REC Silicon ASA

OSE:RECSI

Earnings Call Transcript 2018-Q4

[Tore Torvund, CEO & President]

And I think it's time, so we'll come toward you to this presentation of the fourth quarter for REC Silicon. We're going to cover a wide range of topics today. James May and myself will then cover most of the issues.Highlights. Not a stellar quarter this time either. It is definitely a tough situation not only for REC Silicon but in the renewable industry as such, but it is particularly difficult to REC and the U.S. producers over polysilicon since we have this continued trade war between the U.S. and China. And for those who are not following us, this is now has lasted for 5 years basically as we get used to it. On the other hand, it is a very decisive week this week. There is negotiations ongoing between the U.S. and China on a very high level in Beijing. So probably within the next 2, 3 weeks we will know what is going to happen on the trade war between the U.S., China and also if this will then represent a solution to the polysilicon industry.The revenue came in at $48.9 million, EBITDA loss of $3.8 million. The cash balance, in fact, we are running the company now based upon, let's say, the cash situation. Every morning I go and ask, "James, how much cash do we have in the bank?" And by the end of the year, we had $31.8 million. That's about $9 million less than what we had a quarter ago. And basically the main reason for that is that we paid the interest on our bond in April -- no, in October, and we are going to pay it again in April.Cash costs, $14.6 per KG. Remember, we are operating at 25% utilization. It would definitely be below $9 if we were able to run at full capacity. The only positive issue here is basically that silicon gas is still strong. We delivered 920 metric ton, which is 70 metric ton above the guidance. The market is still strong for silicon gas.The Yulin start-up is slowly ramping up. And we have then proposed to the board that if the existing condition maintained that we will make a temporary shutdown of Moses Lake from March 1 to basically be able to control our inventory.On the key metrics, nothing particular here. I think we are not very good in guiding and predicting what's going to happen. And as I said, the positive thing is the silicon gas sales, the FBR cash costs. What is disappointing is that we are not able to reduce the inventory. By all means, we have only 1 customer for the moment, and that is due to the fact that this industry now is overtaken by the Chinese, except for the polysilicon side, but we do not have any customers except 1 where we can deliver polysilicon.I will then hand over to James, and I would come back afterwards.

[James A. May, Chief Financial Officer]

