Ferroglobe PLC

NASDAQ:GSM

Earnings Call Transcript 2024-Q1

[Operator]

Good morning, ladies and gentlemen, and welcome to Ferroglobe's First Quarter 2024 Earnings Call. [Operator Instructions]I would now like to turn the call over to Alex Rotonen, Ferroglobe's Vice President of Investor Relations. You may begin.

[Alex Rotonen, executive]

Thanks, Sharon. Good morning, everyone, and thank you for joining Ferroglobe's First Quarter 2024 Earnings Conference Call. Joining me today are Marco Levi, our Chief Executive Officer; and Beatriz GarcÃa-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 website at ferroglobe.com. In addition, this discussion includes reference 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.Before I turn the call over to Marco Levi, our Chief Executive Officer, I want to announce that we'll be participating in B. Riley's 24th Annual Investor Conference in Los Angeles on May 22 and May 23. We hope to see you there. Marco?

[Marco Levi, executive]

Thank you, Alex, and good morning, good day, and good evening to everyone. Thanks for joining us on the call today. We appreciate your interest in Ferroglobe. Let me start from operations, let me first, we successfully restarted operations in France with all furnaces [ and ] in efficiency. In addition to France, we are currently running all 3 silicon metal furnaces in [indiscernible] and an additional [indiscernible] in both due to competitive energy prices in Spain, resulting from strong renewable energy generation. As you recall, last October, we acquired a high-quality ports mine in South Carolina to secure a reliable supply source, of course, to support our expected increased production of high-quality silicon metal in the U.S. We are on track to begin mining in the third quarter. This was a strategic purchase that will provide a competitive advantage as demand begins to materialize. To further support our growth plans, we are in the process of applying for a permit to expand our silicon metal production in North America. The additional capacity will be a brownfield expansion, requiring a significantly smaller investment versus a greenfield and faster to develop. This investment will allow us to meet the significant growth opportunity ahead of us in solar and EV batteries. Strategically, we continue to position the company to take advantage of big secular trends occurring in the market. Solar and batteries for electric vehicles are large markets that will drive strong growth for the foreseeable future. As the leading producer of high-quality silicon metal in the West, Ferroglobe is well positioned to be a significant beneficiary of the [ strong demand ]. In March, we announced the signing of an MOU with caution, a U.S.-based advanced battery solution company focused on driving battery transformation in the electric vehicle market. This relationship will enable us to advance the [ industry migration ] on battery ones from graphite to silicon metal, producing various benefits, including lower cost, longer range, and faster charging time. For the past several months, we have been testing at our lab Coreshell nano coatings technology using [ silicon-rich nodes ] with very promising results. As a result of this early success and to further solidify our commitment to this effort, we recently made a strategic investment in Coreshell. Improving the characteristics of battery performance in EVs is an important endeavor, and it will accelerate EV adoption, and we want to be at the forefront of this technological innovation. Turning to markets. The impacts across all our businesses are up from the lows with demand trends beginning to diverge between Europe and the U.S. We are encouraged by the sustained increase in silicon metal prices, especially in North America. Some of the factors contributing to the recent price trend are supply-related factors. However, we are also seeing signs of incremental improvement in U.S. demand, while demand in the European market remains stagnant. European price increases have lagged behind the U.S. market, which has seen an improvement in demand, especially in the [indiscernible].I am also pleased to announce that on May 10, the U.S. International Trade Commission voted in our favor in the trade case against ferrosilicon imports from Russia, Kazakhstan, Malaysia, and Brazil. The commission preliminarily determined that these ferrosilicon imports are causing material injury to the U.S. industry. Here is some background on this trade action. On May 28, together with [ FeSi ] metals and alloys, we filed a petition with the U.S. Department of Commerce and the International Trade Commission, asking them to investigate unfairly traded imports of ferrosilicon from Russia, Kazakhstan, Malaysia, and Brazil. These imports are assuming significant subsidies from their government, resulting in predatory pricing practices, which have forced American ferrosilicon producers to idle some of their operations negatively impacting American domestic production and employment. The commerce department will