Parkland Corp
TSX:PKI
Earnings Call Analysis
Q4-2023 Analysis
Parkland Corp
Bob highlights Parkland's strong performance in 2023, with total shareholder return at approximately 50%. The success is attributed to organic growth and synergies, leading to an increase in adjusted EBITDA to $1.9 billion, above the initial guidance by 10%. The renewables business doubled, and despite M&A suspension, they invested heavily in growth initiatives, which paid off with an increased dividend, share buyback, and reduced leverage ratio to 2.8x.
Marcel reviews the fourth quarter, emphasizing the adjusted EBITDA of $463 million. Canada maintained performance; however, the USA faced a 15% downturn due to market losses. The Refining segment bore the brunt of outages, but the International segment surged 43%. The planned turnaround and the unplanned shutdown at the Burnaby Refinery impacted refining performance with an expected early March resumption.
While addressing the Burnaby Refinery's downtime, Marcel speaks to recovery, mentioning that despite roughly 8 weeks of outage, they still project to achieve their 2024 adjusted EBITDA guidance of $1.95 billion to $2.05 billion. Parkland anticipates making up for some of the lost ground with recuperated utilization rates and leveraging a constructive market for carbon credits.
Looking ahead, Parkland aims to bring adjusted EBITDA up to $3 billion by 2028, emphasizing acquisitions that are accretive and support organic growth. They anticipate generating around $6 billion of cash flow available for dividends, share buybacks, and growth, continuing a record of 12 years of dividend increases.
Parkland looks to overcome operational challenges by pulling forward maintenance work and capitalizing on high carbon credit prices. Marcel also notes that while share repurchases will continue under the NCIB program, the company remains committed to lowering leverage and considering M&A strategically against the backdrop of share buyback value.
The International segment, although strong, might not see the same growth level as last year. Bob acknowledges headwinds like shipping costs, but maintains a positive outlook for Parkland's business trajectory. The team is readying for a constructive market recovery with the Burnaby Refinery, which will include optimization around renewables and carbon credits.
Bob confirms Parkland's ongoing divestiture of Canadian C-stores, part of a $500 million program, which optimizes the operating model and allows for capital redeployment. The $325 million progress already made demonstrates a commitment to this program, balancing asset sales and anticipated organic growth strategies.
Despite the transition challenges, Parkland remains resolute in its business plan. The focus for now is on internal optimization, organic growth, and synergies, foregoing major M&A activities as they work towards their EBITDA target of $2.5 billion without relying on acquisitions.
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Good morning. My name is Clara, and I will be your conference operator today. At this time, I would like to welcome everyone to the Parkland Q4 Analyst Conference Call. [Operator Instructions] I would now like to turn the conference over to Valerie Roberts, Director, Investor Relations for Parkland. Please go ahead.
Thank you, operator. With me today on the call are Bob Espey, President and CEO; and Marcel Teunissen, Chief Financial Officer. This call is webcast, and I encourage listeners to follow along with the supporting slides. We will go through our prepared remarks and then open it up for questions with the investment community. Please limit yourself to 1 question and a follow-up as necessary. And if you have other questions, reenter the queue. We would ask analysts to follow up directly with the Investor Relations team afterwards for any detailed modeling questions.
During our call today, we may make forward-looking statements related to expected future performance. These statements are based on current views and assumptions that are subject to uncertainties, which are difficult to predict. These uncertainties include, but are not limited to, expected operating results and industry conditions, among other factors. Risk factors applicable to our business are set out in our annual information form and management's discussion and analysis.
We will also be discussing non-GAAP and other financial measures, which do not have any standardized meanings prescribed by IFRS. These measures are identified and defined in Parkland's continuous disclosure documents, which are available on our website or on SEDAR. Please refer to these documents as they identify factors which may cause actual results to differ materially from any forward-looking statements. Dollar amounts discussed in today's call are expressed in Canadian dollars unless otherwise noted.
I will now turn the call over to Bob.
Thank you, Val, and good morning, everyone. We appreciate you joining us today. I'm excited to share our successes from the past year and our plans going forward. 2023 was an excellent year for Parkland. The entire team did exactly what we said we would do. We advanced our strategy, served our customers, delivered organic growth, and captured synergies.
