Tag Archives: engagement

Chesapeake Utilities’ (CPK) CEO Mike McMasters on Q1 2016 Results – Earnings Call Transcript

Chesapeake Utilities Corporation (NYSE: CPK ) Q1 2016 Earnings Conference Call May 6, 2016 10:30 am ET Executives Beth Cooper – SVP and CFO Mike McMasters – President and CEO Analysts Nathan Martin – BB&T Capital Markets Operator Good morning. My name is Chrystal and I will be your conference operator today. At this time, I would like to welcome everyone to the Chesapeake Utilities first quarter financial results conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to hand the conference over to Beth Cooper. Please go ahead ma’am. Beth Cooper Thank you, and good morning, everybody. I’d like to welcome you to our first quarter 2016 earnings conference call. Joining me today is Mike McMasters, President and CEO. And in addition to Mike, we’re joined by other members of our management team. For those on the phone today, we’re actually hosting today’s call live from Salisbury University in Salisbury, Maryland. The call is being held within the Perdue School of Business, so as Mike and I are alumni of that school, and we owe special thanks to Dr. William [ph] for enabling us to have the call here today, and included within our meeting we have members of the local financial community here in Salisbury. We have a board member. We have distinguished faculty and also many students here in the room. We are very happy here as I said. As usual today, presentation can be found on our website under the Investors section, the Events and Webcasts subsection or you can access our presentation via our IR app. One of the things I maybe like to point out on Page 1 of presentation, when trying to think about the themes and typically at the beginning of each year, we try to look at what are themes going to be for this as presentation. I pulled something from actually Mike’s President Letter in the annual report and basically within his letter he talks about that we’re driving growth by focusing on long-term sustainable growth opportunities. And hopefully today you will see that that’s really been the case our past – in terms of our past success, as well as what we think in terms of our future opportunities for continued earnings and dividend growth. Turning to Slide 2, this is the typical forward looking and other disclosures section. This presentation today will include forward-looking information. I encourage everyone to take a look at our Form 10-K, there is a section called Safe Harbor for forward looking information. Because some of the information that we talk about may actually differ from our actual results, and we discuss those factors that could cause our forward looking information to differ from the actual results. Turning to Slide 3, I’m now going to begin to touch on the first quarter results. And so what you’ll see is for the first quarter, we reported net income of $20.4 million as compared to last year of $21.1 million, a slight decline of about $740,000 over the prior quarter of last year. On the surface, earnings are down, yes, but certainly it’s driven by the weather. Weather represented for us about $0.27 in terms of decline in earnings per share for the quarter. Our growth that we experienced across – a good part of our businesses helped offset the weather impact and ultimately resulted in net income only being down by about 3.5% for the quarter — pretty remarkable. And that’s really been driven by – and we’ll talk about it a little bit later on — growth in our natural gas businesses, service expansions and customer growth and also the contribution of a new acquisition that we did last year. I’m next going to touch on our results by our segments. And included in our press release that we filed on Wednesday, as well as in our Form 10-Q that we filed yesterday, we provide detailed information about the accomplishments and results for our segments. And so I encourage you to take a look at that for more detailed information. In terms of our regulated energy segment, you will see that we generated an increase in gross margin growth of about $1.9 million. That $1.9 million of gross margin growth actually made its way to the bottom line to generate $2.1 million in terms of increased operating income. Overall, we saw an increase of $4.3 million in gross margin, that was driven by $1.9 million related to natural gas service expansions, our Florida Gas Reliability Infrastructure Program which we refer to as GRIP, generated an additional $1.1 million of margins, and natural gas customer growth, driven basically about half on the Delmarva Peninsula and half in Florida, contributed to an additional $745,000. The gross margin was up about $4.3 million, weather that was much warmer than the prior year offset that by about $2.4 million, resulting in that $1.9 million of margin increase that we saw. You will see expenses were pretty flat year over year, actually a slight decline which resulted in a $2.1 million increase in our regulated businesses, that once again helped to offset that significant weather impact in the first quarter. Turning to our unregulated businesses, which are certainly more weather sensitive, and you will see that here in the results. Our gross margin was down by $2.2 million. That was comprised of basically lower volumes of propane gallon sold which represented about $4.3 million. Our margins per gallon – we were anticipating that those would begin to return to more normal levels and we saw that start to happen. That represented about $1.8 million. And then weather basically — the combination of those two, when you think about, first, the $4.3 million and then the lower margins per gallon, that’s about $6.1 million. That was partially offset, as I mentioned, with the inclusion of Aspire Energy’s results in the first quarter. We acquired that last year on April 1, April Fool’s Day. And so we didn’t have them in our results for last year and they added about $4.2 million. So ultimately ending in the $2.2 million decline that you see here. Additionally we had about $1 million of higher expenses. Those were the result of Aspire being part of our operations. So overall this business was down about $3.3 million in operating income for the quarter, but all driven by the weather and then the lower retail margins which we had anticipated. The next page is actually a summary of a chart that we include within our 10-Q and also within our press release, looking at the factors from an earnings per share standpoint. And you will see, once again, I started off by saying that earnings last year for the quarter were $1.44. Weather contributed basically to a decline of $0.27. But you will see that growth in our regulated businesses added back $0.15 and the Aspire which is basically $0.06 also added to our earnings. So really a $0.27 per share decline was offset with the exception of $0.11. This is another chart – turning to Slide 7 – that actually shows the weather impact. And on this chart, we actually show a comparison relative to normal weather. Because it’s one thing to show a comparison relative to the prior year but compared to normal, what you will see is that we were down in Delmarva by 13% and down in Ohio by 10%. So we talked a little bit about the growth that we’ve experienced as a company. Strong growth in our natural gas businesses, I know this year, is somewhat offset in the first quarter by weather. But that growth has really been driven by the capital expenditures that we as a company have made, those investments have been made to earn either our target returns or greater than our target returns, and the dollars that we have invested have been very substantial. If you look at last year, we invested approximately $195 million in capital expenditures, $52.5 million of which was related to the Aspire Energy of Ohio acquisition. This year we’re projected to invest another $179 million. And when you look at that just a couple of key points relative to benchmark about those numbers. First, $179 million this year represents just under 30% of our total book capitalization. Our equity long term debt and short term debt are very substantial. When you look at this over the five year period, you will see that we’ve invested — will have invested $679 million. Our total book capitalization today once again is about $700 million. So huge investment that has happened over the last five years and are continuing this year. Our projects this year are comprised of about 82% regulated investments in our natural gas and electric businesses and the key projects that are underway include our Eight Flags combined heat and power plant that we expect to complete mid-year this year. Also, we’re expanding facilities to serve Calpine power plant in Dover, Delaware. We have a reliability project that’s underway and our Gas Reliability Infrastructure Program which replaces qualifying pipes and mains in Florida is another large component of our capital expenditure budget this year. So a very substantial project, the largest of which is our CHP plant, that’s about $40 million. And there are other projects that we’re constantly looking at to hopefully add to our pipeline to add further earnings growth as we move from this point forward. Some of those projects we know will not necessarily be incurred this year but may be incurred next year and we’re constantly looking for new opportunities. So while we have all these capital expenditures, it’s very important for us to have a balance sheet that supports those levels of expenditures. And so as you look at our balance sheet, as I mentioned we’re sitting with about $700 million in total book capitalization at the end of March. Breaking that down, when you look at it from a permanent capital perspective, our equity represents about 71% of that balance. When you look at it from a total capitalization, we’re capitalized about 53% equity and our target is 50% to 60% equity to total capitalization. Wanting to have that strong balance sheet, so we can make the investments that we need for continued future earnings growth. Last year we put into place several facilities with the amount of capital that we’ve expanded. We want to try to align as much as possible of the financing with those projects and those projects coming online. We executed a $150 million revolver agreement with five different banks. Currently at the end of March, we borrowed $40 million under that $150 million revolver. But it’s very important as we’re expanding the levels of capital that we have that short term debt capacity available. We’d also entered into a $150 million private placement shelf agreement with Prudential. And that enables us to basically take that shorter term debt and as those projects are placed into service, we can then finance the long term. And we will seek to utilize those mechanisms, those particular options that we have as well as access the equity markets as needed to always ensure that we’re looking towards that target capital structure that I mentioned. Given the growth opportunities we have, we talked a little bit about on past conference calls and a little bit earlier here in the room, that we recognized last year our ninth consecutive year of record earnings for the company. And we’re hopefully going to continue that trend. But looking at what we’ve accomplished and always trying to align our dividend growth, so it is supported by earnings growth. Earlier this week, our board increased our dividend by $0.07 which represented a 6.1% increase in our dividends, moving it from $1.15 to $1.22. What’s important