Frontline - Q1 2023

Transcript

Operator (participant)

Good day, and thank you for standing by, and welcome to the Q1 2023 Frontline plc Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question, you will need to press star one one on your telephone. I would now like to hand the conference over to the CEO, Mr. Lars Barstad. Please go ahead.

Lars Barstad (CEO)

Thank you very much. Good day all, and thank you for tuning in to Frontline's first quarter earnings call. We're a bit late, but, better good than early, or whatever the expression is.

Inger Klemp (CFO)

Better than never.

Lars Barstad (CEO)

Yeah. We've had an unseasonably strong first quarter of the year. Russia still has an impact on the market, or there is sanctions on Russia, I think kind of the key part of the action in Q1 was related to China. The strong Q1 has given us the ability to book quite strong numbers into Q2 as well, as the Frontline team relentlessly grind to create shareholder value. Before I give the word to Inger, get our TC numbers on slide three in the deck. In the first quarter, Frontline achieved $52,500 per day on our VLCC fleet. $64,000 per day on our Suezmax fleet, and $56,300 per day on our LR2/Aframax fleet.

We are, in fact, back to a somewhat reverted earnings relationship between our segments, with the Suezmax outperforming the VLCCs, and the same for LR2s. We have secured quite firm numbers as we progress into Q2, with 78% of our VLCC days booked at $75,000 per day, 71% of our Suezmax days are booked at $65,000 per day, and 63% of our LR2/Aframax days at a very respectable $65,700 per day. Again, all these numbers in the table are on a load to discharge basis, and they will be affected by the amount of ballast days we end up having at the end of Q2. Mind you, this is Q2, which is supposed to be the weak point in the market. With that, I'll give Inger the word, and she'll take you through the financial highlights.

Inger Klemp (CFO)

Thanks, Lars. Good morning, and good afternoon, ladies and gentlemen. Let's then turn to slide four, the profit statement, and look at some highlights. As Lars already have stated, Q1 '2023 is the highest first quarter profit since 2008. Q1 '2023 is also the first interim financial information presented by the company on IFRS. Following the transition to IFRS, one important thing is that dry docking costs will be capitalized and subsequently depreciated over the period to the next scheduled dry docking, which is from 2.5 to five years. Q1 '2023 dry docking costs was $3.6 million that has been capitalized, and three vessels were dry docked in the quarter.

I will also mention that the company has revised the estimated useful life of its vessels from 25 years to 20 years, and that was effective from January 1st, 2023, which resulted in an increase in depreciation expense of $12.7 million in Q3, compared to Q4 '2022. Let's turn to slide five, and look at some balance sheet highlights. The company has no remaining newbuilding commitments in Q1 '2023, as the company took delivery of the two last VLCC newbuildings Front Orkla and Front Tyne in January 2023. The company has strong liquidity of $584 million in cash and cash equivalents, including then the undrawn amount of unsecured facility, marketable securities, and minimum cash requirements.

The company, lastly, has a healthy leverage ratio of 52.9%. I would like you to turn to next slide. Lastly, let's look at the cash flow potential of the company. We estimate industry-leading cash break even rates in 300 fleet average, and that includes dry docking costs for eight Suezmax tankers in 2023. Four of them expected to be dry docked in the third quarter, and four is expected to be dry docked in the fourth quarter. The Q1 2023 average OpEx, excluding dry dock, was $7,300 per day.

The free cash flow indicates strong potential return for the company, as you can see from the table on the right-hand side. Just picking the scenario where we assume VLCC rates of $75,000 per day with five-year historic spread to go to see for Suezmax and LR2 tankers. The annual free cash flow potential is about $1.4 billion, or $6.29 per share, representing a free cash flow yield of 42%. With this, I leave the word to you, [audio distortion] Lars.

Lars Barstad (CEO)

Thank you very much, Inger. Let's have a quick kind of look back at the Q1 2023 tanker market. I already mentioned that it was untypically, seasonally strong. Normally, in a Q1, we'll kind of get sober after the Q4 hype, and markets will fairly quickly start to deteriorate into February. What happened this time around was that we had the second peak in the market in March, and all segments from plan operates were performing very, very strong. If you look at the chart at the bottom left here, you will find how elevated the average weighted market earnings are. The reason for this is obviously that it's not only VLCC and Suezmax, but it's also Aframax and LR2 being very, very strong.