Thank you. Good morning. I'll be reviewing the company's financial performance for the fourth quarter, as Tore indicated.As Tore mentioned, our total revenues for the quarter were $48.9 million. This is an increase of about 12% compared to revenues of $43.7 million in the third quarter, while EBITDA was a loss of $3.8 million compared to the $6.1 million loss that we saw during the third quarter. The smaller loss compared to the third quarter is the result of our continued efforts to control costs, which resulted in somewhat lower fixed costs spending than we saw during the third quarter. And then as you'll recall, during the third quarter we recognized the write-downs of inventory values to reflect lower anticipated sales prices for polysilicon, primarily in the solar sector.The solar material segment realized an EBITDA loss of about -- of $9.1 million. This loss, as Tore indicated, continues to reflect the operation of the FBR facility at 25% of its capacity due to the trade war between China and the United States, which restricts our ability to sell product into China.Semiconductor Materials segment had an EBITDA contribution of $11 million, which is up from the EBITDA contribution of $9.3 million during the third quarter. This is because of higher sales volumes of silicon gases and, then again, because we had write-downs of the inventory that we recognized in the third quarter due to quality downgrades of semiconductor materials and finished goods.The Solar Materials segment saw revenues of $9.9 million. That's an increase of about 60% compared to $6.2 million in the prior quarter. The increase is the result of higher sales volumes, which increased from 658 metric tons during the third quarter to 1,270 metric tons in the fourth quarter. So there was some improvement in demand for solar grade polysilicon.As Tore indicated, the inventories declined only slightly during the quarter compared to FBR production of 1,209 metric tons, which was less than we had expected at the last earnings release.Polysilicon prices realized by REC continued to decline. For prime solar grade material decreased by 16.6% and the overall average price realizations dropped by 18.6% compared to the prior quarter. The difference there is that we had some sales of lower-quality solar grade in the fourth quarter that we didn't have in the third quarter. Tore will cover a little more on pricing in a few minutes.Revenues in the semiconductor space increased by about 3.8%. As I indicated, this was primarily because of the increase in gas sales volumes from -- to 920 metric tons compared to 865 during the last quarter. However, it was offset by some continuing price decreases with Silane caused by competitive pressure, 1.6%. You will recall that we saw a 1.3% price increase in the last quarter. So it's moving around a little bit.Total polysilicon sales volumes in the semiconductor segment decreased from 455 metric tons to 420 metric tons this quarter, but the decrease is the result of lower high-grade solar material, while the underlying sales of semiconductor material increased by about 14% compared to the prior quarter.Silicon gas sales volumes were at 900 metric ton -- 920 metric tons, sizable increase over the 850 metric tons that we provided as guidance. Increase in sales volumes represent continued strong demand in -- for silicon gases and flat-panel display and semiconductor applications while the demand for silicon gases and PV continues to be volatile because of the challenges that we've indicated in the PV markets.Other eliminations for the quarter was $5.6 million. This is basically in line with the prior quarter of $5.4 million and in line with the last few quarters when one-off items are adjusted.In summary, the consolidated EBITDA for the fourth quarter was $3.8 million, slightly smaller than the loss from the third quarter, and again the smaller loss is a result of inventory write-downs that were recognized in the third quarter in addition to higher sales volume of silicon gases. Higher FBR sales volumes were offset by lower prices.In terms of cash flow, we had $8.7 million of outflow from operating activities. The 2 major components there was the EBITDA loss of $3.8 million and the interest on the senior secured bond of $6.3 million. These outflows were offset by a decrease in working capital of $2 million. The major component of that working capital is a decrease in inventories of $7.4 million. And this is almost exclusively decreases in metallurgical grade silicon inventories that we don't require to have as much on hand with lower activity levels. The same time, we paid down our accounts payable of about $2.3 million, and that's primarily a result of lower payables and MG at the end of the quarter due to reduced receipts. And then on the good news side, as we had sales in the excess of customer collections of $3.1 million, which is a result of slightly higher sales during the quarter.Cash flows from investing activities were a $200,000 outflow. That's $500,000 of CapEx offset by an inflow of $200,000 from restricted cash for security on -- our security deposits on certain items, like payroll.Cash outflows from financing activities were $200,000, and this is exclusively associated with the registration of the senior secured bond late in the third quarter. Total cash decreased by $9.2 million to $31.8 million on December 31, 2018.In terms of our liquidity scenario, nominal net debt decreased by $1.5 million. The only effect there is the effect of a stronger U.S. dollar on the indemnity loan, which is denominated in NOK. Nominal net debt, which includes the change in cash, increased by $7.7 million, which is the $1.5 million currency effect, offset by the $9.2 million decrease in cash that we just discussed.There are no significant changes with our expectation regarding the indemnity loan or the tax by the CTO. However, with respect to the tax examination, there was a ruling in a case which tends to support our case. In short, the CTO used our legal arguments and cases cited to support our tax position against Yara and prevailed. So if that argument works for them, theoretically, it should work well for us. However, I think it's too much to overstate it and say that the problem is solved. There's still a great deal of uncertainty associated with it, and we'll continue to oppose the CTO's position and try to get a positive outcome.Now I have 2 other topics that I'd like to discuss. The first one is kind of a housekeeping item. REC Silicon is going to adopt or is required to adopt the IFRS 16 beginning on January 1. That will change especially this slide. The intent of IFRS 16 is to show our long-term lease liabilities as a liability rather than in commitments. That will increase our net debt relative to our cash on this slide. On the other side what it will do is it -- we'll have a capitalized asset, a lease asset capitalized, it will then be depreciated, which in effect will increase our EBITDA and add a line below EBITDA for leased -- for depreciation of leased assets.So what I would encourage you to do is read the disclosures that we've put in Note 1 to the financial statements as well as the changes in segments and the definition of the APMs. And if you have questions regarding this change, please call us and we'll work with you on a one-on-one basis to make sure the changes are understood.And then finally, I'm sure the question that's first and foremost on everyone's mind is what is the liquidity prospects for REC Silicon? At our last earnings release, I indicated with market conditions expected at that time we would have sufficient liquidity to operate beyond year-end 2019. Polysilicon markets have not recovered as quickly as we expected, and we expect to begin to run short of the required liquidity levels during the fourth quarter of 2019 under our current operating profile. Accordingly, the board is considering a temporary shutdown of the FBR facility in Moses Lake. A shutdown will result in a decrease in inventories. Essentially, it will be a conversion of finished goods inventories to cash as we maintain sales to customers from existing inventories, which will slow the cash burn in the short run and allow us to deflects -- the time and flexibility to take additional measures should the market not recover as we expect it to. The proposed plan, as Tore will discuss in a minute, is to curtail production for 2 months, reduce inventories and continue to monitor the market potential before resuming the FBR production. And I'm sure that Tore will provide a lot of information regarding the markets and the proposed shutdown. Thank you.