also to note is that this was a 13 th consecutive year of dividend increases upon the prior year. So it’s not that we’re just increasing our dividend at the prior year’s amount, we’re actually stepping it up beyond that. We paid a consistent dividend for over 55 years. For the last 13, we’ve been constantly increasing each year. And as I mentioned, our focus is on dividend growth that’s supported by earnings growth and we expect a significant growth potential that we see in our businesses to continue to provide the opportunity for superior dividend growth in the future, just as it has in the past. Just a little bit of information, turning to Slide 11 in regards to our gross margin, I talked a little bit about our growth. You will see that last year in the middle of the chart, basically we recognized about $25 million from projects that we had placed into service in 2014 and thereafter. Those projects coupled with new projects that are coming online are expected to result in gross margin this year of about $44 million. So we’ve identified $19 million of margin increase that we’re expecting this year and those same projects are going to add an additional $7 million beyond that next year. So where is some of that gross margin growth coming from? I talked a little bit about the Aspire Energy transaction that we did, and you will see on here that basically that added — third column – that added about $4.2 million of gross margin for the quarter. Serving the Calpine power plant in Dover is at a considerable margin. They’re operating right now under our short term service agreement and ultimately when we place additional services into place next year at the beginning of the year, they’ll be under a long term contract for approximately 20 years. That added additional margin for us. And then last, the Gas Reliability Infrastructure Program added $1.1 million that I talked about earlier. So you will see from projects that have really already been done or set into motion, $15 million. We have two additional projects that are underway, that are going to add some incremental margin, the Eight Flags project, combined heat and power plant, that’s going to add $3.7 million and then next year will add $7.3 million dollars on a fully annualized basis. So a lot of growth that’s happened in the last several years. A lot of growth that we see happening from here on out in terms of projects that we’ve identified, and there are also many other projects on the drawing board. As always, thank you for your support and interest in our growing company. I believe this continues to be very exciting time for Chesapeake, as exemplified by our strong financial results. And certainly the weather was a downer in the first quarter but the amount of growth that the company experienced was able to match a large part of that weather impact. Now I will turn the call over to Mike who will expand on our strategic growth initiatives, our long term performance results and our commitment to continued growth for our shareholders. Mike McMasters Thanks, Beth. I guess I want to turn to Slide 13, 14 I guess – Slide 14, I am going to start talking about our strategic platform for growth. This is a pretty important slide for us as a company. We actually show this to our employees quite a bit, in addition to our board of directors and investors. We start at the bottom and work our way up engagement strategies, basically what we are trying to do is to get our employees more engaged in the company’s efforts. And we do that by allowing them, I guess, the opportunity to get more engaged in the communities that we’re serving. And so what we’re finding. I guess, with our efforts to do that is that we’re getting — I’m going to say — improved community relations. We’re getting improved productivity and therefore improved growth. And one of the key things that we have to do as a company, I guess, the first job really is safety. And so if we can maintain a safe system, we can maintain a reliable system, we take care of our customers and the communities, then we’re positioned for growth. Without those strategic ingredients, growth becomes more difficult. It’s fairly easy to sell services when they look at your track record and see that you’re doing – you’re in a very good development. The next step in the process, moving up the triangle, is developing new business lines and executing existing business unit growth. You think about a utility — as the utility matures, it becomes more and more difficult to grow, and you will see that a lot in the electric industry today. And so what we’re having to do is, so let’s think about things differently. Let’s not just stick to the same services we’re providing, now let’s expand the services that we can provide. In addition, let’s look beyond our current service territories and see if we could grow outside of our territories to help increase our growth, and that’s how you get numbers like the $100 million worth of CapEx et cetera. And then finally, all that shows up in results. And you can see safety awards, community service awards, achieving top quartile growth in earnings, achieving top quartile growth in shareholder return. Turning to Slide 15, there are several things here, and just in a moment ago, I want to point to the last bullet on the slide. This is the fourth consecutive year for the Chesapeake, it was recognized as the Top Workplace. Well the significance of that just says, the engagement strategies are working. It is allowing employees that participate in community service activities. Our executives generally, I want to say almost every time, are also participating whether it’s the Food Bank, Steve is on a couple of different boards, at the time the humanity, for building homes, also and the Food Bank, Steve joined that network as well, these different services. So there is also of different things that our executives are doing and our employees are doing and that’s driving team work and engagement. Turning to Slide 16, I guess to the community side, we get a lot of stuff here but one of the things I will point out here. There are several awards here that were very important to us. The second bullet — Central Delaware Chamber of Commerce Excellence in Business Award for Corporation of The Year. Again, that was based on our community contributions, and the last bullet, just last few months, we got an award — Jefferson Awards in Delaware for Outstanding Service by a Major Company. And so it’s these types of awards that are telling us that we are accomplishing something that our employees –our employees are doing great things and the communities are recognizing what we’re doing. Strategic planning and thinking is one of the key processes that we have for growth. The way we attack I guess strategic planning and thinking is that we set very high growth targets in our strategic planning process – targets that really we could not hit if we kept doing the same thing. So it forces us every year to help — what are we going to do differently tomorrow to help accelerate our growth. We involve every business unit. Just about every employee in the company, at some point of time is involved in the strategic planning process. Every business unit is very much involved in the strategic planning and process. If you roll the clock back probably 10 years, maybe 15, I don’t know how far back it was, we used to do the strategic planning in the corner office. And so the slower speed we’re getting — we would talk about all this stuff and we would write this plan out and we’d put it on the shelf. And next year we go pull it off the shelf. Do it again and nothing ever really happened. So we changed the whole way we approached that and said, okay, let’s get the business units in here. Let’s ask them, what do they see happening in their markets and how can we grow the company, and through that change in the process it took two or three years. But we all of a sudden started getting great ideas coming in the door and the business units were engaged and empowered to execute those plans. That’s a significant change for us. We monitor the conditions that we’ve –or the assumptions that we had in the strategic plan. Constantly, we update the board on that constantly. And we make changes to the plan if necessary when circumstances dictate. Turning to Slide 18, this is another part of the process — part of our growth process. We formed a Growth Council several years ago. The Growth Council — same type of approach. We want to get all the business units involved in the growth council. What the council does is it evaluates the strategic objectives or plans, or actually initiatives that we’re working on, if you bring in specific projects, they’re involved with challenging, the business unit leader that brought the project in, asking good questions, forcing a real thorough evaluation of the project. In that council we had legal counsel, we’ve got engineers, accountants, every business – just operations people, a whole variety of people that you look at the same thing from a variety of perspectives. And that actually is part of our key to sustaining our growth as well. If we’re making good investments we’re going to get returns. We’re going to be able to continue to attract capital. And obviously you can’t grow if you’re not getting the capital. I guess a follow-on here, to give you an idea of how we look at these things – this is a form of illustration but you can see, start with information gathering, identifying opportunities. About 50% of the projects that we’re looking at are in that category. We weed out some of those, we get down to feasibility analysis. About 20% of the project would be expected to be in that category. And then proposal development, offer negotiation, and execution, as you can see, we’re weeding projects out of the opportunities that we see as we work our way down. It was probably a year ago, I think Beth and I were in Boston and somebody asked me, if we ever rejected a project. And I was sitting there, I was actually stumped for a minute, and I think, we reject almost all the projects. And then I’ve been thinking about it, after it occurred to me that, I guess that would be a question if you’re doing a lot of – making a lot of capital investments, the expectation might be from the other side as well. You guys are just doing everything that you come across the table and we do have a strategic set of criteria on these projects as well. So we’re not just doing anything that looks like to be profitable or making sure we’re sticking to things that we understand and that’s what we know how to do with this with our strategic plans. Turning to Slide 19, it’s something about — looking around what are the results of all the stuff. Beth gave you a pretty good picture of that. But this is just something that we look at all the time. So you’re looking at the ROE which is the vertical axis and you’ve got the capital expenditures force horizontally. And you’ll see Chesapeake in the top right hand quadrant, which simply means that we are above the 50% in both ROE and also CapEx, so we’re deploying a tremendous amount of capital. And we’re maintaining returns and that’s a pretty big challenge. You can see how few companies are over there near us and when you do that you’re going to drive EPS growth. All these other dots are just a variety of companies. It’s the electric and combination companies, it’s also an industry index for people that we use in our index for marketing our performance and then Chesapeake. So it’s not cherry picking of the peer group, it’s actually a broad