Algoma Steel Group - Q4 2023

Transcript

Operator (participant)

Hello, and welcome to today's conference call to discuss Algoma Steel's Fiscal Fourth Quarter and Full Year 2023 Financial Results. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. At this time, I'd like to hand the call over to Michael Moraca, Treasurer and Investor Relations Officer for Algoma. Mr. Moraca, please go ahead.

Michael Moraca (Treasurer and Investor Relations Officer)

Good morning, everyone, and welcome to Algoma Steel Group Inc.'s fourth quarter and full year fiscal 2023 earnings conference call. Leading today's call are Michael Garcia, our Chief Executive Officer, and Rajat Marwah, our Chief Financial Officer. As a reminder, this call is being recorded and will be made available for replay later today in the Investors section of Algoma Steel's corporate website at www.algoma.com. I would like to remind you that comments made on today's call may contain forward-looking statements within the meaning of applicable securities laws, which involve assumptions and inherent risks and uncertainties. Actual results may differ materially from statements made today. In addition, our financial statements are prepared in accordance with IFRS, which differs from U.S. GAAP, and our discussion today includes references to certain non-IFRS financial measures. Last evening, we posted an earnings presentation to accompany today's prepared marks.

The slides for today's call can be found in the Investors section of our corporate website. With that in mind, I would ask everyone on today's call to read the legal disclaimers on slide two of the accompanying earnings presentation, and also refer to the risks and assumptions outlined in Algoma Steel's fourth quarter fiscal 2023 management's discussion and analysis. Please note that our financial statements are prepared using the U.S. dollar as our functional currency and the Canadian dollar as our presentation currency. Our fiscal year runs from April first to March 31st, and our financial statements have been prepared for the three and 12 months ended March 31st, 2023. Please note, all amounts referred to on today's call are in Canadian dollars, unless otherwise noted. Following our prepared remarks, we will conduct a question-and-answer session.

I will now turn the call over to our Chief Executive Officer, Michael Garcia. Mike?

Michael Garcia (CEO)

Thank you, Mike. Good morning, welcome, and thank you for joining Algoma Steel's earnings call to discuss our fiscal fourth quarter and full year results. I will start my comments, as we always do, by addressing what truly matters most to us, the safety of our employees. At Algoma, we believe in safety without compromise. As disclosed last week, a subcontracting company performing specialized maintenance work at our site sustained a fatality of one of their employees, who succumbed to his injuries despite the prompt and professional response of Algoma's emergency services team and assistance from the Sault Ste. Marie Fire and Paramedic Service. This tragic loss of life has impacted us all at Algoma. Our prayers go out to the family, friends, and colleagues of the individual. Turning to our results and highlights.

Our fiscal 2023 was a very busy time at Algoma, one marked by volatile commodity prices, operational improvements to our plate mill, and exciting progress on our transformative electric arc furnace, or EAF, project. We overcame a challenging fiscal second and third quarter while commissioning Phase 1 of our plate mill modernization project, followed by our plate and strip production returning to normal levels at the start of the new calendar year. Our results for the fiscal fourth quarter and our guidance for fiscal Q1 2024 reflect solid operational momentum, which we expect to continue throughout the fiscal year, even as activity ramps at our EAF project, which I will give additional color on in a moment. Relentless execution by the entire Algoma team helped overcome commodity price volatility and operational challenges to drive the strong results we achieved in our fiscal year.

Those results included shipments of 2 million tons, revenues of almost $2.8 billion, adjusted EBITDA of $452.3 million, and cash generated by operating activities of $177 million. We recently strengthened our liquidity through an upsized and extended ABL facility, which, when combined with cash on hand and strong cash flows we expect to deliver in fiscal 2024, positions us well to deliver on our goal of exceptional operations at our current facilities while advancing the later stages of our EAF project construction. Regarding Phase 2 of our plate mill modernization project, I am pleased to report that the inline shear installation is currently progressing ahead of schedule, and the company expects to be able to begin increasing plate production in the third calendar quarter of 2023.