[Tore Torvund, CEO & President]

Thank you, James. Let me then give some updates on the general market development.Fourth quarter in 2018 was stronger than what was expected. So basically what we now see is that solar market was approximately flat between 2017 and 2018, about 100 gigawatt of installed capacity both in '17 and in '18, and that is revision about 15 gigawatt at first compared to what was basically the forecast earlier.When we look to 2019, it is expected that the market will continue to grow by some 15% to 20% or it will be around 115 to 125 gigawatt.The only company which then contracted was China. China is -- was 50 gigawatt in '17, while it is expected to be around 42 gigawatt in '18. And for '19 we expect that the target for China will be communicated this week or next week in China, and the expectation is that it will be between 40 and 50 gigawatt.When you look to the quarterly results, as you see for Q4 '18, China was relatively weak with some 7 gigawatt. But what is now really, let's say, picking up is what we call the rest of the world and the fact that the prices of panels has come down to some $0.23, $0.24, $0.25 per watt makes solar possible to invest in without any kind of subsidies. And there is a wide use of solar panels outside the main countries, which has been China, India and the U.S. We also see that Europe is picking up again. And remember, Europe took away all duties on Chinese solar panels last fall, and we see now that Europe come back as a very important market for solar panels. So if we can get rid of all these duties in all parts of the value chain, definitely, solar will then gradually be more and more competitive to the alternative ways of generating electricity.Q4 was strong. Q1 is somewhat weaker, but we expect that the second half of 2019 will be stronger, and that's why we also proposed that we temporary shut down Moses Lake. Our plan so far will be to resume production in May after 2 months of production start-up to control the inventory.When we look to the polysilicon prices, let's say, prices outside of China has been affected by the fact that there has been limited number of customers. 90% of the customers now are located -- or that use polysilicon are located inside China. That means it has been an oversupply outside, so prices in outside of China has been low for a very long time. After the decision in China to reduce installations, which was communicated by the end of May last year, we see that polysilicon prices went down from approximately $19 in China down towards the $9, $10. So the pain is now mainly for those who operate in China or those who are able to access the Chinese end market.From outside China, it is mainly South Korea and Germany, which has access to the Chinese market. As I said, the U.S. companies has no access to this market. We see now that most companies are running capacity with, let's say, where the market price is below their cash costs, and definitely that will gradually transform into a low utilization among the other companies.And I have not used the names here, but according to PV Info Link, which is located in Taiwan, between fourth quarter last year and second quarter this year, they assume that about 160,000 metric ton will be taken off the market. At the same time, there is some ramp-up, particularly in Mongolia, in China, which will add some 180 metric ton. But we see now that those companies, which report numbers, which is trustworthy, most companies are now having a negative EBITDA, negative cash flow in their polysilicon business because of the price pressure. And this is definitely much more a new situation for the Chinese companies because they were used to have $19, $20, now they are down to a $10. And it is very easy to claim that the cash cost is low. It's much more difficult when the fact that the cash cost is falling below -- or the market price fall below their cash costs. At the same time, we see now that the China national development and restructuring commission are pushing harder to shut down capacity, which is not making money. And the zombie companies gradually will disappear from the market, which will then create a more balanced market within polysilicon as well.Let's say, we -- if we had access to the Chinese market, convert full capacity, we would definitely be by -- be one of their lowest-cost producers, even if we are working in U.S. because of the FBR technology.Let me then move to the trade war. And as I said when we started, it is a very, let's say -- this week is definitely of huge importance for the trade discussions between China and the U.S. Ambassador Lighthizer, Ambassador Gerrish was a -- Gerrish, which is the second in command in the USTR in the U.S., started negotiation again on Monday in Beijing. Ambassador Lighthizer will be there on Thursday for meetings on Thursday and Friday on high level with the Chinese. And this is the statement which came out from the same people meeting in Washington D.C. at the end of January this year. And it's basically -- this is the U.S. statement. There is 3 statements there, which is of importance to us. First of all, the fact that what has happened now in polysilicon, as normally has happened here a lot of other industries in China, but the state subsidies create a lot of excess capacity. That's what has happened also in the solar value chain in China. The second thing is that all these retaliation towards the U.S. companies operating within China has to be taken care of. And basically the trade deficit between these 2 countries is also very important in these negotiations.We have been working very -- let's say for many years with USTR. They know very well our case. We are working together with Wacker and Hemlock, who is the other 2 companies operating in the polysilicon business. We think we are part of what will be negotiated with the Chinese. We don't know, have not full insight in what is exactly the items which is being negotiated, but we all feel very confident that there will be some kind of decision resolution within the next 2 to 3 weeks. Probably, we will hear back next week where the status is on this trade war.If I go to our investment in China. As you know, we have a JV in China where we have 15% ownership. We produced 1,850 metric ton with FBR in Yulin last quarter. We have now demonstrated all the capacities, the design capacities has been demonstrated both for the Silane plant for the FBR reactors and for the Siemens plant. And we also have been able to produce the