range of companies. So then what happens – Beth talked about nine years of record earnings, so if you look at the blue line, I am on Slide 20, look at the blue line. Record earnings per share, the blue line climbing from roughly, you can see that $1.20 up to almost $2.80. Over this time period, ROEs maintained, actually climbing a little bit which is pretty hard to do in that kind of environment, up to little over 12. So it’s been a very successful process that we’ve been implementing and it requires a lot of discipline. So also shareholder returns, so what happens with this. We’ve looked at broader comparisons. This was something Beth was just I guess thinking about one day and did a lot of work to come up with some numbers. And when we looked at and we thought these numbers were little scary, little high. It was, what we can — nobody’s going to believe us. So we asked one of our investment bankers to tell us – help us with the analysis and they put together their own and so we use theirs. The numbers are consistent. But as you can see 84 th percentile in five years and then after that you get 86 th percentile for one year, 80 th percentile for three and then 89 th , 10. So substantial I guess [indiscernible] measure there. With an annual large shareholder returns, you see the median — we joke around about this too. Utility business sometimes is pretty tough to grow as you get bigger. So you will see a negative 5.1% could be weather related, could be pricing relate type of thing. And you can see Chesapeake over the 75 th percentile in all four periods. Once again we go to the S&P 500 — maybe the NYSEs big in our peer group. If you go the S&P 500 similar type results for 73th percentile in five years and then up over 75 in the other two periods. So it’s just I guess a measurement of our discipline. This is a table that we use periodically on Slide 23. The lightly shaded blue or those metrics where we didn’t hit to 75 th percentile, all the others we were at 75 th percentile. We have another table that shares — we have basically, 18 out of 20 times was 75 th percentile. So again things that we’re very proud of, and again you can go back to the processes that we talked about earlier, that are responsible for that, obviously the people that are executing on those processes. So now what are we doing tomorrow? We talked about what we did yesterday. One of our key I guess brand values is simply that we don’t rest on our laurels and so we like to celebrate the victories but we know that really it’s about what we do today and tomorrow, that’s going to count. And so here’s a few of the projects that we actually mentioned these. You can see we’ve got three projects here on Delmarva, the White Oak expansion, Beth talked a little bit about the impact of that on earnings. That’s just obviously a significant project for us. We’ll be constructing that soon. I guess we’re still working with FERC to get approval to do that. The TETCO capacity expansion in the second row is an interesting opportunity that comes and goes really. With the TETCO, it’s obviously connected to TETCO, Texas Eastern. And there’s lower cost of gas on Texas Eastern than there are on other pipelines that are nearby. And so what happens is customers may not have subscribed to move gas on that pipe, that section of the pipe, but when those prices change and TETCO become significantly cheaper than the other place, all the companies or the major companies are interested in trying to get more gas off of TETCO, that are subscribed to use long term capacity or just to use short term interruptible capacity to do that, so we get some earnings supplements from that line. The next box down, Eastern Shore Natural Gas System Reliability, going back to the polar vortex that showed some weaknesses and some upstream systems, and that’s flowed through to us. We also learned things about our system so we’ve done – we’re working on a distribution system to improve that. We also have a filing with the FERC to improve our transmission systems and we have to be ready for low gas pressures coming into our system lower than we historically had seen in the past. So it’s an important thing and reliability is obviously a critical issue for us. Florida and Ohio. Florida Public Utilities has a Gas Reliability Infrastructure Program, Beth talked about that. Once again that’s about safety and reliability. It was a very little to natural gas prices now. It was an opportune time to look at and is strengthening your system, so we’re doing that. Eight Flags, Beth talked a little about that as well. That project is expected to come online in June or July of this year, so it’s I think over 90% complete, was the last number we heard, just as strong as we get actually. Aspire Energy of Ohio, that was the acquisition we did last year. So all of these things, if you look at these Eight Flags, it’s a completely new service we never provided. Aspire Energy of Ohio, completely new service territory. We weren’t serving — and the services are slightly different than what we provided. So you’re getting two out of the six big projects are either new service or new territories. And it’s a picture of Eight Flags, it’s actually – the picture was taken with them celebrating the safety. I mean there was – I forgot the number of days now per hour – 60,000 hours of — without an injury, without an incident. So there’s safety, there is special celebration going on there. But the significance of Eight Flags, first, it’s a new service, we didn’t know how to do that. I want to go back even to the beginning. We got a phone call, that hey, we’re considering. This is Rayonier on – that we’re considering going off the grid, really electric utility on to the aisle. And so that means okay, we’re not going to use the electricity. And so we were looking at things, concerns about earnings deteriorating. So the team in Florida walked into the plant, just did a tour, brought some experts and got some experts involved to help us look at opportunities in the plant. And they came up with the idea, well, we could build a combined heat and power plant here and lower your steam costs. And we can scale it up on the electric generation side, because we’re the electric utility and we can buy the power cheaper from this facility than we can buy from on the grid — from the grid. So we turned what was a loss into a win. So as a result of this, Rayonier is saving money. They’re actually expanding their facility now. Two big wins are for Rayonier. For us, we have lower cost power coming into our electric system. So that’s going to help the customers on Amelia Island as millions of dollars of savings associated with that, and in early we had higher earnings. So it was a very big deal, very creative, it was a new service, a good job. And on top of all of that, we used a lot of our different capabilities. Obviously the electric utility was involved, had to build a pipeline, reinforced our pipeline there, we had a gas pipeline. So our gas, or distribution company – gas distribution companies involved and then also we have a company that’s marketing — natural gas marketer that was involved in solving the problem as well. So we took a variety of skills that we had across our entire company to help solve that problem. So that’s really talked about our strat plan and what we’re trying to do, be flexible, be able to do a lot of different things, solve customers’ problems has been a key factor in our success. So with that, I’ll turn it over to questions. Question-and-Answer Session Operator [Operator Instructions] Your first question comes from the line of Nathan Martin with BB&T Capital Markets. Nathan Martin Good morning everybody. Thanks for taking my questions. I guess, first just kind of given the current gas LDC M&A environment and obviously your clear goals to grow, would it be reasonable to assume you guys would execute possibly another deal or two by the end of this year? And kind of – if so, you mentioned you’re continuing to look at opportunities outside of your current territories. Are there any certain types of geographies you’re prioritizing, or would you basically consider anything if the returns and strategic fit are there? Mike McMasters I guess, let me do the first question first. When it comes to acquisitions, we are constantly looking for acquisitions. And you know how that works, you have a hard time, that you can look at it, 10, 100 — you look at a lot of acquisitions. And it’s very difficult to get anyone in particular to the finish line. And so forecasting out is just extremely difficult to do that. At least we just don’t do that but we are looking at several opportunities in that regard and we’re probably — always will be looking at several opportunities. You know that, funnel when you have that first – the top piece of the funnel, and you’ll have a lot of things in there that fully won’t come to fruition. Very few actually get through. So we can’t really forecast that. I’m trying to think the second question now. Nathan Martin Basically as far as geographies — you guys are continuing to look at opportunities outside of your current territory – Mike McMasters There’s maybe a natural tendency for us to be focusing on primarily the East Coast. We’ve been in Florida since the 80s, and so we are comfortable in Florida. And when we’re comfortable in Florida, that we’re going to be comfortable as we look to Georgia et cetera, in contiguous states. And we’ve got — I think primarily the focus is on the East Coast. If we saw something good that was East Coast – I am including Ohio in the East Coast, in that definition. As we get much further west of Ohio it maybe becomes – I don’t know, we’re having seen anything over there actually, so we don’t spend whole lot of time looking that far west. But that’s not to say that tomorrow if we don’t find something that’s attractive and strategic fit that we would look at it. Nathan Martin Thanks for that color. And then just in the same vein, I mean, looking at these opportunities, just trying to figure out where you lean more towards regulated, unregulated, or again is it just come down to strategic fit? Mike McMasters We are a different right — the regulated and unregulated. Aspire Energy of Ohio has basically gathering system delivering gas to either interstate pipelines or delivering gas to LDCs. And so we’re perfectly comfortable in that business. There is some commodity risk associated with that business. But we’re comfortable with that. So it is not whether it’s regulated or unregulated, it’s really what’s the opportunity and the strategic fit. End of &A Operator [Operator Instructions] There are no further questions at this time. I would like to turn the call back over to President and CEO Mike McMasters. Mike McMasters Thanks everyone for joining us on the call today and for your interest in Chesapeake Utilities. We’re here in Salisbury with members of local community at our meeting, and want to thank Salisbury University again for allowing us to use their facilities. We’re proud of what our team has accomplished for shareholders in the past and remain committed to working hard to deliver superior shareholder returns in the future. Thank you. Operator This does conclude today’s conference call. You may now disconnect. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited. THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY’S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY’S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY’S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com . Thank you!