This higher production will allow us to capture market opportunities and to build inventory ahead of the planned Phase 2 hot mill outage to upgrade the hot mill drives currently scheduled in April of 2024. I'd like to spend a few minutes updating you on our progress and outlook for the transformational EAF project. The completion of this initiative will see a shift from roughly 2.8 million tons per year of liquid steelmaking capacity by conventional means today to employing dual electric arc furnaces that are designed for a combined annual liquid steel production throughput of 3.7 million tons. This increased output will match our expanded downstream finishing capacity as we increase our capacity at our plate mill, while simultaneously lowering our carbon emissions by approximately 70% when fully operational.

We recently achieved two important milestones related to securing the power supply necessary to support dual furnace operations. First, we received conditional approval of the System Impact Assessment from Ontario's Independent Electricity System Operator, confirming that we may connect our EAFs to the current 115 kilovolt electricity grid in northern Ontario, in combination with Algoma's on-site Lake Superior Power combined cycle natural gas power plant. This SIA was conducted by the IESO to gauge the impact of the project on the reliability of the Ontario grid for large-scale projects. Dedicated, reliable electricity supply is critical to successful EAF operations. The upgrades to support our project will take place in three phases. Phase 1 is comprised of the existing 115 kilovolt transmission connection, supplemented by LSP on-site generation.

Phase 2 A includes the development of a new local 230 kilovolt transmission line, providing access to more power on the current grid. Phase 2 B represents full power with the enhancement of the Northern Ontario electricity grid, expected to be completed by 2030. Our second milestone was the successful on-time and on-budget installation of two new GE LM6000 turbines and all control systems at our Lake Superior Power plant, which we expect to give us 115 megawatts of internally generated baseload capacity, enabling us to start production at our EAF steel facility. Our original budget for the EAF project, set in 2020, was approximately CAD 700 million, with an expected commissioning start date of calendar mid-2024.

Our startup plan includes normal production from our existing steelmaking facility, while ramping up steel production from our EAFs in calendar 2025, followed by a complete switch to EAF production. The project advanced through fiscal 2023, with approximately 80% of the budgeted project costs contracted and the remainder uncontracted at the fiscal year-end. As is typical for an undertaking of this scope, the remaining portion of project contracting was subject to achieving final detailed designs, a milestone recently reached as expected. Laid on large capital projects for other industrial companies since 2020, have come into play as we move into the next phase of this project.

The company now estimates that the project will exceed its original budget by CAD 125 million-CAD 175 million due to various emerging factors, including general market pressures impacting the cost of materials, along with higher costs for skilled labor and currency fluctuations. Additionally, supply chain disruptions with certain microprocessing chips is expected to delay the start of commissioning of the first furnace to calendar year end 2024. Management remains fully committed to addressing these challenges proactively to mitigate their impacts and to ensure the successful execution of this project. The company expects that the completion of the EAF project will be funded with cash on hand, cash generated through operations, and available borrowings under the company's existing, undrawn, and recently upsized and extended ABL credit facility.

While the date for the start of commissioning has now moved to the end of the calendar year 2024, our revised startup plan will not materially impact shipping performance in calendar year 2025. These are busy times at our site in Sault Ste. Marie, and it's a testament to the execution by our team that we are able to operate our existing portfolio of assets normally, without being operationally impacted by the advancing construction of this transformational project. I will pass it over to Rajat to go over our financial results for the quarter and the fiscal year. Rajat?

Rajat Marwah (CFO)

Thanks, Mike. Good morning, and thank you all for joining the call. I'll remind you again that all numbers are expressed in Canadian dollars, unless otherwise noted. We had a solid quarter to close out our fiscal year end March 2023. Our fourth quarter results included adjusted EBITDA of CAD 47.9 million, which reflects an adjusted EBITDA margin of 7.1% and cash generated from operating activities of CAD 95.4 million. We finished the quarter with CAD 247 million of unrestricted cash and CAD 279 million of undrawn capacity on our revolving credit facility, representing total liquidity of approximately CAD 526 million. Subsequent to quarter end, we upsized our ABL credit facility by $50 million and extended the maturity five years, further enhancing our available liquidity.

As a reminder, the only remaining long-term debt on our balance sheet is in the form of government loans linked to our capital projects. First, I'll dive into the key drivers of our performance. We shipped 572,000 tons in the quarter, up 24.7% sequentially and up 4.5% as compared to the prior year quarter. On our last call, we highlighted how our plate and strip operations were running normally at January first, and that continues through today, as evidenced not only by our fiscal fourth quarter shipment, but also in our fiscal first quarter 2024 guidance. Net sales realization averaged CAD 1,066 per ton, down 4.5% sequentially, and down 33.7% versus the prior year period.

