Ormat Technologies Inc

NYSE:ORA

Earnings Call Transcript 2021-Q1

[Operator]

Good day, and welcome to the Ormat Technologies Q1 2021 Earnings Conference Call. [Operator Instructions] Please note that today's event is being recorded.

At this time, I would like to turn the conference over to Mr. Rob Fink. Please go ahead, sir.

[Rob Fink]

Thank you, operator. Hosting the call today are Doron Blachar, Chief Executive Officer; Assi Ginzburg, Chief Financial Officer; and Smadar Lavi, Vice President of Corporate Finance and Investor Relations.

Before beginning, we'd like to remind you that information provided during this call may contain forward-looking statements relating to current expectations, estimates, forecasts and projections about future events that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to the company's plans, objectives and expectations for future operations and are based on management's current estimates and projections, future results or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks and uncertainties, please see risk factors as described in Ormat Technologies' annual report on Form 10-K and quarterly report on Form 10-Q that are filed with the SEC.

In addition, during the call the company will present non-GAAP financial measures such as adjusted EBITDA. Reconciliation's the most directly comparable GAAP measures and management's reasons for presenting such information is set forth in the press release that was issued last night as well as in the slides that are posted on the company's website. Because these measures are not calculated in accordance with GAAP, they should not be considered in isolation from the financial statements that are prepared in accordance with GAAP.

Before I turn the call over to management, I would like to remind everyone that the slide presentation accompanying this call may be accessed on the company's website at ormat.com under the presentation link that's found on the Investor Relations tab.

With all of that said, I'd now like to turn the call over to Doron Blachar. Doron, the floor is yours.

[Doron Blachar, executive]

Thank you Rob and good morning everyone. Thank you for joining us today. As we indicated in our fourth quarter call a few weeks ago, we view 2021 as a build-up year in which we lay additional groundwork to accelerate the growth of our electricity and our rapidly growing energy storage segments. We made significant progress ramping the generation of the Puna plants in Hawaii. We started the operation of the Vallecito energy storage facility in California and we recently completed the construction of the McGinness expansion in Nevada, which is now in late stage of startup.

On the same time, we're making progress in our efforts to rebuild our backlog, which is still facing the burden of the pandemic-related headwinds. These dynamics explain the low revenue and profitability reported in the fourth quarter compared to last year with $9.9 million reduction in the product segment gross profit as the main driver.

However, the strength and growth of the electricity and storage segment, which are on track to meet our growth plans, partially compensated that significant reduction.

With ample liquidity, combined with the growing pipeline of storage and electricity opportunities and tailwind from government support in renewable energy, we are confident that we can achieve our stated goals of increasing our generating portfolio by 50% to approximately 1.5 gigawatts by 2023, with a significant contribution coming from our energy storage business.

I will now turn the call over to Assi to review the financial results before I provide further updates on our operations and future plans. Assi?

[Assaf Ginzburg, executive]

Thank you, Doron. Let me start my review of our financial highlights on Slide 5. Total revenue for the first quarter were $166 million, down 13.4% from prior year. The driver for the decrease was the product segment, which was impacted by low product backlog as a result of COVID-19. First quarter 2021 consolidated gross profit was $73.6 million, resulting in a gross margin of 44.3%, 170 basis points higher than in the first quarter of 2020, mainly driven by the storage segment.

We delivered net income attributed to the company stockholders of $15.3 million or $0.27 in the quarter compared to $26 million or $0.51 per share last quarter same time last year. On an adjusted basis, taking into consideration the $8.8 million of after-tax onetime net expense related to February power crisis in Texas, net income attributed to the company stockholders was $24.1 million or $0.42 per diluted share compared to $0.51 per diluted share same period last year.

Breaking the revenues down. Electricity segment revenue increased 1.5% to $145 million, supported by contributions from new added capacity at our Steamboat complex and Puna's resumed operation. This was offset by lower generation in the Olkaria complex in Kenya due to continued curtailments and lower performance of the resource that Doron shortly. In the product segment, revenue declined 82% to $8.6 million, representing 5.2% of the total revenues in the first quarter. The decline year-over-year is expected to continue throughout 2021 as the continued global pandemic limits the ability to sign new large contract.