continue its investigation to decide whether further action is needed. It is expected that the preliminary countervailing duty determination could take place in June, and we are [ conducting the termination ] in September. We expect a positive outcome.At the same time, we continue to work with both houses of Congress to pass the Bipartisan bill, increasing American Ferrosilicon Production Act, which was introduced in September last year. If passed, this bill would enact a 35% tariff on imports of Russian and Belarusian ferrosilicon. As mentioned in our previous call related to Q4, we redeemed the remainder of the senior secured notes in February and ended the quarter with a stronger financial position in the company's history. For the first time ever, Ferroglobe is net cash positive. Last quarter, we initiated our first dividend in the amount of $0.13 per share, which was paid on March 28. We are declaring our second quarterly dividend of $0.13 per share payable on June 27. In an effort to continue developing our capital allocation policy, our Board of Directors has approved a share buyback program, which will be included in the notice of the June Annual General Meeting. Once approved by the shareholders as required, we will begin to execute opportunistic buyback. The authorization request is to repurchase up to $200 million of shares over a 5-year period using both discretionary and nondiscretionary [ mentors ]. While we're still cautious about end market demand, we are adjusting our guidance to reflect a stronger pricing environment. Accordingly, we are raising the low end of our guidance from $100 million to $130 million, while maintaining the [ IM ] of $170 million. Next slide, please. I'll start from silicon metal, revenue in Q1 was $168 million [ flat ] versus the fourth quarter. Adjusted EBITDA declined $6 million to $16 million, a 28% decline over the previous quarter. The decline in EBITDA was primarily driven by lower realized prices, which were down 6% in the quarter. Our average realized price for silicon metal increased by 2% in Europe and decreased 12% in the Americas compared to the previous quarter.During the first quarter, index prices increased approximately [ 17% ]. The difference between the index and the realized price was the result of the 3-month lag on [ price realization ] for contracted volumes. We expect to benefit in the second quarter from the higher interest price in Q1. Overall, volume shipped was up 7%, driven by Europe, which was up 30% from the fourth quarter. The silicon metal outlook is quite different in North America compared to Europe where demand remains quite weak with prices being impacted by incremental imports from China and easy supply tightness. The U.S. market continued to be firm with prices increasing into the second quarter. Asian demand for our products remains solid as we are shipping [ traceable ] high-quality silicon metal to the solar segments in China and Korea. Next slide, please. In our silicon-based alloy segment, adjusted EBITDA for Q1 was $40 million, down from $35 million in the fourth quarter. This was mainly due to lower costs driven primarily by lower energy compensation in France relative to the prior quarter. Overall average realized prices were down 5% versus the prior quarter due to weakness in the Americas, which continued to deliver [indiscernible] from the imports from Russia, Kazakhstan, Malaysia, and Brazil. As was the case in silicon metal, the difference between the index and the realized price was the result of the 2-month lag on price realization for contracted volumes. Again, the U.S. market is showing more strength with prices increasing, while industrial activity in Europe is more muted. In its latest April short-range outlook, the World Steel Association cuts its EU steel production for cost growth by half to 2.9%. And with the Americas remaining essentially flat with the October forecast at 1.4%. We expect Europe to be more challenging, while the U.S. market is expected to basically [indiscernible] from potential antidumping [ action ]and a stronger economic outlook. Next slide, please. Turning now to manganese-based alloys. Revenue increased 10% to $66 million in Q1, driven by increased prices and volumes, up [ 8.2% ], respectively, over the prior quarter. Volumes in North America increased by 426%. However, these volumes are off a low base, and therefore, not meaningful. While prices in Europe are up 13% since year-end, they have stagnated over the past 3 months due to weak steel production. The shutdown in late March of South32's GEMCO manganese ore mine in Australia, [ a tight ] supply resulting in a meaningful increase in oil prices. As a result, the manganese alloy [ indexes ] have also increased.Given the weak steel production in Europe, the European indices have not improved as much as the U.S. We anticipate that the demand will improve in the second half of this year. I would now like to turn the call over to Beatriz GarcÃa-Cos, our Chief Financial Officer, who will review the financial results.