The decrease versus the prior year level reflects overall soft market conditions. Plate pricing continued to enjoy a significant premium relative to hot rolled coil during the quarter, driven by resilient demand, particularly from spending on infrastructure projects and durable goods. As a reminder, we are the only discrete plate mill in Canada. This resulted in steel revenue of CAD 609 million in the quarter, up 19% sequentially, down 30.8% versus the same quarter of last year. On the cost side, Algoma's cost per ton of steel products sold averaged CAD 934 in the quarter, down 19.3% on a sequential basis and down 1.4% versus the prior year period.

The main drivers of the modest decrease versus the prior year period include higher volume, more than offsetting the cost of replacing internally produced coke with purchased coke and higher cost for other key inputs. Cash flow from operations totaled CAD 95.4 million for the quarter. The main drivers of cash flow beyond EBITDA included a release of inventories totaling CAD 189 million, offset by increase in accounts receivables and a reduction in payables. As mentioned in our last call, we expect to continue to release inventories throughout the year as quantities normalize with consistent production. Looking at our fiscal 2023 full year results, we shipped 2 million tons for the year, down 12.8% as compared to the prior year.

The drivers of the year-over-year decline included commissioning challenges at the plate mill following Phase 1 of the modernization project and production issues related to staffing. Net sales realization averaged $1,274 per ton, down 17.6% versus the prior year, reflective of soft market condition. This resulted in steel revenue of $2.6 billion, down 28.1% versus last year. On the cost side, Algoma's cost of steel products sold averaged $1,004 per ton for the year, an increase of 17% over the prior year. The main drivers of this increase versus the prior year period were the replacement of internally produced coke with purchased coke and increases in the purchase price of key inputs such as metallurgical coke, coal, natural gas, and alloys. In addition to ratifying the collective bargaining agreement, which resulted in increased pension and post-employment benefit expenses.

Next, I'll touch on the financing activity we completed last month. As a normal course, with our previous ABL credit facility set to expire in November 2023, we engaged our lender groups to amend and extend the facility. Given our financial strength and cash flow profile through market cycle, we were pleased to expand and extend our ABL credit facility on favorable terms to Algoma. We upsized the ABL credit facility to $300 million from $250 million previously, with an extended maturity date to May 2028. All told, with cash on hand and undrawn capacity available, we had total available liquidity at fiscal year-end of $526 million, which has been increased by $50 million, considering the ABL upsizing. Now, turning to outlook for the first quarter of fiscal 2024.

Steel prices have been volatile year-to-date, with another spike in March to near $1,100 per ton for Midwest hot-rolled coil, followed by a re-retreat to approximately $850 per ton. The forward curve is relatively flat, around $850 per ton for the next several months. Recent mill announcements provide cautious optimism that market conditions are improving. Based on our operations to date in the quarter, our order book, and our expectations for shipments through the end of the month, we expect to deliver strong fiscal first quarter adjusted EBITDA in a range of $170 million-$180 million, and total shipments of steel of 550,000-560,000 tons. I'd now like to turn the call back over to Mike for closing comments. Mike?

Michael Garcia (CEO)

Thank you, Rajat. Looking at the state of the North American steel market, pricing levels in the fiscal fourth quarter saw a significant increase, followed by greater stability near current attractive levels, which we expect to drive solid cash generation in fiscal 2024. While we saw prices fall off through the first fiscal quarter, it has been encouraging to see announcements of price increases from several North American producers in recent weeks. We run our business with a diverse customer base that provides selling opportunities across Canada and the U.S., traditionally servicing roughly 150 customers in a calendar year. We target a high percentage of contract sales. These volume commitments provide stability to our order book and operations, and the lagging price mechanics help to smooth some of the volatility experienced when prices shift up or down quickly.

