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Hess Midstream Partners LP (HESM -0.32%)
Q3 2021 Earnings Call
Oct 27, 2021, 12:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, ladies and gentlemen and welcome to the third-quarter 2021 Hess Midstream conference call. My name is Michelle and I will be your operator for today. [Operator instructions] I would now like to turn the conference over to Jennifer Gordon, vice president of investor relations. Please proceed.

Jennifer Gordon -- Vice President, Investor Relations

Thank you, Michelle. Good afternoon, everyone and thank you for participating in our third-quarter earnings conference call. Our earnings release was issued this morning and appears on our website, www.hessmidstream.com. Today's conference call contains projections and other forward-looking statements within the meaning of the federal securities laws.

These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ from those expressed or implied in such statements. These risks include those set forth in the Risk Factors section of Hess Midstream's filings with the SEC. Also, on today's conference call, we may discuss certain non-GAAP financial measures. A reconciliation of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures can be found in the earnings release.

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With me today are John Gatling, president and chief operating officer; and Jonathan Stein, chief financial officer. In case there are audio issues, we will be posting transcripts of each speaker's prepared remarks on www.hessmidstream.com following their presentation. I'll now turn the call over to John Gatling.

John Gatling -- President and Chief Operating Officer

Thanks, Jennifer. Good afternoon, everyone and welcome to Hess Midstream's third-quarter 2021 conference call. Today, I'll review our operating performance and highlights as we continue to execute our strategy and discuss Hess Corporation's latest results and outlook for the Bakken. Jonathan will then review our financial results.

We continue to deliver strong operational performance in the third quarter, anchored by the safe and successful execution of the Tioga Gas Plant turnaround. Extensive COVID-19 protocols were implemented to keep the workforce of more than 650 people safe. We're proud of our team for their outstanding execution under challenging conditions. Following the safe and quick ramp-up of TGP, the team has turned their attention to the commissioning of the 150 million cubic foot per day expansion, which is underway and progressing well.

The additional capacity is expected to be available at year-end, concurrent with the completion of the WBI residue export tie-in. Focusing on our third-quarter performance, gas throughputs exceeded expectations as processing volumes ramped more quickly than anticipated following the turnaround. Third-quarter gas processing volumes averaged 285 million cubic foot per day and as expected, remained below MVC levels. Third-quarter crude terminaling volumes averaged 111,000 barrels of oil per day and water gathering volumes averaged 75,000 barrels of water per day.

Now, turning to Hess Upstream highlights. Earlier today, Hess reported third-quarter production results with the Bakken net production averaging 148,000 barrels of oil equivalent per day versus a guidance of 145,000 barrels of oil equivalent per day, primarily driven by the strong execution of the TGP turnaround. Hess confirmed that the third drilling rig commenced operations in September, allowing Hess to accelerate the development of their inventory of high-return well locations. A three-rig program allows Hess to grow production and leverage our strategic infrastructure, driving incremental volume growth for the midstream.

The additional rig, combined with our aggressive gas capture strategy, positions Hess Midstream for strong organic growth. For full-year 2021, Hess expects Bakken net production to average approximately 155,000 barrels of oil equivalent per day. Now turning to our guidance. For full-year 2021, we now expect gas processing volumes to average approximately 300 million cubic foot per day, modestly higher than previous guidance, primarily driven by the successful execution of the TGP turnaround and strong ramp-up upon resuming operations.

We expect full-year 2021 crude terminaling volumes to average approximately 120,000 barrels of oil per day and water gathering volumes to average approximately 75,000 barrels of water per day. Our full-year throughput guidance continues to anticipate that third parties will contribute approximately 10% of our gas and 15% of our oil volumes. Our higher expected full-year gas volumes is the primary reason for increasing our 2021 adjusted EBITDA guidance to $900 million at the midpoint. Our full financial and operational guidance is included in our earnings release and is available on our website.

Now, turning to our 2021 capital program. We continue to make good progress on our capital program. The commissioning of the TGP expansion and focused build-out of our gas compression system ensures that we're well positioned to meet Hess' accelerated development pace. During the third-quarter turnaround, we completed a series of plant tie-ins for the TGP expansion, which is now being commissioned.

