Q2 2023 Ferroglobe PLC Earnings Call

Speaker 2: for a review of the income statement. Our second quarter results improve over the first quarter due to an overall increase in volume and cost efficiencies, partially offset by weaker pricing. Revenue for the second quarter was $456 million, up from $401 million in the prior quarter.

Speaker 3: You you.

Speaker 2: The 14 percent increase from the prior quarter was due to stronger volumes, driven by the resumption of operations in France after idling in the first quarter as a result of our energy agreement.

Speaker 4: Today ladies and gentlemen and welcome to Ferroglobes second quarter 2023 earnings call. At this time all participants are in listen only mode. Later we will conduct a question and answer session and instructions will be given at that time. As a reminder this conference call may be recorded. I would now like to turn the call over to Alex Ritonin Ferroglobes Vice President of investor relations. You may begin. Thank you Nadia. Good morning everyone and thank you for joining Ferroglobes second quarter 2023 conference call. Joining me today are Marco Levy our Chief Executive Officer and Beatriz Garcia-Caz our Chief Financial Officer. Before we get started with prepared remarks I'm going to read a brief statement. Please turn to slide number two. Statements made by management during this conference call that are forward-looking are based on current expectations. Factors that could cause actual results to differ materially from these forward-looking statements can be found in Ferroglobes most recent SEC filings and exhibits to those filings which are available on our web page at Ferroglobe.com.

Speaker 2: The volume increase related to our French operations was primarily in silicon-metal and manganese alloys, which increased 37% and 34% respectively. Our volume gains were partially offset by lower prices.

Speaker 2: During the second quarter, raw material and energy consumption costs improved to $229 million versus $255 million in the prior quarter. The lower raw material and energy consumption for production costs were driven by cost benefits from our energy agreement.

Speaker 2: Cost of sales as a percentage of revenue improved to 55%, down from 58% in the prior quarter. Excluding the accounting impact from the short-term PP&A in Spain, cost of sales declined to 50%, down from 64% in the first quarter.

Speaker 2: Operating profit in the second quarter was $63 million versus $44 million in the prior quarter.

Speaker 2: As a percentage of sales, operating profit was 14% in Q2, up from 11% in Q1. The $19 million increase in operating profits at the second quarter was driven primarily by higher volumes and cost efficiencies.

Speaker 4: In addition, this discussion includes references to EBITDA, adjusted EBITDA, adjusted gross debt, net debt, and adjusted dialog that earnings per share among other non-IFRS measures. Reconciliation of non-IFRS measures may be found in our most recent SEC filings. At this time, I would like to turn the call over to Mark O'Levy.

Speaker 2: Debt financial expenses in the second quarter declined to $1 million, down from $11 million in the prior quarter. The decline was attributable to lower debt outstanding as we continued to execute our deliberating strategy. In addition, we extended maturity of one of our government loans, resulting in a one-time two-up of accrual interest during the quarter. Please see the complete disclaimer at https://sites.google.com/+PID-MGN-DQ

Speaker 1: as our employees are our most valuable asset. Over the past 18 months, the rate of lost time injuries declined by 66% based on our rolling three month data, approaching best in class industry standards. One of our top priorities is providing a safe work environment for our employees, and we will continue to focus on providing the safest possible workplace. Our solid results in the second quarter reinforce our strong execution and ability to successfully navigate a challenging market. Sales increased 14% and adjusted EBITDA increased 136% to $106 million over the per year quarter. Our cash balance reached $363 million.

Speaker 2: Our adjusted EBD-R in the second quarter was $106 million versus $45 million in the previous quarter. Adjusted EBD-R margins increased to 23% in the second quarter, up from 11% in the first quarter.

Speaker 2: Silicone metals and manganese volumes increase in the second quarter as we resume production in France. The volume increase positively impacted adjusted EBD by $34 million.

Speaker 2: The average selling price across our portfolio declined by 6.7%, resulting in a negative price impact to adjusted EBDI of $23 million. Selling prices in the second quarter were impact by soft demand.

Speaker 2: Improved costs positively impact adjusted EBITDA by $50 million, mainly due to our energy agreement, CO2 compensation, and declining raw material prices.

Speaker 2: Slide 11 please.

Speaker 2: We end the second quarter with a record cash balance of $363 million up from $344 million in the prior quarter, an increase of $19 million.

