Grupo Mexico SAB de CV

BMV:GMEXICOB

Earnings Call Transcript 2021-Q2

[Operator]

Good afternoon. Thank you for holding, and welcome to Grupo México Second Quarter 2021 Earnings Conference Call. With us this afternoon are all of Grupo México's top executives who will discuss the second quarter 2021 financial performance of the company, giving you a summary of the latest news and address any questions you might have at the end of the call.

Before we begin, I would now -- I would like to remind you that information on today's conference may include forward-looking statements regarding the company's results and prospects, which are subject to risks and uncertainties. Actual results may differ materially, and the company is cautioned not to place undue reliance on these forward-looking statements.

Grupo México undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All results are expressed in full U.S. GAAP. The presentation may be followed through our webcast. [Operator Instructions] A copy of the slides that the company will be reviewing today is available on the website at grupomexico.com.

[Operator Instructions] We will now begin with Ms. Marlene Finny.

[Marlene de la Torre, executive]

Hi. Good morning, everybody, and thank you for joining us today for Grupo México's Second Quarter Earnings Conference. We appreciate your time for being here with us. Here with me are always top executives from our divisions, Mr. Isaac; Mr. Xavier Garcia de Quevedo; Mr. Oscar Gonzalez Rocha; Mr. [Fernando López Guerra]; Mr. Leonardo; Mr. [Zinser] and Mr. [Mario].

For today's call, we will be following a presentation that can be downloaded from our website or by accessing the webcast.

I would like to start today's call by sending my best wishes to you all and hoping everybody is well and safe. On today's call, we will be following the program detail on Slide #3 of the presentation. I will start with Grupo México's highlights and ESG achievements, scorecard and financial highlights for the quarter. Then Mr. Xavier Garcia de Quevedo will provide detailed information regarding our Mining Division, commenting on the industry's economic environment, division financial and its highlights. Followed by Mr. Isaac Franklin who will dive deep into the financial results and main events of our Transportation Division. Finally, Mr. Francisco Zinser will comment on the relevant events that occurred during the quarter in our Infrastructure Division. At the end, the line will be open for the questions and answers that you might have.

I want to start the call by highlighting that Grupo México's capital investments exceeding $22 billion over the last decade. A program that has allowed us to increase copper and moly production by 64% regarding copper and 47% regarding moly, respectively, along with the fact -- with a very good environment for metal prices during the year have allowed us to achieve excellent results for the quarter. This has being to continue to being an agent of change in the communities that we operate, where we operate and driving job creation and economic growth.

Let's jump right into our main ESG achievements on Slide #5. We recently released our annual ESG report, which is aligned to GRI, SASB and TCFD showcasing our commitment to transparency. You can all go to our website and you can find there, our ESG report. In the report, you can find relevant information about our strategy, efforts and results regarding ESG. I'll go through some examples right now, but I invite you also download the report from our website for more details that you might have or questions that you might have.

During 2020, we invested 3.8% of our net income in community and philanthropy projects, supporting the UN's Sustainable Development Goals. We also managed to adapt our new community development model and online education program. There have been many, many students in Mexico, Peru. We are able to reduce employees' injury -- injuries rate by 44% in the Mining Division, 30% in the Transportation Division and 25% in our Infrastructure Division.

Our gas emissions during 2020 were reduced by 8% versus 2019, while volume and sales remained stable.

And roughly 20% of our consumed electricity was provided from renewable resources. Our share that will be improved once our Fenicias Wind Farm kicks in. We have set the goal to reach 25% of our consumed electricity from renewable resources in 2022, and we care on our resource front.

In the next slide, Slide #6, I'll say our scorecard for the quarter showed our financial results as we achieved accumulated sales netting $7.35 billion, an increase of over 51% versus the first semester of 2020, driven by higher metal prices.

Our EBITDA totaled $4.56 billion during the first 6 months of 2021, an increase of over 113% versus the same period of our last year, setting our EBITDA margin at 62%, an increase of over 1,800 basis points versus the same period of 2020.

Our accumulated operating income netted $3.78 billion, an increase of 159% versus the first semester of 2020.

Our Board, as always, committed to transfer value to our shareholders, approved a cash dividend of $1.75 pesos per share, a 17% increase versus the last quarter, reinforcing our strong dividend program, which translates into a 7.4% dividend yield. I think we're among the highest dividend yield from a Mexican company. So this is really a good news.