We expect final export tie-ins to be completed at the end of this year, concurrent with the WBI residue system start-up taking Hess Midstream's total processing capacity up to 500 million cubic foot per day, enabling us to meet our customers' expected accelerated development pace. In 2022, we anticipate substantial organic growth in our gas processing volumes, although we expect physical volumes to remain generally at or below MVC levels, which are approximately 15% higher compared to our 2021 physical volume guidance. We expect physical volumes to be above currently set MVCs in 2023, in line with our previous guidance. Construction activities have commenced on two new greenfield compressor stations, which will expand our gas compression capacity by approximately 20% online in 2022.

Approximately 50% of the expenditures for the new stations and related infrastructure is expected to be incurred in 2021, with the balance planned for 2022 when complete -- when we complete construction and bring the stations online. We're also executing our oil, gas and water well connect program to meet Hess' accelerated development plan. Full-year 2021 capital expenditure guidance is unchanged at $180 million. We expect expansion capital to be approximately $165 million, which is comprised of $95 million for compression projects, $60 million for low-pressure gathering and well interconnects and $10 million for gas processing.

Maintenance capital is expected to be approximately $15 million. In summary, we're continuing to execute our strategy, making focused investments to expand infrastructure to meet the needs of our customers, delivering safe and reliable operating performance and strong financial results, which provides the flexibility to take advantage of future accretive growth opportunities, including potential incremental return of capital to our shareholders. I'll now turn the call over to Jonathan to review our financial results and guidance.

Jonathan Stein -- Chief Financial Officer

Thanks, John and good afternoon, everyone. During the third quarter, we continued to execute on our financial strategy that optimizes our capital structure and utilizes cash flow generation to provide increased capital to our shareholders. On October 13, we paid our second-quarter distribution, including a 10% increase in the distribution level compared to the first quarter of 2021, in addition to our quarterly increase consistent with Hess Midstream's targeted 5% growth in annual distributions per Class A share. During August, we also completed a $750 million repurchase of units from our sponsors, optimizing our capital structure and bringing our leverage to approximately three times adjusted EBITDA on a full-year 2021 basis.

Together, these actions delivered immediate accretive and meaningful return of capital to Hess Midstream shareholders. Hess Midstream continues to target annual distribution per Class A share growth of at least 5% through 2023, with distribution coverage of at least 1.4 times. In addition, we maintained significant financial flexibility, including expected ongoing free cash flow after distribution and leverage declining below our three times adjusted EBITDA target in 2022, allowing for potential future accretive opportunities, including incremental return of capital to shareholders. Turning to our results.

For the third quarter, net income was $131 million compared to $162 million for the second quarter. Adjusted EBITDA for the third quarter was $205 million compared to $230 million for the second quarter. The change in adjusted EBITDA relative to the second quarter was primarily attributable to the following. Gas processing revenue, excluding pass-through revenue, was lower by $1 million, as our throughputs were generally below MVC levels in the third quarter, driven by the planned turnaround at the Tioga Gas Plant.

Total operating expenses, including G&A, but excluding depreciation and amortization and pass-through costs, were higher, decreasing adjusted EBITDA by approximately $23 million, including operating expenses related specifically to the Tioga Gas Plant turnaround of approximately $15 million, higher other seasonal maintenance activity at the Tioga Gas Plant of approximately $7 million and higher operating G&A of approximately $1 million. LM4 proportional share of earnings and depreciation, net of processing fees decreased adjusted EBITDA by approximately $1 million, resulting in adjusted EBITDA for the third quarter of 2021 of $205 million at the top end of our guidance, primarily driven by lower-than-expected seasonal maintenance and higher gas gathering revenues from the strong volume ramp following the TGP turnaround. Third-quarter maintenance capital expenditures were approximately $7 million and net interest, excluding amortization of deferred financing costs, were approximately $26 million. The result was that distributable cash flow was approximately $172 million for the third quarter, covering our distribution by 1.3 times.

Expansion capital expenditures in the third quarter were $52 million. At quarter end, debt was approximately $2.6 billion, representing leverage of approximately three times adjusted EBITDA on a trailing 12-month basis. Turning to guidance. As John described, strong gas capture performance has enabled us to once again increase our full-year financial guidance.