Speaker 1: our note balance to less than $150 million.

Speaker 1: highlighting our strong cash position and reinforcing our confidence in our long-term cash generation potential.

Speaker 2: Total adjusted gross debt was $400 million, flat from the prior quarter. During Q2, we regret buildingunk a communities Supreme Court area for McClatchy Pir Af Mikato.

Speaker 2: $2 million of our senior secured notes in the open market, which was offset by a crude interest.

Speaker 1: To put our overall debt reduction accomplishments in perspective, since the first quarter of 2022, we reduced our gross debt from $520 million.

Speaker 2: The debt declined to $37 million in the second quarter, another record level.

Speaker 2: As a result, the debt as a percentage of equity improved to 4% in the second quarter.

Speaker 1: to $250 million, in addition to reducing our interest expense.

Speaker 2: down from 8% in the prior quarter and 30% in the year-ago quarter.

Speaker 1: This transaction enhances our flexibility as we continue to evaluate capital allocation priorities.

Speaker 2: This dramatic improvement over the past year highlights our progress in reducing our leverage and strengthening our balances. Furthermore, in July , we redeemed $150 million of our $9.375 senior secured notes due in 2025.

Speaker 1: As discussed before, our goal is to prudently deploy cash to enhance long-term shareholder value.

Speaker 1: Beatrice will provide more color on these inner marks.

Speaker 1: Recently, the US Department of Energy added silicon metal to its critical materials list.

Speaker 2: effectively reducing the outstanding note balance by half and lowering our annual interest expenses by approximately $14 million. Overall, in less than 80 months, we have reduced gross debt by $270 million down from roughly $520 million, approaching our objective of having approximately $200 million of gross debt. That's all for today.

Speaker 1: as the leading US Citico Metaproducer.

Speaker 1: Ferroglobe is a significant beneficiary of this development.

Speaker 1: will increase from 7 Gb in 2021 to more than 42 Gb over the next 34 years.

Speaker 1: As onshoring efforts among all Western regions continue to build momentum, we expect to be a significant beneficiary as a critical part of the solar supply chain.

Speaker 2: For the next step in our capital structure, we are currently evaluating the most effective capital allocation policy to maximize shareholder value.

Speaker 1: due to our global footprint and ability to produce high purity silicon metal.

As you are probably aware, before we can return any capital to shareholders, we must remove the covenant restrictions in our Senior Secure Note Debt Agreement, which prevents dividends and share buybacks. And the strength of our balance sheet and the alternatives at our disposal.

Speaker 1: The electric vehicle market continues to represent a significant growth opportunity for FerroBlock. We recently signed an agreement to license patents that strengthen our position in the EV battery market, reinforcing the company's position as an emerging leader in high quality solutions for this market. This agreement allows us to advance FerroBlock's proprietary technology and develop silicon products for the next generation of lithium-ion cells. As the silicon content in anodes increases, battery performance increases.

We believe such restrictions will be removed in the coming months.

restrictions will be removed in the coming months. Next slide please.

of record earnings in 2022. Free cash flow in the second quarter was positive $1 million versus $117 million in the prior quarter. During the quarter, we had a working capital release of $79 million. We had a total $66 million of loan cash items.

Speaker 1: Changing time and storage capacity will substantially improve our current technology. This will help Ferroglobe to produce low carbon solutions and also accelerate the energy transition.

Speaker 1: We are very excited about these developments and they reinforce the long-term growth opportunity for the company.

related to the accounting impact of the short-term PP&A in Spain and the energy agreement. We plan to build inventory in the coming months as we prepare for the first quarter, I-link in France. We expect that this will increase our overall working capital in the next quarter.

Speaker 1: In April , we restarted operations in France, which helped our volume and cost performance during the quarter.

Speaker 1: Operations in Spain remain limited due to less competitive energy prices. Our flexible global footprint enables us to move production during volatile energy periods to lower cost plants in other regions and still provide quality products to our European customers.

Catholic South Flux in the second quarter with $23 million versus $17 million in the first quarter.

We continue to project our base level capex for 2023 to be around $75 million with the potential to increase depending on additional spending for growth and ESG initiatives. Lastly, we continue to project our base level capex for 2023 to be around $75 million with

Speaker 1: Overall, our operation continues to perform well. We recently signed a competitive long-term power purchase agreement with a Spanish energy provider starting in January 2024.