If you compare it to the period that we like to look back on, you know, the period from 2003 until 2009 in, in the most recent times, we are actually quite high up on the earnings side, and the markets are performing very, very well. Chinese imports moved to all-time high, if you look at the chart at the bottom right. We also saw the highest number of VLCC shipments to China. As I already said, Russian sanctions continue to yield inefficient trading patterns, but it is more about China, as that situation seems to have found some sort of plateau. We did, however, have a very mild winter in the Northern Hemisphere, both in Q4 and Q1, and this muted oil demand to some extent.

If we then move on to slide eight or page eight, we did receive an OPEC cut or a voluntary cut. The volumes are indeed down for May. What about ton miles? Russia continued to export. With the current oil price scenario or oil price scenario we're in, the G7 cap is not an obstacle to Russian oil exports, and we see Russia pump relentlessly. This is quite interesting now ahead of OPEC meeting on June 4th. Both OPEC+ and non-OPEC volumes were down in May. This is, and we need to remember, this is the seasonal slow point of the year, with high refinery turnarounds. Global oil demand is expected to rise by around two million bbl per day in second half of 2023.

If we look at the whole picture, the global exports overall are indeed back to pre-COVID levels, albeit a little bit slow in May. It's gonna be very interesting to see what the U.S., Brazil, and West Africa are able to do post-summer, as those are the three candidates to have the ability to export more volume as we proceed into winter. Let's move to slide nine. The vessel utilization is still high, but it's volatile. We'll see that on the bottom left-hand side, and this data is from Signal Ocean, where they basically record every fixture done on the various asset classes and measure the amount of days the vessels are laden. If you look at the chart at the bottom left, if you look at the VLCC, we are quite elevated compared to historical patterns.

It has corrected down, yes, it might be a bit muted right now, the VLCC is probably still affected by the rally in Q1 and the mini rally we just observed a couple of weeks ago. If you look at the Suezmaxes, they too are high relative to the previous years, again, have corrected over the last couple of months. LR2s are back to trend, I'd say, although high in the trend. I think the key takeaway from these three charts is to look at the overall direction of the utilization and of the ton mile demand throughout the year. It's clearly that we are, firstly, at the low point in the cycle, and secondly, that the direction towards the end of the year, well, judging on history, could be very interesting.

Let's move to slide 10 and have a quick discussion on the order book. I'm not gonna go through all these charts in detail. I think they tell their own tale. It's quite incredible that by the end of this year, we'll have 111 VLCC still operating in the market above 20 years of age. That amounts to 12.6% of the current trading fleet. The order book stands at 16 vessels yet to deliver, and that's 1.8% of the fleet. If you look at the Suezmaxes, about 14% of the fleet will be above 20 years as this year ends. The order book stands at 18, after having grown actually quite a bit in Q1 and Q2. That amounts to 3% of the existing fleet.

LR2 Aframax, the global fleet is only 450 vessels, 25 of those are over 20 years. Here, it's actually more relevant to look at 15 years, but just to be, kind of, conservative, let's just look at the 20 years. That amounts to 6% of the existing fleet. The order book there is growing and it's sizable, so it currently stands at 12.8% of the existing fleet. If you look at overall for the segments that Frontline are exposed to, or the asset classes that we are engaged in, about, well, close to 12% of those fleets are above 20 years of age, and the order book stands at 4.6%.

It's very, very difficult to see a scenario on the supply side that will rock kind of the tanker story, at least until well into 2026. Finally, to sum up. Frontline delivered the highest Q1 profit since 2008, $193 million, and a cash dividend of $0.70 per share. We continue to capture value on time charter and assets at an elevated point in the cycle. There are new orders being seen for Suezmax and LR2. The 2025 is now firmly sold out, and you can build in 2026 in China. In Korea, you probably need to look to 2027.

On the VLCC only two orders rumored year to date, although more are being discussed, 12% of the tanker fleet that we are exposed to is going to be about 20 years by the end of this year. The OPEC+ actions have had a limited impact so far in May, it looks like it's countered by Thomas. Again, China will be the X factor as we grind through the summer long lull. Lastly, I'd like to explain a little bit on the chart below.