Energy storage segment revenue increased nearly 600% year over year to $12.7 million in the first quarter, representing 7.6% of our total revenue for the quarter. Excluding the onetime positive impact of $5.4 million in revenue related to the revenue we incurred in February power crisis in Texas, the increase year-over-year was approximately 300%. This growth was mainly driven by revenues from the acquired Pomona Energy asset and the contribution of the Rabbit Hill Texas facility that commenced operation in April 2020.

Moving to Slide 6. Gross margin for the electricity segment for the quarter decreased year-over-year to 45%. This was the result of the absence of business interruption insurance proceeds at Puna and the fact that we're still ramping up the output at Puna. Also we saw a reduction in revenue in Olkaria power plant in Kenya. In the product segment, gross margin was 6.6% in the quarter compared to 22% in the same period last year. The product segment gross margin in 2021 was impacted by significant reduction in the revenue. Energy Storage segment reported a positive gross margin of 62.4% for the first quarter and 34.7% adjusted gross margin excluding the onetime impact of the February power crisis in Texas. This was compared to a negative gross margin in the first quarter last year. The improvement was primarily driven by the acquisition of the Pomona storage assets in California.

Adjusted EBITDA decreased 6.4% to $99.2 million in the first quarter and electricity segment generated 96% of Ormat's total adjusted EBITDA in the first quarter. The product segment generated [ 1.3% ] of the Ormat total adjusted EBITDA for the quarter and the Storage segment reported adjusted EBITDA of $3 million, which represented 3% of the total adjusted EBITDA of the company. Reconciliation of EBITDA and adjusted EBITDA are provided in the appendix slide.

Turning to Slide 7. You can see the Q1 2021 results were negatively impacted by February power crisis in Texas. As we discussed in the last earning call, in February 2021, extreme weather condition in Texas caused abnormal reduction in electricity supply, along with a record demand for electricity. The extreme weather condition resulted in shortage of electricity supply, which caused electricity and RRS prices to reach record of thousands of dollars per megawatt hour. Starting February 16 and until February 19, our Rabbit Hill could not charge from the grid due to the energy emergency alert, which resulted in limited ability of the Rabbit Hill storage facility to provide any RRS services.

In order to reduce our merchant risk and increase our revenue in 2021 for these assets, the company started and entered few months ago into a hedge transaction for 80% of the Rabbit Hill capacity, which is currently not in effect. Due to the inability to operate the facility during this time, we recorded in Q1 2021 a net expense of $9.1 million related to the hedge transaction. In addition, we recorded as part of our G&A cost, an expense of $3 million related to imbalance charges from the grid operator in respect to our demand response operation that we estimate we probably may be unable to collect such receivable. We are currently in discussion with ERCOT with respect to some of the imbalance charges and revenue allocated to our [ DR ] customer response that may be impacting us positively in a later date.

Turning now to Slide 8. Our net debt as of March 31, 2021, was $936 million. Cash and restricted cash as of March 31, 2021, was $465 million compared to $537 million as of December 31, 2020. In addition, we had $28 million of marketable securities. Slide 8 breaks down the use of cash in the 3 months and illustrates our ability to reinvest in the business, service debt and return cash to our shareholders in the form of cash dividend, all from cash generation from operation.

Our long-term and short-term debt as of March 31, 2021, was $1.4 billion, net of deferred financing cost, and its payment schedule is presented on Slide 28. The average cost of debt of the company is currently 4.9%. On May 5, the company's Board of Directors declared, approved and authorized the payment of quarterly dividend of $0.12 per share pursuant to the company's dividend policy. The dividend will be paid on June 1, 2021, to shareholders of record as of the close of business day on May 18, 2021. In addition, we expect to pay a dividend of $0.12 per share in the next 2 quarters.

That concludes my financial overview. I would like now to turn the call over to Doron to discuss some of the recent developments and our growth plan for the next 3 years. Doron?

[Doron Blachar, executive]

Thank you, Assi. Turning to Slide 11 for a look at our operating portfolio. Power generation in our power plants increased by approximately 2% compared to last year. In the first quarter, we see the contribution of Steamboat Hill, which started operations in mid-2020; and of Puna that is operating still in partial capacity. The new capacity added was offset by lower generation and continued curtailment at our Olkaria power plant. We continue to execute on our goals, bringing McGinness Hills online as planned, and it is now in final stages of startup. The McGinness Hills enhancement will provide electricity for approximately 6,000 homes, while offsetting approximately 63,000 tons of CO2 emissions, providing the highest level of efficiency and safety in the geothermal industry.