Cash flow from financing activities in the second quarter was $19 million versus negative $96 million in the first quarter. Exact by bond pre-purchase, early repayment and bond interest payment.

Speaker 1: covering a portion of our required energy needs and utilizing 100% green energy. Importantly, this is our first power purchase agreement in Spain and we expect to sign additional agreements in the coming months.

Next slide please. At this time I'll turn the call back over to Marco. Thank you Beatriz. Moving to the corporate update on slide 14. As we have already discussed during the call we made a significant step in strengthening our balance sheet.

Speaker 1: This will help us reduce our exposure to energy price while it is in Spain.

Speaker 1: The global economy remains soft.

Speaker 1: impacting the end markets that we serve.

Speaker 1: Overall, prices continue to decline in the second quarter due to weak demand impacting silicon metal, silicon alloys, and manganese alloys.

Speaker 1: We expect the market to remain challenging in the third quarter as higher inflation and interest rates are expected to continue impeding economic activity.

The US Department of Energy's designation of silica metal as a critical material is a big win for Fairglobe as the leading producer in the US. Combined with a strong push by the US government to strengthen the domestic supply chain, it facilitates the on-shoring trend which has already seen tremendous progress. We believe in incentives created by the Inflation, Reduction and Chips Act.

Speaker 1: Interestingly, in late July the IMF raised its global growth forecast for 2020 to 3%, despite a shallower than expected recovery in China.

Speaker 1: The IMF maintains its 3% global growth estimate for 2024. This, combined with our internal views, provides optimism for 2024, as excess inventories should be depleted and the supply-demand balance for our products should improve.

Speaker 1: The IMF maintains its 3% global growth estimate for 2024. This, combined with our internal views, provides optimism for 2024, as excess inventories should be depleted and the supply-demand balance for our products should improve. Despite these challenging market conditions,

put us in a strong position to take advantage of these growth trends in the coming years.

strong position to take advantage of this growth trend in the coming years.

Speaker 1: We are reiterating our 2023 EBITDA guidance of $270 to $300 million due to FerroGlobe's disciplined cost control and proactive energy agreements in 2023.

Sorry, go ahead. Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by. We will compile the Q&A rule study. This will take a few moments. Now we're going to take

Speaker 1: our 2023 EBITDA guidance of $270 to $300 million due to Ferro Globe's discipline cost control and proactive energy agreements in 2023. Next slide please.

Speaker 1: Let's start with Silicon Metal. Revenue was $195 million in Q2, up from $161 million in Q1, an increase of 22%. The dividend for this segment increased $31 million in Q1 to $82 million in Q2, up 165%.

Thank you very much operator. Good morning. Good afternoon everyone. Thank you for taking my question. Good job on the cost management during during Q2 and my first question is is in regards to Beatrice your comments in your comments in your prior prepared remarks.

Speaker 1: Our cyclical metal business was up, primarily driven by restart in France, partially offset by lower prices due to a challenging market environment. Volume increased 37%, quarter over quarter, to approximately 50,000 metric tons.

regarding the restrictions on capital returns being removed in the coming months. And so my question is, what is your desire to return capital to shareholders in this somewhat weaker macro industry environment? And then more broadly, both Beatrice and Mark, how you kind of think about capital returns versus pursuing growth. You think you have the ability to do both. Thank you very much for your perspective.

Speaker 1: Our average realized price for silico metal sales decreased by 11% compared to the previous quarter.

Speaker 1: driven by lower index pricing in the US and Europe . This price decline negatively impacted adjusted EBITDA by $17 million. We continue to benefit from our energy agreement in France and the indirect CO2, which together contributed roughly half of the cost benefit with lower material costs being the next larger contributor factor. As for the silicon metal outlook, we are starting to see initial signs of increased customer inquiries as the recent inventory of Rang is almost fully corrected.

Speaker 1: At the same time, the price environment appears to have stabilized. Another positive sign for the Silicon metal market is the reduced exports from China, which should bode well for the future prices.

to our shareholders either in the form of shared buybacks or in the form of dividends once we sort out the issue around the governance of the senior nodes. As we see it, we have a couple of options here at the moment.