[Beatriz García-Cos Muntañola, executive]

Thank you, Marco. Please turn to Slide 10 for a review of the income statement. Sales increased 4% in the first quarter to $392 million, up from $376 million in the prior quarter. During Q1, we saw increased volumes across all 3 segments, while weaker prices for silicon metal and ferrosilicon offset some of the volume gains. Raw materials and energy consumption for production increased as a percentage of sales from 53% to 66% in Q1, primarily driven by lower energy compensation in France and Seattle. The staff costs decreased by $9 million in the first quarter to $71 million, driven mainly by profit-sharing arrangements in Europe. Adjusted EBITDA in the first quarter was $26 million versus $60 million in the prior quarter. During the quarter, we earned approximately $8 million from our 2024 French energy agreement, which boosted our EBITDA by the same amount. As a reminder, these benefits will be collected early in 2025. Net income [ finance ] expenses for the quarter declined 38% to $8 million due to the full redemption of the senior secured notes. The full benefit of the debt repayment will be fully realized from the second quarter onwards. Next slide, please. I'm on Slide 11. Our adjusted EBITDA margins declined from 60% in the prior quarter to 7% in the first quarter, primarily due to higher costs, which impacted EBITDA by $39 million relative to the fourth quarter. The higher costs were driven by lower energy compensation in France and CO2 compensation, partially offset by lower raw materials and energy prices in [ Spain ]. Silicon metal and silicon because also contributed to lower adjusted EBITDA with prices declining 6% and 5%, respectively. Overall, realized margins declined by 2% for the fourth quarter, impacting adjusted EBITDA by roughly $9 million. Total volume increased by 6% with a small $2 million positive impact on EBITDA compared to the prior quarter. Head office and noncore business contributed approximately $11 million, driven by improved performance of our mine operations in the first quarter and a tax accrual in the fourth quarter. Slide 12, please. During the first quarter, we generated a strong free cash flow of $180 million, driven by the $155 million rebate for French energy and $17 million through the working capital primarily due to [ $19 million ] reduction in inventory that has been partially offset by accounts payables. CapEx outflows in the first quarter were $18 million versus $26 million in the prior quarter. We used the strong cash inflow to pay off the remaining $150 million of senior secured notes, paving the way for us to begin our share buyback program [indiscernible] shareholders' approval in the June [indiscernible]. In March, we paid $1.3 dividend per share, which we will pay again on June 27. Next slide, please. I'm on Slide 13. We ended the fourth quarter with a cash balance of $160 million, up from $138 million in the fourth quarter. Our financial position improved from net debt of $101 million to a net cash positive position of $79 million, with adjusted gross debt declining from $239 million at the end of the fourth quarter to $81 million due to the redemption of the remaining $150 million of senior secured notes. At this time, I will turn the call back over to Marco.

[Marco Levi, executive]

Thank you, Beatriz. Next slide, please. Moving to the key takeaways on Slide 15. Our enhanced capital return policy is entering in a second phase as we wait for the shareholder vote to approve the share buyback. The third phase quarterly dividend was paid in March with the second quarterly dividend of $1.3 per share declared [indiscernible] 2017. We are in a full position to take full advantage of the exciting development in the silicon-rich EV battery market. Combined with the robust growth expected in the solar market, we are very pleased with our position as the leading western silicon metal producer. Finally, to meet the growing demand, we are applying for a permit to expand our silicon metal production in the U.S. Operator, we are ready for questions.

[Operator]

[Operator Instructions] And your first question comes from the line of Martin Englert from Seaport Research Partners.

[Martin Englert, analyst]

Could you provide is available for more detail on the potential U.S. brownfield expansion, where it might be planned at what facility, what type of capacity timing, and the CapEx associated with it?

[Marco Levi, executive]

Yes. At this stage, it is a bit premature to provide more details about that. Of course, the first thing we're going to do to satisfy demand pickup in U.S. is to restart our capacity in Selma that is already to be restarted with 2 furnaces. But as mentioned in the previous call, we expect a significant growth in the West for silicon metal demand of about 200,000 tons minimum of silicon metal in the next 5 years. And in order to satisfy this additional demand, we will need to be part of the suppliers and have enough capacity to satisfy this demand. This is why we have started the process to apply for a permit in the United States of America. Looking at financing, we already mentioned that we do not intend to go back being a company [indiscernible] leveraged. So we will look at all the options that can finance this expansion with our own cash, with subsidies that are getting available in the United States and also exploiting some of the partnerships that we have already in place in the United States.

