Q1 2025 Enlight Renewable Energy Ltd Earnings Call
Erudite Audionautic Programming
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Speaker Change: Good day and thank you for standing by welcome to the NN lights first quarter 2025 earnings call. Please be advised that today's conference is being recorded I would now.
Speaker Change: I like to hand, the conference I had the T. I know twice director of IR. Please go ahead.
Speaker Change: Thank you operator.
Speaker Change: Good morning, everyone and thank you for joining our first quarter 2025 earnings conference call for a night renewable energy.
Speaker Change: Before beginning this call I would like to draw participants attention to the following.
Speaker Change: Certain statements made on the call today, including but not limited to statements regarding business strategies and plans our.
Speaker Change: Our project portfolio market opportunity utility demand potential gross discussions with commercial counterparties and financing sources pricing trends for materials.
Speaker Change: Yes, I've company projects, including anticipated timing of related approvals and project completion and anticipated probably ever some delays.
Speaker Change: Expected impact from various regulatory developments completion of development the potential impact of the current conflicts in Israel on operations and financial conditions and company actions designed to mitigate such impact on the company's future financial and operational results and guidance, including revenue and adjusted EBITDA are.
Speaker Change: Forward looking statements within the meaning of U S Federal security laws, which reflect management's best judgment based on currently available information we.
Speaker Change: We referenced certain project metrics in this earnings call and additional information about such metrics can be found in our earnings release. These statements involve risks and uncertainties that may cause actual results to differ from our expectations. Please refer to our 2024 annual reports filed with the SEC on March 28 2020.
Speaker Change: And the other filings for more information on the specific factors that could cause actual results to differ materially from our forward looking statements.
Speaker Change: Although we believe these expectations to be reasonable.
Speaker Change: Takes no obligation to revise any statements to reflect changes that occur after this call.
Speaker Change: Additionally, non <unk> financial measures may be discussed on the call. These non <unk> measures should be considered in addition to and not as a substitute for or in isolation from our results prepared in accordance with the IRS.
Speaker Change: We can filiation to the most directly comparable I forget financial measures are available in the earnings release and the earnings presentation for today's call, which are posted on our Investor Relations webpage.
Speaker Change: With me. This morning are a good idea of it.
Speaker Change: Oh and co founder of at night near your hotel.
Speaker Change: Yes, Oh every night and unimpeachable C O and cofounder of <unk>.
Adam: That will provide some opening remarks, and then we'll turn the call over to Adam for a review of our U S activity and then tenure for a review of our first quarter results. Our executive team will then be available to answer your questions.
Speaker Change: Thank you for joining us today for <unk> first quarter 2025 earnings call.
Speaker Change: We are pleased to report strong financial results for the quarter revenue and income grew by 39% compared to the same quarter last year, reaching $130 million.
Speaker Change: Adjusted EBITDA also increased by 84% to $132 million does.
These results support our full year guidance ranges of 490 to 510 million in revenues and $360 million to $380 million in adjusted EBITDAR, which remain unchanged, reflecting the resilience of our combined developer in IPP business model.
Speaker Change: A significant contributor this quarter was the sunlight transaction, which added 42 million to adjusted EBITDA and 97 million to pre tax profit mirror will provide more details on our financial performance later in the call.
Speaker Change: During the quarter, we made good progress with our expansion plans in the U S. Our next wave of projects remain on scheduled.
Speaker Change: Construction on quail, Orange and Roadrunner is advancing and they are expected to begin operations by the end of this year followed by country acres in the second half of 2026.
Speaker Change: Together these projects will add 820 megawatts of generation capacity and two gigawatts hour of storage upon C O D.
Speaker Change: We expect the total revenues and income of approximately 250 million and EBITDA of 219 million during their first year of operations.
Speaker Change: We also reached an important milestone by securing the financial close for country acres and quail ranch during this quarter, joining the financial close with Roadrunner at the end of last year.
Speaker Change: We have raised a total of $1.5 billion in financing at favorable terms for these three projects over the past couple of months. Despite recent U S trade policy changes that created market uncertainty.
Speaker Change: This demonstrates our strong ability to access the capital we need to support our growth.
Speaker Change: Looking ahead to the second quarter, we plan to start construction on <unk> and Snowflake two U S. Mega projects with a combined capacity of 2.6 factored gigawatts and with expected combined total revenues and income of approximately 450 million.