I just had a presentation for a group of students from Denmark, basically explaining the long-term picture in oil and tankers. What you see, the blue line is oil demand, which tends to grow with population growth. On the right-hand side, or the yellow graph, is annual fleet growth as we get into 2025. Although this is a bit of apples and pears, it just doesn't add up. With that, I would like to open up for questions.

Operator (participant)

Ladies and gentlemen, we now begin the question and answer session. If you wish to ask a question, please press star one on your telephone. We are now taking the first question. The first question from Jonathan Chappell from Evercore. Please go ahead. Your line is open.

Jonathan Chappell (Senior Managing Director and Equity Research Analyst)

Thank you. Good morning, Lars, or good afternoon. First question's on strategy. Some interesting developments since the end of the quarter with the sale of the vessel and the two time charters on the LR2s. Are you at the point in the cycle now where you're looking at harvesting some of the older tonnage, which may not be core? I think there's 10 ships that are over eight years old. Also, are you at the point where you're looking to do more time charters, maybe on the LR2s and keep the bigger crude ships available for spot?

Lars Barstad (CEO)

Yeah, I first of all, when we look at the fleet and which vessels that could be potential sales candidates, we look at efficiency primarily. You know, we are preparing for a tighter regulatory framework for CII and ETS and whatnot. It's basically with that in mind, we look at it, and obviously the values that are achievable. As it's been so far, it's on the time charter side, you know, we've seen elevated values on the Aframax/LR2, and we've seen a lot of price action on the second-hand Suezmax side. I think it's just natural.

Yes, we will kind of tap into the market when we see values that are. You know, basically what we call it internally is, you know, when you can achieve unicorn numbers on certain asset classes for a sustained period of time, we basically just have to take it. The average cost, you know, the average cash break even on our Aframax's, LR2s, you know, we kind of if you keep that in mind, you know, when you can achieve $46,500 per day against a cash break even of $16,800, you know, it's basically something you can't pass. On the asset side, we're not, you know, publicly offering all our vessels. That's rarely a good strategy. Yes, for the less efficient vessels, we will be prone to take advantage if the opportunity is there.

Jonathan Chappell (Senior Managing Director and Equity Research Analyst)

If I could just follow up on both of those topics with just kind of a more recent update. There seems to be a lot more skittishness, you know, the OPEC cut global recession, you know, oil prices weak, et cetera. Although, you know, you've laid out a framework where the next two years should remain quite robust. Have you seen any slowdown in transaction activity in the older vessels, which seem to be pretty parabolic over the last 12 months? In the same token, have you seen any, you know, slowdown in the willingness for charters to lock in for that two to three-year period?

Lars Barstad (CEO)

You know, I would lie if I didn't say yes. As you know, you've been in this industry for a long time, we tend to be more focused on the big deals when the spot market is strong, rather than the opposite. Right now we've had volatility. We also have some weakness in the segment, and that's, you know, basically it changes sentiment somewhat. I, but I wouldn't say, you know, I see this as a, as a kind of ebb and flow, short-term, kind of event. I, you know, I don't foresee, unless we end up in a situation where global oil demand falls out of bed, I don't see that being sustainable. It's very typical for Q2 to be quite honest.

Jonathan Chappell (Senior Managing Director and Equity Research Analyst)

Yep, that makes complete sense. Thank you, Lars.

Lars Barstad (CEO)

Thank you.

Operator (participant)

Thank you for your question. We are now taking the next question. Please stand by. The next question from Amit Mehrotra from Deutsche Bank. Please go ahead, your line is open.

Chris Robertson (Director and Equity Research Analyst)

Hey, good morning and good afternoon, this is Chris Robertson on for Amit. Thank you for taking our questions. Lars, just wanted to touch on the LR2 fleet for a moment. How many of those are currently trading dirty, at the Frontline level? Do you have a general sense, maybe across the fleet, of how many LR2s are engaged in a dirty trade at the moment?

Lars Barstad (CEO)

Well, thank you, Chris. That's a very good question because the switch between clean and dirt has become increasingly effective over the last half year. It's actually very difficult to follow. Not obviously, not on our own fleet, I'm quite comfortable, but, you know, with what happens kind of out there in the world. Just to explain to you know, you can turn around a dirty vessel into clean in the Middle East fairly quickly by doing a couple of short trips with the common state. At least up till now, the market has been willing to price a hefty premium for that ability. Basically motivating the owners to do exactly that.at least, you know, on our own, of the vessels that we still control, that are not on time chart route, so that would be 14, there are four that are trading.