Aligned with our estimates, copper production for the first 6 months of the year totaled about 541,000 tons, 3.1% decrease versus the first semester of 2020.

I would like to highlight our achievement improvement in cash costs of 6.9% versus the same period of last year with an accumulated net cash loss of $0.82 per pound, continuing to be delivered in the industry.

Moving forward to Slide #7. There, in Slide #7, you can find a summary of our financials, which is there for you to have in hand in case you need it during the presentation and reflects what we just mentioned.

Then going to Slide #8. You can see that Grupo México maintained a solid balance sheet with low leverage and a net debt-to-EBITDA ratio of 0.5x. As you might already know, our debt is mainly issued in U.S. dollars, representing 81% of the total debt, while the remainder is in Mexican pesos.

On this slide, you can also see the dividend paid and implied dividend yield from 2019 to 2021, including the now [$1.75] dividend -- cash dividend for the quarter, approved by our Board. As you can see, we have a solid track record, and these dividends has been increasing as we increase our cash flow generation with higher recovery prices as the pre-COVID volumes from our Transportation Division. And this will continue to be the case while we generate a steady levels of cash flow going forward.

Into Slide #9 and then going to our debt maturity profile. We have comfortable maturity schedule with no significant payments until 2035, a cash flow generation of around $800 million during the quarter to total $5.6 billion in the quarter. We also saw a 17% reduction of net debt versus last quarter as we continue to pay our debts in timely manner.

Now I would ask Mr. Xavier Garcia de Quevedo comment on the division's performance.

[Xavier García de Quevedo Topete, executive]

Thank you, Marlene. Good afternoon, everyone, and thank you again for joining us today. My best wishes for you and your families, hoping you continue to do well.

Let me start with the Mining Division's operating and financial highlights on the Slide 11. As Marlene previously mentioned, we saw an expected reduction in copper production, a reduction of 5.5% versus the second quarter of 2020, totaling 269,837. This decline was due to lower ore rates in our Peruvian and Mexican operations as a result of the postponement of stripping and maintenance work during the pandemic. Meanwhile, Asarco 3.6% increase in operating scale mitigating this effect.

Besides the decline in production, higher copper and metal prices boosted our sales during the quarter and [indiscernible] period $3.2 billion and over $6 billion for the first 6 months, a 71.1% increase when compared to the same period of last year and 63.8% increase versus 2020 in accumulated basis.

[Cast cost remained at] $0.82, continuing our position to cost leader in the industry worldwide, and continuing the downward trend of our net cash cost. This time supported by higher byproduct credits. Higher metal prices and our cost efficiency focus led us achieve an outstanding 152.5% increase in EBITDA when compared to the same period of last year and setting our EBITDA margin for the quarter at 63.7%.

The Mining Division CapEx for the quarter of $228 million and a total of $467 million for the first 6 months of the year, and we continue to invest in our products.

I would like to continue talking about our projects and the progress in the Slide 12. In Pilares, the construction of the road for mining trucks between the Pilares pit and the primary crossing plants in La Caridad is already completed, with 47% of the investment has been deployed by the end of the second quarter.

On our Buenavista Zinc project, which is expected to be operational by 2023, the basic engineering is complete. We have a 94% completion rate in the detailed engineering plan. It is import to mention that additional preventive protocol COVID-19 protocols have been implemented to further advance this project.

Finally, the results in the leading pads confirm that there are suitable copper recovery levels in El Pilar and will continue to develop with basic engineering.

On Slide 13, you can see all our upcoming projects and their impact of production as we continue our journey to reach 2 million tons of copper produced per year.

I would like to stop here to dive deep into our Michiquillay projects in Peru. Michiquillay, which is expected to be operational by 2028, we produced 225,000 tons of copper per year, along with byproducts of moly, gold and silver at a competitive cash cost. Back in 2018, the contract for the acquisition of the project was signed and an annual initial payment of $12.5 million was made. Up to date, $12.5 million have been made allowing us to continue with the development of the project.

Along these payments, we have had important progress and conversations with the communities in Michiquillay and La Encañada to reach a social agreements. Moreover, inquiries from the MINEM authorities for the semi detailed environmental impact studies have been addressed, thus we expect it to be approved soon. All these considered, the company is at a good standpoint to initiate the exploration program of the project.