[Martin Englert, analyst]

So when referencing your partnerships, are you referencing partnerships to the degree that you have JVs or more so some of the recent partnerships that you've been establishing in the kind of batteries market?

[Marco Levi, executive]

Well, all kinds of partnerships, of course, it's no secret that we have a partnership with [indiscernible] chemical and [indiscernible] our plants and the overall growth in silicon metal is impacting both [indiscernible] and Ferroglobe. But then we are talking about partnerships that may mature in the solar supply chain or the battery supply chain, too. And there, as you know, we have announced our partnership with Coreshell. But as previously declared being the main player in the West, we have been approached also by other players in the supply chain. So I think we have different opportunities than the others.

[Martin Englert, analyst]

Well, you mentioned that the costs would be significantly lower for brownfield expansion versus greenfield, which intuitively makes sense. But any framework as to what you -- I mean, any framework or goal posts as to what you think it would cost to build a greenfield facility today in the U.S. or North American market and what that capacity might look like?

[Marco Levi, executive]

Well, let's say a medium for silicon metal plant with a capacity of 50 maximum [ net ] plate, 60,000 tons of silicon metal greenfield, we estimate that you would [ require about $400 million ] or north of this number. When you build a brownfield, you take a big fraction of this cost out for the same capacity. And on top, you can build much faster. And when you start -- and this is why we are applying for the permit because then we can -- when things materialize in the supply chain of new markets, then we were going to be much faster, we think, in executing what we want to execute.

[Martin Englert, analyst]

Okay. You noted a big fraction of the cost is taken out. Is that something like 25% of the cost is reduced versus greenfield, 50%?

[Marco Levi, executive]

More than that. More than [indiscernible].

[Martin Englert, analyst]

That's extremely helpful. I wanted to pivot and talk about the raw material energy costs increased 29% sequentially at the group level to $257 million. Then there were some puts and takes on cash costs within the businesses within silicon metal cash cost per ton, I think, was about $28.53.That was actually a bit lower by about $70 a ton silicon-based alloys stepped up about [ $360 ] a ton sequentially. The question is looking ahead at 2Q, could you touch on unit cost expectations across the businesses based on how you could see things transpiring [ today ]?

[Beatriz García-Cos Muntañola, executive]

This is Beatriz speaking. Looking at it in the second half of the year, there is a main difference versus 2023. As you remember, there is a huge credit on energy that we discussed of [ $186 million ] in our P&L in 2023. Now in 2024, our estimation as we were discussing on the previous quarter is around [ $40 million ], right? So this could be a big driver to [ versus ] EBITDA in terms of cost. That's number one. And then as well on the CO2, the indirect CO2, I think on the second half of the year, it's going to be a little bit higher the compensation versus the H1. So this is going to be offset. On the other side, raw materials will be offsetting partially with the increase of the energy prices. So this is a kind of a mix but for 2024 in terms of cost. Last but not least, I think Marco will talk to you about that later. You remember that we mentioned this cost reduction program that we are working on it at the moment. And hopefully, we'll crystallize before the end of the year. I think the amount that we made was around $40 million.

[Marco Levi, executive]

Yes, there is another element, if you allow me to add, which is more short-term because Martin was asking about the second quarter. The cost of manganese is going up significantly as a consequence of the Australian shutdown, this doesn't have a big impact on us in the second quarter, but it will start having a significant impact on manganese alloys cost starting the third quarter. This is why we are reacting to increasing prices of alloys as much as we can in order to reestablish the delta between manganese ore and final manganese alloy pricing.

[Martin Englert, analyst]

So several puts and takes moving through the course of the year, and it seems certainly year-on-year lower energy credit from the French power agreement. And then it sounds like there's maybe some higher raw materials in the back half for getting manganese for second silicon-based alloys and silicon still some elevated raw materials, but you're going to get some more favorable what essentially credits regarding CO2. So maybe they should -- is it correct to think of it as second-half silicon metal and silicon-based alloys unit costs maybe see some release and step down marginally to modestly.