Each part of our business contributed to our record year. And this gives me confidence in the quality of our strategy and our ability to deliver the ambitious targets we have set for ourselves. Before I highlight some specific accomplishments, I want to talk about safety, which, as you know, is a core value at Parkland. Since 2017, we have significantly improved our total recordable injury frequency. However, our progress last year was overshadowed by the tragic loss of 1 of our team members in a workplace accident. This loss was felt across Parkland and has strengthened our resolve to continuously improve our safety practices and culture, so that every employee goes home safely to their family at the end of their day.
Let's move to Slide 3. I would like to start with the highlights from the past year, which demonstrate the way we continue to deliver on our commitments. As a result, our shareholders enjoyed a total return of approximately 50% through 2023. Our financial performance was outstanding. We grew our marketing business by 30% year-over-year through integration, synergy capture and organic growth. This growth more than offset a year-over-year reduction in our refinery EBITDA due to the successful completion of a planned turnaround at the Burnaby Refinery, where we have a long-term target of less than 20% adjusted EBITDA contribution.
We delivered $1.9 billion of adjusted EBITDA in the year, which is nearly $300 million higher than last year, and exceeded our initial guidance by 10%. This included $112 million of adjusted EBITDA from our renewables business, which nearly doubled from the prior year. In 2023, we suspended M&A and focused on organic growth and synergies. We invested $200 million of growth capital in conversions and rebrands, expansions of co-processing capacity at the Burnaby Refinery, strategic supply infrastructure and our JOURNIE Rewards program, including our partnership with Aeroplan. The remaining CapEx was for maintenance, which included the planned turnaround at the refinery.
Through these investments, we expanded our On the Run brand to more than 700 stores, grew our JOURNIE Rewards loyalty program to nearly 6 million members, and have seen significant organic growth in our International and Canada segments. Operationally, we have streamlined processes that have resulted in increased efficiency and cost savings. We are seeing the benefits in the turnaround of our U.S. business.
In 2023, we clearly demonstrated the cash generation of the business. We have reduced our leverage ratio to 2.8x, which is now well within our target range. We also increased our dividend and repurchased $26 million of common shares for cancellation in Q4. The success is a testament to the dedication of the Parkland team. And again, I want to express gratitude for their exceptional work. They are instrumental in delivering these results.
With that, I will hand it over to Marcel to discuss our Q4 highlights on Slide 4.
Thank you, Bob, and good morning, everyone. Parkland had a great fourth quarter and delivered adjusted EBITDA of $463 million. Canada delivered adjusted EBITDA of $190 million, which was consistent with last year. Fuel unit margins were driven higher by our supply and logistics capabilities as well as favorable market conditions. We also saw the benefits of our Husky and Crevier acquisition completed in 2022 come through. These positive drivers were offset by reduced demand in our commercial business due to unseasonably warm weather in Q4 and higher operating expenses. Our operational KPIs showed the benefit of consistent execution and organic growth investments. Company-owned same-store fuel volumes were up nearly 7% in the quarter, driven by our JOURNIE Rewards program, which continues to attract customers through the forecourt and into our convenience stores. Food and convenience company same-store sales growth, excluding cigarettes, was 1.2%, and we delivered gross margins of 36%. Convenience alone was up 4%, reflecting the impact of strong center of store and packaged beverage sales.
We did see some weakness in our M&M Food Market channel, reflecting customers being cautious with discretionary spend. We are adjusting our offers accordingly. Our International segment delivered adjusted EBITDA of $157 million in Q4. This is up 43% from last year. We delivered organic growth with higher volumes in our commercial business and strong fuel unit margins. We also captured synergies from our Jamaica acquisition and our supply advantage. We are positioned to win in fast-growing markets like Guyana and Suriname, and continue to win contracts in the utility space. This further diversifies our International business and is creating more ratable quarterly results, which we saw in 2023.
Our USA segment delivered adjusted EBITDA of $39 million in the quarter. This is down 15% from last year. Across the U.S., industry retail fuel volumes were down, and we saw this reflected in negative company same-store volume growth. In Florida, we did not adjust our pricing fast enough in a dynamic environment, and as a result, we lost some market share. We have fixed this and our volumes are back in line with industry trends. These impacts were partly offset by organic initiatives that drove higher convenience store margin, better than industry same-store sales growth and lower operating expenses.
