Exxon Mobil Corp
NYSE:XOM
Exxon Mobil Corp
Exxon Mobil Corp., a stalwart of the energy sector, traces its roots back to John D. Rockefeller's Standard Oil, and today stands as one of the largest publicly traded energy providers in the world. Operating in over 200 countries, Exxon Mobil is deeply involved in nearly every aspect of the oil and gas industry, from exploration and extraction to refining, distribution, and sales. At the heart of Exxon's operations is its integrated business model that weaves together its upstream, downstream, and chemical segments. Upstream, Exxon explores and extracts crude oil and natural gas from reserves globally, leveraging advanced technologies and strategic partnerships. The company’s downstream operations then refine these resources into petroleum products, offering a wide range of fuels, lubricants, and petrochemicals.
In its quest to capture value across the supply chain, Exxon Mobil also engages in marketing these products to commercial, industrial, and retail consumers worldwide. Their extensive global reach in logistics and distribution ensures the efficient delivery of products, which is crucial to maintaining competitive advantages and operational efficiencies. Furthermore, the chemicals segment plays a vital role in transforming byproducts of the refining process into high-value chemical products, diversifying their revenue streams. By focusing on integration and strategic investments in technology and resource management, Exxon Mobil not only responds to market demands but also positions itself to adapt to future shifts within the energy landscape, pursuing initiatives in sustainable energy as part of its long-term strategic evolution.
Earnings Calls
In the first quarter of 2025, the company achieved $7.7 billion in earnings, supported by a robust $13 billion cash flow. Key growth drivers included investments in high-value projects, particularly the China chemical complex, which strengthens market positioning. Structural cost savings totaled $12.7 billion since 2019, with a target of $18 billion by 2030. The net debt-to-capital ratio sits at a low 7%. Shareholders benefited from $9.1 billion in distributions, aligning with an annual buyback pace of $20 billion. Looking ahead, anticipated maintenance impacts volumes by 100,000 barrels per day, impacting second-quarter performance but reinforcing the commitment to operational flexibility.
Management
Darren W. Woods is the Chairman and Chief Executive Officer of Exxon Mobil Corporation, one of the world's largest publicly traded energy providers and chemical manufacturers. He joined Exxon Company International in 1992 and over the years, he has held several key roles within the company, gaining extensive experience across various sectors of the business. Woods was named CEO and Chairman of the Board in January 2017, succeeding Rex Tillerson. Under his leadership, ExxonMobil has focused on improving the company's financial performance, developing advanced technologies, and advancing efforts to address climate change through innovative energy solutions. He holds a Bachelor's degree in Electrical Engineering from Texas A&M University and a Master of Business Administration from Northwestern University's Kellogg School of Management. Woods' career with ExxonMobil reflects a deep understanding of the energy industry and a commitment to the company's long-term vision in balancing energy demands with environmental stewardship. His leadership strategy has also emphasized operational efficiencies, strategic investments, and the expansion of ExxonMobil's global reach.
Kathryn A. Mikells is a prominent financial executive who serves as the Chief Financial Officer (CFO) of Exxon Mobil Corporation. She joined ExxonMobil in August 2021, bringing with her extensive experience in financial management and leadership across various industries. Before joining ExxonMobil, Mikells held several significant roles in leading global companies. She served as the CFO at Diageo plc, a multinational alcoholic beverages company. Her career also includes executive roles at Xerox Corporation and ADT Inc., where she similarly focused on financial strategy and operations. Mikells has been recognized for her ability to drive financial transformation and growth, enhancing operational efficiency and shareholder value. Mikells holds a bachelor's degree and an MBA from the University of Chicago. Her education and professional background have equipped her with a strong foundation in financial strategy, governance, and global business operations, making her a valuable asset to ExxonMobil as it navigates the complex energy landscape. Her role as CFO at ExxonMobil involves overseeing the company's global financial activities, including financial planning, management of financial risks, record-keeping, and financial reporting.
