.

In 2019, GATX repurchased nearly two million shares for approximately $150 million. This compares to our 2018 repurchase activity of 1.5 million shares for approximately $115.4 million. As of December 31, 2019, we have approximately $150 million remaining under our existing repurchase authorization.

Lastly, as noted in the earnings release, we currently expect 2020 earnings to be in the range of $5.50 to $5.80 per diluted share.

With that, I will now turn the call over to Brian.

Brian Kenney:

Okay. Thanks, Shari. Good morning, everyone. Those of you that have listened to our earnings calls for a while know that we're not a fan of long prepared comments and canned slide presentations at the beginning of these calls, and we'd like to get right to the Q&A. But if you'll indulge me for just a few minutes, I'd like to give you some color behind our recent performance and more detail on our 2020 guidance than I can put into a press release. So with that, let me dive in.

In 2019, again, we outperformed our earnings expectations coming into the year. As Shari just said, and as laid out in the press release, we earned $5.51 per share after deducting the net positive effects of the tax adjustments we had and other items. And that compared to our original guidance of $4.85 to $5.15 per diluted share.

If you look at where we outperformed, it was North American rail, American Steamship and our Rolls-Royce joint ventures -- all producing earnings in excess of our original expectations. Looking at Rail North America, in 2019, lease revenue performed relatively close to our original expectations, as it usually does. And the largest single driver of the segment profit outperformance was lower net maintenance

expense, and it was lower-than-expected in 2019 due primarily to higher maintenance revenue. As we indicated on prior conference calls, the mix of repairs that we performed in our network in 2019 contained a higher percentage of repairs that are reimbursable from customers. We have better systems in place to identify those liability issues, and we've been way more systematic in collecting for them.

In addition, we did improve the efficiency in both our fixed and field repair network. And also, railroad repairs were lower than we anticipated coming into the year. Now, over the last few years, I realized that we've consistently overestimated our net maintenance expense coming into the year. And the maintenance organization's great performance has been due to two things: One, the improvements and efficiency that I've just mentioned, but also, there's been great performance by our commercial team in keeping the fleet at 99% utilization. And that, of course, helps us avoid having to spend maintenance dollars on preparing cars to move to new customers. So overall, despite my spotty record of predicting how well our commercial and maintenance organizations perform, they've done a great job. And I'm really pleased with the strides they've made the last few years, and there's plans currently being implemented, actually, to continue these efficiency improvements.

So quickly, the other two outperforming segments -- first, American Steamship operated in extremely favorable weather conditions and favorable water levels throughout the year. So, although they carried less tonnage in 2019 than we originally anticipated due to the loss of the St. Clair, they did so much more efficiently, and they generated more segment profit than originally planned.

And lastly, at our Rolls-Royce joint ventures, they had another great year for investment. Their volume for the second consecutive year is over $900 million. They continue to show excellent residual realization and segment profit that exceeded our expectations. So, looking at the end of 2019, despite an extremely tough market here in our largest business, the North American rail team is performing very well. We've produced strong performance across our

other businesses, and we outperformed our original expectations. Our balance sheet sitting here today is very strong, as is our liquidity, and we have attractive investment opportunities to pursue.

So, moving to that outlook for 2020 -- given the general economic and political uncertainty we see in North America today, I'd best describe our outlook for North American rail as guarded

• especially relative to what you might expect given their segment profit outperformance in 2019.

So moving to North American rail, we do expect segment profit to decrease in 2020 by approximately $30 to $40 million. The main driver, again, of that decrease is continued declining revenue on the existing fleet. As we mentioned on our calls throughout last year, the positive lease rate momentum that we saw in 2018 did stall as we moved through the year in 2019. And we currently expect that lease rates across most of the North American railcar fleet will move somewhat lower in 2020. And that results, obviously, in further revenue declines as leases renew throughout the year.

We're also expecting a small decrease in fleet utilization. Competition is intensifying due to the continued oversupply in the market. And the net effect of all this is that we project revenue to decrease by about $25 to $35 million, that's about 3%.

