Ferroglobe PLC

NASDAQ:GSM

Earnings Call Transcript 2023-Q1

[Operator]

Good morning, ladies and gentlemen, and welcome to Ferroglobe's First Quarter 2023 Earnings Call. At this time, all participants are in a 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 Anis Barodawalla, Ferroglobe's Vice President of Investor Relations and Corporate Strategy. You may begin.

[Anis Barodawalla, VP, IR]

Thank you. Good morning, everyone, and thank you for joining Ferroglobe's first quarter 2023 conference call. Joining me today are Marco Levi, our Chief Executive Officer; and Beatriz García-Cos, our Chief Financial Officer.

Before we get started with some prepared remarks, I'm going to read a brief statement. Please turn to Slide 2 at this time. 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 Ferroglobe's most recent SEC filings and the exhibits to those filings, which are available on our webpage, ferroglobe.com. In addition, this discussion includes references to EBITDA, adjusted EBITDA, adjusted gross debt, net debt, and adjusted diluted 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 now like to turn the call over to Marco Levi, our Chief Executive Officer. Next slide, please.

[Marco Levi, CEO]

Thank you, Anis, and good morning, or good afternoon, everyone. The first quarter has been very productive, and we have achieved significant milestones that demonstrate our commitment to deliver value to our shareholders. During the quarter, we continued to make progress in deleveraging our balance sheet by paying down debt. We have focused on managing our operations, and have successfully released working capital. On the operational front, we continue to start operations as we expand our capacity and are finalizing agreements to provide long-term renewable energy to our Spanish plants. Our company is at a pivotal moment in its history, ready to seize substantial growth opportunity as the largest western producer of silicon metal, a critical component of many industrial and consumer goods, and in particular, a key material supporting the green energy transition. The global trends towards renewable energy are driving strong growth in the solar analytic vehicle battery markets. The growth outside of China is being amplified by an increased focus toward onshore. These onshoring trends are being enhanced by incentives such as the Inflation Reduction Act in US and its equivalent in Europe, the Green Deal Plan for Net Zero Age, which are focused on local production and reducing reliance on China. As the western market leading silicon matter producer, Ferroglobe is in a unique position to capitalize on these trends, providing an opportunity that will drive strong growth for years to come.

As we review Q1 results, it is important to recognize the resilience and the adaptability of our business model. Our commitment to operational excellence, innovation, and cost efficiency, has allowed us to maintain a positive and stable financial and operational performance during this challenging market environment. In Q1 2023, we've achieved an adjusted EBITDA of $45 million. Our free cash flow reached $117 million, underlining our ability to generate strong cashflow. At the close of the quarter, we maintained a robust cash position of $344 million, and net debt of $55 million. During this quarter, we made significant progress in strengthening our financial position by reducing our debt by $50 million. Given our strong cash flow and the excess of cash on our balance sheet, we're actively starting options to reduce our overall growth debt, optimize our capital structure, and we'll position the company to return value to shareholders. We will provide more detailed insights in the next few months. As you may recall, we previously made a commitment to release working capital. We have delivered on that commitment with a significant release of $131 million of working capital during the quarter, in addition to what we released in the fourth quarter. This is a direct result of the targeted actions that we have implemented and will continue to focus on optimizing our working capital. Our positive adjusted EBITDA generation, combined with these improvements, positions as well to achieve our goal of turning net cash positive in the next couple of quarters.

Now, I'm pleased to provide an update on the progress of our operations worldwide. In Europe, we have successfully resumed our French operations on April 1, 2023. The significant milestones will have a positive impact on our financial performance in the coming quarters as we leverage our production capacity in France and capitalize on market opportunities with our best-in-class cost position. We are in the final stages of analyzing long-term power purchase agreements in Spain, which will provide us with competitive energy prices. Securing these contracts is a critical step in our plan to restart and secure the long-term competitiveness of our Spanish facilities. I will provide further details on this in my upcoming corporate section. After restarting two furnaces at our Polokwane, South African facility, we are ready to restart the third furnace. These three furnaces will provide 55,000 tons of additional capacity. This expansion demonstrates our ability to rapidly add capacity at very low capital intensity. It also significantly improves our geographic footprint by serving markets in Asia and the Middle East, and provides us with a considerable competitive advantage.

