Earnings Call Transcript - BW Q3 2023

Operator, Operator

Good evening. My name is Hannah and I will be your conference operator today. At this time, I would like to welcome everyone to the Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. Sharyn, you may begin your conference call.

Sharyn Brooks, Director of Communications

Thank you, Hannah. And thanks to everyone for joining us on Babcock & Wilcox Enterprises' Third Quarter 2023 Earnings Conference Call. I'm Sharyn Brooks, Director of Communications. Joining the call today are Kenny Young, B&W Chairman and Chief Executive Officer, and Lou Salamone, Chief Financial Officer, to discuss our third quarter results. During this call, certain statements we make will be forward-looking. These statements are subject to risks and uncertainties, including those set forth in our Safe Harbor provision for forward-looking statements that can be found at the end of our earnings press release, and also in our Form 10-Q that will be filed today and our Form 10-K that is on file with the SEC and provide further detail about the risks related to our business. Additionally, except as required by law, we undertake no obligation to update any forward-looking statement. We also provide non-GAAP information regarding certain of our historical and targeted results to supplement the results provided in accordance with GAAP. This information should not be considered superior to or as a substitute for the comparable GAAP measures. A reconciliation of historical non-GAAP measures can be found in our third quarter earnings release published this afternoon and in our company overview presentation that will be filed on Form 8-K this afternoon and posted on the Investor Relations section of our website at babcock.com. I will now turn the call over to Kenny.