As noted on Slide 12, Puna resumed operations in November 2020. We have ramped Puna generation to approximately 20 megawatts. On the field side, we have connected one new injection well during April. And once we will complete the connection of another well during the second quarter of 2021, we expect, along with repairs to the bottoming turbine unit, to gradually increase generating capacity to near its full levels by mid-2021, assuming connection of the well to the power plant will be successful.

Subsequent to the end of the quarter, we were notified that the new PPA with HELCO is suspended, and we may be required to complete an environmental study. In addition, the PUC ordered the parties to review the PPA rates. A new environmental study cane take 1 to 2 years. HELCO filed a motion to reconsider this decision, and we are still considering the impact of the PUC order on our [ growth ] plant in Hawaii. I would like to remind you that our current PPA is currently at significant higher prices and it is in place until the end of 2027.

Turning to Slide 13. Our revenue in Olkaria is down year-over-year as a result of a combination of the curtailment that continued into the first quarter and the reduction in the performance of Olkaria resource that reduced the generating capacity by approximately 25 megawatts. We are operating to restore the complex generating capacity through our drilling campaign in Kenya, and we are optimistic we'll see an increase in production in the second half of this year. In Kenya, we are also encouraged by the collection from KPLC that continues to pay its monthly invoices, and as a result, not increasing overdue amount.

Turning to Slide 14 for an update on our backlog. Our product segment has been the part of our business most impacted by the COVID-19 pandemic with our customers' projects around the world being delayed. However, we believe this is a short-term phenomenon, and we see many opportunities that can mature to a signed contract before the end of this year. As of May 5, 2021, our product segment backlog was $37 million. We anticipate continued weakness in our product revenues during 2021, and as a result, our 2021 guidance for this segment is significantly lower than recent years.

As I discussed on our last earnings call, our business model is resilient and a key part of it relates to our vertically integrated structure, which enables us to better allocate our manufacturing capacity and resources while focusing on internal initiatives to support our electricity segment growth. Intersegment revenues increased this quarter approximately 200% in the first quarter of 2021 compared to 2020. We firmly believe that as the global pandemic abates, we will see increasing demand for our products around the world.

Partially offsetting the weakness of the product segment has been a consistent improvement in our energy storage business. Energy storage, discussed on Slide 15, continues to evolve, to grow and to become more profitable, as Assi presented in his financial remarks. This quarter, we commissioned the Vallecito 10 megawatts, 40-megawatt hour storage facility in California, which provides local resource adequacy to Southern California Edison under a 20-year energy storage agreement. In addition, the facility provides ancillary services and energy optimization through participation in merchant markets run by the California Independent System Operator, CAISO. Also this quarter, we released for construction 2 storage projects in New Jersey, one is a 20-megawatt facility and the other a 7-megawatt facility that will both provide services to PJM.

Moving to Slide 16. We continue to see further support in the renewable energy coming from the new administration in the U.S following legislation enacted in December 2020 that extended the PTC and ITC for renewable projects. The first quarter of 2020 has seen renewed efforts to further extend tax credits for renewable projects, including geothermal and energy storage technologies. House Democrats introduced the Green Act in February 2021, a comprehensive clean energy tax proposal. And shortly after, in March 2021, President Biden unveiled the American Jobs Plan, which includes among the proposal a 10-year ITC and PTC extension that will be fully refundable.

In April 2021, Senate Democrats introduced the energy tax proposal, the Clean Energy for American Act. This bill seeks to consolidate the 40-plus existing clean energy tax incentives into one tax neutral incentive and propose that all zero emission power projects placed in service after 2022 would qualify for 10 year of $25 a megawatt hour PTC clean energy projects that will be placed in service after 2022 [ or ] 30% investment tax relate that could be paid in cash. In addition and very important to our growth plan, the Senate did authorize a separate 30% investment tax credit for stand-alone storage facility placed in service after 2022.