Speaker Change: And EBITDA of 400 million during their first year of operations.
Speaker Change: As part of its global strategy and light has worked to build a diversified and resilient supply chain for the equipment used in its projects as a result, the recent introduction of tradeoffs in the U S has no material impact on our project economics, our solar panels are either domestically sourced or are imported.
Speaker Change: From countries other than China, and we use Tesla is our main battery supplier, which produces a large portion of their equipment domestically and therefore is relatively lower exposure on.
Speaker Change: On a broader scale. We are also confident in our ability to negotiate with equipment supplier as well as adjust our ppas to market conditions.
Speaker Change: Adam will give more detail on our U S project progress and tariff impact in a moment.
Speaker Change: In Europe, we are seeing rising demand for energy storage and our development strategy is leveraging this trend.
Speaker Change: We're also studying construction on one three gigawatt hour of energy storage this year in Italy, Spain and Sweden.
Speaker Change: We also entered the Standalone energy storage market in Poland with three two gigawatt hour at now under development.
Speaker Change: In Israel, we advanced our position in two key growth areas.
Speaker Change: Data centers and Standalone storage we've.
Speaker Change: We won a state land tender for Israel's first integrated data center and renewable energy complex it actually.
Speaker Change: We plan to build a 100 megawatts I T data center at an expected investment of $1 billion.
Speaker Change: This project is strategically important as demand for computing power is rapidly growing in Israel.
Speaker Change: We also strengthened our leadership in Israel deregulated electricity market by winning a one nine gigawatt hour of bid in Israel first Standalone energy storage capacity tender.
Speaker Change: Further solidifying our 50% market share in this sector.
Speaker Change: In summary, this quarter combined strong financial performance with continued progress delivering on our near term project and long term expansion plans.
Speaker Change: A robust supply chain continues to shield us from changes in the U S tariff and trade policy. This resilience allows in light to continue executing on its strategy of tripling company growth every three years.
Adam: Now I'd like to turn the call over to Adam.
Adam: Thank you Lord I'm excited to report the great progress our U S team continues to make on our extensive project portfolio and on our three large projects now under construction.
Adam: Beginning with quell ranch located in Albuquerque, New Mexico. This 128 megawatt television and 400 megawatt hour battery storage project.
Adam: This is the second phase of our interests go complex, which achieves here day in 2024.
Adam: Structure that quell rash is on schedule and progressing well the PV side is all piles installed with racking and in Burger installation underway nearly all the medium voltage trenching is complete on the energy storage portion of the project and we're halfway through the foundation construction for the battery containers.
Adam: We anticipate achieving commissioning of this site before the end of 2025.
Adam: <unk> mentioned in mid April and in the midst of tariff related uncertainty. This project closed financing on a $243 million construction loan package.
Adam: Now moving on to Roadrunner, a 290 megawatt solar and 940 megawatt hour battery project in southeast Arizona.
Adam: Quell rads construction of this project is making excellent progress we have completed nearly half of the pilot installations, a third of the overall racking system and Inverters are starting to be delivered and installed.
Adam: We've also began construction on the battery storage portion of the project with foundation materials delivered and ready for installation.
Adam: We're currently on track for commissioning by the end of this year.
Adam: Our final project under construction is country acres near Sacramento, California, with 403 megawatts of PV generation and 688 megawatt hours of battery storage capacity.
Adam: Construction is accelerating with ground clearing internal road building in the first row of PV solar now underway.
Adam: We anticipate this project will be complete and commission during the second half of 2026.
Adam: This quarter, we also closed the $773 million construction financing needed for this project.
Adam: Our successful financial closures this quarter as well as excellent construction progress we're in a great position to rapidly bring three major projects online to make critical demand and set us up for success with snowflake.
Adam: And C O bar, our next wave of projects with 2027.
Adam: Recent changes to U S trade policies have put a renewed emphasis on the renewable energy industry supply chain.
Adam: <unk> has built a strong reputation and an attractive portfolio of projects within the sector, helping us establish a diversified and agile supply chain with the ability to navigate shifting trade and tariff policies.
Adam: Our deep relationships with equipment manufacturers from around the world and our reputation for completing projects and challenging market conditions are especially important during times of volatility.