Kenny Young, CEO

Thanks, Sharyn. And thanks to everyone for joining us today. As you can tell by our earnings release, it's been a busy third quarter for Babcock & Wilcox. I'd like to start the call today by first reviewing our third quarter performance on a continued operations basis, accounting for the announced reclassification of our solar business, as well as the latest advancements across our Bright Lube and Climate Bright initiatives. I'll also discuss our announced strategic business realignment and the rationale behind that decision, as well as details related to our 2023 and 2024 financial targets, which are based primarily on the strong performance of our aftermarket parts and services businesses, before turning the call over to Lou. Let me start by highlighting the broad-based activities that drove revenue growth across all business segments during the quarter. Revenue for the third quarter was $239 million, which is a 13% improvement compared to the prior year and our third consecutive quarter of revenue expansion on a year-over-year basis. Our top-line improvement was led by thermal revenues that increased approximately 17% when compared to the third quarter of 2022, followed by renewable services and environmental revenues increasing 11% and 4% respectively. Our aftermarket parts and services business in thermal and renewable typically, our higher margin businesses continue to perform above our internal expectations. Consolidated adjusted EBITDA from continuing operations for the quarter was also impressive at $20 million, an improvement of $7 million or 54% when compared to the same period last year. This is inclusive of roughly $2 million in expenses for Bright Lube and Climate Bright in Q3 2023. While product mix was a large factor in the adjusted EBITDA performance for the quarter attributable to the higher margin nature of our aftermarket businesses, we also demonstrated strong execution on increased volumes of projects within our environmental segment. While continued operation bookings and backlog were mostly flat year-over-year, this is largely attributable to the timing of new bookings, as negotiations on a few larger opportunities are taking slightly longer than anticipated. Some of these delays are positive due to increased scope for B&W aftermarket services, as many utilities and large energy companies are reevaluating the timing of new build projects and deferring to upgrades due to higher interest rates and other geopolitical factors. Our outlook for near-term booking opportunities remains robust positioning us to achieve updated backlog growth in a range of $550 million to $650 million by year-end 2023 based on continued operations, not including our reclassified assets. In addition, based on our improved performance of thermal parts and services and our global reach and providing clean energy technologies, we remain confident in achieving our revised full year adjusted EBITDA target from continuing operations of $85 million to $90 million in 2023 when excluding Bright Lube and Climate Bright expenses. Transitioning to Bright Lube and Climate Bright commercial activities, we are pleased to provide several updates related to our hydrogen generation technology and project portfolio. As previously mentioned, we are developing a small Bright Lube hydrogen production plant in Massillon, Ohio, very near our headquarters here in Akron. We are close to signing a definitive agreement for hydrogen uptake at this location for up to 3 tonnes per day of hydrogen production for the next 10 years. We are also excited to announce we have a Letter of Intent for project level financing, and we have signed a lease agreement and are moving forward with construction to produce hydrogen by the end of 2024, or very shortly or early in 2025. With regard to our medium and larger platforms, we are also excited to announce a collaboration with Air Products, which represents a key step forward in our development of a net negative carbon intensity hydrogen production facility in Louisiana utilizing Bright Lube technology. More specifically, we have signed a memorandum of understanding with Air Products to enter into a definitive offtake agreement for up to 200 tonnes of carbon negative hydrogen per day, as well as the CO2 produced at the facility, with the initial production facility expected to be operational in late 2026. This comes on the heels of our previously announced offtake agreement with General Hydrogen to acquire both hydrogen and CO2 from our medium-sized biomass Bright Lube platforms. Both of these agreements come with 10-year length terms. Based on the traction we have received to date, it's become clear that commercial solutions that address carbon neutral targets have become imperative. Importantly, in parallel, we are continuing to progress in Wyoming and within recently announced hydrogen hubs, especially in West Virginia. This includes permitting fuel commitments and collaboration offtake land allocations as well as project funding. While our recent developments across Bright Lube projects continue to progress, we're also pleased to announce a meaningful update to our board of directors. Effective today, Dr. Naomi Boness will join our board of directors bringing extensive expertise within the energy sector, particularly in hydrogen generation and carbon capture. We welcome Naomi to the board and are confident her deep industry experience will prove valuable as we continue to accelerate our hydrogen strategy going forward. To reiterate our updated pipeline when excluding the reclassified operations is over $8.5 billion across all three segments, with approximately $1 billion in Bright Lube opportunities. We believe this puts us on a pathway to reach $1 billion in bookings by 2028, with a combination of small, medium and large projects. We feel confident that could lead to $1 billion in revenues from Bright Lube by 2030 and beyond, while still only representing 1% of the market share of total hydrogen spend by 2030. I would now like to focus on the announced strategic business realignment, including what it means for the company going forward and its immediate impact on our current operations. In response to today's market conditions, which include higher interest rate costs and reduced or delayed growth capital expenditures by our customers, we see a growing global trend in extending the operational lifespan of existing power and industrial generation facilities. This presents us with an opportunity to shift our focus to the more predictable revenue streams generated from our aftermarket businesses. We plan to utilize these cash flows to strengthen our balance sheet and reduce our overall debt. While we are also evaluating strategic alternatives related to non-strategic assets, we expect to realize up to $30 million in annualized cost savings primarily through reduction of the high overhead associated with seeking multiple new build projects. Our heightened focus on producing more predictable cash flow generation is consistent with our approach to provide long-term profitable growth for the company and its shareholders, ultimately driving our decision to streamline our efforts to concentrate on aftermarket businesses and capitalize on higher margin parts and service opportunities. In order to ensure a successful realignment of our updated strategy, our focus is on the following: one, a greater emphasis on higher margin aftermarket parts and services across all three segments, while further reducing overhead costs associated with certain large new build project opportunities. Additionally, we plan to reduce our senior secured letters of credit facility by up to $20 million by the end of fiscal year 2024, refinance our existing senior secured credit facility to reduce our interest expense by up to $5 million, and just today announced a commitment for $150 million in refinancing. We're focused on bolstering cash flow generation and strengthening the balance sheet while utilizing federal, state and project level financing to accelerate the deployment of our Bright Lube and Climate Bright technologies. While we recognize the long-term growth potential for solar from both the community and utility standpoint, there were several key factors that our management team and board considered when evaluating what steps the company would take regarding the pathway for continued growth. As part of this evaluation process, we have decided to reclassify our solar business out of continuing operations. This is primarily due to the historical projects, the higher risks and the margin profiles. Looking ahead to next year, our focus on promoting future growth aligns with the sustained demand we observe across all segments, paving the way for improved performance in 2024 with our announced adjusted EBITDA target range of $100 million to $110 million when excluding Bright Lube and Climate Bright. Importantly, given our strategic business realignment, we now have increased visibility and confidence in our outlook as a significant portion of our targeted adjusted EBITDA will be generated from existing backlog with less reliance on large projects.