We expect net income to be in the range of $605 million to $615 million. Adjusted EBITDA is expected to be in the range of $895 million to $905 million, representing at the midpoint 20% growth compared to full-year 2020 results. Maintenance capital and cash interest are projected to total approximately $115 million for the full-year 2021 and distributable cash flow is expected to be in the range of $780 million to $790 million, resulting in an expected distribution coverage of greater than 1.4 times. As implied in our full-year 2021 guidance, we anticipate fourth-quarter net income and adjusted EBITDA to be significantly higher compared to third-quarter results, supported by increasing volumes and lower operating costs with the completion of the TGP turnaround and lower seasonal maintenance activity.

At the midpoint of our guidance, we expect fourth-quarter adjusted EBITDA to be approximately $240 million or 15% higher than third-quarter results, with distribution coverage of approximately 1.6 times with revenues that are approximately 95% protected by MVCs. We expect to end the year with leverage at our conservative three times adjusted EBITDA leverage target. In 2022, in addition to organic growth, we expect higher revenues that are approximately 95% protected by generally increasing MVCs. We expect this revenue growth to continue in 2023 as our physical volumes increased above MVCs from higher Hess production and continued increase in gas capture.

As a result, we have visibility to continued growth in adjusted EBITDA and generation of adjusted free cash flow after distributions and expect to delever below our conservative three times adjusted EBITDA leverage target in 2022, providing continuing flexibility to take advantage of future accretive growth opportunities, including potential incremental capital to shareholders. In January, we will release our 2022 operational and financial guidance, including 2024 MVCs. This concludes my remarks. We will be happy to answer any questions.

I will now turn the call over to the operator.

Questions & Answers:


Operator

[Operator instructions] And our first question comes from the line of Brian Reynolds with UBS. Your line is open. Please go ahead.

Brian Reynolds -- UBS -- Analyst

Hi. Good afternoon, everyone. To start off on capital allocation, you talked about in your prepared remarks about incremental return of capital opportunities going forward. Given 2021 saw distribution step up, a buyback and a secondary offering and given that 2022 has a similar free cash flow profile, can we potentially have an all of the above scenario again and with terms of return of capital as we look ahead into 2022? Thanks.

Jonathan Stein -- Chief Financial Officer

Thanks. Yes, I mean, our financial strategy includes maintaining our optimized, an optimized capital structure with targeted leverage at our three times EBITDA. As you mentioned, this year, we did both the $750 million share repurchase and the 10% distribution increase at the distribution level increase that accomplish that financial strategy by bringing our leverage back to three times EBITDA on a 2020 basis and utilizing our free cash flow. So as we look forward, as I mentioned, we're going to continue to be free cash flow positive after distribution and our leverage will decline below that three times adjusted EBITDA target in 2022.

So therefore, from a capital allocation point, you can certainly expect that part of our capital allocation strategy will be the continued buybacks and increase dividends to utilize that financial flexibility.

Brian Reynolds -- UBS -- Analyst

Great. Thanks for the color. That was super helpful. As a follow-up, Hess talked about on its call about increased capex spend in the U.S.

Gulf of Mexico to spend on tiebacks and money on an exploration well. From a HESM perspective, what does HESM need to see from upstream activity for those conversations to restart around the Gulf of Mexico long-cycle assets? Could this be a 2023 event if the results come back positive and Hess continues to spend capital in the Gulf of Mexico? Thanks.

John Gatling -- President and Chief Operating Officer

Yeah. Thanks for the question, Brian. Overall, the GoM transaction isn't an immediate priority for us for the midstream or for Hess. We're continued focus on our strategy around building out the business in the Bakken.

The work that we did for the Gulf of Mexico remains active. We're continuing looking at the asset, looking at the future opportunity. I mean, it's definitely something that's available to us in the future. It just kind of depends on when the timing is right for that.

So at this point, there's nothing immediate on the horizon. But again, we're continuing to look at the development opportunity that's going on in the Gulf of Mexico and it remains definitely an asset that we're interested in, in the long term, but there isn't anything on our plans right now.

Brian Reynolds -- UBS -- Analyst

Great. That's all you have for me today. Have a good day. Bye.

John Gatling -- President and Chief Operating Officer

Thanks, Brian.

Operator

Thank you. And our next question comes from the line of Jeremy Tonet with J.P. Morgan. Your line is open.

Please go ahead.