[Marco Levi, executive]

Well, it's difficult to give you a picture here. Let me pause for a second. When we look at the European situation, we expect also some pressure from the energy market. As you know, we are going to -- we buy still most of our energy in Spain at market, and we expect a rise of energy costs in Spain in the second half of the year. So this will impact mainly our operation in Sabon. Looking at the other critical geographic areas for silicon metal, I expect other flat energy cost as for the first half.

[Martin Englert, analyst]

If I could one last one, the silicon metal volumes were quite strong for the quarter, and you called out strength in EMEA is a contributing factor. How do we think about the volume trend now given that environmental contribution when we proceed through the year, do you have any targeted goalposts for silicon metal volumes for the year? Or at a minimum, maybe what you're seeing with 2Q?

[Marco Levi, executive]

Well, clearly, we have restarted our plants in France in the second quarter. And so we expect to sell more higher volumes. The part is the following. I go back to the market dynamics. U.S. demand is pretty strong, I would say, because Silicon's demand of our customers is better. Aluminum demand from the aluminum players is better. So the U.S., we expect to become more and more robust at this stage. In Europe, while we have our productions up and running, we don't see an improvement in demand. On the contrary, aluminum market seems to be even weaker than in the previous quarters. So I would be very cautious on volume expectations in Europe.

[Operator]

And your next question comes from the line of Lucas Pipes from B. Riley Securities.

[Lucas Pipes, analyst]

Marco, I want to ask you kind of a higher-level question. Looking back over the last few years, you improved the operations, improved the commercial side, fixed the balance sheet. And now obviously, you're in a net cash position. Congratulations to you and the team on that accomplishment. So it appears you have a lot more opportunities strategically to maybe do what you want to do. And I wondered if you could maybe lay out the priorities for the company over the next couple of years.

[Marco Levi, executive]

Thank you for the question, Lucas. Of course, you simulate my ambition. I want to underline that most of our business has not changed. We are still playing in commodities. As a consequence, our performance short term is linked to the market dynamics that I commented before. Of course, we are extremely bullish about the future because we are involved in a lot of strategic discussions with different partners for batteries, particularly in U.S., but also in Europe that we're sure will drive to a major uptake of silicon consumption in the world. I think we have never been so close to solving the framework swelling problem of silicon metal for batteries. And this is why we believe in what we are doing with Coreshell, we have invested in Coreshell. And we think that the Coreshell solution will speed up the massive introduction of silicon metal in batteries. Looking at solar, there are different new supply chains that are getting established from the traditional markets, China and Southeast Asia and we are ready to exploit these opportunities. So growth is there for sure in silicon metal. Now we need to look at profitable growth and one key moment that we are looking at is the polysilicon market situation because there is a tremendous excess of capacity of polysilicon in China. The Chinese have difficulties to place volumes. And as a consequence, polysilicon price in China has dropped further a little bit more than $6 per kilo when it was at $35, about one year, one and half year ago. And this is causing a lot of dynamics in China. The polysilicon market outside of China is still around $21, $22 per kilo. We'll see how we developed with the new supply chain setup for solar, mainly in the Middle East. But our position is very good because we have the assets at the right place. We are strongly back integrated with the right quality of [indiscernible]. So my aspiration Lucas, is to dramatically grow this company by growing the silicon metal envelope.

[Lucas Pipes, analyst]

And a quick follow-up on Coreshell. Sorry if I missed it, but what is approximately the investment or the terms of the investment? And what percentage of the company would you maybe own today or eventually own and also not familiar with their specific technology? Maybe you can comment quickly on why you think this is the right horse to bet on in the battery market?

[Marco Levi, executive]

Yes. Thank you, Lucas. The first investment is a few million dollars, but we have the right to further invest in the next round of capital raise for the company. The beauty of this thing at this stage is that all our tests look extremely promising, and this has been made on sales samples, reproducing the same test that Coreshell has made, and they're all based on our silicon producer in Europe. The key is to go through the charging and discharging cycles. And basically, the process of the battery doesn't change. This means that you can charge and recharge this batteries faster and guarantee a longer tenure to the battery. The beauty, I think, of this opportunity is that at the beginning of next year together with Coreshell, we will send that in the automotive industry with 60 lithium batteries. And this basically is a leapfrog move because we don't need to go through a battery element manufacturer or battery manufacturer. We will have a pilot plant that produces more quantities of batteries that represent our technology that based on our assessment with Coreshell don't require any change in terms of the layout of the factories. And we'll have the opportunity to be validated directly by the automotive OEM. I consider this breakthrough, of course, has to be validated. You know that a new solution in battery, it takes time. So we are talking about significant growth, if successful, in a time range of 3 years from now. But at this stage, everything is working fine and we are aggressively making progress on this development line.