As a testimony of these advantages and our reputation as a high-quality producer, we assigned a new long-term contract to supply silicon metal to a leading Asian polysilicon producer. This further solidifies our position in the solar value chain, and demonstrating our ability to forge strong partnership with key industry players. In line with our strategy of furthering our vertical integration, we recently signed an LOI to acquire a new quartz mine, while also expanding our existing Serrabal quartz mine in Spain. Furthermore, our board has approved additional growth targets to expand operations at Alden, our mining operation in Kentucky, to maintain our competitive advantage. This design with actions, strengthen our leadership position in the silicon metal industry and enhance our global presence by managing complex vertical integration into quartz mining and strategic sourcing of essential raw materials. In the electric vehicle battery market, we see exceptional growth opportunity, driven by silicon metals considerable advantages over graphite, the current anode standard. These benefits include an increase in battery capacity, and enables significantly faster charging times, providing important improvements to EV technology. We are working with partners to innovate towards increasing the content of high purity silicon metal in the anodes of batteries. While the current market environment presents short-term uncertainty, we are focused on things that we can control and drive long-term shareholder value. We are enthusiastic about the long-term prospects of our company, and remain confident in our ability to navigate these challenges and deliver strong results for our valued investors. Accordingly, we are reiterating our 2023 adjusted EBITDA guidance, targeting a range of $270 million to $300 million. Next slide, please.

Let's focus on silicon metal. Silicon metal revenue was $161 million in Q1, down from $184 million in Q4, a decline of 12%. Adjusted EBITDA for this segment was $31 million in Q1, down 65% from $89 million in Q4. Our silicon metal business was down due to a challenging market environment impacting both price and volume. Volume declined 6.4% sequentially in Q1 to approximately 37,000 metric tons as a result of a shutdown in France due to our French energy agreement. We expect volumes to increase significantly in the second quarter as we have secured long-term contacts with new customers in Asia and the Middle East, and are bringing our French operations back online. Our average realized price for silicon metal sales decreased by 6.5% compared to the previous quarter, driven by lower index pricing in the US and Europe. This price decline negatively impacted adjusted EBITDA by $17 million. Our total costs had a negative impact of $25 million to adjusted EBITDA versus the prior quarter. We continue to benefit from energy compensation agreements in France and CO2 compensation in the first quarter. However, compared to the previous quarter, we experienced less favorable impact, negatively impacting our cost by $7 million compared to the prior quarter. Additionally, we incurred increasing idling cost of $17 million. The chemicals market are facing challenges, driven by a weak microeconomic environment and oversupply in China, with low priced exports driving weak sales in silicones. As a result, our outlook is cautious. Next slide, please.

Silicon-based alloys revenue was $135 million in Q1, up 7% over the prior quarter. Adjusted EBITDA for Q1 was $22 million, down 41% from the prior quarter. Sales volumes increased 23% over the prior quarter, positively impacting adjusted EBITDA by $9 million. Average realized pricing was down 13% over the same period as a result of low-cost exports from Brazil, China, Kazakhstan, and Azerbaijan, negatively impacting adjusted EBITDA by $18 million. Relative to the prior quarter, silicon alloys also received a lower benefit from the energy compensation agreements in France and CO2 compensation. This had a negative impact of $14 million, which was partially offset by favorable impact due to year-end one-offs of $8 million, resulting in a net negative impact to cost of $6 million. Moving to Slide 7, please.

Turning now to manganese alloys. Manganese-based alloys revenue was $62 million in Q1, down 32% over the prior quarter. Adjusted EBITDA for Q1 was $2 million, down 90% from the prior quarter. Sales volumes were down over the prior quarter, negatively impacting adjusted EBITDA by $6 million. While average realized pricing was down 10% over the same period. This resulted in a negative impact to adjusted EBITDA of $3 million. The steel market continues to face challenges due to weak fundamentals in construction. While the current low spread between manganese alloy and ore is concerning, we expect demand to recover in the second quarter, which will help improve our margins. In Q1 2023, our costs were negatively impacted by $8 million due to various factors. In the fourth quarter, we recognized a gain from an adjustment to an earnout provision that was not repeated in the first quarter. Costs were also negatively impacted by CO2 and the French energy compensation agreement relative to the prior quarter. These were partially offset by improvements in raw material costs.