Jack P. Williams Jr. is a prominent executive at Exxon Mobil Corp, where he has held several key positions throughout his career. Educated in petroleum engineering at Texas A&M University, Williams has applied his expertise in various leadership roles within the company. Williams joined ExxonMobil in 1987 and has amassed extensive experience in refining, supply, and project development. His career has included significant international assignments, providing him with a global perspective on the oil and gas industry. Over the years, he has tackled multiple roles that have sharpened his management and operational skills, contributing to his reputation as an effective leader within ExxonMobil. As a senior vice president, Williams' responsibilities have included overseeing the company's upstream business operations, focusing on oil and gas exploration and development. His work ensures that ExxonMobil maintains its position as a leader in the energy sector, and he is recognized for his strategic vision and commitment to sustainable and efficient energy practices. Williams is also known for promoting technological innovation within ExxonMobil, enhancing both productivity and safety standards. His leadership has played a critical role in steering the company's strategic direction and maintaining its competitive edge in the highly dynamic global energy market. Throughout his tenure, Jack P. Williams Jr. has consistently demonstrated a dedication to advancing ExxonMobil's long-term growth and success while navigating the complexities of the global energy landscape.
Karen T. McKee is a prominent business executive known for her significant contributions to the energy industry during her tenure at Exxon Mobil Corporation. She served as President of ExxonMobil Chemical Company, one of the world's leading petrochemical companies and a division of Exxon Mobil Corporation. In her role, Ms. McKee was responsible for overseeing the global chemical business, which involves the production and marketing of a wide range of petrochemicals used in various industries. Ms. McKee joined ExxonMobil in 1990 and has held various technical and managerial positions throughout her career. Her roles have spanned across different areas, including refining, supply and trading, and corporate planning. These diverse experiences equipped her with a broad understanding of the complexities of the energy and chemical industries. As a leader, Karen McKee is recognized for her strategic vision and her commitment to operational excellence and safety. She has been instrumental in driving innovations and efficiencies within ExxonMobil Chemical, aligning with the industry’s evolving landscape and the company’s long-term goals. Her leadership extended beyond business operations; she was also an advocate for diversity and inclusion within the workplace, actively promoting initiatives that support the professional development of women and minority groups in the industry. Ms. McKee's influence and leadership have been pivotal in maintaining ExxonMobil Chemical's position as a leader in the global petrochemical market, particularly during times of significant industry shifts and challenges.
Jeffrey A. Taylor is a notable executive at Exxon Mobil Corporation, where he serves as the Vice President of Corporate Financial Services and Treasurer. In this role, he is responsible for managing the company's financial policies, structuring financial strategies, and overseeing ExxonMobil's treasury operations, which includes optimizing capital resources, managing corporate finance operations, and ensuring the corporation’s financial health and liquidity. Taylor has been with ExxonMobil for over three decades, accumulating extensive experience in various financial and operational capacities. He has held several key positions within the company, contributing to its global financial strategy and operations. His leadership is marked by a focus on financial efficiency and maintaining a robust balance sheet, which are critical in navigating the challenges of the energy sector. Throughout his career at ExxonMobil, Taylor has demonstrated a strong commitment to financial integrity and strategic planning, making significant impacts on the company's financial operations and contributing to its long-term success.
Tracey C. Gunnlaugsson is a notable executive at ExxonMobil, holding the position of Vice President of Global LNG (Liquefied Natural Gas). She is recognized for her extensive experience and leadership in the energy sector, particularly in natural gas and LNG markets. Gunnlaugsson’s career at ExxonMobil has spanned several important roles, demonstrating her expertise in strategic planning, operations, and environmental policy. She has contributed significantly to the corporation's global LNG strategies, helping to navigate the complexities of the global energy market and expand ExxonMobil’s LNG portfolio. In addition to her professional accomplishments, she is also known for being an advocate for environmental stewardship and sustainable development within the energy industry. Her leadership style emphasizes collaboration, innovation, and efficiency, traits that have been instrumental in her successful tenure at ExxonMobil.
Daniel L. Ammann is a notable figure in the energy sector, known for his role at ExxonMobil Corporation. Prior to joining ExxonMobil, Ammann had an extensive and successful career in the automotive industry. He served as the President of General Motors from 2014 to 2018, where he was responsible for leading the company’s operations and driving significant business strategies and transformations. In 2019, Ammann transitioned to the role of CEO at Cruise, a self-driving car subsidiary of General Motors, focusing on advancing autonomous vehicle technology. His leadership at Cruise was marked by efforts to position the company at the forefront of the autonomous vehicle industry. In 2021, Daniel Ammann joined ExxonMobil as the President of ExxonMobil Low Carbon Solutions. In this role, he oversees the company’s initiatives and strategies aimed at reducing carbon emissions and advancing ExxonMobil's contributions to a lower carbon future. His expertise in operations and business strategy is instrumental in driving ExxonMobil’s commitment to addressing climate change through innovative solutions. Ammann's diverse experience in both the automotive and energy sectors underscores his role as a key leader in navigating the evolving landscape of sustainable energy and technology.