Moving to net maintenance expense and acknowledging what I just said about our recent difficulty in predicting it accurately, we do expect an increase in 2020. As I said, we'll continue to work to increase the cost and efficiency of our network, as we've seen over the last 18 months. But those gains are expected to be offset by higher maintenance expense, and that's really due to increased commercial churn in the fleet. Meaning, we expect to see a lower renewal success rate and more cars will need to be assigned to new customers to keep the fleet utilized, and that drives the maintenance costs higher.

That current expectation for maintenance cost increase is about $8 to $13 million that will contribute to the drop in segment profit in 2020.

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Increased ownership costs, as well in 2020, that's primarily due to the 2019 and 2020 investments. And that should reduce North American rail segment profit year-over-year in the range of $5 to $10 million.

And the last major factor to mention for Rail North America is asset disposition income. We continued to optimize our fleet in 2019 through scrapping, sale of railcars in the secondary market, as we always do. But scrapping rates did decline in 2019, and that drove most of the lower asset disposition income versus the prior year. But the secondary market for railcar sales remains strong, and we continue to see opportunities in 2020.

If you look at our current fleet plans, our expectation for this year is that asset disposition income should exceed last year's level in the range of $5 to $15 million, primarily because we don't anticipate the scrapping losses we experienced in 2019, but we can also see higher gains on railcar sales as well.

Let me address International rail. I'll start with GATX Rail Europe. As we discussed throughout 2019, the mineral oil, LPG, chemical markets were all very strong throughout the year. We continued to see lease rate increases in those markets. In addition, their total new car investment, especially into certain freight car types, added to segment profit in '19. And that fleet growth -- I actually expect to accelerate in 2020. So that segment profit growth from higher utilization, increasing lease rates and the fleet growth, will be offset somewhat by higher scheduled fleet maintenance, but we currently expect profit at GATX Rail Europe, segment profit that is, to be up in the $7 to $10 million range.

Turning to GATX Rail India. The good news continues there. Their fleet size increased by 50% in 2019. They have almost 3,700 cars in their fleet right now; their fleet utilization remains at 100%. They continue to diversify their fleet mix, they're securing the Indian Railways approval for, and they're investing in new car types. And as I've said in the past, lease rate factors in India are higher relative to our other jurisdictions, and we're seeing strong profit growth for such a young fleet. I expect

similar investment in 2020, and much of that projected growth is already committed to customers. So given that outlook, we expect segment profit growth in India to increase by $3 to $5 million in 2020.

Combined with GRE, that means that the expected segment profit growth for Rail International in total should be in that $10 to $15 million range.

At American Steamship, as I said, after another strong year operationally in 2019, we're forecasting a similar year in 2020. Based on the current nominations for tonnage from customers, they expect to carry slightly less tonnage versus last year, but it looks like they'll again be operating with favorable water levels and the full complement of 11 vessels. So, the current expectation is they will earn flat to slightly lower segment profit in 2020.

And lastly, in Portfolio Management, as I said, we've had two consecutive years of record investment volume at the Rolls-Royce joint ventures, over $900 million each year. They've had excellent fleet performance, strong residual realization, and we expect more of the same at these joint ventures in 2020 and some improving financial performance from our remaining marine investments. So the net effect is that segment profit is expected to increase in the $15 to $20 million range for Portfolio Management this year.

So that's what's driving segment profit at each business unit. If you work your way down the income statement and look at SG&A, we did reduce our SG&A by about $3 million in 2019 from the prior year. That's actually not as much as we had originally planned, but that shortfall was due primarily to stronger financial performance across the Company that drove higher incentive payments. And, some cost savings that we did realize in the Rail North America maintenance we had planned for the SG&A line, instead, they showed up in the operating cost line. So, the savings were there, the geography was wrong. In 2020, we plan on trying to hold SG&A spending constant with 2019.