I will now turn the call over to Beatriz, our CFO, to review the financials. Beatriz?

[Beatriz García-Cos, CFO]

Thank you, Marco. Please turn to the Slide 9 for a review of the income statement. As expected, our first quarter results experienced a decline relative to the fourth quarter, driven by price and volume declines across most of our product portfolio. Revenue for the first quarter was $401 million, down from $449 million in the prior quarter. The 11% decline from the prior quarter was a result of weaker prices across all three product lines and volume declines in silicon metal and manganese alloys. Silicon-based alloys volume increased 23% over the prior quarter due to higher sales of standard grade products. For the first quarter, raw material and energy consumption for production, declined to $255 million, down from $290 million in the prior quarter. As a percentage of sales, cost of sales remain flat at 64%, excluding the impact of our short-term power hedge in Spain. Other operating income in Q1 was $15 million, down from $78 million in Q4, driven by lower energy compensation in France versus the prior quarter. Operating profit for the first quarter was $44 million versus $30 million in the prior quarter. As a percentage of sales, operating profit was 11% in Q1 versus 7% in Q4. The $15 million increase in operating profit in the first quarter was driven primarily by the gains from short-term power hedge in Spain, partially offset by lower volumes and other operating income relative to the prior quarter. Net financial expenses in the first quarter declined to $11 million, down from $17 million in fourth quarter. The decline is attributable to lower debt outstanding as we continue to execute on our deleveraging strategy. Next slide, please. Slide 10.

Our adjusted EBITDA the first quarter was $45 million versus $130 million in the previous quarter. Adjusted EBITDA margins decreased to 11% in the first quarter, down from 29% in the fourth quarter. Volume declines in the first quarter negatively impact adjusted EBITDA by $30 million. The decline in volumes was partially driven by the shutdown at our French plants where we optimized our power contract, as discussed in the prior call. These assets have since been turned on and we expect improved volumes in the second quarter. Average selling price across our portfolio declined by 4.5%, resulting in a negative price impact of $38 million. Cost had a negative impact of $39 million, mainly due to idling cost, maintenance expenses, earnout provisions, CO2, and energy compensation, partially offset by a favorable impact from raw materials and inventory revaluation. The results in the first quarter were as expected, even declining price and weakened markets. As we stated in our last quarterly recall, we believe the first quarter will represent the trough, and expect to see improvements in Q2, continuing through the second half of the year. Slide 11, please. Next slide.

We ended the first quarter with a cash balance of $344 million, up from $323 million in the prior quarter, an increase of $21 million. This was driven by working capital release, partially offset by the pool chase of bonds in the upper market of $26 million and a $70 million partial repayment of a Spanish government loan. Total adjusted gross debt declined to $400 million in the first quarter, down from $450 million in the prior quarter. Net debt declined to $55 million in Q1 versus $127 million in the prior quarter. This represents our lowest level of net debt in the company’s history, and is a testament to our continued focus to reduce leverage. We aim to be net cash positive in the next couple of quarters. Next slide, please.

During the first quarter, we generated operating cash flow of $135 million, up from $118 million in Q4. Free cash flow in the first quarter was $117 million, up from $104 million in the prior quarter. During the quarter, we had a working capital release of $131 million. CapEx in the first quarter was $17 million versus $15 million in the fourth quarter. We continue to expect our base level CapEx for 2023 to be around $75 million, with the potential to increase depending on additional spend for growth and ESG initiatives. Lastly, cash flow from financing activities in the first quarter was negative $96 million versus negative $18 million in the fourth quarter. The first quarter financing cash flows includes a coupon payment of $18 million and the debt repayment mentioned on the previous - on the prior slide.

At this time, I will turn the call back over to Marco. Next slide, please.