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Good morning, everyone. Welcome to ExxonMobil's First Quarter 2025 Earnings Disclosure. I'm Jim Chapman, Vice President, Treasurer and Investor Relations. This quarter's presentation and prerecorded remarks are available on the Investors section of our website. They're meant to accompany the first quarter earnings news release, which is posted in the same location.
We also published a new company overview presentation, which is posted alongside our earnings materials. This document provides some new financial and other perspectives on ExxonMobil. During today's presentation, we'll make forward-looking comments, including discussions of our long-term plans, which are subject to risks and uncertainties. Please read our cautionary statement on Slide 2.
You can find more information on the risks and uncertainties that apply to any forward-looking statements in our SEC filings on our website. Note that we also provided supplemental information at the end of our earnings slides, which are also posted on the website.
Before diving into our first quarter results, I want to say a few things about the current market environment and how ExxonMobil is positioned within it. The headlines today are dominated by the uncertainty from tariffs, which is weighing on economic forecasts and causing market volatility. This economic uncertainty, combined with threats of potential increase in OPEC supply has put pressure on prices and margins. For us, these are not obstacles, but are reminders that we built our business with the flexibility to thrive through market cycles.
This flexibility makes us stronger now than ever before. Despite increased uncertainty, our strategy is unchanged. Our position is strong, and our track record speaks for itself. We have built the business to excel in any market. We stay focused on the things we can control, the things that make us stronger by ensuring our assets are the most competitive in the industry, which helps us to deliver leading value in any environment.
One thing that sets us apart is our disciplined approach to capital allocation, which ensures we drive long-term growth by investing in advantaged opportunities across our portfolio and through commodity cycles. We don't chase trends. We focus on the fundamentals, making well-informed choices about where and how to deploy capital. Then we execute.
Our unique advantages, technology, scale, integration, execution excellence and of course, our people have underpinned the transformation of our business. We've spent years cultivating these advantages. So it would be extremely difficult for other companies to replicate what we do. These unique competitive advantages deployed towards our unmatched opportunity set, equip us to continue executing our proven strategy and enable us to reliably create leading shareholder value again in any market.
You've heard us talk about our business transformation from growing our portfolio of advantaged assets and improving the mix of products we produce and sell to structurally removing costs across our business. We've fundamentally transformed our company and in turn, our underlying earnings power. You'll recall, we've talked in recent disclosures about improving earnings power by about $3.5 billion quarterly since 2019 at constant prices and margins. This is driven by structural earnings improvements, which include our volume and mix improvements as well as continued efforts to drive structural cost efficiencies.
On this slide, we're taking a different look at earnings power, calculating our earnings improvement versus 2019 using the prices we've seen recently in April. We've taken our 2025 first quarter results and our first quarter results from 2019 and adjusted them to this current price environment.
Since 2019, even in this weaker market environment, the strength of our strategy and our improvement in earnings power is significant. While our strategic acquisition of Pioneer, which closed a year ago, is certainly a contributor, even more so is the significant business transformation we've delivered over the past 6 years.
In total, our structural earnings improvements have contributed around $4 billion to improving our earnings power, more than offsetting higher inflation and other costs. As with everything we do, we don't just promise results, we deliver them a proven strategy, relentless execution and real measurable results.
In the first quarter, our transformed business continued to outperform. We delivered $7.7 billion in earnings, highlighting the differentiated strengths of our portfolio and our improved earnings power. Underpinning our results were continued execution excellence, the strength of our advantaged portfolio and continued cost discipline across our businesses.
The transformation we've executed over the past 5 years has clearly made us stronger. This is evident in this quarter's results, especially when compared with the same quarter a year ago. We remain laser-focused on investing in competitively advantaged low cost of supply, high-return opportunities, on delivering execution excellence in everything we do and on driving additional structural cost improvements. The importance of this is evident now more than ever.