Both the House and Senate proposed bills and the White House proposed plan would benefit renewable energy development across the nation. These proposals are currently under consideration for an infrastructure and climate package that we expect will move through Congress this summer and fall. We believe that this enhanced flexibility in the duration of the availability of the tax credits and the options in claiming them will encourage renewable developers to get construction going on more projects over the next decade.

Moving to Slide 18. As I mentioned at the beginning of this call, 2021 will be significant build-up year, comprising mainly of geothermal projects. We have a robust growth plan to increase by 2023 our total portfolio by almost 50%, with a significant contribution from the energy storage business as detailed in the following slides. This increase is subject to obtaining all permitting and regulatory approvals required as well as completing the development and construction of these power plants as planned.

On Slide 19, you can see that our medium-term goal in the electricity segment is to add between 250 megawatts and 270 megawatts by the end of 2023. And in our rapidly growing energy storage portfolio, we are planning to enhance our growth and to increase our portfolio by between 200 to 300 megawatts by the end of 2023. This represents an approximately 29% increase in our geothermal and solar capacity and a 400% increase in our energy storage assets by the end of 2023. Achieving this growth target is expected to help us reach an annual run rate of $500 million in adjusted EBITDA towards the end of 2022 that we expect to continue to grow as we move forward with our plans in 2023 and onwards.

The next slide displays 14 projects underway that comprise the majority of our 2023 growth plan. We already secured long-term PPAs for the majority of these projects and affirmed the resource viability. We will provide an update on Puna expansion new time line as we evaluate our alternatives.

Moving to Slide 21 and 22, the second layer of our growth plans come from energy storage segment. Slide 21 demonstrates the energy storage facilities that have announced or started construction. The other projects included in our growth plans are in different stages of development and their release will require site control and execution of an interconnection agreement, all subject to obviously to economic justification.

As you can see on Slide 22, our energy storage pipeline increased from 1.2 gigawatt to 2 gigawatts as we were able to identify and make progress on new prospects that are expected to be mature beyond 2023. Currently, the pipeline includes 40 named potential projects. As I mentioned earlier, we believe that we can develop from this potential pipeline between 200 to 300 megawatts by 2023, mainly in Texas, New Jersey and California. This target excludes any add-ons from M&A activity that we are proactively seeking.

Moving to Slide 23. The significant growth in both our electricity and storage segments would require robust capital investments over the next couple of years. To fund this growth, we have over $900 million of cash and available lines of credits. Our total expected capital spend for the remainder of 2021 includes approximately $360 million for capital expenditures for construction of new projects of geothermal solar and storage, enhancement to our existing geothermal power plants that management release for construction, maintenance of capital expenditures, including our work at the Puna power plant and enhancements to our production facilities as detailed on Slide 29 in the Appendix. Overall, Ormat is well positioned with excellent liquidity and ample access to additional capital to fund future initiatives.

Please turn to Slide 24 for a discussion of our 2021 guidance. We expect total revenues between $645 million and $680 million, with electricity revenues between $570 million and $580 million. The electricity segment include $33 million from the Puna power plant in Hawaii, assuming we will meet our plans to bring it close to full operation in mid-2021. We expect product segment's revenue between $50 million and $70 million. Guidance for the energy storage revenue increased to reflect the additional revenues recorded in Q1 related to Rabbit Hill and is now expected to be between $25 million and $30 million. We expect adjusted EBITDA to be between $400 million and $410 million. We expect annual adjusted EBITDA attributable to minority interest to be approximately $32 million.

Before I move the call to the Q&A, I'm sure that you all have questions around the short seller report. I'm reminding you that on March 2, 2021, our Board of Directors established a special committee of independent directors to investigate, among other things, certain claims made in the report published by the short seller regarding the company compliance with anticorruption law. The special committee is working with outside legal counsel to investigate the claims made. All members of the special committee are independent in accordance with our corporate governance guidelines, the New York Stock listing standards and SEC rules applicable to Board of Directors in general. We are also providing information as requested by the SEC and the DOJ related to the claims. And we are unable to further discuss or answer any questions regarding this issue.

As I said in my opening, 2021 is going to be a significant buildup year, accelerating our growth in the storage and electricity segment. With ample liquidity, combined with a growing pipeline of storage and electricity opportunities and tailwinds from government support in renewable energy, I'm confident that we will be able to achieve our growth targets.

This concludes our prepared remarks. And now I would like to open the call for questions. Operator, please?