highest-quality polysilicon through our Siemens reactors, which has been produced in China ever. That's what we call close-on.Concerning the 2019 targets, we have a target of 14,000 metric ton of polysilicon in 2019, and we also then will demonstrate the mono capability of the FBR reactors in Yulin during 2019.Let me then talk a little bit about the long-term market development for our product. I'm not going to spend a lot of time on this one. It's well-known. But you see that the market continue to grow in the PV, it was 99 in 2017, it's now about 100. This is Bloomberg in 2018. Expected to be 125. That means 25% growth between '18 and '19. And it will continue to grow in 2020. And definitely, the reason why is that solar now is competitive with the alternatives without duties, so we are less and less dependent upon subsidy schemes, which has been -- what has been the rule in this industry so far.On the semiconductor side, we are pleased with the development we make. We continue to increase our semiconductor deliveries. We have now contracts or we have -- let's say, we are sending products to the 4 largest semiconductor companies. And they are very pleased with our -- on quality, particularly floats on where we are just 1 out of 2 having the ability to make that high-quality polysilicon. They are very pleased with the quality we are delivering to them.On the silicon gas side, we are still about 70% of the global market, and we continue to defend our position. And as you know, we have a very decent margin on our silicon gas, and that's where we make most of our money as of today.And let's say there is still a lot of interest comes from the battery companies to talk to us. This is a slide which is from the Department of Energy in the U.S., which says that the next move now in battery is to use silicon in the anode part of the battery. And by using this silicon, you can increase the capacity of about 3 -- between 30% to 40%. And at the same time you can make charging faster, so you can recharge the battery faster than what you do in today's batteries. Definitely 40% increased capacity will also change a lot of the electric cars' ability to compete with a normal car.Let me then talk a little bit more about the proposed shutdown. We discussed this with the board yesterday. There's, let's say, the reason why we proposed this is that we would like to avoid to ask for more capital for equity from our shareholders. We are running the company now based upon our cash situation. We are confident that as long as we are around, gradually things will be resolved. The market will be better. We have a technology, which is definitely much more efficient than all the -- let's say, all our competitors' technology out there. And hopefully the trade war will find its resolution shortly. If it's found within the next 2, 3 months -- we will not -- 2, 3 weeks, we will not shut down Moses Lake. But if there is not a resolution to the trade war, we feel that it is most prudent to reduce our inventory. So basically, the shutdown will start on March 1. At that time we will know what is the outcome of the trade negotiations now going on in China. We have sufficient inventory for 2 months' continued delivery to our customers. And we will then restart the operations in May 1, and hopefully at that time to a somewhat higher utilization rate than the 25% we have been running so far.We don't intend to make any reduction in our headcount. Let's say, the headcount now has been taken down from 880 back in 2012 to less than 400. And we keep the -- all our critical, let's say, people in Moses Lake and in Butte, and they will then be used for preparing, doing maintenance and prepare those entities to be restarted on May 1. And as we have said there, we believe that there will be a trade resolution within this time period or there will be some market development, which then will support a restart on Moses Lake by May 1. As such, the decision is not made. It will be taken by the board prior to March 1.So what kind of action has been taken by REC? We have reduced the FBR to 25%. We have been running now 25% for the last 2 quarters. We have been able to manage the inventory, but not to reduce the inventory level during that period of time. We are still reviewing all costs in the company. And we are at the very low level in terms of expenditure, which means that when we come back to 100%, we will be a very competitive company in this industry.What we are doing now? We are putting a lot of time in this trade war discussions. We are constantly in negotiation or in discussions with the U.S. government on this -- concerning this. And just recently we have had a lot of discussions about the importance of silane. And remember we are the only silane company in the U.S. and also on a global basis. And silane might be very important for the battery developments I just talked about. So we have been discussing that just recently, both with Department of Energy and department -- or USTR. The temporary shutdown will be basically executed by March 1, and then we run the company, keeping cash, so we don't need to ask our shareholders for more.Potential upside in REC. Everybody understand that the trade war resolution, access to the market, will be a tremendous boost for our company. The battery market within the next 2, 3 years, if this, let's say, ideas that silicon in the anode will be the future, it is estimated that there will be a need for some 100,000 metric ton of silane within the next 7 to 8 years. And remember, we have a capacity in Moses Lake of some 30,000 metric ton of silane, and we are the only one, which do have silane available in the market. And an increased ownership in Yulin. We still have the opportunity to increase our ownership in Yulin up from 15% to 49%, the negotiations there will be then 2 years from now. But we are -- we have a very good relationship with our partner over in China, so we should be in a very good position to negotiate. And we also have a lot of technology, which has not been transferred to China yet, so they definitely would like to continue the cooperation with REC.In terms of guidance, this is what we guided, the numbers we achieved in 2018. And we then only give guidance for our semiconductor business this time for Q1 because we -- there is this uncertainty about the temporary shutdown on Moses Lake in Q1 and Q2.So that's our presentation today. Then I will be happy to take questions. And the next time we will be here is on May 9 in this year with Q1.