We're delivering on 10 key project start-ups in 2025 that are part of our rich pipeline of advantaged opportunities growing both our traditional and our new businesses. From Yellowtail, our fourth and largest FPSO in Guyana, which has arrived on location and is progressing hookup and commissioning activities to our 25 KTA production capacity expansion of Proxxima resin, a product with the potential to capture a large share of growing, less cyclical markets. In a minute, I'll go into more detail about 2 of these 10 projects that have now commenced operations, our China chemical complex and our second advanced recycling unit in Baytown.
More broadly, the delivery of so many major projects in a single year is a testament to the capability of our global projects organization across a diverse range of project types from upstream to downstream to low carbon, we are delivering.
Beyond our traditional businesses, we've also continued our transformation by growing our new technology-driven businesses. For example, composites represent less than 2% of an average car's weight. Looking forward, we project that the new high-performance materials in automobiles could reach more than 20% by 2040, consistent with that industry's current lightweighting objectives.
Our proprietary Proxxima resins are very well positioned to meet that growing demand. In March, ExxonMobil showcased a revolutionary EV battery case prototype made from Proxxima products that simply can't be produced from existing composite materials. We're aiming to replace steel and aluminum battery cases with solutions that reduce overall vehicle weight and enable more efficient production, allowing Proxxima products to compete and win in this multibillion-dollar addressable market. And that's just one application and just in the automobile industry.
And in another example, just last week, we announced our sixth large carbon capture and storage contract, in this case, with Calpine, which operates a power plant near our Baytown facility in Texas. We will transport and permanently store 2 million metric tons per year of CO2, leveraging our green line CO2 transport network, the world's only end-to-end CCS system. That brings our total CO2 under contract for CCS with third-party customers to 8.7 MTA.
Add the 7.5 MTA from our planned low-carbon hydrogen plant in Baytown, and we're more than halfway to our aim to permanently store 30 MTA of CO2 by 2030. And finally, we continue to maintain industry-leading financial strength while delivering robust returns to our shareholders.
We ended the first quarter with 7% net debt to capital after distributing more than $9 billion to shareholders via dividends and share buybacks, more than any other IOC. You can see every quarter that our strategy is succeeding. We're improving earnings by transforming our business to produce more profitable barrels and higher-value products while also lowering costs.
In the Upstream, we're continuing to grow advantaged production. More than 60% of upstream volume is expected to come from our advantaged assets in the Permian, Guyana and LNG by 2030. Even at constant prices, this helps lift our upstream profitability another $3 per barrel from $10 last year to $13 in 2030.
In Product Solutions, we're delivering advantaged projects and significantly growing our high-value products. Both are key to driving earnings growth. Our advantaged projects delivered $2.1 billion of earnings in 2024. And we're expecting roughly $4 billion per year more from these and additional advantage projects by the end of the decade. Nearly all of the advantage projects coming online in 2025 through 2030 increase high-value product volumes.
Through the first quarter, we've produced roughly 3.5 million tons of performance chemicals, lubricants and lower emission fuels more than the same period last year, and we're on track to achieve 25 million tons of high-value product sales in 2030. We also remain committed to taking costs out of the business and to keeping them out. We're not just nibbling around the edges here, while others who seem to be adopting our playbook are just getting started, we've already removed costs at a monumental scale.
For the past 5 years, we have consistently saved about $2.5 billion annually, more per year than some companies aspire to achieve over multiyear periods. While others set small, safe goals, we've been challenging our organization to aim higher with bigger, bolder targets that redefine what's possible. And as a result, we've fundamentally transformed the cost base of our company by delivering $12.7 billion of structural cost savings since 2019, this far exceeds anyone else in the industry. In fact, it's more than all other IOC's reported cost savings combined. And we are not done yet.
We have plans to achieve $18 billion in structural savings by 2030. Our first 2 major project start-ups of 2025 are the China Chemical complex and our second advanced recycling unit in Baytown. Both are operational and are ramping production. Our ability to successfully deliver large and attractive advantaged projects at or below cost and often ahead of schedule positions us well, especially in challenging market conditions.
Our industry-leading global projects organization delivered our China chemical complex, an enormous project ahead of schedule and an industry-leading pace and at a significant cost advantage. At present, we've produced on-spec olefins, polyethylene and polypropylene.