Before concluding the Mining Division's highlights, I would like to share with you a couple of quick remarks on the current copper market. The LME copper price increased on an average of $2.43 per pound in the second quarter of 2020 to $4.43 during the quarter of '21, an 8.8% increase. As of today, we are seeing prices at about $4.36 just above the year-to-date prices of [$4.50] per pound, probably seeing a positive outlook for the company in the market.

Some of the factors influencing the markets are strong demand in the U.S. and Europe, particularly in terms of capital consumption. The relatively low levels of combined inventories of LME, COMEX, Shanghai and bonded warehouses, particularly given the number of days of consumption considered.

And on certainty regarding future production in Chile and Peru, which together represents about 40% of the world supply, Peru with 12% and Chile 28%. Copper market in Chile and [indiscernible] are expecting a market deficit of about 250,000 tons this year. Due to a recovery in demand, we should grow between 2% to 3.5%.

If you happen to have any follow-up questions, we will be pleased to have it and during the Q&A session. I would like to close by reinforcing our full support for the community where we operate and our collaborators.

Now I'll let Isaac Franklin comment on our Transportation Division. Thank you.

[Isaac Franklin Unkind;General Director of Administration, executive]

Thank you, Xavier, and good morning, everyone. Thanks for joining us. Continuing with the Transportation Division on Slide 15, I would like to talk about our financial highlights for the second quarter of the year. First, I'm proud to announce that all segments show positive variations in revenue, carloads and tons kilometer.

Our sales, which totaled $644 million during second quarter '21, continued to increase quarter-over-quarter, 8.6% versus first quarter of '21 and a 35.9% increase versus second quarter of 2020. This quarterly increase was mainly driven by the automotive metals, intermodal minerals and energy segments. On a cumulative basis, sales are up 14.6% versus 2020.

Following the growth trend, our volume and carload increased 17% and 24%, respectively, versus the same period of last year and 9.4% and 10.6% on a cumulative basis. This quarter's surge was led by our agricultural segment, which increased 770 million net tons kilometer.

Along these lines, our EBITDA totaled $293 million, a 52.2% increase versus second quarter 2020 and resulted in an EBITDA margin expansion of over 490 basis points, while our net income, which totaled $102 million, increased 113.4%.

As we move forward to Slide 16, you can see our main highlights for the quarter, which results in Mexican pesos. Volume has returned to pre-COVID level in all our business units, leading to record revenue, EBITDA and net income. Revenue saw an increase of 17% versus the same quarter last year, driven by market share volume gains and our EBITDA increased 31.3%, netting MXN 5,875 million. Last but not least, our Board approved a cash dividend of MXN 0.35 per share.

Continuing with the main variation of our revenues on Slide 17, as I previously mentioned, all of segments saw revenue growth during the quarter. With automotive segment is our top performance, showing a 221% increase due to last year's plant shutdowns and partially offset by the worldwide microchip shortage.

Following the automotive segment, we have metals and intermodal segments with 39% and 26% (sic) [ 28% ] increase, respectively. Both segments mostly driven by market share gains and a recovery in consumption level.

Along this performance, we also saw high revenue growth in the minerals, energy, cement and industrial segments, where market share gains and economic recovery profitably double-digit growth with medium revenue growth we saw in the agricultural and chemical segment.

On Slide 18, we show our operating metrics of the second quarter in 2019. We can see that most of our indicators showed overall progress since then. Thanks to our efforts to optimize our Service Master Plan.

Our average train speed was above 36 kilometers per hour, a 6.3% decrease versus the second quarter 2020. We also have a setback in dwell time mainly due to weather conditions in Mexico. As a result, these complications translated in a decrease in car velocity of 7%. Having said that, we have great results on train length. Average train length improved 10.3% versus the same quarter of last year. We are now running trains over 1.9 kilometers long in our network. Gross tons per train saw an increase of 6.1%.

As for crew starts, we suffered an increase of 11.3% from the same quarter of last year, but we continue to have relevant 6.6% improvement when compared to the same quarter of 2019.

Our investment plan for 2021 shows on Slide 19 shows a revised total of $373 million, of which $246 million will be allocated for maintenance, including new rail & ties, locomotive overhauls and rail maintenance; $72 million will be allocated to growth projects, improving our capacity to see the opportunities in the markets we serve; and $54 million for the efficiency programs including LNG locomotive conversion and trip optimizer equipment.

This concludes our general overview of the Transportation Division.