Our primary focus is on delivering prudent financial discipline and operational excellence to ensure our ability to execute our EAF project, ushering in the next phase of our company that provides a foundation for long-term value creation for our stakeholders. That endeavor defines the future of Algoma and solidifies our leadership position at the forefront of green steel production in North America. The fiscal fourth quarter was a solid end to a very exciting year at Algoma. As we continue to ramp through the later stages of our EAF project construction, be assured that we will continue our relentless focus on safe, reliable, efficient operations of our existing facilities to enjoy the benefits of strong markets. We will continue to build upon this and position Algoma as a compelling value proposition for all of our stakeholders. Thank you very much for your continued interest in Algoma Steel.

We look forward to what the future holds. At this point, we would be happy to take your questions. Operator, please give the instructions for the Q&A session.

Operator (participant)

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Katja Jancic with BMO Capital Markets. Please proceed with your question.

Katja Jancic (VP and Equity Research Analyst)

Hi, thank you for taking my questions. Starting off with the CapEx, the for the EAF project, I think there's CAD 590 million left to be spent. How much of that is going to be spent this year, so in fiscal 2024?

Rajat Marwah (CFO)

We will be spending around $300 odd million, $300 million-$350 million during this fiscal, which is fiscal 2024, and the balance will follow.

Katja Jancic (VP and Equity Research Analyst)

Can you update us on the remaining CapEx outside of EAF? How much is that for this year?

Rajat Marwah (CFO)

Sure. So the remaining CapEx, normally, for us, based on all the maintenance activity that's happening, we spend around CAD 80 million-CAD 90 million. With the inflationary pressure that's out there for labor as well as construction, I think that will be a little over CAD 100 million. That's on the maintenance side. We are also completing our plate mill project during this year. By early next year, we should be done with our outages. There will be another CAD 30 million spent in that area. It'll be in the range of CAD 110 million-CAD 150 million for the remaining CapEx, other than electric arc furnace.

Katja Jancic (VP and Equity Research Analyst)

Just on the plate mill, the CAD 30 million, is that for the Phase 2?

Rajat Marwah (CFO)

Exactly, that's for the Phase 2.

Katja Jancic (VP and Equity Research Analyst)

That's all gonna be spent this year, fiscal 2024, right?

Rajat Marwah (CFO)

Yeah. Yeah, that's all gonna be spent this year.

Katja Jancic (VP and Equity Research Analyst)

Just going to the plate mill modernization. I know you mentioned the Phase 2 hot mill outage will be done in April 2024. Can you update us on when is the second phase going to be fully complete? Are you still expecting to increase capacity by 350,000 tons to around 700,000 tons? How should we think about the ramp-up following the completion?

Michael Garcia (CEO)

Sure, Katja, this is Mike Garcia. As we announced in our remarks, we are commissioning our inline shear, which was part of the plate mill modernization project. We're gonna start cold commissioning that in August, which is actually early in the schedule. We believe that once that commissioning is in place, as soon as October, we will start to see more shipments and capacity through that plate mill. Over the balance of the third fiscal quarter and the fourth fiscal quarter, we would expect to see 15%-20% more plate mill shipments. The one caveat on that is some of that incremental plate production will be going into stock as we prepare for our 40-day outage in April of calendar year 2024.

That's what the profile will look like, the balance of this fiscal year. Once we come out from that, plate mill outage next April, we would look to factor in the increased plate mill capacity fully into our annual plan and commercial strategy and try to get as much of that high-margin plate into our order book as practical. Does that help?

Katja Jancic (VP and Equity Research Analyst)

... yeah, just one follow-up. Sorry. The 15%-20% increase, I guess, in the second half of this fiscal year, is that based on the current level, so quarterly level, so how should we think about that?

Michael Garcia (CEO)

It's based off of a current quarterly level of 70,000-75,000 tons of plate per quarter.

Katja Jancic (VP and Equity Research Analyst)

Okay, perfect. Thank you so much.

Michael Garcia (CEO)

You're welcome.

Operator (participant)

Our next question comes from the line of Ian Gillies with Stifel. Please proceed with your question.

Ian Gillies (Managing Director and Equity Research Analyst)

Morning, everyone.

Michael Garcia (CEO)

Morning.

Operator (participant)

Morning, Ian.

Ian Gillies (Managing Director and Equity Research Analyst)

I wanted to go back to some of the financing comments made and ask in a different manner. Can you just confirm that there's no intention to use external equity to help finance the remainder of the EAF, and that you believe it can be funded through credit facilities, cash, and operating cash flow?