When fully operational, the project will have the capacity to produce nearly 1.7 MTA of polyethylene and nearly 900 KTA of polypropylene. Importantly, over 75% of the complex's capacity will have the capability to produce high-value, differentiated performance chemicals. This greenfield project will not only be competitive, but will also be protected from tariff impacts. It will supply China's growing domestic market, the largest in the world, with high-value chemical products that have historically seen demand grow by about 7% a year.
That's double the pace of commodity chemical growth. In advanced recycling, we started up our first unit in 2022. Since then, we've improved upon the technology that enables this proven process to convert waste that is difficult to recycle by other means into many valuable products. We've expanded the range of plastic types we can recycle while enabling integration into existing operations without compromising reliability or product quality.
Our latest advanced recycling unit in Baytown leverages this technology and commenced operations in early April. Like our first unit, it has the capacity to process 80 million pounds per year of plastic waste annually, thereby doubling our capacity.
Additional units are now under development across sites on the Gulf Coast and are expected to start up later this year and next, bringing our total advanced recycling capacity to 500 million pounds per year by year-end 2026. Looking at the entire slate of 10 major projects starting up this year across all our businesses, they have the potential to deliver more than $3 billion in earnings in 2026 at constant prices and margins.
Now to cover some of the financial highlights of the quarter. We generated earnings of $7.7 billion and cash flow from operations of $13 billion in the first quarter, the highest among all integrated oil companies. As of year-end, our 5-year compound annual growth rate of cash flow from operations was double the next highest IOC and nearly 4x that of the large-cap industrial group.
We are well positioned to navigate market cycles, thanks to improved corporate efficiency and lower cost of supply. Since 2019, we've made tremendous strides in reducing structural costs. And at the end of the quarter, we reached $12.7 billion of savings, more than all other IOCs combined. Our track record gives us confidence we'll hit our plan to reach roughly $18 billion by 2030.
Our ongoing drive to become more efficient has also lowered our breakevens with plans to further reduce them to $35 per barrel by 2027 and to $30 per barrel by 2030. Our improved earnings power and disciplined capital allocation strategy is designed to deliver unmatched financial strength, giving us the flexibility we need to outperform in any market environment.
Our debt-to-capital ratio at the end of the quarter was 12% and the net debt-to-capital ratio was 7%, again, leading all other IOCs. And all of our successes help ensure predictable and dependable shareholder distributions. In the first quarter, our total distributions of $9.1 billion, including $4.8 billion in share buybacks, were among the largest in the entire S&P 500.
These distributions in turn, support total shareholder return, where we've led IOCs and the average of large-cap industrials over the last 3 years and rank among the top 20% of companies across all segments of the S&P 500. Looking at the macro environment, a lot has changed since the end of the first quarter. However, as I previously mentioned, our strategy, our company, our people are built for this.
Within the first quarter, crude prices remained roughly flat near the middle of the 10-year range, while natural gas prices improved on stronger global demand driven by LNG exports in the U.S. and colder weather in the United States and in Europe.
Sequentially, global industry refining margins were lower, driven by weakness in Asia Pacific from capacity additions and higher regional feed costs. That global industry margin trend was in contrast to our own energy products business, which generated higher sequential margins based primarily on our majority weighting within the North American market.
In fact, on a look-back basis, all the strategic decisions we've undertaken since 2019, including increasing our North American footprint, have contributed over $1 billion to our Energy products earnings in the quarter. Chemical margins stayed well below the 10-year range as growing demand was met by new capacity additions primarily in Asia Pacific.
Our Chemicals business performed well, thanks to our effort over many years to grow high-value chemical products and to rigorously drive down costs. Looking at the window, the economic uncertainty we saw reflected in the markets in March and April may indeed continue.
Regardless, as our results show, we've built our business to excel in any market environment. Turning to the quarter. I'll start with an overview of our first quarter results compared with the same quarter a year ago. GAAP earnings of $7.7 billion were down roughly $500 million, driven primarily by market forces across our businesses. However, you can clearly see contributions from our continued investment in advantaged volume growth and our structural cost reductions.
Across our businesses, these items contributed $1.4 billion more to earnings in the first quarter as compared to the same period a year ago. The key drivers for this advantaged growth were the acquisition of Pioneer in the second quarter of 2024 as well as growth in Guyana. This growth was partially offset by lower base volumes as we've continued to high-grade our portfolio, including the recent Nigeria JV and Argentina divestments.