I will now let Francisco Zinser comment on the Infrastructure Division.

[Francisco Gonzalez, executive]

Thank you very much, Isaac and good morning, everyone. I will start by going through the financial highlights of the Infrastructure Division shown on Slide 21. Year-to-date revenues totaled $272 million, a 3.6% increase compared to 2020 despite the complicated and ongoing circumstances caused by the pandemic. It's important to mention that the energy business unit was the main driver of this increase, demonstrating the capacity of this business model.

Our EBITDA totaled $58 million for the quarter and $117 million on a cumulative basis, which translates into an 8.6% decrease versus the second quarter of 2020 and an 18% reduction when comparing the first semester of 2020 and 2021. The EBITDA margin for the quarter was 46.4% and our net income totaled $815,000 during the quarter, showing net positive results for the second quarter in a row.

As we continue on Slide 22, I'll go through the most relevant events of the division and a brief project update. In our energy business unit, sales totaled $66 million, an increase of 20.6% when compared to the same quarter of last year. This increase was mainly driven by an increase in the price of the gas molecule. Our highway business unit saw a 13% recovery in daily traffic when compared to the same period of last year. This was due to the easing of mobility restrictions that were imposed last year because of the pandemic. As a result of this, second quarter '21 sales totaled $10 million, while EBITDA net $6.5 million, an increase of 73% and 74.2%, respectively, year-over-year. The highway division ended the quarter with an EBITDA margin of almost 64%.

In our drilling business unit, we finished with an efficiency of 99.3%. $72 million in revenues and $31.5 million in EBITDA, a decrease versus last year of 26% and 35%, respectively, mainly driven by target reductions from PEMEX across all platforms in the industry.

As for our construction business unit, we reached $30 million in revenues and $8 million in the EBITDA, decreasing 14% and 26%, respectively, versus last year, as the execution of projects has been moved forward, but backlog remains robust, and we expect a strong second half for 2021.

Finally, the division's project main updates are: First, in our Fenicias wind farm located in Nuevo Leon, we reached a 99% completion rate with all 42 turbines already commissioned and generating test power. We are planning to go live during the third quarter of 2021.

Additionally, the consortium led by Grupo México Infraestructura and Acciona in charge of the executive project of the Section 5 South of the Maya Train and the construction of itself, which runs between Playa del Carmen and Tulum, have concluded a preliminary topography studies and reached a 58% completion rate on the geotechnical studies. Construction already began late in June, 105 days ahead of schedule with the placement and foundations of footings on the critical construction route.

Now I will let Marlene proceed with her closing remarks. Thank you.

[Marlene de la Torre, executive]

Thank you Xavier, Isaac and Francisco, and everybody for joining here for all your questions. Before closing, I would like to thank everybody again for your time and attention and reiterate our commitment with everybody in the communities as we continue to navigate during difficult times.

Now we will open the line for the Q&A.

[Operator]

[Operator Instructions] Our first question comes from the line of Carlos De Alba with Morgan Stanley.

[Carlos de Alba, analyst]

Yes. The first question, as always, if you could maybe share the cash cost before byproducts of Asarco for the quarter and your expectation for the year? That will be appreciated.

And the second question has to do with any potential implications that you see or may see on your fuel distribution business from the recent changes or proposed changes in the fuel import legislation or policy in Mexico?

[Marlene de la Torre, executive]

Thank you, Carlos. Thank you for your questions. Regarding Asarco, the before byproduct, the net cash cost, it was on -- for the first semester or second quarter?

[Carlos de Alba, analyst]

Second quarter, please.

[Marlene de la Torre, executive]

Pleasure. For the second quarter, it was 1 -- 205 and then after byproducts, 192. The idea and then if you -- if somebody wants that -- is still continue being very profitable and trying to reduce our cash cost as we move in Asarco and continue to have this as going forward.

[Francisco Gonzalez, executive]

And Carlos, this is Francisco. Regarding your second question about the fuel storage terminal, we've been closely monitoring the recent events that have been happening in Mexico and evaluating if there is an impact to our projects. We continue to advance in engineering and in the different stages that we planned, but we are, of course, very looking to the signals to see if there is any modification that we need to make. We still believe that the country needs these fuels and this infrastructure is very much needed across different states in Mexico, but we also, of course, have to be very alert to how these changes could impact us. So that's what we have to say so far.