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On the tax rate, it's projected to be a few points lower in 2020 due to a higher percentage of our income coming from those non-U.S. sources. So, the net of all this puts net income in 2020 relatively flat with 2019 at GATX. And with continued share repurchase, that's what gets us to our guidance of $5.50 to $5.80 per diluted share for 2020.

Before I end, I do want to pause for a commercial here and remind you that 2020 marks our 102nd consecutive year of paying a dividend, a track record that few companies can match. Our Board does meet next week; they should cover -- discuss, I should say, a variety of topics, including dividend, share repurchase, so we'll announce the dividend decision at that time. They -- the Board certainly understands the importance of the dividend, and I think our century-long streak is a great example of our long-term record of success and our commitment to shareholders.

And I'll close this by saying, GATX employees did an outstanding job again in 2019, executing our plan. And I'm very pleased that we're seeing the benefits of our strategy to diversify and grow in other attractive leasing markets outside of North American rail. And, fortunately, our performance in these other markets is largely offsetting the weakness we're experiencing in a really competitive and volatile North American railcar leasing market. So, we look forward to continue this performance in 2020 and beyond.

And with that, Operator, let's go ahead and open it up to questions.

QUESTION AND ANSWER

Operator:

(Operator Instructions) Our first question comes from Allison Poliniak with Wells Fargo.

Allison Poliniak:

Hi, guys. Good morning. First, just looking for some color on maintenance - just looking at the efficiency side of it; more specifically, what are you trying -- what have you been addressing there that's driven some of those success and sort of kind of walk us through what your plans

are for 2020? Because I think you noted some more improvement on the efficiency side there?

Bob Lyons:

Sure, Allison. This is Bob Lyons. I'll take that question for you. During the past year, we came into 2019 with 20 -- a little over 20 locations total within the GATX network. We did a very detailed analysis and deep dive on the most- efficient facilities within that network. And during the course of the year, we actually sold or closed 10 of those.

Most of those were customer sites, two of those were smaller fixed locations. And what we've been able to do is essentially remove the costs associated with running that network and running those additional locations that were really inefficient. They were never going to generate the type of car volume that was going to support owning those facilities. So we took those out of the network.

Those costs essentially have gone away. We've been able to absorb that work into the rest of the network very efficiently. On top of that, we've continued to make investments in the network -- in the existing network, with regards to systems, how the shops are laid out, the IT support behind those, all the way down to the shop floor. So, we're putting capital into our most important facilities. They're running more efficiently than they have historically.

And we're seeing that show up in our numbers. And we're going to continue to do that. We are continuing to look at how the facilities are laid out, the locations of those and the most efficient way to move the assets through the network.

Allison Poliniak:

Got it. And then just -- I'm sorry if I missed this, but the ability of earnings, a pretty sizable step up. Can you walk us through sort of the Rolls- Royce JV, what's going on specifically there? I know you're calling for more earnings improvement in 2020. Just some more color, so we can better understand that.

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Tom Ellman:

Great. This is Tom Ellman, and I'll take that. Our share of earnings from the Rolls-Royce JV was up by about $28 million for the quarter and about $34 million for the year. Virtually all of those variances were due to higher residual realization and gains on engine dispositions. Brian mentioned that a couple of different times in his opening comments.

And just pointing out, the gains on asset sales and residual realization happened a few different ways. First and foremost, at the end of its life, an engine can be sold for a gain. Another thing that can happen is that the engine can be broken down and parts can be sold at a gain. And then it's also worth noting that over the life of an engine, the joint venture accrues for maintenance reserves. When the engine is scrapped or sold, any unused maintenance reserves are taken into income. And we saw all of these in the quarter and for the year.

Allison Poliniak:

Got it. Thank you.

Operator:

Our next question comes from Justin Long with Stephens.

Justin Long:

Thanks and good morning. Maybe to start with that last question on Portfolio Management. When you think about that step up related to the higher residual realizations and gains on asset sales, can you talk about what's driving that? I mean, is there anything related to the MAX grounding that's driving that or something else that's specific to Rolls-Royce? And within the 2020 guidance, what are you assuming for the progression of residual realizations and gains on asset sales?