[Fredrik Steinslien, Analyst]

Fredrik Steinslien from Pareto Securities. So I understand that in order to be above $50 million of cash towards year-end, you -- that's why you're looking into doing this shutdown. But can you discuss or shed some light on what assumptions you put in place for being with the industry's $2 million cash range? I mean, in terms of prices for your inventory, what capacity you expect to run that in the second half and price developments throughout the second half of this year?

[Tore Torvund, CEO & President]

This is typical for a CFO to answer, isn't it?

[James A. May, Chief Financial Officer]

We've obviously run various scenarios. In general, what I would say is that if prices stay about where they are right now, we sell at 25%, the shutdown is going to allow us to manage that cash for a longer period of time, but we'll still run into a problem in the fourth quarter. So in order to avoid that, what will have to happen is we've got to come back up to a higher utilization rate after the shutdown or not take the shutdown and increase our utilization, and then we'll be able to get to year-end near or a little bit higher than current prices. I think there's 3 keys. First key is we've got to be able to reduce our inventory, if it's through a shutdown and to sell that inventory, that's one thing, we'd be better off if we can decrease that inventory and continue to operate. Once the inventory was gone, then we can -- the second thing is to increase our capacity utilization. And then obviously the third thing, which probably the most puzzling, is prices have continued to stay relatively low. So the current prices don't support -- the majority of the polysilicon producers are bleeding cash right now, so if the prices come up a little bit that will alleviate that. And I realize that's kind of a variable answer, but I think that's kind of where we're at this point.

[Fredrik Steinslien, Analyst]

Sure. And just in terms of following up on that, we saw that towards, particularly year-end 2018 I guess the installation rates actually surprised on the upside, whereas prices were quite depressed. And so how relative it gets it to forecasted price increase towards the second half? I know the market is improving, kind of, on the relative basis, but still given the price depression we saw towards year-end, nonetheless given the...

[James A. May, Chief Financial Officer]

Our decision -- obviously part of it was the price decreases toward year-end contributed to our cash flow -- the cash outflow this quarter. I think more importantly, as you look forward, we've decreased the price estimates that we've got through end of the second half, and that's really what's driving the decision for the shutdown. If that comes back and doesn't occur, that will obviously affect our decision whether or not to shut down or how long to shut down.

[Fredrik Steinslien, Analyst]

Final one from me. Presume a scenario with the trade talks between U.S. and China is to postpone kind of final resolution beyond to the 1st of March, how do you respond to that in terms of deciding on a shutdown?

[Tore Torvund, CEO & President]

Let's say, we are -- let's say, we probably know more than what we would like to disclose because we are in a -- let's say -- we have some insight in what's going on in the trade negotiation with respect to polysilicon. We think there will be something happening before March 1. Let's say the U.S. government need to make a decision if they want to increase from 10% to 25% in the 301, and that couldn't -- could be postponed, but they will require that something is then happening in the negotiation. If not, there will be an increase from 10% to 25% by March 1. And there is reason to believe that the negotiations going on this week that at least there will be some kind of temporary agreement, but everybody understand that there will not be a full agreement, let's say, within the next 2 weeks, but something will happen hopefully within the next 2 to 3 weeks.