[Carlos de Alba, analyst]

And then if I may, Francisco, just a follow-up. So if the circumstances change and the business model as you currently have is no longer viable, what would be the option there? It will be to sell it to PEMEX -- the business to PEMEX or what are the options?

[Francisco Gonzalez, executive]

We have been very prudent in our capital expenditure so far, spending only the money that we need until we have all the relevant permits and approvals. So we -- that's something that we will need to evaluate. I mean Valero, which is our main partner, as you know, is the main importer of fuels in Mexico, and we have a very strong logistics with Infrastructure and Transportation Division. So we believe that we have a lot of value to add. But of course, we need to be ready to see what are the rules and how we play them. But it's important to say that our exposure so far to the business unit has been limited by our prudency in capital expenditures.

[Operator]

Our next question comes from Isabella Vasconcelos with Bradesco BBI.

[Isabella Vasconcelos, analyst]

Everyone can you hear me well?

[Marlene de la Torre, executive]

Yes, we can hear you Isabella.

[Isabella Vasconcelos, analyst]

Okay. Great. So I have a couple of questions on basically how you're thinking about capital allocation ahead. Should we see higher dividends or even buybacks and then your -- can you [indiscernible] specifically on growth for the Trans Division, I know it's very healthy on analyzing further growth or even M&A?

So these are my questions, please.

[Marlene de la Torre, executive]

I think capital allocation I didn't know [indiscernible] responsible for their own growth. So we've seen, as we mentioned before, our project Mining Division, we also keep an eye open to any M&A opportunities. And with recent copper prices, I think we have -- we're well covered on that sense.

Transportation Division as well is accountable for their own growth. Recently, we did an emission in Mexican pesos with [indiscernible]. So -- as well -- and the Infrastructure Division as well with project demand in certain projects or whatever makes more sense depending on the different business units.

So that's how we're doing in terms of capitalization. We feel very comfortable with this levels of debt. We know we're generating more with more cash flow. And that's why you can see our increase in the dividend and dividend yield as well. We always keep an eye open and consider buybacks if it makes sense. So that's something that we have on our table [processes and looking at processes]. But for now, we just started increasing the dividends. So, you, the shareholders can have the value add of this straight going forward.

I don't know if that answers your questions, and then I will let Mr. Isaac answer the Transportation Division question and if you have any further -- any questions regarding capital allocation, please let me know. But I don't know if I was clear enough.

[Isaac Franklin Unkind;General Director of Administration, executive]

Thank you, Marlene.

[Isabella Vasconcelos, analyst]

No. I think it was very clear.

[Marlene de la Torre, executive]

Okay. Perfect.

[Isaac Franklin Unkind;General Director of Administration, executive]

Thank you, Marlene. And on the Transportation side, we see a very strong market for the second half. We -- besides the recovery from the pandemic and the growth in volumes that we are seeing and we're doing a very high conversion from truck to rail. So that's why we expect a very strong market for the second half and go on.

[Operator]

[Operator Instructions] And our next question comes from Alfonso Salazar with Scotiabank.

[Alfonso Salazar, analyst]

I have 2 questions. The first one is related to the Mining Division. Many years ago, you have a project to increase capacity at the Ray mine in Asarco. I don't know if this is something that you are considering once again with the high copper price that we see or any expansion of Asarco that could be implemented?

And the second is -- also related to that, is there a plan B for expansion of the Mining Division. In case that for any reason, the products that you have in the pipeline takes longer to -- or there's some delays or cannot be possible to complete them, what is the plan for expansion of the Mining Division? Are you thinking about M&A? Are you considering other jurisdictions going to some other places? I remember that you had some exploration in Chile, but anything that you can tell us about growth beyond the products that you have, it would be very helpful?

[Xavier García de Quevedo Topete, executive]

[indiscernible] Asarco's potential growth we've been exploring since last year. A couple of alternatives, as you may know, on the mining side, at a certain time we have conducted [indiscernible] preliminary exploration stories and we're following the [indiscernible]. Once we have some [indiscernible] we will let the market now, but for now we are still evaluating...

[Marlene de la Torre, executive]

Mainly, regarding the plan B for growth in Mining Division, I would like Mr. Xavier [indiscernible] comments, but we still have projects in line coming in and Buenavista Zinc and Pilares and then as you can see we have a long -- medium-term projects as well in [ Santa Eulalia ]. So we still have a lot of -- we had a strong pipeline. I think we're one of the companies that have or it's not the company that has the strongest pipeline in terms of projects.