Michael Garcia (CEO)

That's correct. Yes. There's no intention to fund it through issuance of securities or equity.

Rajat Marwah (CFO)

Just to follow up on that, Ian, there is, when you look at the cash profile that we have right now, the liquidity profile, we've got CAD 250 million of cash. You know, there is roughly CAD 300 million+ of ABL availability that we have. We will be drawing down our inventories. We did a huge draw in the March quarter, but our March end inventory is still elevated compared to historical numbers, and it's elevated to the extent of CAD 250 odd million. We know that there is some bit of a disprice, but still the volume part of it, around CAD 100 million-CAD 150 million, will get released over the next several quarters.

When you take all of that into account, there is enough liquidity available to manage the EAF CapEx, and we are not even taking into account the good quarter that's just getting behind us, which is the first fiscal quarter, and how our profile looks for the balance of the year. You know that there's no debt on the balance sheet in any case. We are pretty confident about funding the EAF.

Ian Gillies (Managing Director and Equity Research Analyst)

Okay, that's helpful. It led to my next question. With respect to the inventory, the absolute releases are helpful, but given we all tend to run different models and different strip, could you maybe is there any way you could frame that in the way of where the target is for inventory days? I mean, historically, it's been sub 80 or you're around 100 last quarter. Do you have any context you can provide of where you're targeting to get that to by the end of the year?

Rajat Marwah (CFO)

I think it should come down, if it should come down below $80s. By, let's say by end of the fiscal year, we should see a release of $100 million-$150 million. Now, this is from the current levels that you are seeing. From March, getting down to next March, we should see it in that range. That doesn't release the entire extra tonnage that we are carrying. As I mentioned last time, that, you know, with the fixed tonnage contracts that we have, it takes a little longer to get those inventories down.

We should get down to below 80, but, you know, in absolute dollar terms, $100 million-$150 million of inventory reduction over a year, and further reduction happening in 2025 as well.

Ian Gillies (Managing Director and Equity Research Analyst)

Okay. The last one for me with respect to shipments, there was some focus on plate in the prior question set. As you get into the back half of this fiscal year, do you think shipments can push into that 600,000-650,000 ton range, or is that a bit aggressive?

Michael Garcia (CEO)

Ian, I think that that'd be a bit aggressive. I think our run rate for the year should be similar to the volumes we demonstrated in the quarter that we're talking about, as well as the quarter that we're currently in. I think there's always some opportunity from upside, but I would say north of 600 is probably a bit aggressive.

Ian Gillies (Managing Director and Equity Research Analyst)

Okay. That's helpful. I'll turn the call back over. Thanks very much for the detail.

Rajat Marwah (CFO)

Thanks, Ian.

Operator (participant)

Our next question comes from the line of David Ocampo with Cormark Securities. Please proceed with your question.

David Ocampo (Equity Research Analyst)

Thanks for taking my questions. I guess my first one is just on the CapEx treat there. If I look back at the last quarter, you guys had, call it 70% of the CapEx locked in at fixed rates, so call it $210 million, but you still had a contingency. It does look like that last little bit that you guys have to contract out has increased by roughly 100%. I was just hoping you guys could drill into that a little bit. Just so we can understand it a little bit better.

Michael Garcia (CEO)

Sure, David. You know, as we initiated the project, you can think about it in a series of major construction packages for the project. The initial ones, which were the most significant, which we locked in on fixed price and fixed duration, were the Danieli contract, obviously for the equipment, and then the Walters contract for the building construction. At that point, it was too early in the project life to award some of the more, some of the other significant packages that needed detailed engineering to be completed before those bid packages could go out and get priced by the market. Those, that detailed engineering was wrapped up around six to seven weeks ago.

When those bid packages went into the market is when we saw a pretty different market for construction costs than we were seeing when the early large bid packages were going out in the market in, you know, 2021. Those packages involved the installation of the equipment, the fume treatment plant, the electrical install, the piping. We started to see an emerging risk in those packages coming back higher than the original budget. As we, you know, went through an iteration with the contractors to make sure they fully kind of had all the details they needed, we started thinking of, you know, how to take costs out.