Tom Ellman:

Great. Yeah. So first of all, on the MAX grounding, that really has no impact. The JV has a total of one engine that's associated with that aircraft, so that is not the source of the impact.

And first, maybe backing up, Justin, since you talked about Portfolio Management as a whole, as well as the JV specifically, some of the improvement that we expect to see next year in 2020 versus this year has to do with the other businesses in Portfolio Management.

Specifically, two different types of marine businesses. And essentially, what you're going to see there is some challenges in 2019 that we don't expect to see in 2020, and that's what's going to drive some of the year-over-year improvement. Specifically, we have a business of platform supply vessels that deliver supplies to offshore oil platforms. And this has been really taken down over time. And we now -- we have a total of two vessels left in that portfolio. And we have -- and we impaired those vessels. That's one of the items that you see on the press release, and they're now down to essentially a scrap value.

And we also had some negative operating variance in our ocean-going business driven by oversupply situation there and some inefficiencies resulting from a change in control in commercial managers. So you're going to see improvement in 2020 from those items coming back to normal.

As far as Rolls-Royce specifically, we expect continued strong performance there and continue to see growth in the number of aircraft on lease. That has continued year to year -- up about 20 aircraft in 2018 versus '19, and then the continued successful residual realization.

Justin Long:

Okay, that's helpful. And then shifting to that North American railcar business. I was wondering if you could provide some color on the sequential change in lease rates that you saw for both tank and freight, just to give us a sense for how the market is trending. And it sounds like in 2020, you're assuming that lease rates are down, but maybe you could just give a little bit more color around that and what you're expecting for the LPI?

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Bob Lyons:

Sure, Justin. It's Bob Lyons again. So sequentially, we saw between Q3 and Q4 both tank and freight car lease rates down in the low single digits, 2% or 3%. On a year-over-year basis, if you look at 2018 versus 2019 full year, tank car lease rates were up a little bit.

Freight car rates, as we've talked about in the past, were down pretty sharply, closer to 15% to 20%. So the freight market continues to be the main source of the negative impact overall on the sequential performance of lease rates.

The LPI in the fourth quarter was a negative 9%, as we laid out in the press release. As we look at 2020, the -- and the components of the LPI, the average renewal rate that we anticipate in 2020 is down just a little bit from where we were in 2019. So yes, we continue to expect some pressure there on lease rates, both tank and freight, but it's not significant as -- with regards to the LPI.

The thing -- the other thing that's happening there is that the LPI renewal rate is moving up in 2020 again versus 2019, as we're rolling cars that we put on lease during a very strong market 2013, 2014. So, as we look at the LPI, negative 9% in the fourth quarter; for 2020, we would look for the LPI to be somewhere in the negative 10% to negative 20% range.

Justin Long:

Okay. And in terms of what that translates into and as it relates to your assumption for the sequential change in lease rates over 2020, is there any kind of order of magnitude, you can give us around that? I know you said lower, but are we assuming that tank car and freight car rates are down 5%, 10%? Any kind of rough ballpark?

Bob Lyons:

It's in that low, single-digit range, maybe in that 3% to 5% range again.

Justin Long:

Okay, very helpful. I appreciate the time.

Operator:

Our next question comes from Matt Elkott with Cowen.

Matt Elkott:

Good morning, thanks for taking my question. I want to go back to the Rolls-Royce question, just for a bit and ask you if the Trent 1000 engine issues that Rolls-Royce-- how much did they contribute to spare engine demand and lease rates? I think Rolls-Royce took a EUR 1.4 billion exceptional charge to cover the cost of compensating customers because of those engine issues. So I wonder how much that -- how big of a factor that was?

Tom Ellman:

Yeah. So you're right, the Trent 1000 engines have had some widely known problems with cracking in the compressor and the high- pressure turbine blades. It's important to note that these engines have actually performed quite well when on wing. But the issue has been

• they require more frequent maintenance for the engine. So it's resulted in some service disruptions for several airlines.