Chris Robertson (Director and Equity Research Analyst)

Okay. Got it. Switching gears here, just looking at shipyard capacity, you know, you mentioned the limitations, you know, the Chinese yards maybe for 2025 delivery, in 2026. I guess, do you have a sense of how much mothballed capacity could come back online over the next few years? And is the limitation out there right now more of a labor issue, or is it more of the, you know, the yards themselves, the real estate aspect of it?

Lars Barstad (CEO)

I think, you know, we have seen, not new kids on the block, but we've seen, I wouldn't call them mothballed, but, yards in China with very, very much reduced capacity, that are kind of getting revitalized, and, willing to take orders. This is obviously a risky exercise, but, you know, if you're an owner, to utilize these yards, but there are a few. I think it's difficult to, to quantify it, but, if you look at, say, some of these new kids, you can't get a ship before 2025, or you can't even get it before 2026. That's basically because, it takes time to, to get these yards up and running.

I think on the labor side, I don't, it doesn't seem like China has much of a problem. In Japan and Korea, that's definitively a factor. In Korea, what we see is that, you know, although a tanker is a fairly complicated ship, they tend to focus on kind of more labor intensive or more technical, technology intensive ship types. They're actually not really, well, they're offering, but they're pricing themselves out of the equation to a large high. That's 2027. With regards to kind of the overall potential volume there, it's very difficult to gauge, and there is not a potential volume until... Well, it's starting in 2026.

Chris Robertson (Director and Equity Research Analyst)

Okay, yeah, that's great color. Last question for me. This just relates to, I guess, your expectations around the OPEC meeting, coming up here in a few days.

Lars Barstad (CEO)

Yes.

Chris Robertson (Director and Equity Research Analyst)

You know, the Brent prices are trending well below $80 a bbl, which we kind of see as a threshold price. Some market commentary out there, around the speculators in oil pricing. Is your fear that there could be additional cuts on the table going into this meeting, or how are you thinking about that?

Lars Barstad (CEO)

Well, I can't really do much more than reading, I think, with you guys.... read in the press. I must say, however, that, you know, when you do a cut with effect in May, to then suddenly start a additional cut in June is, you know, kind of it looks a bit strange because you need this. It's also at a low point in the demand cycle. I guess you need to have a little bit of patience when you do such a big move coming, you know, being an OPEC strategist.

I think what's disturbing the situation is that Russia, although claiming to adhere to the voluntary caps strategy, physically, they are obviously not doing that. It's yeah, it's gonna be an exciting one. It's almost impossible to give a qualified kind of guess. What I will say, though, that any kind of demand increase, since this is a voluntary cut, it's gonna be reversed very quickly once demand kind of shows its hand.

Chris Robertson (Director and Equity Research Analyst)

Yeah, I think that's fair. It seems more like a compliance enforcement issue in the short term, then they could ramp back on over time, as you said. Okay. Yeah, thank you very much for taking the questions.

Lars Barstad (CEO)

Thank you, Chris.

Operator (participant)

Thank you for your question. We are now taking the next question. The next question from Omar Nokta from Jefferies. Please go ahead.

Omar Nokta (Managing Director, Senior Equity Analyst)

Thank you. Hi, Lars. Hi, Inger. Good afternoon. Just wanted to just check back on the new building discussion. Clearly, I think that the slide 11, very simple chart, but probably just says it all in terms of oil consumption growth and the fleet growth. I remember, Lars, on the last call you had mentioned, I think it was the last one, you had mentioned new buildings weren't that interesting to Frontline. Just wanted to see kind of if you have an update there. Obviously, you just highlighted in your comments about how we're looking at firmly into 2026, perhaps 2027, to take delivery. Just in terms of how you're seeing the opportunity to get into the new building market, I guess, one, is that something you're perhaps revisiting? Two, how would you maybe compare the opportunities when it comes to maybe placing VLCC orders versus Suezmaxes and LR2s?

Lars Barstad (CEO)

Yeah. No, it's a good question, but regretfully, or not regretfully, I think the answer is the same. You know, three things that we need to consider when we look at the new building market. Number one is obviously what technology we're gonna go for. Say you were looking for a conventional, then it's the delivery time until you can actually get the cash flow from that investment. Lastly, it's, you know, the price of the asset itself. Basically what we're seeing is, you know, I hear arguments that inflation has kind of yet to hit asset prices.