Commercial fuel unit margins were also lower due to unfavorable market conditions. We experienced some onetime impacts in the U.S. during the year that do not reflect underlying performance, and believe the business now has a solid foundation to grow. We are confident in the future of our USA segment, and in 2024, we expect to deliver between $230 million to $250 million of adjusted EBITDA. Our Refining segment generated adjusted EBITDA of $106 million, which is down $22 million from last year. Composite utilization was 90% during the quarter compared to 98% in the prior year, which was caused primarily by a third-party power outage. Crack spreads also normalized during the quarter.
In the first quarter of 2024, the Burnaby Refinery was temporarily shut down following a period of extremely cold weather. We expect to resume normal operations early March. During the expected downtime of approximately 8 weeks, we have been able to complete repairs and previously planned maintenance activities, which will allow us to recover some lost utilization and improve our capture of refining cracks going forward. I would like to thank the refinery team for their continued commitment to safely executing the work.
We have developed a robust recovery plan and still expect to meet our 2024 adjusted EBITDA guidance range of $1.95 billion to $2.05 billion despite the impact of the refinery outage. In 2023, Parkland delivered cash flow from operating activities of $1.8 billion, up more than 30% from 2022. And available cash flow was $812 million or $4.60 per share. We used these funds to grow the business as well as repay nearly $750 million of debt on our credit facility in 2023, and this lowered our leverage ratio to 2.8x. We also bought back more than 580,000 shares in November and December.
And with that, let's turn to Slide 5. This slide is a reminder of our longer-term ambitions that we presented at our Investor Day in November. We expect to grow adjusted EBITDA to $2.5 billion by 2028, driven mainly by organic growth initiatives, cost efficiencies and some additional synergy capture from past acquisitions. We see the potential to grow adjusted EBITDA up to $3 billion by 2028 through acquisitions, but that is subject to any deals being accretive relative to the alternative.
We also expect to grow our available cash flow per share by almost $4 to $8.50 per share by 2028. In this period, we expect to generate about $6 billion of cash flow that is available for shareholder distributions, reducing leverage and growth. As we shared previously, we intend to allocate about $1.5 billion to dividends and firm share buybacks. This allows for continued annual dividend increases as we have now done for the past 12 years. We also expect to invest around $1.5 billion or $300 million per year in organic growth. As we have grown the Parkland platform in the past few years, we see many opportunities to invest in our own business with at least a 15% expected return.
And finally, we have about $3 billion available cash remaining. We will prioritize reducing our leverage to the low end of our target range by 2025. This leaves the rest for inorganic growth and/or additional share buybacks. We will allocate this to the highest value opportunity and focus on driving shareholder value.
And with that, I will hand it over to Bob to discuss Slide 6.
Thank you, Marcel. I am confident that we can deliver those targets with the growth platform we have built. Parkland is a much larger company today. We have significantly increased our scale through strategic investments made in our customer offerings and supply network. The Parkland strategy aims to continue building upon our customer advantage and leverage our supply advantage. These 2 pillars reinforce each other and provide opportunities to further grow and increase returns. Our customer advantage is built on the value we provide to our retail and commercial customers. We gain their loyalty through our proprietary brands, differentiated offer, extensive network, competitive pricing, reliable service and loyalty programs. These programs have been our consistent focus for years, and we are starting to see the benefit of the team's hard work. Our supply advantage aims to achieve the lowest cost to serve through proprietary logistics assets, industry-leading capabilities, and significant scale. This allows Parkland to generate industry-leading margins and deliver value to both customers and shareholders.
These 2 advantages complement each other and drive synergies. As we create more loyal customers, increased demand for our products, we increase our supply advantage with greater volumes and scale. In turn, we can attract more customers and continue to grow. This strategy is underpinned by the values, integrity and dedication of the one Parkland team. I have every confidence that they're going to deliver the ambitious targets we have set.
In conclusion, I want to thank the Parkland team for our success over the past year. Together, we've achieved remarkable results, and I'm excited about the opportunities that lie ahead. Let's continue to work collaboratively and build on our successes in the coming quarters and years.
With that, I'll turn it back to the operator for questions.
[Operator Instructions] A reminder that we request our analysts to limit yourselves to 1 question and 1 follow-up, and rejoin the queue for the remaining questions you might have. [Operator Instructions] Our first question comes from the line of Luke Hannan from Canaccord Genuity.