It was at that point where we started seeing the increase of the total cost beyond the CAD 700 million budget and to the number that we disclosed today, which is the result of a lot of work, and we're very confident about. That's kind of how the evolution of the cost increase transpired.

David Ocampo (Equity Research Analyst)

Just out of curiosity, is there any contingency built into that CAD 875, like, at the top end? Just kind of wondering if there could be additional cost creep beyond this.

Michael Garcia (CEO)

Well, I think the contingency is that you know, we're giving a range, that top end of the range would be reflective of, you know, a dipping into that contingency.

David Ocampo (Equity Research Analyst)

Okay. That makes sense. Rajat, just out of curiosity, it does seem like the maintenance CapEx has also creeped up with inflationary pressures. What's the thought process behind, you know, the maintenance CapEx when you are finally EAF? Because I think before you were talking about CAD 20 million lower than the CapEx would be if you're a blast furnace. Does that put you at CAD 80 million?

Rajat Marwah (CFO)

It will be $20 million-$30 million U.S. lower. If we are spending around 110 on the CapEx, we should be around CAD 70 million-CAD 80 million on the CapEx in Canadian dollars after the full EAF is running and the blast furnace and coke batteries are closed.

David Ocampo (Equity Research Analyst)

Okay. That's perfect. I'll hand the line over. Thanks a lot, guys.

Operator (participant)

Our next question comes from the line of Ahmad Shaath with Beacon Securities. Please proceed with your question.

Ahmad Shaath (Partner, Director, and Equity Analyst)

Hey, guys, maybe just one for me on on the guidance front. We're noticing a trend, that you keep, I guess, beating the guidance. Can you talk about a thought process when you provide the guidance and maybe some of the challenges or the moving parts, just to help us frame our thinking, once you release those guidance numbers, in our modeling?

Rajat Marwah (CFO)

Sure. There is, you know, we are a single site, so there is always that variability on the material moving out of the facility. The big variability we normally see is on movement through water, the barges that move out, and there are a number of barges that go out during the month. We see some variability in those situations. That's why we provide guidance also towards the end of the quarter or closer to the end of the quarter, so that we are at least closer to the numbers. You know, things relative to that keeps changing. It's mostly on the shipment side, as we see.

As we close the books, there are a few variabilities that happens on the pricing side as well as on the cost side. You know, we have been beating except for a quarter where we had a coke fire, which was unexpected, and the plate mill, that led to certain issues. You know, we've been consistent in providing a reasonable guidance. Based on how the quarter ends, it's normally closer to the higher end.

Ahmad Shaath (Partner, Director, and Equity Analyst)

Fair enough. That's very helpful. Maybe, and this could be in the disclosure, and if I missed it, apologize in advance. Talk to us about the revolver. It's backed by the receivables and the inventory, and you're talking about some release of that. How is that gonna work, as you guys plan to finance some of the CapEx using that facility, as well? Maybe talk to us about the moving parts there and how that, if there is any potential impact on your liquidity from the revolver.

Rajat Marwah (CFO)

Sure. Good question. There is a lot of unused availability that we have under our revolving credit facility, and that's just given by the amount of inventories and receivables that we have on the balance sheet. The amount that we can borrow under the revolver is $300 million, let's say it's CAD 400 million. When you look at our balance sheet, we've got CAD 700 million of inventories and, you know, CAD 300 million, roughly, of receivables, so almost CAD 1 billion. Even after reducing the inventories that I'm suggesting, we will still have enough capacity under our ABL to borrow the entire amount. That's how it will play out.

We will be able to release a lot of inventory and create liquidity there, but it should not impact our revolver from that perspective.

Ahmad Shaath (Partner, Director, and Equity Analyst)

That's very helpful. Thanks, Rajat, and I'll get back in the queue.

Operator (participant)

We have reached the end of the question and answer session. I'll now turn the call back over to Michael Garcia for closing remarks.

Michael Garcia (CEO)

Thank you. Thank all of you again for your participation in our fourth quarter fiscal 2023 earnings conference call, and for your continued interest in Algoma Steel. We look forward to updating you on our results and progress when we report our fiscal fourth quarter results later this summer.

Rajat Marwah (CFO)

Thank you.

Operator (participant)

Thank you. I'm sorry. This concludes today's conference, and you may disconnect your line at this time. Thank you for your participation.