Chesapeake Utilities’ (CPK) CEO Mike McMasters on Q4 2015 Results – Earnings Call Transcript

Operator Good morning. My name is Nicole and I will be your conference operator today. At this time, I would like to welcome everyone to the Chesapeake Utilities 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Beth Cooper, Senior Vice President and Chief Financial Officer, you may begin your conference. Beth Cooper Thank you, Nicole, and good morning, everyone. We appreciate you joining us today to review our fourth quarter and 2015 annual results. Joining me on the call today is Mike McMasters, President and CEO. In addition to Mike, we also have several members of our management team here with us to answer questions. The presentation to accompany our discussion can be accessed on our website under the Investor section and Events and Webcasts subsection or via our IR app. Moving to Slide 2, before we begin, let me remind you that matters discussed in this conference call may include forward-looking statements that involve risks and uncertainties. These forward-looking statements and projections could differ materially from our actual results. The safe harbor for forward-looking statements section of the company’s 2015 Annual Report on Form 10-K will provide further information on the factors that could cause of such statements to differ from our actual results. I would like to begin today’s presentation by highlighting the company’s record performance. As shown on Slide 3, the year 2015 culminated in the ninth consecutive year of record earnings generated by the company, both in terms of net income and earnings per share. In addition, as the slide highlights, Chesapeake has generated very strong returns on equity ranging from 11% to 12.2% over this nine-year period. These results have been driven by our successful capital investments in organic growth opportunities and acquisitions like FPU, Sandpiper Energy, and Aspire Energy of Ohio. The returns that we have generated on these investments have resulted in a compound annual growth rate of 9.8% in earnings-per-share over the nine-year period. Moving to Slide 4, yesterday, we reported results for both the year and the fourth quarter ended December 31, 2015. Net income for the year was $41.1 million, or $2.72 per share, which represents an increase of $5 million, or $0.25 per share, compared to 2014. Year-over-year earnings per share grew by 10.1%. For the fourth quarter of 2015, the company reported net income of $8.6 million, or $0.56 per share. This represents a decrease of $1.5 million, or $0.13 per share, compared to the same quarter in 2014. The decline in the quarter-over-quarter results was caused by lower energy consumption due to warmer temperatures that reduced earnings by $2.5 million, or $0.17 per share. The fourth quarter of 2015 was the warmest fourth quarter in the past 30 years in our operating territories. As you know, gas consumption is impacted by the variability in heating degree days in the winter months. I will now highlight the accomplishments and results for the two business segments for the year. Detailed discussions of our results for the quarter and year ended December 31, 2015 are provided in our press release, which was filed yesterday and will be included in our Annual Report on Form 10-K, which will be filed Monday. Turning to Slide 5, Chesapeake’s regulated energy businesses, which include our natural gas distribution and transmission and electric distribution operations generated operating income of $61 million in 2015, compared to $50.5 million for 2014. The increase in regulated energy operating income was generated from strong growth in the regulated energy businesses. The impact of several nonrecurring items also enhanced 2015’s results. Gross margin increased by $13.2 million as a result of service expansions, the Florida Gas Reliability Infrastructure Program, or GRIP, as we refer to it, natural gas customer growth and the Florida electric rate case. The higher gross margin was partially offset by lower margin as a result of warmer weather and an increase in other operating expenses reflecting the incremental cost of service, ultimately resulting in an increase of $2.6 million in 2015 operating income. The nonrecurring items included non-cash pretax impairment charges recorded in 2014 in the aggregate amount of $6.4 million and a gain from a customer billing system settlement of $1.5 million recorded in 2015. The impact of these nonrecurring items resulted in additional operating income of $7.9 million in 2015, compared to 2014. As shown on Slide 6, the unregulated energy segment reported operating income of $16.4 million, compared to $11.7 million for 2014. Operating income excluding a $432,000 nonrecurring charge in 2014 increased by $4.2 million. Higher retail propane margins and margin generated by Aspire Energy were the largest drivers of the $12.4 million increase in gross margin generated by the segment. The increased gross margin was partially offset by the warmer weather, lower results for Xeron, operating expenses from the addition of Aspire Energy and additional expenses as a result of the year’s strong performance. The key variances in terms of net income and earnings per share contribution between 2015 and 2014 are highlighted on Slide 7. This table is a summarized version of what is included in our filings and provided in the appendix. For 2015, as mentioned previously, earnings per share increased $0.25, or 10.1%, to $2.72 per share. Gross margin increased $0.95 per share, higher operating expenses largely to support growth offset the gross margin increase by $0.48 per share. Unusual items resulted in a $0.13 decrease in earnings per share for 2015, the largest component of which was the warmer weather in 2015, compared to 2014. While approximating normal weather, 2015 was significantly warmer than 2014, which impacted results year-over-year by $0.18 per share. In our regulated energy segment, an increase in gross margin of $0.65 per share was generated from natural gas customer growth, service expansions in the natural gas transmission businesses, continued investment in the Florida GRIP to enhance infrastructure reliability and safety and the full-year impact of the 2014 electric rate case. In the unregulated energy segment, gross margin increased $0.30 per share largely due to higher retail propane margins, which added $0.37 per share partially offset by lower contribution from propane wholesale marketing and sales. The inclusion of nine months for Aspire Energy lowered Chesapeake’s earnings per share by $0.06, including the impact of issuing approximately 593,000 shares for the acquisition. Finally, interest and other changes reduced year-to-date net earnings per share by $0.03. Slide 8 shows our history of capital expenditures as a percentage of total capitalization. For 2015, we invested 28.3% of total capitalization, 20.7% of which came from organic growth capital investments and 7.6%, which related to the purchase of Aspire Energy. Since 2011, we have made capital investments of $545 million, including acquisitions, which equates to an average 21% of capital expenditures to total capitalization annually. In terms of the dollars invested during 2015, we invested $142.7 million in our existing businesses, including $98 million in our regulated energy segment. Adding in the Gatherco acquisition that was completed in 2015 for $52.5 million, this increases our total capital expenditures for the year to a record of $195.2 million. The execution of our strategic plan continues to generate significant opportunities for profitable capital investment. The current capital budget for 2016 projects investments of $179 million to support and grow our existing businesses. We are pursuing several other projects, which could further increase our level of capital spending. Of the total capital budget for 2016, approximately $30 million represents capital expenditures that are in early project development stage. We are excited about these investments, but recognize that the review and approval process by the regulatory bodies may take longer then we experienced in our previous applications. Slide 10 highlights the company’s commitment to maintaining a strong balance sheet, which should facilitate access to competitively priced capital to fund our growth initiatives. Our equity to permanent capitalization and equity to total capitalization, including short-term borrowings, was 70.6%, and 51.9%, respectively, as of December 31, 2015. We target to maintain a ratio of equity to total capitalization, including short-term borrowings of 50% to 60%. As of December 31, 2015, our short-term debt, including the current portion of long-term debt, was $183 million, which also includes $35 million borrowed under our $150 million revolving credit agreement. Available for five years, we can utilize this facility to bridge financing to long-term debt. Given the level of capital expenditures in 2015 along with the 2016 capital budget, we anticipate securing longer-term permanent capital to maintain our targeted equity to total capitalization ratio and will seek to align such financing with the earnings generated from the larger projects. In this regard, on Slide 10, we have highlighted one possible means of securing new long-term debt capital, a Shelf Facility with executed with Prudential Investment Management in late 2015 also for $150 million. In May of 2015, the Board of Directors increased our annualized dividend by $0.07, or 6.5%, to result in an annualized dividend of $1.15 per share as shown on slide 11. We are firmly committed to dividend growth supported by earnings growth. Chesapeake Utilities has paid a dividend continuously for 55 years. Our Board of Directors will be revisiting the dividend level again in May 2016. Given broad market uncertainty and investors current expectations for income and security, we understand the desire for reliable dividends. We expect a significant growth potential in our businesses to continue to provide potential for superior dividend growth in the future, just as it has in the past. Before I dig into the details regarding the gross margin growth we achieved in 2015 as well as our estimates for future margin growth, I would like to spend just a few moments highlighting the overall key financial accomplishments for the year. We have highlighted many of these accomplishments on Slide 12. First, as we mentioned earlier, we increased earnings per share by 10.1%, achieving record earnings for the ninth consecutive year. Our capital expenditures, including the Gatherco acquisition, were $195.2 million, the largest level of annual capital expenditures in our history. This level of investment fostered growth in our overall asset base, which surpassed $1 billion for the first time in 2015. Achieving record earnings enabled us to generate a solid return on equity of 12.1%. We are proud of the growth in our businesses and the returns we have generated for shareholders, which Mike will elaborate on later including a 16.7% total shareholder return for 2015 that included a 6.5% dividend increase. Finally, at year-end, our market capitalization had grown to approximately $867 million. As recently as yesterday, this had escalated further as we closed at a market capitalization of approximately $975 million. Slide 13 shows a snapshot of the consolidated gross margin impact of major projects and initiatives completed since 2014, as well as major projects and initiatives announced and underway. As you can see, these projects and initiatives add a gross margin of $18.2 million in 2015 and are expected to add incremental gross margins of $19.1 million in 2016 and $10.3 million in 2017. We have included a slide in the appendix that provides the detail for the completed projects and their margin contribution for 2014, to 2017. We have a number of other projects and initiatives in place to expand margins in 2017 and beyond and as their timing related to in service is solidify, we will update our projections accordingly. Slide 14 provides detail on projects and initiatives underway as referenced on the previous slide. These investments will be completed over the next year and are expected to produce gross margin of approximately $7.2 million, in 2016 and $18.2 million, in 2017. As our results over the past nine years demonstrate, our team is relentless in identifying and pursuing opportunities to enhance our growth and further increase our gross margin. As always, thank you for your support and interest in our growing company. These continue to be very exciting times for Chesapeake Utilities, as exemplified through our strong financial results. Now I will turn the call over to Mike, who will expand on our strategic growth initiatives, long-term performance results and commitment to continued growth for shareholders. Mike McMasters Thanks, Beth. Good morning everyone. Slide 15 