Jeremy Tonet -- J.P. Morgan -- Analyst

Hi. Good afternoon. I just wanted to follow up on the earlier discussion here on the capital allocation priority. We did see some pickup in midstream consolidation, especially in the Permian and Bakken.

Can you share any thoughts on how HESM is currently evaluating buybacks versus M&A opportunities? Any thoughts where you can share on how the market is right now?

John Gatling -- President and Chief Operating Officer

Yeah. Maybe I'll take the first -- the last part of your question first and just talk about kind of our overall strategy and then Jonathan can talk a little bit about the financial side of it. So we're continuing to look at assets in the Bakken as it relates to bolt-on opportunities, things that will strengthen our footprint and our strategic infrastructure position in the Bakken, in particular, as it relates to supporting Hess and our currently connected third parties. So that's really our primary focus right now is just executing the Bakken plan.

And just as a reminder, all of those things are incremental to our current plan to the activities and the guidance that we've already provided. So again, those all represent upside opportunities, but we're always looking for quality assets that strategically fit in with our infrastructure. So that's our focus from an M&A perspective. So I'll hand it over to Jonathan for the first part of the question.

Jonathan Stein -- Chief Financial Officer

Yeah. I mean I think John said it well with our focus really not on active M&A and really just looking at potential bolt-on opportunities, that really means that our flexibility and financial flexibility that we have are really primarily bolt-ons would be utilized for return on capital, like I mentioned. Again, as we move into 2022, we'll be below our three times EBITDA target and continue to be free cash flow positive. So that really allows for the capital allocation that I talked about before in terms of return of capital in terms of buybacks or dividends increases as appropriate.

But really, we'll continue to execute our financial strategy. We have a very clean and story with a visible growth. And so we'll continue to focus on that, as John described.

Jeremy Tonet -- J.P. Morgan -- Analyst

Maybe just picking up on the buybacks comment there. So we did see you guys did announce a strong sponsor plans executed a few months back and then there was another sale early this year. So increase in public float is a positive. But just want to understand if you could share any thoughts on what discussions are going on with sponsors? I mean, midstream assets are very well integrated into Hess.

But do they have any planned exit over the next few years, maybe with respect to GIP or Hess itself?

Jonathan Stein -- Chief Financial Officer

OK. It was a little hard to understand, but I think you're asking in terms of sponsor plans and relative to the secondary and the buyback that we did earlier. So I think -- look, I think if you look at the two types of transactions we did this past year, they each had different objectives. The secondary is we're really focused on technical ownership so owner -- to technical ownership of feedback that we've got from investors that they see that relative to the flow in liquidity.

So those offerings were really targeted at addressing that issue. Since our March transaction, our average daily trading volume has more than doubled. So in terms of focus on that objective and certainly been focused on achieving that and value accretion since that transaction in March was offered at 21 and still early days on our recent transaction. But again, it's targeted toward that focus of increasing our liquidity and increasing the float.

Going forward, again, there's no specific plan with regard to secondaries. Hess and GIP recognized that there's continued demand for additional full liquidity, but they're also very disciplined investors who see the long-term value in Hess Midstream. The buybacks are really a different objective. Those are really geared at, as I said before, our financial strategy in terms of maintaining our optimized capital structure in terms of our targeted leverage, particularly at three times EBITDA.

So there, we've certainly got a lot of positive feedback from investors relative to the transactions we did earlier this year in terms of the buyback, in particular. And as I talked about, we continue our financial flexibility. And certainly, that will continue to be part of our strategy going forward to optimize our capital structure through buybacks and increase dividends as appropriate. So really two different objectives, really geared toward Hess Midstream that all geared toward the sponsors.

I mean, in terms of the secondary, certainly, those were relatively small amounts relative to Hess and GIP. So really, the focus has been on how do we improve the liquidity and float and how do we continue to execute our financial strategy in terms of having an optimized capital structure and using that financial flexibility for return of capital to shareholders.

Jeremy Tonet -- J.P. Morgan -- Analyst

Got it. That's it for me. Thanks.

Operator

Thank you. And our next question comes from the line of Doug Irwin with Credit Suisse. Your line is open. Please go ahead.