[Unknown Executive]

There are some questions from the web. On the solar opportunities outside China, what is the company's strategy to develop alliances? Or is there anything ongoing in other growing markets for solar?

[Tore Torvund, CEO & President]

Yes. It is important to understand the value chain. Let's say, we are making polysilicon. Polysilicon is moved into ingots. That means you melt the polysilicon and you make ingots. You slice them, you make wafers, cells and modules. There is customers outside of China which make cells and modules, but there is very few today who makes ingots, and we don't see that there is any new investments coming on outside of China in terms of making ingots. That means that if we are going to, let's say, create a market for our product outside of China, it needs to be some kind of new investment then. It has been floated, some ideas, that if there was a complete breakdown in the trade war between the U.S. and China that I say those -- the U.S. will take the lead to try to make an alternative solar value chain, which is not dependent upon China. If that is going to happen, it is way -- let's say, that's not an easy task. China has overtaken this industry, 90% of everything, and they continue to invest in solar. So solar today is made in China by more than 90%. And we have seen that the downturn in the prices, which occurred after the Chinese decision by May has left a few customers we had at the time has been exiting the business. So that's why we have only 1 customer left, which is operating now outside of the Chinese market.

[Unknown Executive]

And just to follow up on that. Could it be an option for REC to move into ingots? And will that -- would you avoid the tariffs by entering that?

[Tore Torvund, CEO & President]

But let's say I think we have said that our financials isn't like -- I'd say there is 2 ingots manufacturers here in Norway, Norwegian Crystal and Nordland. I don't know if they operate. We are not -- they are not our customers. Besides that not -- I don't -- we are not going to make investments in ingots, I think that's...

[Unknown Executive]

And with regards to silicon gas, you have a quite strong market position. What are the chances or opportunities for REC to expand your position in the silane gas market?

[Tore Torvund, CEO & President]

Let's say we tried to grow with the market. The market is about 5,000 metric ton. We have about 70% of that market. So basically it's hard to grow beyond 70% on a global basis because the customers would like always to have at least 2 suppliers. So we -- what we do is that we grow with the market, but it's limited market share we can go after.

[Unknown Executive]

And with regards to the battery market, can you elaborate a bit on how advanced your discussions with potential partners are and give any flavor to possible value of that market to REC Silicon?

[Tore Torvund, CEO & President]

Yes, there is a lot of money going into the battery market. To me, let's say, I said the last time that I'm not a specialist in battery, maybe [ Stan ] can help me out. But let's say it is a lot of interest. Let's say we have several companies coming to Moses Lake to discuss the availability of silane gas. It's mainly the silane gas, which seems to be of interest to them. On the other hand, it is not a developed market yet. Let's say, we have heard that some Chinese companies are using about 6% silicon at the maximum in their anode today. There is major technological issues to be resolved. But more and more people says that we can, 2, 3 years now see an opportunity that there will be 50% to 60% silicon in the anode, which will then increase the capacity of a battery by some 30%. My position today has been that I have tremendous amount of silane when you need it. So come back when we can definitely sign a contract, but we are not going to be the battery expert. We are going to supply the material they need to make these batteries.

[Unknown Executive]

Yes. And finally on funding, you indicated that you have cash into Q4 next -- this year. And given that current market situation remains, what are your alternatives for additional funding? And would selling off your 15% share in the JV be an option? And if so, what do you regard as potential buyer for that share and the value of it?

[Tore Torvund, CEO & President]

Yes. Let's say we were the -- for the moment we try to do what James have explained. We reduce our costs. We take down Moses Lake. We reduce our inventory. We have definitely alternatives. I don't want to elaborate on these. Among these might be the JV. But we are working every day, and we will try to make the right decision. Hopefully, this will be resolved by itself, because as I said the market in the second half seems to be much stronger than what it has been these last 2 quarters. Second thing, the trade war can be resolved, then all our problems are gone. So this is a dynamic situation. What we have said is that we are not going to -- or the priority is to avoid to ask our shareholders for getting -- helping us out. We are going to make it ourselves.Okay, any other questions? Okay. Thank you so much for coming.