Speaker 1: Next slide please. Moving to Silicon-based Alloys, revenue was $133 million in Q2, essentially flat with the prior quarter. Adjusted EBITDA for Q2 was $32 million, up 45% from the prior quarter. Sales volumes remained flat over the prior quarter. Average realized pricing was down 2% over the same period.

In one side we can get a consent of course in our senior notes. The other option is to refinance or to redeem our senior notes. We feel quite strong about the cash generation that we have at the moment.

So those are the options that we have at the moment. Once we get to that point, that either we refine it or we redeem our senior notes, or as I explained before, we got a consent, then we will be evaluating what is the best...

financial policy for the company, either in the form of share buybacks or payment of dividends. I think this could be something that we're going to be announcing shortly.

That is very helpful. Thank you.

Follow-up question.

Mark, you mentioned.

the critical material status for silicon metal. If you could maybe comment on the implications for your business of that US designation. You also mentioned the licensing agreement in your prepared remarks.

If you could maybe expand on some of the details of that agreement, what it could mean in terms of potential revenue, I would appreciate a perspective on that.

And that then separately kind of near term questions, just how you think about the cadence of EBITDA for the remainder of this year, given you reiterated your full year guidance. Thank you very much. I know there were a few questions in there. Thank you. Thank you, Luke. And thank you.

Well, the news from the U.S. are particularly good because, I mean, Silicon Metal has been already classified critical and strategic by the European community.

Now the US has confirmed the fact that silicon metal is critical for the green transition. Now of course being the largest producer of silicon metal in the US and in Europe ,

we see great opportunities to benefit out of it, not only because we know that our business is cyclical, chemicals will come back, but there is growth related.

to solar and batteries and I think that due to our global asset footprint we are pretty well placed to compete successfully to exploit these opportunities. Regarding the license, yes we...

basically supply chemical producers to produce products that partially abuse replaced graphite in the anode and this is already going on. These specific licenses Support our second development which is toward the full replacement of the graphite with silicon.

in the anode. So having this additional NOAA at our disposal is going to speed up our development. The third question was about the cadence of IBITDA.

guidance of 270 to 300.

The market is Extremely challenging at the moment in terms of volumes in terms of price trends our expectation is to

to see better conditions in the new year. But in the meantime, we expect to deliver good results in Q3 and lower results in Q4 due to the fact that we will have to slow down our production in France.

due to the energy conditions. Got it. So really like the cadence of Q3 and Q4 is really driven first and foremost by your volumes.

Got it. So really like the cadence of Q3 and Q4 is really driven first and foremost by your volumes. Yes.

Correct. Okay. That's helpful. Marco and team, really appreciate your color this morning. Continue best of luck. Thank you, Anouk. Thank you. Now we're going to take our next question. Just give us a moment.

question comes to the line of Martin Anglert from Seaport Research Partners. Your line is open. Please ask your question. Hello. Good afternoon, everyone. Hi, Martin. Hi, everyone.

I wanted to touch on costs. Costs were well managed in the recent quarters, but maybe what you are seeing incrementally there as we move into and through the back half of the year, kind of your expectations, if we'll continue to see some deep light in there that will act as some mitigating factor on the declining price environment. Do you want to start, Beatriz? Yes, I can start. Thank you, Marco. Hi, Martin. I think on the core side, what we have been seeing on this quarter is in general a decrease in the raw material pricing. The only raw material with prices that are still holding is coal and the black productants as well.

That were adjusted for an EBITDA and or were beneficial from a cost perspective that he called out while reviewing the slides, like the PPA and carbon credit. What's the expectation that that all continue at a similar rate or those off the table for the remaining quarters? Yes, Martin, in this quarter we adjust to the EBITDA, the PP&A that we signed in Spain. It was a swap for two months.

So you saw the impact and we adjusted even if it is a positive impact in the quarter. And then I think as one of the highlights in our presentation, we said that we signed or executed the first PP&A in Spain. And this would be the first one because our target is to cover more or less 50 percent of our energy consumption.

with this PP&A. So you can expect more movements like that going forward. Okay, well, earlier in the call you said that the news maybe I misheard it, but the new Spanish PP&A.

as the EBITDA cadence question, but...

thinking about third quarter, fourth quarter, I think you alluded to fourth quarter volumes, probably sequentially lower. Maybe if you could review that. The picture is the following for us. Silicone metal, we see a slightly better situation than in the previous quarters. We think that the supply chain.

is rather empty and we see our orders coming now more regularly than before. This is valid for silicon metal. While I think that to see the same situation...