We also -- you know that we always keep an eye and we look at M&A opportunities. If it makes sense, if that fits with our current portfolio of Class I assets in countries or locations we feel comfortable. So that's something that our strategy from many years ago, and we'll continue to do that and to look into opportunities, but we still have a very long pipeline and then invest.

Mr. Xavier, I don't know if you have anything...

[Xavier García de Quevedo Topete, executive]

Thank you. First of all, I would like to refer to Asarco. Asarco is one of the world's copper deposits. And we are working right now in the story of environmental infrastructure which we finished rate lines. We are also finishing the stories for interconnecting the Sonora and Baja California for electricity [indiscernible]. We almost finished with the acquisition of land for the port and also for the new warehouse and [focus on employees performance].

The second project that is quite important for us is in Spain, in Aznalcóllar. We are still waiting for the final license for construction. And we hope to get it by the -- in the second half of the year. We have good projects, for example, in Ecuador. We have spent almost $50 million in explorations. Probably, we will soon [indiscernible] see copper deposit.

We are also working -- we continue working in Chile with some exploration project in the northern part that we started a few years ago and we are almost ready to find a possible new project for the launching [indiscernible].

In Argentina, we have some projects for copper, but mostly for [indiscernible] in Rio Negro area. This is mainly the project. Of course, in Peru, we continue with some exploration projects as well as in Mexico. That's all.

[Marlene de la Torre, executive]

We continue to do exploration as Xavier...

[Alfonso Salazar, analyst]

And I have another question now regarding the Grupo México Transportes. In the conference call, you mentioned that security expenses were declining, and that's good to hear. At the same time in the press release about that some organized crime are fighting for controlling the Manzanillo port. So I just want to know if you have any problems or this has been affecting operations somehow at [indiscernible]?

[Francisco Gonzalez, executive]

No. We're -- as we mentioned in the conference, our security has improved due to our own strategies and the support from the federal government from the Marine, [Serena] and the local state and local police. We haven't seen anything affecting our traffic for Manzanillo. As you can see our intermodal segment has been growing and Manzanillo is one of the main drivers. So we're confident that we've got the thing that we've been doing we can continue to grow as we expect.

[Alfonso Salazar, analyst]

And the final one regarding the changes in customs -- the control of customs. Is that something that you can mention about how things are -- if they can impact on the operations, anything or how that is impacting in the fact that now it's controlled by [indiscernible]?

[Francisco Gonzalez, executive]

The thing is -- well, as you know, we have to wait on the new customs they -- they are more focus on deeper revision and all that, but that really -- at some point, it might affect you in the very beginning, but the backlog keeps there, and we'll be moving forward. So we really don't expect much change regarding the traffics and everything.

[Operator]

Our next question comes from [indiscernible].

[Unknown Analyst]

Just a quick one for Isaac maybe. Just to know if you're just maintaining the guidance in terms of growth in volume this year, between 5% to 7%. But if you can update us on the saving on the PSR, we were estimating between [ MXN 2.31 billion to MXN 2.6 billion.] Just to know where you stand now and if the number remains the same?

[Isaac Franklin Unkind;General Director of Administration, executive]

The guidance and the outlook we mentioned in our conference is still about growing 10% in volume and we're expecting between 6% and 18% in revenue. And regarding the -- which was the second question?

[Marlene de la Torre, executive]

Savings.

[Isaac Franklin Unkind;General Director of Administration, executive]

The savings on the PSR, we will continue our programs, as we mentioned. Our train length increased 10.3% from the second quarter last year. Our gross ton per train increased 6.1%. So we're moving forward towards that. We're expecting to keep growing and putting more fuel efficiency. Our -- regarding the fuel efficiency, also our trip optimizer is now working on all the locomotives. So we have [indiscernible]. Yes, and then our LNG conversion. So that will increase our -- will decrease our cost and improve our efficiency.

[Operator]

And this concludes our Q&A portion. I'd like to hand the conference back over to Ms. Marlene Finny for closing comments.

[Marlene de la Torre, executive]

Thank you so much. Thank you for your questions. In case you need and you have any further questions, we'll keep in touch, please let us know. And thank you for joining us and your time. Have a good day.

[Operator]

Ladies and gentlemen, thank you for your participation. You may now disconnect. Everyone, have a wonderful day.