Adam: We have the advantage of increased flexibility by sourcing material from location is least impacted by changes to trade policy, whether in the U S or Asia.
Adam: Due to our large purchasing volumes, our suppliers prioritize our orders and remain tuned to our needs. Our utility partners continue to select us as a respected independent power producer able to deliver the projects needed to meet the increasing demand.
Adam: These relationships among other factors helped us mitigate the various impacts of changes in trade regulations minimizing impact to our project economics.
Adam: More specifically as it relates to tariff risks all PV panels for projects under construction are either domestically sourced or imported from countries other than China eliminated tariff exposure our exposure to battery storage is also mitigated due to our strong partnership with Tesla their batteries.
Adam: Offer one of the highest domestic production levels available in the U S and they represent a majority of the energy storage equipment at our projects currently under construction.
Adam: We continue to work with all of our suppliers as well as our world leading financial partners in the utilities and mitigate the impact of tariffs.
Adam: We have modeled potential scenarios for the impacts of tariffs on our three projects currently under construction in the U S.
Adam: These are pairing our quarterly results presentation published today.
Adam: Within that context of about $1 $7 billion construction budget for these projects the impacts are minimal the U S. Government has suggested that tariffs on China could fall to lower levels over time and should this occur the impacts on our projects would be even less in terms of estimated project.
Adam: Returns calculated as expected project EBITDA divided by net Capex, our analysis shows a reduction of between 2% to 1%.
Adam: As we work through these new and uncertain future macroeconomic factors I stress that these challenges are not new to us.
The clean air team has been developing solar projects for decades weathering, many changes to trade policy and government incentives. Our focus remains on the market fundamentals are customers utilities across America need new sources of power to meet the growing energy demand and we have proven we can deliver.
Adam: For high quality affordable projects and short timelines.
Adam: I believe this season will be an opportunity for our company to outpace competitors and enhance our strong position in many markets, ensuring we execute our impressive development pipeline over the coming years.
Nir: I'll now turn the call over to Nir.
Nir: Thank you Adam in the first quarter of 2025, the company's total revenues and income increased to $130 million up from $94 million last year, a growth rate of 39% year over year.
Nir: This was composed of revenues from the sale of electricity, which was 21% to $110 million compared to $90 million in the same period of 2024 as well as recognition of $20 million in income from tax benefit compared to $3 million in the first quarter of 'twenty four.
Nir: Revenues from the sale of electricity grew due to the contribution of newly operational projects since the first quarter of 2020 for seven of the solar and storage cluster units in Israel, a prescreen the U F protein in Serbia, and Hungary began selling electricity the most important increase.
Nir: <unk> originated at a three score which added 13 million followed by the Israel solar and storage cluster, which added $11 million in total new project contributed $13 million to revenues from the sale of electricity.
Nir: Offsetting this good electricity volumes generated at our wind project operating in Europe were lower compared to the same period last year, mainly due to weaker wind. In addition generation volumes at project billing baked in Sweden fell compared to last year due to a blade failure.
Nir: Our experience in January 2025.
Nir: The company recognized compensation $4 million from billing bank operating contractor in lieu of the lower output, which is recorded in other income.
Nir: Revenues and income were distributed between Europe, and the U S with 34% of revenues denominated in Israeli shekel, 39% in Europe, and 27% denominated in U S dollar.
Nir: During the quarter and light reported the sale of 44% stake in the sunlight cluster of renewable energy project in Israel to institutional investor for a cash consideration of $52 million of devaluation of $119 million and the consolidated assets from our balance sheet following.
Nir: Loss of control.
Nir: This generated a pretax profit of 97 million reflected the higher valuation of the entire cluster of which $42 million, reflecting the actual consideration received for the stack sold less related book value was added to adjusted EBITDA Accordingly first quarter.
Nir: Net income was $102 million compared to 24 million last year, an increase of 316% year over year.
Nir: Site from the 80 million post tax profit from the sunlight transaction growth was driven by new project in the amount of $28 million and offset by higher operating expenses of $70 million and net financial expenses of $10 million.
Nir: After tax.
Nir: The company adjusted EBITDA grew by 84% to 132 million compared to 72 million for the same period in 2024, the increase in adjusted EBITDA was boosted by $42 million from the sunlight transaction, along with $36 million from the same factors that drove the revenue and income.