[Marco Levi, CEO]

Thank you, Beatriz. Moving to the corporate update on Slide 14. In 2022, we made the decision to limit production across our Spanish assets in response to the European energy crisis. Our flexible global footprint enabled us to move production during the volatile energy period to lower cost plan in other regions and still provide quality products to our European customers. We are in the final stage of executing two long-term power contacts that will provide energy stability at our Spanish plant, enabling us to maintain consistent operations and to regulate production in these plants based on market dynamics. These power agreements represent energy that is produced from renewable energy sources. One agreement is set to start on July 1, 2023, with the second one starting in January 2024. These agreements reinforce our commitment to ES&G by sourcing power from 100% renewable energy sources. During the first quarter, we received approval from our board to plan to expand our Serrabal quartz mining in Spain, enabling the extraction of additional 300,000 tons per year of extremely high quality quartz. This critical mineral enables us to serve high end markets in chemical, solar, and batteries. By completing this expansion, we're adding critical resources and optimizing maintenance costs. This, combined with the expansion in Alden, will ensure that we will continue to have access to high quality raw materials, further reducing our reliance on third parties and dramatically improves our operating efficiencies. We announced our strategic plan last year to become the reference in silicon metal and ferroalloys by creating value for stakeholders through innovation. To successfully execute this strategy, we understand that workforce engagement is crucial. Over the past two months, we have held in-depth conversations with our top 400 leaders about our strategy and culture efforts. The sessions were very successful, resulting in excitement and commitment to achieve our aspirations. With this positive momentum of engagement, we are now well positioned to accelerate our strategy as one Ferroglobe. Thank you.

[Operator]

Thank you. [Operator Instructions] We will now take the first question. It's from the line of Lucas Pipes from B. Riley Securities. Please go ahead. Your line is open.

[Lucas Pipes, B. Riley Securities]

Thank you very much, operator. Good morning, good afternoon, everyone. Good job on the inventory site and on the full-year outlook. And that's my first question. For the rest of the year, what would be roughly your expectation around cadence of EBITDA and any drivers that you could point to, be it on the volume or pricing side or cost side for that matter, that would drive EBITDA towards, I think it's at $80 million run rate at the midpoint? Thank you very much for your additional color on that.

[Marco Levi, CEO]

Hey, Lucas, hi. It’s Marco. I will start answering your question. I think I touched on some of your questions during my pitch, but let me summarize. First of all, we confirm, we have reiterated our guidance of $270 million to $300 million of EBITDA for the year. The second key factor is that the outlook that we have is positive related to our sales volumes as we have restarted our operations in France. We have a more solid outlook on what we can do with our Spanish assets due to the energy contracts. We have a pretty solid outlook on what we can do with our Polokwane operation in South Africa, and hopefully, it's going to run full in the second half of the year. These are things that are pretty much under our control. In terms of pricing, of course, we are in the trough. The key comment that I have to make is that our expectations that silicon metal price in the trough was better than in the previous troughs, is visible, both in Europe and in the US. And for the alloys market on ferrosilicon, we will keep on leveraging on our 50% product mix on ferrosilicon specialties and foundry, and opportunistically continue to maintain our position on ferrosilicon standard. Manganese, due to the restart of steel operations in Europe, we see now a pickup in demand. Overall, there is - due to the slow economy, there is not a great visibility on demand for the coming quarters. Also, because everybody in the supply chain is counting on lower raw material prices, lower energy costs, lower input costs. So, everybody's quite cautious on managing his inventory. So, this is the key picture that I can give to you.

[Lucas Pipes, B. Riley Securities]

That's very helpful and a follow-up. What period would you expect to be the strongest based on your current outlook for the year?

[Marco Levi, CEO]

Well, for sure we expect Q1 to be the weakest, and I stop there.

[Lucas Pipes, B. Riley Securities]

Okay, understood. I appreciate that. And then you mentioned the supply agreement with an Asian polysilicon customer, and I wonder to what extent additional offtake agreements could be in the works, and then what a typical structure looks like. Are these multi-year agreements? What is typically the size of those supply agreements, and what opportunity do you see in Europe and North America for additional agreements, or in Asia too? Would appreciate your perspective on that.

[Marco Levi, CEO]

Yes, Lucas, we are - as you remember, I restarted Polokwane only under the conditions that we had two, three-year contracts to cover the restart of this demand. And what we did with this contract, we covered the restart of the first two furnaces. One has restarted in November. The second one was restarted in January this year. And now, we are planning to link the restart of the third furnace to these additional contracts. So, I want to reiterate it that we are talking about two, three years contracts.

[Lucas Pipes, B. Riley Securities]

Marco, really appreciate the color. Continued best of luck to you and your team. Thank you.

[Operator]

Thank you. [Operator instructions] And the next question comes from the line of Martin Englert from Seaport Research Partners. Please go ahead. Your line is open.