For alloys we have at least for for commodities we have to wait The end of of the year, of course we have the advantage of Mush Pen hid it in her toares Bergynud steel gold silk herringfield <expletive> . We are hear in here to keep one more recipe.

have a rather stable volume trend, but definitely the supply chain of manganese alloys and ferro-silicon standard still suffers out of oversupply. Understood, thank you for that. And one last one here, and you did touch on this.

in 3Q and then...

What was the, I didn't catch the reason behind that, why that is expected to happen. Apologies, I was not clear, my fault, Martin. Let me try to repeat it more clearly. We expect an increase of working capital in Q3, driven by the fact that we will slow down production in France.

where we have the core of our silicon metal production in Europe at the end of Q4. So we will need to to start building inventory of silicon metal. So this means producing more finishing goods but also by the...

the right volumes of key raw materials. Okay, at a group level, any goal posts on how we should think of overall working capital as a percentage of sales in 3Q then?

Well, the silicon metal will be higher than our target 21-22%. We expect to run at this level ferro-silicon and manganese will continue to be north of 25% overseas. All right, excellent. I appreciate the questions.

Hi guys, nice quarter. Two questions for you. One on the cash flow statement, there was a 62 million dollar outflow related to the other line item. I was hoping you could provide a little bit of additional color around that and then as my follow-up, could you just maybe give a bit of additional detail in terms of what is the practical impact of having the Department of Energy add silicone metal to its critical material list. Thank you.

What I explained before is the adjustment of the SWAP agreement that we have in Q2 2023. Okay, got it. Understood. Thank you. On your second question, the thing is that when we think about what's happening in solar and battery markets, the idea in US but also in other countries is to establish the full supply chain.

What I explained before is the adjustment of the SWAP agreement that we have in Q2 2023. Okay, got it. Understood. Thank you. On your second question, the thing is that when we think about what's happening in solar and battery markets, the idea in the US but also in other countries is to establish the full supply chain and what and

What is important is that everybody understands what are the elements of this supply chain and the fact that Silicon is recognized like a critical and strategic material implies that Silicon and investments related to silicon are going to be considered by legislators, by politicians, by investors, so this is really the essence and as these things are moving pretty fast in the Western world where we have our happening also in Europe Unfortunately, my opinion, Europe is less efficient than the US not only in protecting from dumping but also in terms of working the talk, so I think I'm very optimistic about the situation in the US at the moment.

Yeah hi, thank you for taking my questions. I have two questions. The one is a fairly easy one. What is the sales mix between the US and Europe in silicon metal and silicon based alloys? And the second question is regarding the CO2 compensation. How do you book that? You mentioned higher CO2 compensation in the second quarter. And what was the incremental change in the CO2 compensation between the first quarter and the second quarter? And is the CO2 compensation in the second quarter?

also representative for what you will book in Q3 and Q4. Thank you. OK. As far as I know, usually we don't give data about the mix by geography.

But let me try to help you a little bit. In Europe , we sell the entire mix. So we sell silicon metal, silicon base alloys, foundry, and manganese alloys. In the Americas, we don't sell manganese alloys while we are present with silicon metal.

Ferrosilicon and Foundry and founder products.

Outside of these geographies, we have quite important footprint in South Africa that supplies basically for ferrosilicon Europe while for silicon metal, the asset in Polokwane, South Africa supplies a little bit everywhere in the world. We have a plant which produces...

Electrodes in China is the only plant that we have that produces electrodes and now this production basically goes to the US and to Europe . We have a plant in Argentina that supplies calcium silicon and found the products to supply Europe . This is broadly our mix. Okay. And Martin, regarding the CO2 to your question, so to comment, comment number one is that the CO2 is, I'm sure that you know that, but okay, is an allowance that we receive, right, based on the production. Okay.

the previous years. And then we bookend our P&L based on the production of the quarter. And as you remember in Q1, we didn't produce in France, right? And this...

core that we have been resuming the operations in France, so we have been producing. So the amount of CO2 that we book in our P&L is higher than in Q1. So the way to look at CO2 is depending if our plants are operating.

you will see a different amount of CO2, if this answers your question. Okay, thank you. Thank you.