Structural cost savings are key in offsetting the upward expense pressure from inflation and from growth initiatives. In the first quarter of 2025, our structural cost savings helped offset these pressures as well as higher depreciation.
Favorable timing effects of $700 million were primarily driven by the absence of unfavorable impacts from last year. Now let's look at our sequential results. First quarter GAAP earnings improved from the fourth quarter of 2024, increasing $100 million. Adjusted for prior quarter identified items, earnings improved $300 million sequentially. This was supported by favorable prices and margins in our Upstream and Energy Products segments and lower expenses.
Higher liquids and gas prices and stronger refining margins more than offset slight market headwinds in other segments. Overall, prices and margins were a $600 million help to earnings. As mentioned during the fourth quarter earnings call, we saw higher seasonal expenses at the end of 2024 across segments. In the first quarter, we saw the absence of the higher spend from fourth quarter as well as lower exploration expenses in our Upstream segment, resulting in a $600 million help to expenses.
Lastly, other items reflect the absence of the $700 million of help we had in the fourth quarter from year-end inventory, asset management and tax impacts. We also saw net unfavorable ForEx, tax and divestment-related impacts in the first quarter. The combined sequential impact was a $1.2 billion reduction from the prior quarter.
Turning to cash. We generated $13 billion of cash flow in the first quarter as the earnings power of our business reliably delivered again. We continue to consistently deploy capital according to our allocation priorities. First, we're investing in advantaged assets and projects to drive long-term earnings and cash flow growth to the end of the decade and beyond.
We invested nearly $6 billion of cash CapEx in the first quarter, and as mentioned, are on track for 10 project start-ups in 2025. We're closely monitoring the changes in market conditions and remain focused on value. If we can improve the NPV of our investments by inventorying opportunities for later, we will do that.
The flexibility of our investment portfolio with over 1/3 of our production coming from short-cycle U.S. unconventional assets gives us this option. And as discussed at our corporate plan update in December, in our newer businesses, if the necessary policy support and market development do not materialize in the time line we expect, we'll defer or suspend investments.
Second, we strengthened our balance sheet during the quarter with more than $4 billion of debt repayment, leaving our net debt-to-capital ratio at 7%, again, the lowest among IOCs. Finally, strong operational results, coupled with a strong balance sheet, allow us to predictably and reliably return excess cash to our shareholders.
During the quarter, we distributed $9.1 billion, including $4.3 billion in dividends and $4.8 billion in share buybacks, in line with our guidance of a $20 billion annual buyback pace. Looking ahead to the second quarter, in the Upstream, we expect scheduled maintenance primarily in Qatar and Canada to decrease volumes by about 100,000 oil equivalent barrels per day compared to the first quarter.
We also had roughly $100 million of net favorable divestment-related earnings impacts in the first quarter that we do not expect to repeat in the second quarter. In Product Solutions, we'll have lower scheduled maintenance versus the first quarter. We'll be ramping up production at our China chemical complex throughout the year. This means higher volumes, but not full rates from this asset in the second quarter.
We expect second quarter corporate and financing expenses to be between $600 million and $800 million. This range is higher than what we've guided in recent quarters, primarily driven by lower interest income on cash balances. And finally, as has been the case for a number of years, we expect seasonal tax payments of $2.5 billion to $3 billion in the second quarter, driving a working capital outflow.
To sum up our discussion today, if you come away with one key message, it's that we are built for this. In any market environment, our focus stays the same. Our proven strategy, superior execution and cost discipline have delivered, and we are well positioned to continue creating leading shareholder value through cycles. Uncertainty will always exist, but with great challenges also come great opportunities. The opportunities in front of us are tremendous, and we are ready to seize them.
The companies that will win are those that capitalize on these moments. As we've said many times, we remain steadfast in our approach to capital allocation, and our discipline is without question. To us, capital discipline is not about investing less, it is investing in the right things.
You can be assured that we will continue to leverage our unique competitive advantages to capitalize on what can only be described as an unmatched opportunity set. Combining the right advantages, the most attractive opportunities and the best execution delivers leading results. It is the combination of these things that will drive long-term shareholder value, our primary focus, delivering profitable growth and creating leading shareholder value today and long into the future. Thank you.