[Martin Englert, Seaport Research Partners]

Hello. Good afternoon, everyone. So, circling back on volumes on the near-term, and I get the general expectation is for pickup coming out of the trough in 1Q, but any goal posts when we think through the segments on 2Q relative to 1Q based on what you're seeing from customers today, taking into account their inventory position, demand that they're seeing, what we could see on silicon metal, silicon-based alloys and manganese?

[Marco Levi, CEO]

Yes, clearly the key factor is France, right? And France is basically our key footprint for silicone metal production. And we have multi-year contracts to supply silicone metal. And we agreed with our customers to supply less in the first quarter, but now that we have the volume available, we are going to catch up on supplying these contracts. The other key factor is the fact that as of July, we will have a better cost position for our assets in France - in Spain, sorry, and this will drive more production, I suppose, out of Sabón and our manganese plants in Boo and Monzón. And the point, as you know, Martin, we have pretty historical customers in the western world. So, we negotiate supply based on our capabilities. The new factor is our expansion of sales in the Middle East and in Asia, which is related to the successful restart of Polokwane. These are the main factors.

[Martin Englert, Seaport Research Partners]

Okay. When thinking about both the reduced production in France and output for silicon metal in 1Q and kind of aligning with customers, you get the sense that there was a fairly significant destock that happened through maybe the Euro footprint or maybe elsewhere where the rightsizing inventories, you reduced production just trying to better align with demand expectations.

[Marco Levi, CEO]

I mean, if we talk about silicon metal, I think that destocking is over. So, what we are facing in the supply chain is mainly related to lack of visibility of demand. And so, everybody in the supply chain is watching like we are doing, their working capital position. And on the manganese alloys, I expect a pickup of demand due to the restart of blast furnaces, steel blast furnaces in Europe in the first quarter. Of course, there is a bit of hiccup due to the fires to the two blast furnaces of ArcelorMittal, but overall demand of manganese alloys is going up. Our view on ferrosilicon specialties and foundry is rather stable, while on ferrosilicon standard, there are a lot of new dynamics, mainly aggressive, I would say, commercial policies from Brazil all over the world. Aggressive commercial policies from Kazakhstan, and Azerbaijan in Europe. Aggressive commercial policy on ferrosilicon standard from China due to the slow restart of the steel, lower than expected restart of steel industry in China. And the first time we have seen significant volumes of Chinese ferrosilicon also in the United States. So, in a slow economy, there is price pressure also related to this new event. I must say that the recent data on steel production indicate that production now in China is ramping up significantly. Same in India. These are the only two countries in the world where we see a positive trend at this stage on steel production. Europe is catching up, but they’re still foreseeing to be rather flat versus last year. And United States is to be seen, until now has been stable on the levels of 2022.

[Martin Englert, Seaport Research Partners]

Understood. Thank you for all the detail there. I want to touch on, within the silicon metal segment, costs per ton, I think were about 3,500, which seemed high, and you gave some explanation in the slide deck there, but if you could maybe provide a bit more detail, or if you have some ranges. At a group level on Slide 10, you broke out a lot of the cost impact from lower energy and CO2 compensation, idling costs in France, annual maintenance, and those things. But I'm curious what that might have looked like for just the silicon metal segment and maybe more importantly, if it's worth 3,500 or so there for 1Q, how do we see a potential deflation there moving into the coming quarters?

[Marco Levi, CEO]

Well, we usually don't give specific information about our cost position for our products, also because they differ by plant. And we're not accustomed to do specific indications on these values.

[Beatriz García-Cos, CFO]

Martin, maybe I can put some color in Q1. So, we expected from the - as we said in Q4, we expect to be on the trough of the cycle from a pricing perspective as well. But on the cost side, we have been idling our assets in France and part of our assets in Spain. So, the fixed cost or the lack of absorption, the fixed cost has been an important topic for us in Q1, right, and is going to be as we restart or resuming our operations in France, this will be diluted. So, we expect a better position going forward, yes, compared with Q1.

[Martin Englert, Seaport Research Partners]

Do you think - when you're calling out a fixed cost impact on 1Q, do you think that was the majority there of what was kind of elevating it on a per-unit basis?

[Beatriz García-Cos, CFO]

Yep. I think this is the right assessment, Martin.