[Operator]

[Operator Instructions] Today's first question comes from Noah Kaye with Oppenheimer.

[Noah Kaye, analyst]

If we can start with the electricity segment. You've left guidance unchanged for the year, but we presume there are a few moving parts to that. You mentioned the lower output at Olkaria, some timing considerations in other parts of the portfolio. Can you maybe just help us bridge a little bit what seems to be maybe going a little bit ahead of plan to offset any potential lower production from Kenya?

[Doron Blachar, executive]

I'll say, one, the McGinness Hill enhancement came a bit earlier than what we originally anticipated. And in Kenya, we believe that we will be able to bring it back to its capacity during the year and hopefully be able to get back some of the lower revenues that we had. And Puna, as we said, it is similar to what we've expected. So all in all, balancing between McGinness and Olkaria are the 2 main items of it.

[Noah Kaye, analyst]

That's very helpful. And maybe not to get too technical, but can you help us understand what is causing the lower resource performance? And how do you mitigate that, some of the potential ways that you can increase the output there, given what I guess is a cooling impact at the Olkaria complex?

[Doron Blachar, executive]

Yes. So as you know, over the course, over the life of a power plant, we -- every few years, drill, make up wells. And we have the plan that drilling campaign in Olkaria and the wells didn't came out as strong as we expected them. And our analysis is some different temperatures within the resource and by changing the well and the way we drill and accessing a different reservoir, we think that we'll be able to bring it back to its 150-megawatt capacity.

[Noah Kaye, analyst]

That's very helpful. A question on the storage side, I think, as you mentioned, some hedges around Rabbit Hill. Just in general, as you develop your storage portfolio, what are you seeing as sort of the availability of hedges or other instruments to help get more of a fixed revenue on some of these projects? What kind of visibility do you have on revenues for, say, the first 3 to 5 years of these projects coming online?

[Assaf Ginzburg, executive]

So let me start by saying that with respect to Rabbit Hill, the goal was to fix the revenue of the storage facility. And the issue we had here is that we lost the money on the hedge, but we could not generate the offsetting revenue because the storage facility would not be able to charge itself. Now when we look at going forward, the markets of RRS and electricity, I will say, in general, are not as advanced of some other commodities that one may be familiar. But I do believe we will see an advance in that -- there will be some progress with that. With that being said, we are looking in some cases on a balanced portfolio that will enable us to, for example, a tolling agreement or capacity agreements to basically fix our revenue with our customers instead of fixing it through a financial hedge. So that's something that we would like to build.

And when we look at the next few years, the goal is to do a combination of fixed transaction with the customers, which can be a capacity payment or a tolling agreement. And then on the other hand, we will have some merchant activity. I don't have the percentage, but again, large projects. At this point, we are looking to reduce exposure and to guarantee a minimum return. I will say that the next 3 years will be probably a big difference between where we are today. I do think there will be more hedging opportunities. I've already seen the [ ICE ] market being developed, but it will take time.

[Operator]

The next question comes from Jeff Osborne with Cowen and Company.

[Jeffrey Osborne, analyst]

I had a couple of questions on my end. Back on Kenya, not the facility itself, but I was wondering, the line unfortunately broke up when you were discussing the payments. Can you just talk about the relationship you have with the customer and the status of the accounts receivable? Would be helpful.

[Assaf Ginzburg, executive]

So our relationship with the customer hasn't changed. Throughout Q1, in line with what we have seen in the last few months, KPLC has paid in full the monthly charges. With that being said, there is still roughly $45 [ million ] of prior invoices that haven't been paid yet. We are working with the customers. But we do understand that the situation in Kenya with COVID is not easy. They are under a quarantine, I believe, until May 15. With that being said, they are paying on a monthly base, 100% of the monthly invoice, which is very encouraging.

[Jeffrey Osborne, analyst]

Got it. And then there seems to be sort of weekly or biweekly news flow there around just the broader power company being pressured by everybody from the top of the government on down about renegotiating power prices to try to improve the profitability. Obviously, COVID is exacerbating that, but are there any ongoing negotiations about newer prices or no?