illustrates how we approach achieving sustainable growth. Chesapeake Utilities’ success story starts with engaged, dedicated, and capable employees who are committed to expanding our infrastructure, to meet the energy needs of our customers and communities. Our employees continually seek opportunities to further engagement with the local communities. They construct and operate safe, reliable energy delivery systems whether they are pipelines, wires or trucks. Our employees do a remarkable job of identifying, developing, and transforming opportunities into profitable earnings growth. Finally, we employ a disciplined capital allocation process to produce superior returns to shareholders. Turning to Slide 16, our success in delivering returns is due to the hard work of our employees, our strategic planning process, and discipline in executing our strategic plan. Strategic planning is a continuous process for our company. We update our strategic plan every year and we ask our business unit leaders and our strategic business develop team, to take a new look at market conditions and the new opportunities are evolving in the market. Then we challenge our teams to identify ways to grow at rates faster than they could if they simply continue doing what they are doing today. This keeps our thinking fresh and our focus on generating sustainable long-term growth. Turning to Slide 17, the performance quadrant is one of the ways that we monitor the results of our strategic plan and its execution. We believe that one of the keys to our success is our ability to deploy significant amounts of capital with attractive returns on investment. Chesapeake continues to rank in the upper quartile of gas distribution, electric, and combination utility companies in terms of capital invested and return on capital over the past three years. Our ability to achieve higher than industry average returns, while investing higher levels of capital relative to our size is result of our ability to identify and develop profitable growth opportunities, maintain our disciplined capital investment decision-making process, execute on our growth opportunities and achieve our targeted financial results. Turning to Slide 18, the environmental and economic advantages of natural gas and propane provide opportunities for expanded use in our service territories and across the United States. Natural gas is abundant, clean, efficient, domestic and affordable. The abundance of clean natural gas in the United States continues to provide security of supply, energy reliability, and stable prices to Americans every day. As shown on Slide 18, natural gas and propane continue to have price stability, compared to oil and are expected to maintain this advantage for the foreseeable future. This price stability creates opportunities to satisfy new customer demand at affordable prices. And has helped to create opportunities that our team has developed to drive growth in margins, earnings, and ultimately dividends. Turning to Slide 19, one such opportunity is the White Oak expansion project to increase mainline capacity to serve Calpine’s new power plant in Dover, Delaware. Eastern Shore plans to invest between $32 million and $35 million, which could be used to build 7.2 miles of pipeline looping an additional compression facilities to provide natural gas to the power plant. The estimated annual gross margin resulting from this project, under the 20 year service agreement will be approximately $5.8 million. In 2016, we expect to generate approximately $5 million of incremental margin. As part of our ongoing commitment and efforts to provide reliable service to our customers, Eastern Shore has proposed a $32 million reliability project that is highlighted on Slide 20. The project includes the installation of one compressor and 10.1 miles of 16-inch pipeline looping. These facilities are necessary to provide optimal system reliability and design. FERC issued a scheduling notice to establish a deadline of April, 2016 for the environmental assessment and July 2016 for all other federal agency decisions. The project will be included in the Eastern Shore’s upcoming 2017 rate chase filing. Once the cost is included in our rates, the estimated annual margin associated with this project will be approximately $4.5 million. As a company, we are committed to offering our customers supply, diversification opportunities and access to the lowest cost of natural gas. One such example is highlighted on Slide 21. Eastern Shore is moving forward with making certain modifications to its interconnect with Texas Eastern transmission, TETCO, that will increase the availability of natural gas at the interconnect point by 53,000 dekatherms a day. FERC’s approval to move forward with these modifications was granted in December 2015. These modifications, which are scheduled to be completed and in service during March 2016, will allow customers to have access to additional TETCO supply and the opportunity to secure lower cost natural gas. This 53,000 dekatherms equates to $2.8 million, in incremental annual margin for Eastern Shore. Turning to Slide 22, safety is a top priority for our company. Our Florida GRIP pipeline replacement program is an example of one of our initiatives designed to increase service reliability and operation safety for the communities we serve. The GRIP program enables the company to accelerate the replacement of cast-iron and bare steel mains, and service lines. GRIP also authorizes a company to accelerate the recovery of pipeline replacement investments including a return on those investments, as well as the recovery of certain program related costs. Our GRIP investments totaled $32.8 million, in 2015, and are approaching $80 million, since the program’s inception. To date, we have replaced 162 miles of pipeline and over 4,300 service lines. The gross margin generated from these investments was $7.5 million at 2015 and is projected to be $11.4 million, in 2016. Turning to Slide 23, our Eight Flags Energy subsidiary is constructing a combined heat and power plant located in our electric and natural gas distribution territory on Amelia Island, Florida. The plant will produce approximately 20 megawatts of base load power to be sold to our electric distribution system on the island. Steam from the plant will be sold to Rayonier’s Advanced Materials paper mill. The combined heat and power plant and the related facilities will cost approximately $40 million to construct. Site construction is moving forward on schedule. In terms of timing, the project is expected to be online in the third quarter of 2016. In addition to generating approximately $7.3 million in incremental annual gross margin, the electric output from the plant is excited to generate savings for our electric customers of approximately $3 million to $4 million annually. As shown on slide 24, the Eight Flags project is an example of the diverse capabilities that we have to provide value-added service to our customers and the communities we serve. In this case, our financial pipeline company transports the natural gas to FPU’s natural gas distribution system. FPU in turn delivers that gas to the Eight Flags CHP plant. Eight Flags then generates the power for delivery to FPU’s electric distribution system and the steam for delivery to Rayonier Advanced Materials plans. When all of this is said and done, we save Rayonier Advanced Materials money, save our electric customers on the island money and returns on capital for investors. Slide 25 illustrates the aspired energy of Ohio business model, which operates over 2500 miles of pipelines pipeline in the areas in and around the Utica Shale, and Eastern and Central Ohio. We operate 16 gathering systems for conventional producers in the area. Over 80% of Aspire’s margin is derived from the sale of natural gas, to two local distribution companies that are connected to our gathering system and serve more than 20,000 end use customers. The addition of new producers to our system presents an opportunity for increased reliability for our local distribution customers and increased margins for the company. Finally, we also own rights-of-way that we expect will present additional opportunities for growth over the long-term. Over the last 10 months, since April 1, there has been a significant progress and success with integrating Aspire Energy into the Chesapeake family of companies. Our management team lead with focus and drive to strategically develop, Aspire Energy organization and align the business with the vision, strategies and cultural of our parent company. The team has maintained the momentum of operating the existing business and customer needs, while also focusing on the future growth of the business. Our Aspire Energy employees are actively engaged in developing a strategic growth plan and have already begun to successfully identify and develop new growth opportunities. As a result of our team’s efforts, Aspire energy generated $6.3 million in gross margins since April 1 and is expected to generate approximately $13 million in gross margin in 2016. We continue to be excited about the opportunities presented by the latest addition to the Chesapeake family and continue to expect the Aspire Energy to be accretive to earnings in the first full year of operations. Turning to Slide 26, in 2014, we found a rate increase for our electric operations in Florida which increased rates by approximately $3.7 million annually. As the rate case was approved last year, 2015’s results include a full-year impact of the new rates. On December 1, 2015, we found a rate increase application for $1 million, to increase our Sandpiper subsidiaries operating – returns in Worcester County, Maryland. The following was required as part of the Maryland PSC’s approval of the Sandpiper acquisition and regulatory plan. A decision on the application is expected during the second quarter of this year. We found a $4.7 million rate case in Delaware in December 21, 2015 included in our application, our new service offerings to promote growth and a revenue decoupling mechanism for residential and small commercial customers. The decision on the application is expected during the third quarter of 2016. Pending the decision, the Delaware division implemented an interim rate increase of $2.5 million, on February 19, 2016. Our last rate case in Delaware dates back to 2007. Finally, our Eastern Shore natural gas subsidiary will follow a rate case with the FERC new rates effective February 1, 2017. The filing is required as part of a settlement of our last rate case. Our application will be submitted by the end of 2016. As the chart on Slide 27 shows, Chesapeake provide a total shareholder return of 17%, for 2015. For each of the five periods shown, Chesapeake shareholders have earned more than 14% returns on a compound annual basis. In addition, before the five periods shown, the Chesapeake’s performance exceeded the 75th percentile of the peer group. Slide 28 shows our financial performance of the past one, three, and five years. I am proud to say that our employees have delivered top quartile performance in 18 of the 20 categories. Further, our 10 and 20 year compound annual total shareholder returns of 14.4% and 14% respectively, ranked first amongst our peers. In fact, when you compare our the shareholder returns to the broader market, you could evaluate our performance relative to this larger group. As Slide 29 shows, when you compare us to more than 2,200 companies listed on the New York Stock Exchange, our performance exceeds 84th percentile. Similarly, as shown on Slide 30, when we compare performance to the company’s comprising S&P 500, for all periods shown, our returns range from the 703rd, to the 81st percentile. We are very pleased with our strong performance after the broad market as measured by either of these two larger groups. In closing, our employees’ determination for excellence and consistently high performance, enables us to deliver clean, liable, low-cost energy solutions to our customers while achieving strong growth and earnings and return to shareholders equity, and therefore delivering superior shareholder value. We will now be happy to take questions. Question-and-Answer Session Operator Mike McMasters Well I just want to thank everyone for joining us on our call today and for your interest in Chesapeake Utilities. We’re proud of what our team has accomplished for shareholders in the past and remain committed to working hard to deliver superior shareholder returns in the future. Thank you. Operator This concludes today’s conference. You may now disconnect. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited. THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY’S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY’S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY’S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com . Thank you!