Doug Irwin -- Credit Suisse -- Analyst

Hey, everyone. Thanks for the question. Maybe just on expansion capex. I was wondering if you could help frame kind of what we should expect in 2022 now that the TGP turnaround is complete? From the prepared remarks, it sounds like we should expect another $95 million spend on compression next year and then some well connect capex on top of that.

Just kind of curious year over year how we should be thinking about that move?

John Gatling -- President and Chief Operating Officer

Yeah. I think what we've said is we're planning to be at or below 2020 levels. We do expect capital to increase slightly and trying to give some indication of directionally where that's heading. It's definitely a well-contained spend and it's primarily in the focus of supporting Hess' development plan over the next couple of years as we've ramped up to three rigs and then potentially ramping up to four rigs.

But as you say, I mean, as with the expansion capital behind us, it really is more focused on the compression activity to support the development and then well connect. So that's primarily our focus over the next year or so.

Jonathan Stein -- Chief Financial Officer

And I would just add with that with John, just add some context. And just as a reminder, as we've said, we do expect EBITDA to continue to grow in 2022 and 2023. And that's based -- as we've talked about, based on MVCs provide line of sight to that, both in terms of increasing MVCs in 2022 and the continued physical volume growth in 2023. So with that driving our EBITDA up and even with the higher capex that John just mentioned in terms of 2022, we'll continue to be free cash flow positive after distributions as I've talked about, continue to delever below our three times target.

Doug Irwin -- Credit Suisse -- Analyst

OK. Got it. That's helpful. Thank you.

And then maybe just on more of a macro level on the Bakken, obviously, Hess just added a rig, but just curious how the conversations with third parties have been doing here recently with the run-up in crude prices? Have you seen an increased appetite from third-party producers or is everyone still staying pretty disciplined from how your conversations have gone?

John Gatling -- President and Chief Operating Officer

Yeah. I mean I think the overall tone in the basin is fairly consistent with what Hess' plans are. I mean, Hess has increased some activity. And as you're probably aware and then there's definitely been rig increases in the basin.

So we are seeing activity increases. But I think that overall, the producers are trying to stay disciplined trying to maintain that position of free cash flow and making smart investments. So we are seeing some increased activity, both obviously from Hess, as you heard from Hess's call and also as in our prepared remarks, but also seeing increased activity in third parties. As I mentioned in my prepared remarks, we see gas kind of at the 10% level and crude at the 15% level.

But that does represent -- there is some potential upside in both of those as well as the basin continues to recover from -- with the higher oil prices.

Doug Irwin -- Credit Suisse -- Analyst

Got it. Thanks. That's all for me. Thank you.

John Gatling -- President and Chief Operating Officer

OK. Thank you.

Operator

Thank you. And our next question comes from the line of Robert Kad with Morgan Stanley. Your line is open. Please go ahead.

Robert Kad -- Morgan Stanley -- Analyst

Thanks so much. Maybe more of a macro question here. But I was wondering if I could ask for some high-level thoughts on your outlook for ethane recovery in the Bakken. Certainly, we've been seeing processing margins increase a bit recently.

So just curious for your thoughts on how you see that trending into '22? And really what sorts of margins do you think might be necessary to incentivize more meaningful ethane recovery across the basin? Thank you.

John Gatling -- President and Chief Operating Officer

Yeah. I mean I think it's difficult for me to comment on what other processes are going to do in the basin. But we're very fortunate that we have a high-quality asset in the Tioga Gas Plant that has full fractionation capability up to 250 million cubic foot per day with full ethane extraction and we have a reliable export market to send that ethane. As I mentioned in my prepared remarks, we also expanded the gas plant by an additional 150 million cubic foot, which will be available at the end of this year once we have residue export.

We feel like we've met the needs from an ethane perspective and an overall frac availability. So we feel like we've got a nice mix of both full fractionated products and also Y-grade export from a liquids perspective. So overall, we feel like we're very well positioned to take advantage of any prices across the different products and our ability to flex on that and optimize for Hess ultimately providing the best netbacks to Hess and our third-party customers.

Robert Kad -- Morgan Stanley -- Analyst

Great. Thank you.

John Gatling -- President and Chief Operating Officer

Thank you.

Operator

Thank you. And our next question comes from the line of Michael Lapides with Goldman Sachs. Your line is open. Please go ahead.