And it's important to note, though, that those challenges with maintenance and that challenge with service disruption is at the Rolls-Royce parent level. It does not impact the JV. Our leases are net leases. So those costs and issues are really dealt with by the parent.

We would expect, over time, that demand for spare Trent 1000s are actually likely to increase as these issues are addressed. But as far as the total performance for Rolls-Royce in 2019, that's really just driven by the continuing positive trends in air traffic miles, the percentage of aircraft that airlines prefer to lease versus own and just the continuing strength and growth in that market.

Matt Elkott:

That's very helpful. And then switching back to Rail North America. We're starting to hear some earnings from the railroads. It looks like most CapEx budgets are flat to only slightly down. It

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looks like a lot of the equipment idling has happened already. A lot of equipment fleets are going to be flat in 2020 in the network. And if we get the trade war issues behind us completely in 2020, which were -- contributing factor to rail traffic being down so much in 2019. Do you think there would be upside to your assumptions behind the North America segment guidance. Meaning, you may be -- I assume you're building in very modest, low, single-digit rail traffic in 2020 off of a low base in 2019. If we get 3% or 4% or 5% rail traffic increase in 2020, could that -- could there be a significant upside to lease rates?

Brian Kenney:

Sure. Matt, it's Brian. Let me take that. The answer is yes. We only make specific demand catalysts that we're assuming or that's showing up in our assumptions for 2020. But we don't do

• that's not the way our plan is built. We don't have specific economic assumptions like GDP growth or capacity utilization forecast or any rail industry high-level metrics like car loadings that we use to build our plan.

It's way more granular than that. I think it's a more sound methodology for all of our leasing businesses. We review with our sales force and the fleet group every rider that's coming up for renewal in every delivery, and then individually determine on a renewal, would that railcar be renewed or not. If yes, at what lease rate? If no, where do they think they can assign the car. And for new deliveries, where we think they're going and at what rate. So, it reflects current conversations with existing customers. I think that's more valuable.

So, depending on the business segment, the guidance reflects what our customer is thinking about their business in 2020. And in Rail North America, those conversations, obviously, resulted in us projecting lower renewal rates and revenue.

In Rail Europe and Rail India, it's the opposite. But it's not built with global assumptions. It's very granular. Now having said that, I don't know, I'll let Bob comment. But I don't think anybody's super optimistic at this point.

Bob Lyons:

Sure. I think there's still too many questions, Matt, with regards to how this is all going to play out. The trade agreement, the China trade agreement, in particular, is broken down into -- right now, at this point, four fairly broad categories, as you know: manufacturing, agriculture, energy and services. And how that eventually works its way down into specific commodities, whether it's grain, soybean, crude, coal, what have you, is yet to be determined. So sure, there's a little bit more positive discussion around what -- how this may play out in 2020, but we're not seeing that manifest itself in any change in customer behavior right now.

Matt Elkott:

Got it. And just one final question. I think I may have brought this up on our previous call, but it becomes more relevant now as we're staring down a down cycle in North America while your overall company earnings are going up. I know in 2016, I think, was the worst demand year by

• as measured by railcar demand -- railcar orders and lease rates since probably the Great Recession. But you did 5 77 that year, which is peak earnings for that cycle. And now, we're looking at worsening conditions in North America, and you're going to grow earnings again in 2020, materially. I wonder how much of the guidance range that you gave, the low end and the high end, have to do with secondary market opportunities for equipment, for equipment sales? And do you see your fleet in North America shrinking in 2020?

Tom Ellman:

Yeah. Yeah, Matt, so what Brian actually pointed out in his opening comments is the net income expectations for 2020 versus 2019 are quite similar. We expect it to be relatively constant.