Paladin Energy’s (PALAF) CEO Alex Molyneux on Q2 2016 Results – Earnings Call Transcript

Paladin Energy Ltd. ( OTCPK:PALAF ) Q2 2016 Earnings Conference Call February 16, 2016 6:30 PM ET Operator Ladies and gentlemen, thank you for standing by and welcome to the December Quarterly Conference Call and Investor Update. [Operator Instructions] I must advise you that this conference is being recorded today, Wednesday, February 17, 2016. I would now like to hand the conference over to your speaker today, Mr. Alex Molyneux. Thank you. Please go ahead. Alex Molyneux Thank you and welcome to the December 2015 half year and quarterly results conference call for Paladin. I am Alex Molyneux, the CEO. With me in the room today, I have Craig Barnes, our Chief Financial Officer and I have Andrew Mirco, our GM Corporate Development and Investor Relations. So we are going to step into the presentation. There is a disclaimer which we would draw your attention to. And then moving on to Slide 2, we have repeated this message a number of times and it doesn’t really get old for us at the [indiscernible]. I think we can show from our results and how they are evolving in a low uranium price environment that we have the asset base and skill set with optionality to survive difficult markets. We are absolutely positioned for margin and margin expansion when these markets turn around. We are a global uranium leader and we are the largest investable pure-play uranium miner. We have fully built capacity that includes our Kayelekera mine on care and maintenance which when restarted would immediately increase our production by 40%. And our global resource inventory is almost 400 pounds, which gives us a substantial pool of assets on which to draw future growth from in addition to our current operating Langer Heinrich mine. Langer Heinrich is undisputedly a world class asset. We have said it many times. And this is in terms of its key features, scale, mine life and production cost. Cost at the moment is where this mine is coming to its own. It’s moving well into the first quartile of global cash costs. And with that introduction, I will hand over to Craig who will go through some of our results. Craig Barnes Thanks, Alex. Good morning, ladies and gentlemen. Slide 5 and 6 provides some highlights of the December quarter. Uranium production for the quarter decreased by 9% compared to the December 2014 quarter primarily as a result of lower processed grade, which decreased to 714 ppm from 773 ppm a year ago. The company’s 12-month moving average lost time injury frequency rate was 2.10 compared to 1.39 last quarter and 4.14 for the quarter ended 31 December, 2014. The realized uranium sales price for the quarter was $37.90 a pound, a 5% premium to the TradeTech average weekly spot price for the quarter of $36.03 a pound. However, for the 6 months to 31 December, 2015, the realized uranium sales price was $40.54 a pound versus the average weekly spot price for the 6 months of $36.26 per pound which is a $4.28 per pound premium. Record low C1 cash costs of $25.38 per pound for the quarter decreased by 11% from $28.58 per pound in the December 2014 quarter. And we are at the lower end of our December quarter guidance of $25 to $27 per pound. The decrease in costs was largely driven by a reduction in reagent costs resulting from the bicarb recovery plant as well as a weakening of the Namibian dollar against the U.S. dollar. The trend of reducing costs is continuing in the March quarter and we achieved C1 cash costs of $24.36 per pound in January. The reduction in costs from last year resulted in the operation achieving a 396% increase in gross profit to $12.4 million from $2.5 million in 2014. Cash and cash equivalents at 31 December, 2015 of $136.8 million was within our previous pro forma guidance of between $122.5 million and $132.5 million. Sales revenue for the quarter decreased by 7% to $64.4 million in the December quarter, as a result of 11% decrease in sales volume, which was partially offset by a 4% increase in realized sales price. Underlying EBITDA for the December quarter of $10.6 million was a $17.2 million turnaround from the negative underlying EBITDA of $6.6 million in 2014. In the quarter, we repurchased an additional 17 million of the 2017 convertible bonds for approximately $15.5 million reducing the outstanding amount owing on these convertible bonds to $237 million. On Slide 7, this waterfall chart provides a breakdown of the change in cash and cash equivalents for the December quarter. Our cash and cash equivalents increased by $28.4 million during the quarter and were made up of the following major cash flow movements. Langer Heinrich generated free cash flow for the quarter of $62.7 million assisted by the timing of cash received from the September quarter sales as well as a reduction in costs. Cash utilized for Kayelekera care and maintenance and corporate and exploration expenditure amounted to approximately $4.8 million for the quarter, a significant drop from the $8.7 million cash utilized in the previous quarter. This drop was expected and is as a result of the various cost reduction initiatives which took place in the September quarter. In the December quarter, we paid $9.2 million interest on the convertible bonds and also on the Langer Heinrich project finance. In addition, we repurchased 17 million of the 2017 CBs for $15.4 million which excluded accrued interest and repaid $4.5 million on the Langer Heinrich project finance. Slide 8 has two waterfall charts which provide a variance analysis of EBITDA comparing the December 2015 quarter to both the previous September 2015 quarter and last year’s December 2014 quarter. Firstly, comparing to the previous quarter, the chart on the left shows that our EBITDA increased by 66% from $6.4 million in the September quarter to $10.6 million in the December quarter. In the graph, you can see the large variances caused by the increase in sales volumes from 800,000 pounds in the September quarter to 1.7 million pounds in the December quarter. Due to the size of certain sales and also the timing, these large sales volume variances will continue from quarter to quarter. You can also see the positive sales volume variance of $34.1 million was partially offset by the $6.6 million negative sales price variance. As a result of the higher sales volume, cost of sales was also higher and partially offset by lower unit costs. Exploration, admin and unallocated fixed overheads were all lower than the previous quarter by $1.4 million in total. Comparing to the previous years, December 2014 quarter, the chart on the right shows that the increase in EBITDA was even more pronounced increasing by $17.2 million from a negative $6.6 million in the December 2014 quarter to $10.6 million in the December 2015 quarter. The impact of 11% decrease in sales volume was more than offset by the positive variance in both the sales price and cost of sales performance of $2.8 million and $11.8 million respectively. In addition, exploration, admin and Kayelekera care and maintenance costs were $3.7 million lower than in the December 2014 quarter. Slide 9 illustrates how all-in cash expenditures reduced from $48.91 per pound in the December 2014 quarter to $39.58 a pound in the December 2015 quarter. This is a reduction of $9.33 per pound year-on-year. All-in cash expenditure includes all spending, including financing costs and the principle repayments of Langer Heinrich project finance. The reduction in all-in cash expenditure has exceeded our expectations and we have therefore lowered our guidance for the full year. The graph on the left compares all-in cash expenditures for the last six quarters and shows that the trend of decreasing expenditure with the December quarter is $39.58 per pound, significantly below the FY ‘15 average of $50.75 per pound. This is also the first time that all-in cash expenditures dropped below $40 a pound and the downward trend is continuing in the March quarter. The all-in cash expenditure is trending towards the $38 to $40 per pound revised guidance range provided for the full year FY 2016. The waterfall chart on the right provides an analysis of the movement in all-in cash expenditures from the previous year’s December 2014 quarter. The biggest movements have been the reduction in reagent costs resulting from the bicarbonate recovery plant of $6.99 per pound and the weakening of the Nam dollar against the U.S. dollar of $3.39 per pound. Additionally, the reduction in mining costs, CapEx, Kayelekera care and maintenance costs and corporate and exploration costs resulted in $3.71 per pound decrease in all-in cash expenditure. The table on Slide 10 provides a breakdown of the Paladin’s debt at the face value amounting to $443 million at 31 December, 2015. Since June 2012, Paladin’s debt has been reduced by approximately $471 million. The $17 million repurchase of the 2017 convertible bonds and the $5 million repayment of Langer Heinrich project finance in the December quarter were the most recent debt reductions. The next debt maturity is the $237 million convertible bond due in April 2017. Strategic initiatives are currently being advanced with a view to refinance or repay the April 2017 convertible bond. Based on Paladin being cash flow neutral, we now see the funding gap required to pay the 2017 convertible bonds reduced to $140 million to $165 million. I will hand you back to Alex to complete the presentation. Thank you. Alex Molyneux Thanks Craig. So we are now on to Slide 11. We can say that, so during the last quarter, we reconfigured the highly successful Bicarbonate Recovery Plant at Langer Heinrich Mine. The result is we are now seeing at full $6 per pound of cash savings on what we would say and call an apples-for-apples basis in terms of taking us back to before the Bicarbonate Recovery Plant was introduced. Frankly, this kind of innovation is a key element of our strategy in a weak uranium price environment. When we talk about all-in costs, it’s the team that delivered this success that’s already working on initiatives for FY 2017 and beyond. When we go to Slide 12, we originally published a chart that looks like this in August of last year and this is the first time since we published that chart that we have updated it. It actually reflects updated guidance which is for lower all-in costs. We are now expecting $38 to $40 a pound on a full year average basis i.e., $1 a pound lower than what we are expecting at the start of the year. You can see, if you were to compare this chart to the previous one, it’s a little bit of a story of swings and roundabouts. We had a better than previously expected impact of currency. Previously, we were aiming for currency to help us reduce our all-in costs by about $1 per pound. And now, it’s helping us by about $2.72 per pound. In terms of volume and grade, we always had a reduced grade. But our volumes are slightly lower than was our original guidance. And that’s also being presented to you in our revised production guidance. So that’s gone from a $0.71 positive impact to a $0.37 negative impact. Efficiency from mining is close to what we have previously been expecting. Efficiency from processing is actually higher than – or it’s not higher, but the cost saving we are projecting is better than we had projected at the start of the year. And then, we are pretty much on track with the remaining items in terms of capital expenditure, care and maintenance, exploration, corporate and debt servicing. So we are revising this guidance lower. And the two key items that are driving that lower guidance are more efficient processing costs and the impact of the worsening Namibian dollar