[Assaf Ginzburg, executive]

Ormat has a long-term PPA, and we have not been approached to discuss it. We are seeing what you guys are seeing in the newspapers, and we are aware of it, but nobody approached us. I don't think that geothermal is the one that is the most expensive. As you also know, it is a baseline electricity, and we have the support of the government operating there. I think the best outcome for us is that this will continue. And at this point, we don't have a reason to think that it will not continue, the current arrangement.

[Jeffrey Osborne, analyst]

Perfect. I just had one more quick one on Kenya, if you don't mind. Can you quantify the degree of curtailment of the 150 megawatts? Is it roughly 10%, 20% or more meaningful? I just wasn't sure how to put it in perspective.

[Doron Blachar, executive]

The curtailment is different between the days and the weekends. Some days, you can get to 20% curtailment. Others, you get to 10%. And it's also usually overnight for a few hours, it's not for the entire day. So it's very hard to average it.

[Jeffrey Osborne, analyst]

Got it. And then just two last ones...

[Assaf Ginzburg, executive]

As you remember -- I just want to mention, as you remember, the curtailment doesn't impact the revenue as much because most of the dollars that we are getting are capacity payments. So I would say, the curtailment last year or probably for the whole year was $3 million, $4 million. It's not a big amount versus the company's revenue. The key for us is to fix the resource so we can go back to the 150 capacity that we can operate in.

[Jeffrey Osborne, analyst]

Got it. Makes sense. And 2 other quick ones. So Puna, with the suspension of the PPA, how does that mechanically work? Like are you just paid the merchant price and the facility's still operating? Or what are the mechanics of that facility?

[Doron Blachar, executive]

The mechanics is that we have a PPA until end of 2027, but it's not a merchant. It's actually a relatively high PPA that was signed many years back. And based actually on the PUC request, we negotiated a new PPA that could come into effect only after the PUC approved it. So actually, the delays of the PPA, is actually, in the short term, increasing our revenue because the pricing in the existing PPA is higher. And at this point, we still believe the PPA will be approved. HELCO is the one that approached the PUC to reconsider, and they are reconsidering their decision. So we're waiting. And again, this relates only to the new PPA that comes into effect only after it is approved. So currently, we do have a PPA until the end of '27.

[Jeffrey Osborne, analyst]

Got it. Okay. Thank you for the clarification. And then the last one I had is just if you add up what you did in Q1 for the product segment, coupled with, I think it was $37 million in the product backlog, you don't get to the low end of the range. So you must be assuming for the year that there's additional bookings. Can you just talk about, A, the confidence in that? And then B, geographically where that would come from, is that from New Zealand or some other country?

[Doron Blachar, executive]

One, you are correct, obviously. The numbers do not add to $50 million to $70 million. But we are, over the last few months, negotiating a couple of contracts that we expect to sign. And assuming we will be able to sign them in the next few weeks, they will impact revenue recognition in Q4 of this year. And based on these negotiations, we believe that we will be within the guidance that we gave. These contracts are in 2 or 3 different countries. New Zealand is currently not one of them.

[Operator]

[Operator Instructions] The next question comes from Mark Strouse with JPMorgan.

[Mark W. Strouse, analyst]

A lot of focus on raw material pricing in the market right now. Can you kind of just give us an update on how you're potentially incorporating that into some of these growth projects that you're bidding on?

[Doron Blachar, executive]

We have seen, as you say, an increase in raw materials. And also, we've seen the transportation issues across the world. And these obviously impact the costs, but it is impacting the entire industry. It's not impacting specifically Ormat. So when we are responding to projects, we are pricing them with the current cost that we know, that's the cost that we expect to incur, but the same does to our competitors. So we're on the same ground here.

[Mark W. Strouse, analyst]

Yes, Yes, that makes sense. And you kind of touched on this with competition. Are you seeing any change in the competitive dynamics? Any kind of new start-up companies or anybody else getting more aggressive in the market?

[Doron Blachar, executive]

We see on the product side, the same competition as in the past with [indiscernible]. These are the 2 main competitors that we see in the different places that we have RFPs and respond to.

[Operator]

At this time, there are no further questioners in the queue and this ends the question-and-answer session. I would now like to turn the conference back over to Ormat management for any closing remarks.

[Doron Blachar, executive]

I'd like to thank you all that participated and thank you for your continued support. And we see 2021 as a very build-up year that will bring us and continue the growth going forward. Thank you very much.

[Operator]

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.