Chris: Chris mentioned above it was offset by an additional $11 million in cost of sales linked to new project, while other operating expenses rose by $4 million.
Speaker Change: Looking to our balance sheet and light completed a broad range of financing transaction during the quarter, we reached financial close on project country acres and quit orange.
Speaker Change: Combined $1 billion in construction financing at competitive rates.
Speaker Change: You need $245 million of new bond issued in Israel. During this quarter and 550 million financial close for Roadrunner in December 2024.
Speaker Change: In total <unk>, one 8 billion in financing during the past months to support the expansion plans with particular focus on the U S supplement in decent funds, we have $350 million of revolving credit facility at several Israeli bank of which nothing had been drawn.
Speaker Change: As of the balance sheet date.
Speaker Change: This further increases our financial flexibility as we continue to deliver on our growth strategy.
Speaker Change: We reiterate our 2025 guidance range, which expected revenues and income between $490 million and $510 million and adjusted EBITDA of between $360 million and $380 million, our revenues and income guidance for 2025 include recognition of the estimated 60.
Speaker Change: Two 8 million income from U S tax benefit and 90% of 2025 generation output is expected to be sold at fixed price either through hedges or PPA.
Speaker Change: I'll now turn it over to the operator for questions.
Speaker Change: Thank you.
Speaker Change: Ask a question you will need to press star one on one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one on one again.
Speaker Change: Please standby, while we compile the Q&A queue.
Speaker Change: Our first question comes from the line of Justin Clare from Roth Capital Partners. Please go ahead. Your line is open.
Justin Clare: Hi, Thanks for taking my questions.
Speaker Change: So I wanted to start off here just on the.
Speaker Change: Potential for PPA negotiations here it looks like.
Speaker Change: You did change the estimated first our first full year revenue.
Speaker Change: Or you haven't changed the first full year revenue for some of your U S projects with Cod's in 'twenty five 'twenty six.
Speaker Change: So just wondering what the potential is that we do see changes to the revenue expectations as a result of PPA adjustments.
Speaker Change: Then.
Speaker Change: And how that might affect the project returns here.
Jeff: Yeah, Hi, Jeff.
Jeff: Thank you for your questions.
So we are very optimistic.
Jeff: About the result of the project and the <unk>.
Jeff: Given the minor impact that we currently have from I would say the changing tariffs.
Jeff: Uh huh.
Jeff: The acceleration in the U S. I think it's derived from a multi layer.
Jeff: Our approach coming.
Jeff: Both from the cost side.
Jeff: So on the tax equity protection and also from.
Speaker Change: As you mentioned the revenue side that they would say the revenue side.
Jeff: PPA adjustment is marginal we have.
Jeff: Very good protection coming from our supply chain strategy from the fact that currently our solar partners. They are not affected at all.
Jeff: On what we call the second wave so the project that will be constructed until 'twenty six.
Jeff: And relatively on the on the best side relatively you are in a good situation because 80% is sourced through Tesla.
And which has a relatively high domestic content. So on top of that we have and the tax equity protection.
Jeff: On the back side, it's primarily ITC.
Jeff: And on top of that we have some protection coming also from <unk>.
Jeff: Dissipation of the PPA counterpart, so all in all we do not foresee currently a change in our forecast or guide that guidance for 25.
Jeff: And we are very encouraged from the reside I do hope that during the day, maybe we are even going maybe to review.
Jeff: Uplifting.
Jeff: The guidance, but currently third quarter.
Jeff: We are reaffirming.
Jeff: The guidance and we believe that the impact the current impact.
Jeff: That we see.
Jeff: On the tariff policies is minor.
Jeff: Okay got it that's good to hear.
Jeff: Just to better understand it does look like there were some modest adjustments to capex it looks like for storage projects in 2020 five 'twenty six wondering alright negotiations are still ongoing with your suppliers or are things mostly agreed upon at this point.
Jeff: And then I was just wondering if tariffs were to change, which we could see.
Jeff: A change soon here.
Jeff: Or would your contracts potentially adjusts for for that yeah. Yeah. It's a great question. So first Gino.
Gino: The contract that we have because we have multiple contract projects first.