I wanted to start, if we can, on the refinery recovery plan. Bob, can you describe, maybe in just a little bit more detail, to the extent that you can, what the core elements are of this plan? I think I heard you correctly in that there should be some catch up when it comes to the utilization as a result of the work that you've done there. But maybe just a little bit more detail on what the core pillars are of that plan?
Yes, Luke, thanks for the question. As you indicated, we are bringing the refinery back up. It will be next week, and we will start to bring it back online, which leaves us with about an 8-week shortfall. I would say a few things. One is we had a minor shutdown plan for this period. So it was taken into account in our budget, part of the slowdown.
The second thing was, on the recovery side, we've been able to pull forward some work that we planned to do later in the year, which allows us to continue to run the refinery at higher rates, but also come out at a higher utilization than we had planned once we're back up and running, so we can make some up there.
And then finally, we expect to be in a constructive crack environment when we bring the facility back up. Some of the other things on the optimization side. We're seeing a good market right now for carbon credits, particularly the Canadian carbon credits, which will allow us to monetize those as well on the bio blending and imports.
Again, it's quite a constructive environment where we can make up certainly a big portion of the unplanned shutdown. And I would say that the team is working hard to get it back online here and they're making sure that they're prioritizing safety before they put the machine -- put the refinery back online.
Okay. And then for my follow-up here, I wanted to ask about the share repurchases. It was noted that you had done some in Q4, and it seems like that's accelerated a little bit further in Q1 so far. So I'm just curious how we should be thinking about, one, maybe further share repurchases or accelerated share repurchases in the near term here? And then maybe also, if I can squeeze another 1 in here, how that speaks to your overall near term thinking on capital allocation, specifically M&A and balancing that with share buybacks in the near term?
Yes, I'll ask Marcel to...
Yes, Luke, so share buybacks, we did some in November, December. We've continued to do that actively in the first quarter. Our NCIB is active at the moment, and those share buybacks fit within the overall capital allocation framework that we laid out at Investor Day and I summarized a bit earlier here as well. So that's how it fits in there. I think our focus continues to be to bring leverage down, which we have now done within the range, and we'll continue to do so. And then the allocation of the cash flow, which we have available, it's really how we look at M&A opportunities, both from a strategic and value kind of fit relative to kind of the value of buying back the shares, and we'll continue to do that. But we continue to be active with our NCIB program.
Our next question comes from the line of John Royall from JPMorgan.
So my first question is on the '24 guide. You've reiterated confidence in the $2 billion despite the 8-week refinery outage. Was there a contingency built into the guide? Or do you think other parts of the business could make up for the loss? And I think Bob mentioned that you expect to come back into a better crack environment. Do we need better cracks that weren't in the plans, that you're running to maintain that number? Just kind of trying to bridge to that $2 billion despite the outage?
John, no, we don't actually need higher cracks to make the plan. Again, we had planned to have a slowdown during this 8-week period anyway. So the cash flow that we had predicted in Q1 was less than what was already taken into account in the plan. And then other items like optimization, particularly around renewables and carbon credits, is incremental to the plan, as well as a higher utilization rate for the balance of the year. So those are the key items that allow us to have confidence in our guidance for the year. And so we're on track for being within the range that we had indicated [ 1950 to 2050 ].
Okay. And then my second question is on the Canada business. Can you speak a little to what's going right in Canada on the same-store side -- the same-store [ gallon ] side. You've consistently, throughout 2023, been doing kind of mid- to high-single digits there. I know you called out JOURNIE, but any other driver versus weather impacts -- go ahead.
Yes. Look, we have been well above industry, and our market share data would show that we've been increasing our market share. I would say the primary driver is the JOURNIE Rewards, and that's, as we've indicated in the past, getting scaled. And the other thing is we've been doing a lot of work on our backcourt, which is pulling people in as well. We're seeing that trend well from an industry perspective, but also it has an offsetting benefit of selling more fuel. So I would say those are the 2 key drivers that we're seeing.
Our next question comes from the line of Ben Isaacson from Scotiabank.
Bob, in 2023, you improved your leverage. You focused on synergy capture, organic growth. The stock did very, very well. Can you talk about what is the plan in 2024? What should we be looking for to get the stock to the next level?