versus the U.S. dollar. I think what’s important on this point is, I often get asked, what happens in financial year 2017, how will you keep the all-in cost structure ahead of uranium price if uranium price does not go up? And here is our answer. This $38 to $40 a pound is a full year range. To get there, it means our second half FY ‘16, will already be down at a running rate of $35 to $37 a pound. Next year, we will have a big debt reduction which will reduce our total funding cost and then that in itself will have a pass through to our all-in cash cost with respect to the debt servicing element of it. We are quite confident that at current currency assumptions, we are looking towards a range of $34 to $36 a pound for the financial year 2017. It will also include more optimization and direct cost saving initiatives. This is something that we will talk a lot more about in our next results as we refine out budget for financial year 2017. Moving on to talk a little bit more about the uranium market and the fact that Paladin is uniquely leveraged to the expected upside in the uranium market. Here, we have a chart that shows us uranium versus oil and other commodities. We are not seeing much upside in uranium in the most recent few months, but it seems to be the best performing major commodity out there. There is definitely something to say here because we are not seeing uranium drag down in the correlation low-up with oil prices or other energy commodities. Uranium is really poised to benefit from the fact that its supply side is in a much more disciplined position than for other commodities, given we have had the adjustment of the Fukushima event in the past. It’s all so that we don’t anticipate the same correlation between uranium and other energy commodities going forward because we now have a regulatory environment which promotes the use of nuclear energy versus carbon dioxide emitting energies. Slide 14, we show something that we are quite focused on at the moment, which is uranium market liquidity. We don’t really think our market is normal per se until we see transaction volumes move at a regular level and more in line with annual consumption. The graph on the top left shows long-term uranium contracting volumes. And in the commentary, we talk a little bit about what’s happening in the volumes in the spot market. 2013 was the lowest liquidity year for uranium because it came after the Japanese reactors actually shut in 2012 and there was so much uncertainty in that year regarding the future for nuclear and whether there would be a large volume of material release into the market associated with the – a permanent shutdown in Japan. That didn’t come to fruition and now Japan is starting. Since 2013, liquidity has improved in the market every year. But it’s still well below normal. Long-term contracting volumes in 2015 were 81 million pounds and there were 49 million pounds in the spot market, i.e. 130 million pounds total transaction market for uranium. Now we anticipate that we will have a larger transacted uranium market in 2016. We currently view that it’s likely we see 150 million to 160 million pounds of material transacted this year and that prices will rise to reflect the slow normalization of the market. A normal market will actually come when we have annual volumes of around about 180 million to 200 million pounds a year, which are volumes that are required to replace the uranium that is actually used in nuclear power generation globally. Next slide presents our strategy and this hasn’t changed since our last presentation, quarterly presentation. Our strategy is very simple. Number one, it’s to maximize Langer Heinrich operating cash flows through optimization initiatives while preserving the integrity of the long-term mine plan. Number two, we continue to maintain Kayelekera and our exploration business on a minimal expenditure care and maintenance basis. And in fact, we are always looking to drive those costs even further lower. Number three, we are minimizing corporate and administrative costs. And number four, we are making progress with respect to strategic initiatives and partnerships that may result in strategic investment funding and corporate transactions for the company as a way to resolve the – our funding needs for our maturity coming up in April 2017. On the last slide, we are representing our guidance for the financial year 2016. Our production guidance is 5 million pounds to 5.2 million pounds. That was something that we flagged in our last quarterly activities report around a month ago and it’s a revision from our previously stated 5.0 million to 5.4 million pounds. We still expect, on a full year average basis, an average selling price premium of around $4 per pound for our received uranium price. Our Langer Heinrich full year C1 cash cost guidance is now $24 to $26 a pound and that is a revision downwards from $25 to $27 a pound. We have not changed guidance for the absolute expenditure on corporate cost, Kayelekera care and maintenance and exploration, which we expect to be $19 million, which is $14 million lower than the number for financial year 2015. With these elements of our full year guidance, we continue to expect to be cash flow neutral through 2016 – for financial year 2016. And with that, the second half of the financial year 2016, in aggregate, will be cash flow positive. The March quarter, we expect sales of 450,000 to 650,000 pounds. Langer Heinrich C1 cash costs of $23 to $25 a pound. The cash balance will reduce to $100 million to $110 million, but this is in line with our overall cash generation for the second half in aggregate. What you can see there is it’s one of those quarters where we have lower sales than normal and that is primarily because we will be building material in advance of a very large, almost 700,000 pound delivery to China that will take place in April 2016, i.e., the following quarter. And so our cash balance will swing somewhat with the timing of sales and sales receipts. So that finishes the presentation component of what we wanted to do today and I think we can throw to the operator for any questions that people might have on these results in the presentation. Thanks. Question-and-Answer Session Operator Thank you. [Operator Instructions] And the first question comes from Mr. Glyn from UBS. Please ask your question. Glyn Lawcock Alex, good morning. Couple of questions if I may. Firstly, interesting move, dropping down into the CEO role full time, I am just wondering if you could talk through a little bit about the logic behind that, what happens now given your role back at Azarga, etcetera. And I note your fairly interesting incentive scheme, how you directly get a strategic deal done, just wondering if you can talk through potential timing of that? And then the second question, I think is really just around the cost. Clearly, you are really benefiting from FX, which is great, but it tends to also lead to higher inflation. Just wondering if you could talk a little bit about what you are seeing on the ground in terms of inflation, your labor agreement, how long that’s good for, when does it come up for renegotiation, etcetera, because I would have thought, you are probably going to get hurt at the back end from the – from the good exchange rate today? Thanks. Alex Molyneux Okay, thanks, Glyn. Now, so, on the first topic, I know that you didn’t congratulate me by the way. But I will say that… Glyn Lawcock Congratulations. Alex Molyneux Thanks. Okay, I think Paladin is obviously – there is a lot going on. I think there is two elements to disappointment is that number one, I think, I guess the board has become somewhat more, let’s say – we have – let’s say we have grown together in terms of the board being comfortable, I can’t remember the exact language that was used in the press release, but let’s say that the board is broadly comfortable that I have got the skill set at the moment to do what needs to be done at Paladin. And let’s say the position might not be that – I don’t think it’s changed radically, it may not be that – so it’s more about specifically what the company is doing at the moment. You can see that it’s reflected. What’s important to the company is to ensure that it’s best positioned to deal with its funding GAAP and to hopefully achieve the best outcome for a transaction that results in best value capital to deal with that funding GAAP. And I think that the board obviously has insight into things that are going on that may not be baked enough to obviously be able to discuss publicly, but people are reading that into the nature of my remuneration structure. And I don’t think – I think that’s, let’s say, that’s a correct – that’s broadly a correct assumption, but there is nothing we can actually say. We don’t have any timing on the transaction. We can say we have made significant progress. We have a number of things that we are working on, but we – if we had certainty over a transaction and the timing of it, we would actually be making that announcement. So, I hope that answers that question. With respect to Azarga, I am on a leave of absence from any Azarga Uranium specifically and I will continue to be on a leave of absence from an executive role at Azarga Uranium. With respect to costs, in terms of inflation, I am going to ask Craig to answer that and specifically on the labor agreement as well. Craig Barnes Okay. Yes, just on the cost, Glyn, you mentioned obviously we have had the benefit of the weakening Nam dollar against the U.S. dollar. But I think the biggest benefit for our cost has been the drop in processing costs due to the savings on reagents. And then with regard to inflation, the inflation assumption currently in Namibia is 7% and that’s in line with our current wage agreement and the average increase that we expect in costs in Nam dollars if that answers your question. Glyn Lawcock Yes, it does. And just quickly then, so that’s in your current agreement, when does that agreement expire, because I would imagine perhaps with the way the exchange rates going, you might end up being pushed to increase that? Craig Barnes Yes. I think we recently negotiated new ways and I believe it’s a 2-year wage agreement. Alex Molyneux Well, it’s a 3-year wage agreement that we have got to run. Yes. Glyn Lawcock Okay, wonderful. Thanks so much. Operator Mr. Matthew Keane, your line is open to ask a question. Please go ahead. Matthew Keane Yes. Hi everyone. Just a couple of very quick questions, first one on sales, you have given a bit of forecast say where you see the market is going. First one, have you accounted for Chinese inventories and where they might stay and also Japanese inventories, is that in your number, were you expecting that increase from the number you said there, 150, 160 we transacted in the year. And the second half of that question there is, are you seeing those tens out there at present and if so, where about they are coming from, which part of the world? Alex Molyneux Okay. So in terms of – so in the long-term, the market has to be 180 million to 200 million pounds because that’s what the world uses every year. And so eventually, the inventory situation has to neutralize. In the short-term, in terms of – as we proceed to that, we believe specifically on China – so we believe inventories and this is the biggest thing that the market misunderstands about our commodity. Inventories will be a source of net buying between now and the end of the decade, not meant selling, okay. So we have Japan is, let’s say Japan is – has got enough inventory so that they may not be in the buying mode. But we have – China will likely need to build their inventory and