Gino: Each project has multiple supply contracts so.
Gino: It varies but in general in some of the cases, we have automatic adjustment in the current contract and in some of them we adjust.
Gino: But I would say the overall situation that we are at already is positive and provide a minor impact and I believe that with the negotiations that are even currently undergoing we can get even a better result.
Gino: So in this regard we feel safe what we provided in our presentation relates to the 145% tariffs on China and 10% broader Globo.
Gino: That you declare it.
Gino: Of course, if that tax policy will change youre not results will change, but what we've seen.
Gino: Already the policy change multiple die.
Gino: When we took each one of the policies.
Gino: That.
Gino: We're noted and put that generic sales, while we got in each one of them.
Gino: He was a very minor impact and this reaffirms our supply chain strategy over the last two years because.
Gino: The current projects that are already affected from decision. We took two years ago and I think for US. It was very encouraging to see that diversification. The fact that rely rely them out of China sourced we relied more on domestic U S. Domestic.
Gino: Content suppliers on supply coming from China out even from the FERC for countries of the CBD. So we feel.
Gino: After February.
Gino: But we are in a good place but of course, we will have to see on future future policies.
Gino: Alright, okay.
Gino: That's helpful. And then just one more wondering if you could just provide an update on how much of your U S pipeline, you think could qualify for the IRA credits under the Safe Harbor and just talk to your strategy in terms of.
Gino: Potentially extending that.
Gino: Qualifying projects into the future here.
Gino: Yeah, So I would like to let Adam answer.
Adam: It will be more accurate than me Adam. Please go ahead.
Adam: Yes, I think in terms of <unk> I mean, this is a difficult question to answer when we have multiple projects in different stages.
Adam: And timing.
Adam: We're continuing to accelerate our schedules and ensure that.
Adam: That we're able to.
Adam: Take full advantage of the IRA.
Adam: As it stands today.
Adam: Okay got it thanks guys.
Adam: Yeah just to complement.
Adam: On a specific projects basis.
So on the three projects under construction, meaning oil project that will reach CODI until the end of 2006, we are already.
Adam: Fully covered.
Adam: Safe harboring.
Adam: And we are now working on getting to the safe Harbor of steel barn, snowflake that will be.
Adam: Operated by Dan of 27 to early 'twenty eights so.
Adam: Also in this regard the acceleration or the men's.
Adam: Ready to do that.
Adam: Next phase of project, while project that affect our results for the next two years is already fully covered by the safe Harbor.
Adam: Okay got it thank you.
Adam: Thank you.
Adam: We will now move on to our next question.
Speaker Change: Our next question comes from the line of chlorine plant shot from Deutsche Bank. Please go ahead. Your line is open.
Mike: Hey, this is actually Mike <unk>.
Speaker Change: Great. Thanks for taking the question and congrats on the strong quarter.
Speaker Change: My first question revolves two financing have you seen any.
Speaker Change: Can you speak about.
Speaker Change: Current financing environment, how that's changed over recent months and what you expect going forward.
Speaker Change: Yeah, Hi, good morning, So first.
Speaker Change: Yeah.
Speaker Change: I think we got and we showed a very good sign by closing three major.
Speaker Change: Ah projects finance transaction in the last four months in a total debt of $1 5 billion of projects with a total cost of $1 7 billion.
Speaker Change: And with very good and favorable terms that we also disclosed to the market. So I think this was a good time because the last dementia close was done in the mid <unk>.
Speaker Change: Uh huh.
Speaker Change: The tariffs turmoil in the U S and the 145% Declaration I think this is a good sign sharing showing the resilience of our project and the drag that we have.
Speaker Change: The banking industry in our ability to execute and to meet our forecast. So in this regard I think we are in a very good situation.
Speaker Change: The next wave of project that will come to <unk>.
Speaker Change: Nancy will close would be towards the end of the year with snowflake.
Speaker Change: We are.
Speaker Change: No I think encouraging we believe that we have very good too.
Speaker Change: To get to very good financing on this project.
Speaker Change: Great. Thank you I appreciate that.
Speaker Change: And the second question I had is related to the tariff impact on that 20% of sorts, that's not sorts from Tesla.
Speaker Change: Can you talk about where you source that and then any risky there.