Look, I think we've laid that out in our Investor Day. And again, the focus that we'll see this year is again continued organic growth. The U.S. business will continue to come on, particularly through integration. We've guided that to $240 million for the year. So some nice growth in that segment.
And our International business continuing to perform. The team did well over the last couple of years, and we would expect to maintain within that business. I would say, on the balance sheet side, we'll continue to see increased strength in our balance sheet. And that gives us the optionality to continue to buy back shares, as Marcel had chatted about, and delever at the same time.
And then just as a follow-up, not to belabor the recovery plan at the refinery. Is it fair to say that lost EBITDA is probably somewhere in that kind of $75 million to $100 million area? And if so, what I'm interested in is the MG&A cost reductions that you're focused on, it seems like that's something that could be sustainable. Can you just kind of quantify that to the best that you can?
Yes. So look, I think your estimate on the low end is an accurate estimate. And again, look, there are many things that will help us make that up. But the primary 1 is being able to come out stronger. As I had indicated, we pulled forward some maintenance activities that we planned for later in the year, which would have been a headwind on utilization. So we don't need to do that. Plus we've been able to make some improvements. It just allows us to run the refinery harder. And then along with, like I said, some of the other activities -- yes, I mean, those are the primary things that we're doing here to make sure that we're back on track.
And then maybe just then on your MG&A comment, right? As you recall, we initiated some of that work in the middle of last year. And of course, that in 2024, we'll have the full year benefit plus some additional benefits that took a little bit longer just with a bit longer runway. So the answer is, yes, there's more sustainable and there's more to go on the MG&A side, and that also will make up a little bit of the shortfall here with the refinery.
Our next question comes from the line of Michael Van Aelst from TD Cowen.
I just wanted to touch on the U.S. business. So the quarter -- $39 million of EBITDA in the quarter, and that was boosted quite a bit by a strong lubricants business. So can you talk about the sustainability of the 80% increase in the lubricants? And then on the flip side to that, it means the commercial business must have been quite weak. So how do you bridge the gap between what your kind of normalized run rate might have been in the fourth quarter to that $60 million average or so that you're looking at per quarter in the U.S. for 2024?
Yes. So look, I would say the lubricants business is quite small. So it might be worth connecting with Val just to clarify that. I don't think that was a key driver of performance in the quarter. We talked about a couple of onetime items. One is on our pricing system. So as you're aware, we've been doing a lot of work on that business.
One of the initiatives was to roll out our pricing system. And we had some issues with that in our Florida Rock, where it wasn't as responsive as we would have liked, and we had some bad information and we were out of market for a period there. That's since been fixed. I would say when you peel that out, our data would show that we tracked at industry throughout the rest of the business, so indicating that we don't have any structural issues in the business. That's 1 item.
And then the second item is, as the team there continues to dig in and make improvements, we're seeing an increase in the run rate, which brings us back to that $240 million for the year and roughly $60 million for the quarter.
Okay. And then on the commercial and wholesale business, if I might. Obviously, it's very strong growth. Are there any headwinds that you're seeing, whether it be ocean freight or anything else, that might cause that to slow down considerably going forward? Or should we expect some reasonable growth in the International to continue?
Look, I think the International business, we saw a lot of growth last year. So I wouldn't expect a ton of growth in that business this year. And we did have constructive commodity markets that helped that business last year. I would say, the businesses -- and to your point, there are some headwinds around shipping costs. I mean, generally, those costs can be transferred into the market, because everybody has the same cost structure. And so I would say that business is on track for a year, but not as strong as last year.
Yes. And then maybe, Mike, just to add to what Bob said, like we talked about continued growth in the Guyana market, with all the offshore work that's happening, we start seeing the first bits of that a similar kind of event happening in Suriname. So those are kind of good commercial contracts. And 1 of the things which we've added over the last few years, our sales to utilities, which are more ratable during the year than like what we perhaps have seen in the past, and you see that come through in International as well with strong Q2 and Q3 in addition to the usual season of Q4 and Q1. So more ratability going forward in International from what we saw a few years back through the addition of more commercial, more kind of all year-round business as well as kind of utility contracts that we won.
Our next question comes from the line of Neil Mehta from Goldman Sachs.
Yes. First question I have is just around that as you bring back Burnaby, your perspective on the crude markets [Technical Difficulty]
As we are hearing no response, I will go ahead and move forward to the next question. Our next question comes from the line of Luke Davis from RBC.