Because if you look at asset prices adjusted for inflation, kind of long dated, 2008, 2009 VLCC equivalent would be $70 million today. But in order for that to be true, you need inflation also to hit the rates and so forth. We need, like, the long-term time charter market to be far higher than what we've seen kind of glimpses of in the last couple of quarters. I think kind of, you know, with that in mind, it just doesn't look very interesting to Frontline. I also note that some of the orders we're seeing, it's either against long-term charter commitments, which is not something Frontline would engage to.

You know, our proposition to our shareholders is to give spot exposure. Secondly, the ones that are not connected to a long-term charter, seem, at least to me, as somewhat opportunistic. Basically, you pay a 20% or 25% down payment on a call option for a market that could be, you know, quite interesting in, say, 2026. And we are not in that business either. This is why, you know, we obviously we look at it, we observe it, but, we're not there to press the button.

Omar Nokta (Managing Director, Senior Equity Analyst)

Makes sense, Lars. Thanks for that. I guess, as we think about that, you know, clearly, you do need inflation in terms of, you know, the impact on charter rates to really induce some ordering. How do you then think about I mean, obviously, Frontline, you guys have been very acquisitive over the years, but in general, when you think about deploying capital, obviously you have a capital allocation policy of paying out meaningful dividends.

But in terms of where maybe there's an opportunity or the value set or whatnot, is it new buildings clearly off the table, how do you then think about whether, you know, doing stuff in the sale and purchase market, is there opportunities in the younger tonnage? Are there opportunities maybe in the older tonnage where people have maybe ignored because of the, you know, transition here towards a greener future? Any kind of thoughts about where there could be an opportunity to pluck some assets on the cheap, whether it's age range or perhaps vessel class type?

Lars Barstad (CEO)

Yeah, no, I think on of vessel class side, you know, we would be kind of studying closely any LR2 Afra, Suezmax or VLCC that is below five years, or at five or below. If you look at the visibility on the offering in that kind of portion of the market, it is virtually zero. It's, you know, a lot of the modern, we also see, you can say that have been delivered over the last few years, are actually on time charters, and even relet again to operators or traders or oil majors.

These guys are not really sales candidates. So there is basically a vacuum for vessels in that kind of age group that would be interesting to us. I think that's basically the answer. You know, with that in mind, we'd rather sit tight and churn out the best return we can from the assets we hold until we make kind of an investment decision.

Omar Nokta (Managing Director, Senior Equity Analyst)

Sure. Yeah, it makes sense. You already have that critical mass. Maybe just one, if I could, you know, obviously very sensitive, but just wanted to check in and see, you know, since you're having this call, any public comments that you're willing to make, in terms of the, you know, the situation at Euronav, you know, with the shift in management in the board? You know, also, I know it's obviously probably more sensitive and not necessarily directly related to Frontline, but any comments to make about, you know, the back and forth with International Seaways yesterday?

Lars Barstad (CEO)

Yeah, no, I understand the question, but it's not really for me to comment, to be quite honest. I'm an observer, just like you are, on both the Euronav situation, well, we're shareholders, but that's basically as far as it go. International Seaways is the same. It's, you know, I read what you read, and I have, you know, limited visibility.

Omar Nokta (Managing Director, Senior Equity Analyst)

Good. That's good enough. Thanks, Lars. figured I'd ask, I'll turn it over.

Lars Barstad (CEO)

Thank you.

Operator (participant)

Thank you for your question. We are now taking the next question. The next question from Chris Tsung, from Webber Research. Please go ahead. Your line is open.

Chris Tsung (Senior Associate Analyst)

Hey, good afternoon, Lars. How are you?

Lars Barstad (CEO)

I'm good, thank you. Yourself?

Chris Tsung (Senior Associate Analyst)

Good. Good, thanks. I wanted to just ask, like, in your deck, you highlighted the Russian sanctions have led to the, you know, inefficient trading patterns, which has obviously been a tailwind for a lot of tanker owners. Do you believe these inefficiencies could be worked out, or are they more structural in nature, and until the war is over and until sanctions are removed?