Speaker Change: Yeah. So the 20% comes from Chinese supplier top tier.
Speaker Change: In this regard we are protected.
Speaker Change: From I would say multiple layer.
Speaker Change: Some of it comes from the fact that the equipment was already delivered to the U S and some of it.
Speaker Change: Adjustment mechanism that we have.
Speaker Change: Within our contract.
Speaker Change: Good relationships so.
Speaker Change: On the 20% the picture that we have shown in our presentation I think it provides.
Speaker Change: Provide the bottom line that includes the 20%.
Speaker Change: You can see that on the.
Speaker Change: Overall is good.
Speaker Change: Great. Thank you so much I appreciate it.
Speaker Change: Thank you, we'll now move on to our next question.
Speaker Change: Our next question comes from the line of Jack <unk> from Mizuho. Please go ahead. Your line is open.
Speaker Change: Hey, guys. How are you on the line from behavior just on tariffs I appreciate the color on the China sensitivity in the slide deck, but how should we think about sensitivities to tariffs to other countries for either on new construction projects or pre construction projects.
Speaker Change: Yeah. Thank you for the question Zack so.
Speaker Change: Inc.
Speaker Change: What we tried.
Speaker Change: Based on the last two here.
Speaker Change: <unk> strategy that is very diversified.
Speaker Change: He is trying to first rely mostly out of China, a sourcing than domestic content from the U S. Then.
Speaker Change: Out of the 480 CVD countries.
Speaker Change: And then two countries that we believe that there are less exposed like India and other countries. So.
Speaker Change: We believe that this diversification we have.
Speaker Change: Think relatively very good I would say a solution.
Speaker Change: Too uncertain.
Speaker Change: Tariff policy.
Speaker Change: Good.
Speaker Change: Now there were several announcements part of them in both alright.
Darius: Alright, Darius and other countries in higher level.
Darius: So it was already tested then again showing slightly different results, but keep in mind on the <unk>.
Darius: So of course, we don't know what will be the final outcome, but we are quite confident.
Darius: On the resilience.
Speaker Change: Oh gosh.
Speaker Change: The supply chain side, the data that is based on this.
Speaker Change: These priorities and criteria.
Speaker Change: Alright, Thanks, a lot for that also.
Speaker Change: Regarding Europe, given europes focus on infrastructure spending are you seeing any signs of growth in advanced projects on that.
Speaker Change: <unk>.
Speaker Change: Yes, yes, we do see strong demand today coming from Europe, and by the way manner.
Speaker Change: In Europe, what we see I think a broad trend and a strong demand for that.
Speaker Change: So energy storage projects.
Speaker Change: We do have in our pipeline currently on an advanced pipeline of one six gigawatt hour of best projects in Europe.
Either as a Standalone project Oracle implementation to our generation projects.
Speaker Change: And we believe that this would be one of the drivers of our growth in Europe.
Speaker Change: In the next few years, while in Israel, and what we see there I would say.
Speaker Change: Three folds.
Speaker Change: And coming from agro solar requirements. So the utility scale business in Israel will grow on the PV side.
Speaker Change: In the area of agro solar and we are now developing an already provided the first solar project with very good results, we see very strong requirements in Israel.
Speaker Change: Also for energy storage coming from the fact that Israel is not connected to other electricity network needs to rely on these doses.
Speaker Change: And we also see in Israel.
<unk>.
Speaker Change: Future requirements for data centers.
Speaker Change: Our combined with.
Speaker Change: Solar generation. So this is also an area that we.
Speaker Change: They entered into development with it.
Speaker Change: First time this quarter by winning a tender of the Israeli landless surety on the combined.
Speaker Change: Solar.
Speaker Change: Solar generation and data center, and we will develop that.
Speaker Change: In the coming is but we will see we believe that we will see some growth.
Speaker Change: Growth also coming from this area in the coming years.
Speaker Change: Got it thanks.
Speaker Change: Thank you.
Speaker Change: Once again.
Speaker Change: To ask a question you will need to press star one and one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one and one again.
Speaker Change: Please standby.
Speaker Change: Yeah.
Speaker Change: There are no further questions at this time, so I'll hand, the call back TNF for any closing remarks.
Speaker Change: Thank you very much for joining and we'll speak next question.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect speakers. Please standby.
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