probably double the size of it between now and the end of the decade to achieve the strategic – the level of strategic inventory that’s in line with Chinese policy, okay. So it might look like they have about 9 years worth last year’s usage. But their usage is growing so quickly that if they can meet the 7-year target, they are going to had to roughly double their inventory by 2020 to hold 7 years strategic inventory. And then we have got inventory build from India which is announced – it’s building an inventory in the order of 50 million pounds or so initially. And frankly, we can see that being reflected in an early stage in market inquiry. We then have the IAEA global inventory, which is a new initiative and we currently estimate that’s likely to be about 40 million pounds. We don’t know over what period they will try and establish that inventory, but that’s a new global inventory facility for smaller countries and customers that’s being setup in Kazakhstan and its being setup and funded and that’s another inventory build that will take place. So, of course Japan has an excess of inventory, but frankly the rest of the world – and inventories are towards the low end of their traditional bands in Europe and North America. So inventories other than Japan, generally low and in certain situations require substantial additional buying. So this is why we believe the market will normalize to that 180 million, 200 million pound level over the next couple of years. In terms of specific contracting, it’s been a little bit quiet in contracting in say, let’s say January, December. We can see some tenders that need to come up. There is one very, very big tender in the market which is an interesting one at the moment. There is an Asian utility that has a more than 10 million pound tender in the market, which by the way is a re-tender of a tender that was put out twice last year and obviously hadn’t been anywhere near fully supplied. So what’s interesting in the market right now is we are starting to see some tenders coming and we were aware of some others that will have to come down the pipe during the year. But it’s also interesting to see some of the bigger tenders really failing to achieve supply and coming back into the market as re-tenders during that period where uranium prices being low. So at some point, the market has to keep you up. Now in the very short-term, there is a bit of I think gravity on short-term spot price for uranium and that’s the currencies of production which have all come down quite significantly with the U.S. dollar strength over the second half of last year. And that, if you like – if you are talking about month-to-month spot prices, that can create I think a little bit of downwards pressure or a bit of a ceiling on spot prices. But if we are talking about quarter-to-quarter, half year to half year and this year to next year, I think we are really waiting to see that transaction activity and liquidity pick up and it needs higher prices for suppliers to be willing to close out almost high demand volumes. Matthew Keane Sure, okay. The second question I had there, sorry for the lengthy questions and answers. But it was around – your report today required cash – the cash balance or the cash gap required for the 2017 CB maturity, definitely taken into account the amount you require in balance sheet for normal operations, what would that be over and above the obviously, the repayment of the CB, so basically just working capital required to maintain the business? Craig Barnes It’s somewhere in the region of $50 million to $60 million, that’s what our current assumption is. There is a lot of moving parts around that as well. And I think over time, it might be that we have the ability to bring that down as well if we can look at ways to smooth our sales and things like that. But our assumption is around $50 million to $60 million. These numbers may actually factor in something more like about $65 million. Matthew Keane Okay. So just to confirm that $140 million, $165 million gap, that it does include cash required on the balance sheet to run the business? Craig Barnes It does. Matthew Keane Okay, that’s all for me. Operator Thank you. And our next question comes from Stefan Hansen from Morgan Stanley. Please ask your question. Stefan Hansen Good morning. Actually, my question on the funding gap I think was just answered. I mean you have got your next – your bond is $237 million and you have got $137 million in cash with $100 million the difference but – and expectation of being cash flow neutral from now on, but you are looking at a funding gap of $140 million to $165 million, so that difference is I guess timing of sales and that sort of thing, is that…? Alex Molyneux Well, hang on. I think we made the point that our expectation to be cash flow neutral on a full year basis. We actually are cash flow positive at the moment and expect to be cash flow positive for the second half. So our – in our numbers, using fairly conservative assumptions, we would have a higher June 30 balance being forecasted internally than was reported for our December 31 balance. So – and by the way, it’s not using commodity price assumptions for that above market. So for that kind of forecasting, we are using real current market assumptions. So that’s then – there is obviously, as we said, there is some leakage or there is some cash that’s not accessible to us because it has to be held back for capital purposes and whatnot. And then our external estimated funding gap is $140 million to $165 million. That’s really what we are talking about that we really would need to be provided from outside the company. Stefan Hansen Okay. I mean I guess as you are cash flow positive from now on, meaning you are going to I guess, be more than $137 million cash covered as of the April CB then the working capital amount that you are talking about could actually be more than $65 million? I mean, it’s quite large. Alex Molyneux Well, look, I mean, well, even if you took the – it’s not really – I mean, we have got $237 million repayment, deduct $150 million from that and the numbers kind of give or take $10 million, they will work out for you, right, so with the $65 million holdback for holding cash balance. Stefan Hansen Alright. No worries. The next question I mean we talked about the change in material influence part of your engagement agreement. What’s yourself and the board mostly focused on, I mean, just looking for a deal that can get you over the near-term funding GAAP or is there an actual change in control, something that the board is focused on? Alex Molyneux The board is focused on looking at all deal structures and picking something that is – that provides the best value for investors and has got other elements to it, de-risk in terms of what’s the risk of the transaction, what’s the likelihood of it succeeding blah, blah, blah. So, there is no – what’s happening is we have engaged with a number of parties of different natures to discuss what options and interests there are in Paladin and we are obviously receiving a number of different ideas back in return to that in terms of how they would perceive they would like to work with us. So, frankly, we are getting a lot of ideas in-bounded and they are all quite different structurally and we are working through them in a diligent manner and I can’t say whether any outcome would be. There is no preference for a change of control or non-change of control or anything like that. It’s just that we are working with third-parties. And to some extent, we have to – we are sort of working with what we are provided as well. Stefan Hansen Alright. And just one final one on this timing of sales over the next couple of quarters, it looks like you are building inventory for another large sale to CNNC in the fourth quarter and we saw that in the first half that you had a greater premium when you would sold lower volume basically the CNNC agreement seems to be closer to spot. Is that how we should think about the price premiums that we will see in the third and fourth quarter? Alex Molyneux I think when we look at the third and fourth quarter, when we look at the fourth quarter, we do – we have some fixed term in that fourth quarter as well and we have a very large number in total sales for the fourth quarter. So, we are building a lot of material for that CNNC contract, but it could actually be less than half our total sales for that quarter. So, I think when we look at the impact on price and we – the margin moves sales between quarters a little bit. I think we – our current expectation is we will have a premium to spot in both quarters. And frankly, the premium looks like it will be higher in the fourth quarter than it will in the third. Stefan Hansen Okay, great. Thanks very much. That’s it for me. Cheers. Operator Thank you. The next question comes from Mr. Simon Tonkin from Patersons. Please ask your question, Simon. Simon Tonkin Yes, good morning, Alex. Congratulations on your appointment. I have just got a couple of questions. First one is capital, is there any large capital items you expect at Langer Heinrich in FY ‘17 such as tailings or stripping etcetera? Alex Molyneux The largest capital – so, our biggest upcoming capital item is that we do have in our plan to do a move of the TSF 1 at Langer Heinrich and the total capital number for that, Craig, if you can remind me. Craig Barnes I think it’s $7 million to $8 million in total, that’s moving the TSF 1 and then also building TSF 5 construction. Alex Molyneux Okay. I think it’s actually a bit more than that. Yes, I think it’s closer to $10 million. So, we are still – we are basically still looking at our numbers. But the question is, for us, right now is whether any of that will be spent in 2017, we are not sure, but the biggest year of that TSF move in a spending sense will probably be ‘18 regardless. But we are just trying to work out the exact timing of it maybe that there is a couple of million dollars of that comes in to FY ‘17. Simon Tonkin Okay. And the other question just on grade, obviously we are seeing it trend downwards, how can we think of grade in 2017? Alex Molyneux 2017 feed grade will be – so what we have said is for the next 5 years or so of mine life, we will be within the current zone of feed grade which is around 650 to 700 parts per million. So we are still finalizing – I mean basically, we won’t finalize our 2017 mine schedule until around May. And – but we had a relatively meaningful drop off in grade from FY ‘15 to FY ’16. And then we have said that we are broadly in the same grade zone for the next few years, but it’s in May that we will work that out. We will finalize our schedule and we will be able to provide some guidance on – within a much smaller level of tolerance around the grade. Simon Tonkin Okay. Thanks a lot. Operator Thank you. There are no more further questions. Please continue further with your presentation. Thank you. Alex Molyneux So no further questions? Operator There are no more further questions. Alex Molyneux Okay. So thanks everybody for joining our conference call. And if you do have any further questions, then feel free to contact Andrew and he can coordinate all of us to respond and thanks for your time this morning. Operator Ladies and gentlemen, that does conclude our conference today. Thank you for all participating. You may all disconnect. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited. THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY’S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY’S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY’S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com . Thank you!