[Martin Englert, Seaport Research Partners]

Okay. Understood. Thanks for that color. If I could one more, working capital I think was 36% of sales this quarter, down somewhat from 39% previously. Any specific ranges? I know the intent is to kind of continue to work back towards the targets, but any specific ranges when we think about 2Q?

[Marco Levi, CEO]

Well, our objective is to get to run silicon metal and ferrosilicon in the 21%, 22%, and the manganese alloys in the 25%, 26% of working capital. Of course, Q1 had a revenue that was extremely low, with extremely low volumes. So, we did our best, and I think we achieved a working capital that at least that was above - is above my previous indication. We indicated in the last call between $80 million and $100 million target release in first quarter. So, and we will keep on adapting our capital performance to get to the optimal levels that I have mentioned. Of course, due to the extreme volatility that we have been facing since Q3 of last year, we have to take every week or every day and adjust our performance.

[Martin Englert, Seaport Research Partners]

Okay, thank you for that. But no specific release range just yet for 2Q, right? Just kind of continuing to work back towards …

[Marco Levi, CEO]

Well, we are balancing - in Q2 we are balancing what I say between higher volumes and as a consequence the need to have the raw materials with the right level of inventories that we need to have to manage our customer portfolio.

[Martin Englert, Seaport Research Partners]

Okay. And if I could just get you to repeat, you mentioned 21% to 22% for silicon, ferrosilicon. And what was the manganese alloys, you wanted to get back to about what percent?

[Marco Levi, CEO]

25%, 26%.

[Martin Englert, Seaport Research Partners]

Okay. Excellent. All right, thanks for all that. Nice job navigating a difficult market. Thank you.

[Operator]

Thank you. We will now take the next question. It's from the line of (Greg Benoit), Stockholder. Please go ahead.

[Unidentified Analyst]

Good morning. Thank you for the call. I was curious, I understand the expansion of this mine in Spain. You've mentioned that you're going to acquire an additional mine. Where is that located, and is that for reserves for the future or is that something that will produce cash flow once you acquire it?

[Marco Levi, CEO]

Yes, thank you for the question. I don't hide. We purposely don't disclose the location of the mine at this stage. We will once the negotiation is closed, but clearly our strategy is to reinforce our back integration. We feel that in order to be competitive and win the growth in silicon metal, we need to have the best possible back integration on quartz and related quartz quality. So, we'll be moving toward two directions. One, expand the capacity of our Serrabal mine in Spain, which is a fantastic mine in terms of quality. The quality, of course, is outstanding there. And then signing this LOI that will hopefully drive to a positive closure of the negotiation, and will allow us to count on further reserves of high quality quartz.

[Unidentified Analyst]

Okay. Thank you. Final question. The refinancing, with your cash balance right now, is that invested? And with rates where they are, short-term rates, are you able to invest your cash balance at the high rates we're getting right now for US treasuries, for instance?

[Beatriz García-Cos, CFO]

We hold some money markets deposits, of course, at good rates. This is basically in the US and as well a part of it in the European side.

[Unidentified Analyst]

So, right now, your net interest expense seems to me on the cash balances would be - the spread would only be somewhere in the neighborhood of 4%.

[Beatriz García-Cos, CFO]

Yes, it's still relative, let me put it like this, the spread.

[Unidentified Analyst]

So, the need to refinance your - call your bonds in July, it's not pressing as much as long as we have an inverted yield curve, I guess.

[Beatriz García-Cos, CFO]

Well, this is what we are reiterating. So, we are generating strong cash flows, right? We are watching very close the debt market and the opportunities that we have at the moment. We reiterate our intention to reduce our gross debt. And we'll be announcing something in the next month around the refinancing, if this has answered your question. Yes.

[Unidentified Analyst]

Okay. Thanks for such a great job. Appreciate everything you guys are doing.

[Operator]

Thank you. That was the last question we have time for. I would like to hand back over to the speakers for final remarks.

[Marco Levi, CEO]

Thank you. That concludes our first quarter 2023 earnings call. As we move forward, we remain focused on executing our strategic plan and optimizing our operations. In addition, we are positioning the company to capitalize on significant opportunities in the solar energy and battery markets that we expect to drive strong growth in the coming years. Thank you again for your participation. We look forward to hearing from you on the next call. Have a great day.

[Operator]

That does conclude our conference for today. Thank you for participating. You may now disconnect.