Specifically addressing your question on secondary market sales. Our expectation is that gain -- total gains on asset dispositions, should be higher in 2020 than they were in 2019, maybe more along the lines of what we saw in 2018. But that is being primarily driven by -- that the scrapping numbers that we saw in 2019 were impacted by relatively low scrap rates,

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significantly lower than we saw in 2018, and we would expect that to more normalize. So the secondary market sales may be a little bit better because of some of the timing impacts that we saw late in the year 2019, as far as when things got closed. And then also helped by a normalization of scrapping, all of which just gets you back to -- for GATX as a whole, relatively flat net income. And then as Brian mentioned, the pickup in EPS is more driven by buyback assumptions.

Brian Kenney:

Yeah. And I'd pile on by saying that when the North American rail market is this weak and there's this much economic uncertainty, at least my thoughts around capital allocation shift a little bit, and it's more towards investing in the core business. Hopefully, we'll be able to take advantage of bigger investment opportunities at more attractive prices.

And the second is they focus even more so than usual on efficient and low-cost access to capital so I can achieve the first objective. So we're much more focused as the market weakens, in investments. So I would not expect the railcar fleet -- hopefully, it increases dramatically in 2020, but we'll see.

Matt Elkott:

Perfect. Brian, Tom, Bob thank you very much, I appreciate it.

Operator:

Our next question comes from Steve O'Hara with Sidoti & Co.

Steve O'Hara:

Hi, good morning. So maybe just jumping back to the RRPF again in the MAX. I know you said there was only one engine in the portfolio. But do you sense there's any increase in demand or stronger demand because engines are staying on wing because the MAX has been out of the fleet? Is that the issue? Or it's just not an issue at all?

Tom Ellman:

Okay, yeah. So one really important thing to note is that the Rolls-Royce portfolio is primarily

1. wide-bodyportfolio, wide-body engines. And obviously, the 737 MAX is narrow-body. So again, we really don't think that the 737 MAX is driving things.

Steve O'Hara:

Okay, okay. That's helpful. And then just going to Portfolio Management. If I look at the, let's say, segment operating income, kind of the loss doubled in 2019. If you look at 2018, are we talking about going back to more around that level? Or are we moving towards an exit of enough of these businesses and assets where maybe this -- from a segment basis, excluding the gains and losses and things like that, it's closer to breakeven.

Tom Ellman:

Yeah, the really important point with Portfolio Management is -- you've seen it happening already. And over time, it's really going to be driven by what's going on at Rolls-Royce. And you really should think about the remaining businesses as something that will be a smaller and smaller percentage of the total.

Steve O'Hara:

Okay, okay. And then just maybe jumping back to the - RRPF, did you -- I know this year's been pretty strong from a gain standpoint. But did you quantify kind of what the -- let's say, continuing earnings are versus kind of the gains in 2019? And if -- are we expecting both to increase in 2020? Or is it more about RRPF is kind of on the flatter side versus a very strong 2019, and then you see a pretty good improvement on the rest of the business?

Tom Ellman:

Yeah, we -- I mean, we expect to see Rolls- Royce to continue to perform strongly, both in terms of lease income and in terms of residual realization.

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Steve O'Hara:

Okay, okay. And then maybe quickly, just on India. Is there -- can you kind of talk generally about the fleet makeup there? And then as the investment continues, do you expect to keep that makeup the same? And maybe what the outlook there is?

Brian Kenney:

Yes, it's Brian. I'll take that. So let's say at 3,700 cars, still majority is in container cars. But they've done a great job of diversifying the fleet, which we really asked them to do because you want that in a leasing portfolio.

So it now includes auto carriers, steel coil rigs, general purpose wagons, gondolas, cement wagons. So they're doing a nice job of diversifying, and they need to continue to do that. That's not as easy as just investing in it. You have to get approval from the Indian Railways for that car to be privately owned and leased first. And then you have to find the customers. But they're doing a nice job diversifying, and they will continue to diversify going forward.

Steve O'Hara:

Okay, alright. Thank you very much.

Operator:

That concludes today's question-and-answer session. At this time, I will turn the conference back to you for any additional or closing remarks.

Shari Hellerman:

I'd like to thank everyone for their participation on the call today. Please reach out to me with any follow-up questions. Thank you.

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