Just seen a headline here suggesting that you guys have put up 157 Canadian C-stores to be divested through NCR Realty. Just wondering if you can speak to some of the details there? What the key drivers were? How that relates to your previous divestiture targets? And if you can just speak to kind of the quality of the stations, locations, all that sort of stuff?
Yes. This is consistent with the priorities we laid out in our divestiture program. We've talked about high-value retail sites, which we've made good progress on. We've talked about various aspects of our commercial business. And then the third 1 was around low productivity sites. So these are sites that don't quite fit where we're pushing our brands, but still are good sites. So in most cases, these will be sold to partners, dealers that will own the business, and continue to sell branded product through them. So we're just changing the operating model of those businesses and allowing us to pull some of the capital out. And it's all part of our $500 million divestiture program, which we committed to by the end of 2025, and we're making good progress.
Got you. And would that be incremental to the $325 million that are already in process?
That is included in the $325 million.
Our next question comes from the line of Steve Hansen from Raymond James.
Marcel, I think you referenced the M&M offering was a little slower in the period. Just curious if that weakness extended across the rest of the food offering at all. And what type of adjustments you are implementing to account for that demand shift at all?
Yes. So M&M was off the frozen food segments. We did see some pressure on consumers, which was consistent with other food retailers. I would say on our fresh food offer, we continue to make good progress in terms of rolling out frozen within our convenience store network. And again, we won't see the benefits of that, because really we just completed the rollout at the tail end of the year. And then secondly, on our fresh offers, which were in market in 3 locations. So again, those are on track. We have M&M, certainly has been adjusting its volume margin, just to make sure that we're continuing to be able to meet the needs for our customers.
Okay. Great. That's helpful. And just a follow-up. I see that cruise bookings continue to hit new records. This is perhaps a bit of a naive question, but how much visibility do you get into the types of customer demands in the Caribbean as you look at sort of staging fuel supply, that kind of thing, in the future? Do you get a good read into those customer bookings and what kind of demand you expect through the balance of the year?
Yes. No, we do continue to see robust demand in those markets, and we do monitor customer bookings, which remain robust throughout the region.
Our next question comes from the line of Neil Mehta from Goldman Sachs.
Okay. Sorry about that. First question is just on the crude markets. There's been a lot of volatility in Western Canada. As you bring Burnaby online, do you see commercial opportunities around this? And then just your thoughts on what TMX means for both crude and product markets for Western Canada?
Yes. No, they're good questions. I mean, look, we're not sensitive really to the price of crude. It's the spreads. Some spreads remain constructive, particularly to the light crudes, which we use in the Burnaby Refinery. So we've seen that environment stay consistent and don't expect it to change here going forward.
TMX, interesting, mainly bringing heavy capacity online. And our analysis would show that it will have little to no impact on the light spreads. So we don't expect to see a significant impact there. And on the product side, I mean, Vancouver is currently supplied by Burnaby or primarily out of Edmonton. And so that product is already in the market. So we don't expect that to create any changes in terms of the product supply and availability in that market.
And Neil, we have active shippers on the pipeline. And of course, with our own crude being there, there's always opportunities to optimize as the markets move, and that is an active program that's ongoing. And so when Bob earlier referred to kind of higher capture, part of that higher capture comes from optimizing those positions that we have in the market. And so generally, volatility is good.
Yes. And both of you guys talked about this, you've made a lot of progress around deleveraging and part of that's been the asset sale market. So would just love your perspective on is there room for further asset monetization? And as we think about M&A, is it fair to say that Parkland at this point is digesting a lot of the M&A that is done as opposed to being active in the acquisition market this year?
Yes. So our deleveraging has primarily come from cash flow from the enterprise. So it hasn't been materially boosted by divestitures at this point. We'll see that more in '24 and '25, as we continue to work through the pipeline of opportunities. And M&A. Look, we're still in a mode here where we're integrating. And as we talked about in our Investor Day, our first priority right now is to get the benefits we can internally out of the business, focusing on organic growth and synergy capture, of which there's still opportunity and it's a core part of our plan to grow the business from $2 billion to $2.5 billion of EBITDA without M&A.
Thank you. This concludes our question-and-answer session. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.