Lars Barstad (CEO)

Well, what I'll say is I was contemplating adding that to this deck, but I wanted to this further checking, but you know, with basically, all the, whatever that's called. Basically, what I'm observing, or what we are observing, is that if you look at the Suezmax and Aframax fleet, and you look at how many are calling on Russia, if you do that study for the last three months, you'll find that approximately 30% of the Afra and 30% of the Suezmax fleet is still at one point calling on Russia. This suggests that the, kind of, the interconnection between the gray fleet, if you call it that, and the white fleet, if we use that word, is actually very, very high.

It means that there are obviously inefficiencies, but maybe not as pronounced as one would expect, because it's not so that we've lost 30% of the ships in the non-Russian trading market. I think, you know, it is a bit more balanced picture. What is true, though, is that, you know, a vessel of less quality and, you know, kind of outside of the age restrictions and so forth, or maybe operated by a company that has a red flag attached to it, they will obviously not be able to access the compliant market.

It seems like, you know, the interconnectivity is actually quite efficient, as you would expect in a tanker market. This has actually some positives to it, because it actually means that, you know, the risk on. Well, it's wrong to call it the risk. Whenever this situation reverses, maybe the negative impact on the ton miles won't be that kind of grave as well.

Chris Tsung (Senior Associate Analyst)

I see. I see. Thank you. Maybe just one follow-up on the arbitration. I just wanted to ask if are there any notable milestones that we should be on the lookout for from now through June 2024?

Lars Barstad (CEO)

No, not at the moment.

Chris Tsung (Senior Associate Analyst)

Okay. Fair enough. I'll turn it over. Thank you, guys.

Lars Barstad (CEO)

Thank you.

Operator (participant)

Thank you for your question. We are now taking the next question. The next question is from Sherif Elmaghrabi from BTIG. Please go ahead, your line is open.

Sherif Elmaghrabi (VP in Equity Research)

Good afternoon. Thanks for taking my question. First I want to do a quick follow-up on an earlier question about the clean and dirty LR2s. How long does it take to switch an LR2 back to the clean trade, and what are the costs associated with doing so?

Lars Barstad (CEO)

It obviously depends a bit on how you do it. You know, if you do three very short condensate calls across AG say, you can be, you know, partially cleaned up within 21 days. You'll just do a manual clean to get the remaining whatever is left, so add a few more days. Yeah, somewhere between, say 25 days.

Sherif Elmaghrabi (VP in Equity Research)

That's helpful. Thanks. Given the limited fleet growth you highlighted on slide 10, if demand holds up, could ships over 20 years see retrofits to extend their life or maybe slip into the Russian trade, or are there other factors that are gonna push them to the scrap yard?

Lars Barstad (CEO)

No i think you're- you know, you're hitting the nail there. You know, obviously in the more opaque tank market, there is life, a vessel that's passed 20 years of age. But I have to say though that what we've seen over the last month or so is that certain, you know, kind of in China, you have the Shandong province, which is home to a lot of the independent refiners in China. So it's a huge discharge port for all qualities of crude. You know, the fact that they have started to clamp down on some of the older, kind of, less maintained vessels is actually a positive sign that people are starting to have a proper look at this.

If you probably read about this Pablo, I think it was called, an Aframax sitting outside Malaysia or Singapore, that blew up. I think this is kind of raising the attention from regulators on the risks in, in this market. For a well-approved tanker, and there are probably many, and well-maintained, there is no reason why it shouldn't be extended. This, again, with kind of common scrutiny with the vetting of the various kind of vetting departments in, in the charterers, on the charterer side. What we basically are assuming in our kind of fleet modeling is that, a ship that passes, you know, 17.5 years, will lose about 25% of its efficiency. If you go beyond 20 years, you lose 50% of your efficiency. Utilization-wise, you know, or your ability to kind of service the oil market falls by 25% and 50%.

Sherif Elmaghrabi (VP in Equity Research)

That's really interesting. Thank you. I'll turn it over.

Operator (participant)

Thank you for your question. There are no further questions at the moment, if you wish to ask a question, please press star 1 on your telephone. There are no further questions. I will hand back the conference over to management for closing remarks, please.

Lars Barstad (CEO)

Well, thank you very much for dialing in. It's been a pleasure to report yet another good quarter. Hopefully we'll continue to do that, and look forward to what's to come. Thank you.

Operator (participant)

That concludes the conference for today. Thank you for participating. You can all disconnect.