Now we're going to take our next question. And the question comes from the land of Greg Bennett, just the stockholder. Your line is open, please ask the question.

Good morning, thank you for the great results. Silicon metal in the United States, you say you're the largest, at what capacity are you now running? Is there excess capacity or do you have the opportunity to expand that capacity? Yeah, we have two plants in joint venture when you talk about North America with the Dow.

company, one in Vancouver, Canada, and one in Aloia, West Virginia.

These plants produce only silicone metal.

We have another plant in Surma, Alabama, which is owned by us, which produces only silicon metal.

And then we have a plant in Ohio.

in Beverly, Ohio, which produces ferrocilicon, foundry, and silicon metal. So it produces all the mix to supply the United States. These plants are back integrated with mines in Canada and Alabama for quartz.

and with a coal mine in Kentucky. So this is the footprint. Now we believe that when you keep your plants in a good state, in a good status with the right maintenance capex, you have the possibilities, one, to improve the yield of the furnaces with different technologies. These are incremental capacity.

and pretty fast to put a new furnace and to increase the output of silicon metal. So the footprint and the back integration are basically our strong points.

Is your energy supply natural gas or is it – what is the energy supply? Because you focus on energy costs quite a bit, at least in Europe . Yeah, we are talking about electricity. Your cost is electricity, not natural gas. Is that correct? You are talking about electricity and this is very important because of its utility voltage.

We're looking at electricity, yes. Okay. And these are competitive areas like West Virginia for that.

Well, you are talking about we have different contracts for the different assets. How do you expect the U.S. – is there going to be grants given to companies like yours for financing, favorable financing for you to –

How do you envision what's going to happen besides tariffs? Yeah, we are looking into that and...

We are talking to different partners. I think that the...

The key thing is to form alliances with other companies in the supply chain to leverage at best the incentives that the government can potentially guarantee.

In your joint ventures with Dow Chemical, if you want to expand, is that an agreement between the two of you? How do you see your partner contributing in this?

The joint venture with Dow Chemical is related to the two sides of Becancourt and Aloé. And whenever we consider an expansion either in Becancourt or Aloé, we need to sit down with.

with a down chemical company that uses capacity for their own production of chemicals. Okay, for whatever it's worth, I would like you to continue to de-lever.

uses capacity for their own production of chemicals. Okay, for whatever it's worth, I would like you to continue to de-lever.

considering the uncertainty of where from an economic point of view going forward for whatever that's worth thank you I hear you loud I totally agree with you the leveraging further deleveraging and start

distributing dividends to our shareholders is our priority. Let me ask you one other shareholder question.

There's virtually very little ownership. Or if you look at your shareholder base, you have some hedge funds, that type of thing. But as far as being part of any kind of...

environmental, social governance or solar. I don't think there's any coverage at all. And you've hired a new shareholder relations person. Do you anticipate coming to New York or Boston or places to visit with institutional investors to try to get the vanguards and fidelities of the world to look at your company? You're kind of an author. Let me start answering your question. First of all, we have been doing that a lot between December , February , and then we have been doing that for a long time. So, I think that's a good question. I think that's a good question. I think that's a good question. I think that's a good question.

and March this year. And we've been several times to the US meeting current and potential investors. Today we are covered by B-Rally and by Seaport. There are other parties who are showing up interested in covering us. You made a reference and I'm pleased about that.

investor relationship, yes, we have decided to focus much more on our shareholders and for this reason we have hired somebody who has an enormous experience in IR and we are pleased to have him around for this exercise. So yes, Alex Rotonen is in the call at the moment. Thank you. All right.

So that is clearly one of my missions is to do more outreach, expand coverage, and I'm quite familiar with the U.S. market since I've spent most of my life there. So I'll certainly be visiting U.S. quite a bit with the management team.

But I've been here for about six weeks now, so I haven't had a chance yet, but...

Fantastic. Thank you very much for your hard work. Thank you. Thank you. This concludes the question and answer session for today. I would now like to hand the conference over to your speaker, Marco Leiby, for any closing remarks. Thank you. That concludes our second quarter of 2020 year-end calls. Thank you again for your participation. We look forward to hearing from you on the next call. Have a great day. That does conclude our conference for today. You may now all disconnect. Have a nice day.