Michael Lapides -- Goldman Sachs -- Analyst

Hey, guys. Thank you for taking my question and congrats on an exciting last couple of months. A little bit of macro questions and then one micro. On the macro side, just curious, when you look at the basin, when do you think the basin and I know you just expanded TGP, so I may be premature here.

But when do you think, given your outlook for the basin, there'll be a need for even more processing capacity? That's my first question. My second is -- my second two are a little more micro. I wanted to just make sure I understand on the growth capex for 2022. You expect growth capex to be roughly in line-ish with '21 or up slightly? And then finally, are you planning when you give guidance in January at the end of January to also give an update on capital allocation at the same time?

John Gatling -- President and Chief Operating Officer

Yes, sure. So let me just talk about the basin processing first and then I'll address the '22 capex. And then I'll hand it over to Jonathan to mop up anything I missed on the guidance question and then also kind of moving into the capital allocation piece. So on the processing side, it really depends -- we have very good visibility into what Hess's plans are.

And obviously, our development and our infrastructure is anchored by Hess and also our third parties. I think we're uniquely positioned that we really have a strong understanding of the subsurface with our relationship with Hess and other producers that we're currently contracted and connected with. So from our perspective, we feel like Hess Midstream is uniquely positioned to take advantage of the expansion we've already done. That's part of the reason why we're going to be investing in more compression in 2022.

So we feel like we're well positioned to meet the needs of our customers.  If you look at some of the broader forecasts coming out of the -- for the basin, there definitely is an upward trend that looks like it continues toward the end of the decade. So I mean, depending on where you are in the basin, there may be additional need for processing. I mean I've seen some curves that have exceeded the cumulative processing available in the basin. So I definitely think there's more opportunity for further build-out.

And I would say that, for us, we are looking at that long-term horizon as we think about our processing needs as well and what Hess and our third-party customers need. So that continues to be a focus for us. To your first micro question and again, I'll let Jonathan kind of mop up anything I miss here and then talk about the allocation piece -- the capital allocation piece. We do expect capital to increase going into 2022 as it compares to '21.

However, we do expect the long term and as we look back at, say, 2020, we expect to be at or below that level. So we're trying to kind of put a range on what we're talking about as we move into '22. The increase is really driven by the development pace that we're seeing from Hess and from third parties. So that's really kind of what we're focused on and that's why we gave a little bit of indication of where we are from a compression perspective.

And then as Jonathan mentioned in one of the prior answers, we are focused on EBITDA. We still continue to see substantial EBITDA growth. We still continue to see substantial organic volume growth. So the investments that we're talking about we're talking about the things that are going to ultimately support that EBITDA and physical volume growth as we transition from MVC levels in 2022 to above MVCs -- expected above MVCs in 2023.

So with that, I'll hand it over to Jonathan for any cleanup.

Jonathan Stein -- Chief Financial Officer

No, that was good. I have nothing to add on that. Just on your last question around capital allocation, I mean certainly, as we move into 2022 and we gave our guidance. In terms of our financial strategy, that will continue to be, as I said, no change there, which will be to utilize our financial flexibility, primarily and certainly for capital allocation, including buybacks and increased dividends.

What we will have in 2022, when we give our guidance will be, obviously, you'll see what our free cash flow will be after distributions based on our guidance, you have a better feel for -- based on that, we have a specific number on capex. You can also get a feel in terms of with being free cash flow positive after distributions, well, that will mean in terms of our leverage progression through the year, which will certainly move below our three times target. So get more specific information in terms of that, but there's really no change to our financial strategy, which continues to be to maintain a optimized capital structure and to utilize return of capital to shareholders as part of that.

Michael Lapides -- Goldman Sachs -- Analyst

Got it. Thank you guys. Much appreciate it.

John Gatling -- President and Chief Operating Officer

Yup. Thank you.

Operator

[Operator signoff]

Duration: 33 minutes

Call participants:

Jennifer Gordon -- Vice President, Investor Relations

John Gatling -- President and Chief Operating Officer

Jonathan Stein -- Chief Financial Officer

Brian Reynolds -- UBS -- Analyst

Jeremy Tonet -- J.P. Morgan -- Analyst

Doug Irwin -- Credit Suisse -- Analyst

Robert Kad -- Morgan Stanley -- Analyst

Michael Lapides -- Goldman Sachs -- Analyst

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