[Lucas Pipes, analyst]

This is helpful. Beatriz, some quick one for you. In terms of working capital, anything major to be aware of for the balance of the year, I know it can be lumpy. So if you could maybe flag anything that might stick out from a working capital perspective? I would appreciate that. And then with the updated guidance range, what's been holding back increasing the high end of the guidance? Obviously, good to see the low end of the guidance come in here. But I would appreciate your comments as to why not the whole range shifted but just the low end. Thank you for any additional color there.

[Marco Levi, executive]

Maybe I'll start from the second part of the question, Lucas, if you don't mind, on the guidance, the reality is that there are a number of factors, and there are opposite factors, meaning we are facing a salad of different trends in our view at the moment. As I mentioned, let's start from Europe, demand is very weak. Prices have been stabilizing in the first quarter and are trending down now in the second quarter, and I refer mainly to silicon metal and ferrosilicon. In U.S., we have the opposite trend in the U.S. where demand going up in silicon metal prior to enforcing, aluminum is rather balanced, ferrosilicon is reinforcing on pricing in view of what I mentioned before during my speech. Then you have another element, which is manganese alloy. As I mentioned before, manganese price is skyrocketing, and this is very difficult for us because we sell in Europe where steel demand as I mentioned before, is reduced [indiscernible] expectations. So demand is not there and the ore price is going up. As I mentioned before, energy market price in Europe in the second half of the year is expected to go up. So there is -- we have increased the bottom of our guidance because we see slightly better price and because we trust in our capabilities to reduce cost, Beatriz mentioned the cost program. But there are also a lot of challenges, particularly in Europe. So this is why at the end, we ended up increasing the bottom and so this is where we feel comfortable

[Beatriz García-Cos Muntañola, executive]

Maybe jumping just on the working capital. So as you remember, the impact on the end of the last quarter in Q4 last year, our preparation [indiscernible] plants in Q1 in France is happening. Now in Q1, we have been releasing working capital, as you have been seeing. But we have some key tax as well in Q1 that we are fixing now. So we have relatively increase of working capital in our last quarter due to ramp up. And you know that we are ramping up our [indiscernible]. So we face some issues there. And then as well in our one of our plants in PIC that is located in the south of France. So at the end, this has been allowing us to release EUR 20 million, but would have been limited to the basing decisions in South Africa and in France, as I mentioned. Now for the rest of the year, now in the bumping portion in our plans in France for the rest of the year in the U.S. and in Spain, right? So when you look at the overall picture of the working capital, I would say we should expect a balanced picture because, as you said, look at it is a little bit bumpy. So I would expect maybe a small additional consumption of working capital going forward. And this will be as well favored because of what Marco mentioned on the Manganese prices. So the prices of the old [indiscernible], this would affect directly not in the number of cores, of course, but in pricing for our working capital as well.

[Operator]

[Operator Instructions] And your next question comes from the line of John Rolfe from Crest Rock Capital.

[John Rolfe, analyst]

Most of my questions have been answered. I did have one. I noticed in the most recent 20-F, Marco, that the number of shares that you beneficially own as well as the number of shares that Mr. Madrid owns had increased substantially from the prior 20-F. I was just wondering, is that due to grants or to open market purchases or some combination of both?

[Marco Levi, executive]

Well, if you ask to Marco, both. Sorry, in Madrid. Mr. Madrid is also here, it is due to both.

[Operator]

There are currently no further questions. I will hand the call back for closing remarks.

[Marco Levi, executive]

Thank you. Let's go to the closing. In a nutshell, I have really to say that we are excited about our prospects in solar and lithium-ion battery market and are well-positioned to take advantage of improving the fundamentals that we expect in our core markets. I want to thank all of you for your participation, and we look forward to hearing from you on the next call. Have a great day.

[Operator]

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.