Lou Salamone, CFO

Thanks, Kenny. I'm pleased to review our third quarter results and our recent commitment for the refinancing of our senior credit facility. Further details of which can be found on our 10-Q that is on file with the SEC. I'd also like to call your attention to the fact that I will be referring to amounts from our continuing operations. Our third quarter consolidated revenues were $239.4 million, which is a 13% improvement compared to the third quarter of 2022. This is primarily attributable to higher volumes in our renewable segment due to the B&W Renewable Services operations, as well as thermal segment volume, which increased due to higher levels of construction and parts activity. Our net operating income for the third quarter of 2023 was $5.5 million, compared to an operating loss of $2.7 million in the third quarter of 2022. Our adjusted EBITDA was $20 million, as compared to $13 million in the third quarter of 2022. Bookings in the third quarter of 2023 were $198 million, and the ending backlog at the end of the quarter, third quarter of 2023, was $507 million. Our net loss per share in the third quarter was $0.18 as compared to a loss per share of $0.15 in the third quarter of 2022. As Kenny mentioned, we've reclassified the solar business out of continuing operations. As a result, we will have taken an impairment charge of about $56.6 million and recognize contract losses of $47.9 million, including future estimated losses, both of which are reported in discontinued operations. We're pursuing potential recoveries of certain of these amounts, up to $40 million. And there is no assurance that these amounts will be recovered. Accordingly, such recoveries have not been recognized in the financial statements. I'll now turn to our third quarter segment results. Within our Babcock & Wilcox Renewable segment, revenues were at $7.1 million for the third quarter of 2023, which is an 11% increase compared to $78.5 million in the third quarter of 2022. The increase in revenue is due primarily to higher volume associated with renewable services. Our adjusted EBITDA in the third quarter was $10.1 million as compared to $4.5 million in the third quarter of 2022, primarily due to the higher revenue volumes as described above. Within the Babcock & Wilcox Environmental segment, revenues were $46.4 million in the third quarter of 2023, which is an increase of 4% compared to the $44.6 million in the third quarter of 2022. The increase is primarily driven by a lower volume related to Bluegrass treatment projects, offset by a higher overall volume of cooling technology projects. Adjusted EBITDA was $5 million for the quarter as compared to $3.1 million for the same period last year and again, this was primarily driven by a higher product mix, higher margin product mix as described above, along with favorable close out of a Bluegrass treatment plant. Turning to our Babcock & Wilcox Thermal segment, revenues were $107 million in the third quarter of 2023, which is an increase of 17% compared to the $91.3 million in the third quarter of 2022. This was primarily attributable to the higher level of volume in our construction progress projects, as well as parts and service and our package boiler businesses. This was partially offset by a decline in certain service projects. Adjusted EBITDA in the third quarter of 2023 was $11.3 million, compared to $10.8 million in the third quarter of 2022. This was primarily driven by the higher revenue volume and product mix described above. I'll now turn to our balance sheet cash flow and liquidity. Total debt at September 30, 2023, was $377.6 million, and the company had cash cash equivalents and restricted cash balance of $65.1 million. Additionally, subsequent to September 30, 2023, we obtained a commitment to refinance our senior credit facility and amend our existing reimbursement agreement, including updating certain financial covenants. The refinance commitment is expected to reduce our interest cost by up to $5 million per year based on current interest rates. The financing and strategic alignment should significantly improve our liquidity this quarter and onward. I'm also pleased to announce that we have signed a letter of intent for the financing of our first Bright Lube hydrogen project being developed in Massillon, Ohio.

Kenny Young, CEO

Thanks, Lou. In closing, while Q3 wasn't without challenges, it included several strategic decisions to improve the fundamentals of our business. We are extremely excited about the growth opportunities ahead of us. With increasing commercial interest in our core and new technologies and global demand for our baseload power generation our market outlook remains robust, and we see momentum and booking activity accelerating into 2024 and beyond. Finally, as always, I'd like to recognize the efforts of our employees as they continue to drive our success as an organization worldwide. With the outstanding support of our extremely talented and experienced employees and the continued confidence of our customers, we're driving innovation and supporting the global transition to sustainable solutions. We are focused on delivering strong profitable growth for our shareholders. We are entering a new phase and as we execute our strategic business realignment, and we look forward to the transformation that will enhance overall margins and improve cash flows generation for the company.

Operator, Operator

Thank you. Our first question is from the line of Aaron Spychalla with Craig-Hallum. You may proceed.

Aaron Spychalla, Analyst

Yeah, good afternoon, Kenny and Lou, thanks for taking the questions.

Kenny Young, CEO

Hey, Aaron. No problem.

Aaron Spychalla, Analyst

Thanks, first for me on the guidance. Appreciate some of the color there. Can you just talk a little bit more about the exclusion of Bright Lube and Climate Bright there? What those investments might look like as we think about 2024 and then maybe just elaborate a little bit; you talked about some project-level financing and other things that you're pursuing there.

Kenny Young, CEO

Sure, I'd be happy to. So I would think about Bright Lube and Climate Bright from a broader company expense standpoint to be under $10 million, maybe $5 to $7 million, perhaps somewhere in that neighborhood. Just to give some transparency there. From a B&W standpoint, obviously, the project financing that we're referring to will be at the project level, versus having a direct impact on B&W. So there will be timing depending on how that project financing is set up, and the exact structure of ownership of those particular projects, and how the revenue will flow back and forth to B&W, as we've mentioned in the past. But from an expense perspective, that's roughly how we're thinking about Bright Lube and Climate Bright.

Aaron Spychalla, Analyst

All right, thanks for that. And then second, just on the backlog. Can you talk a little bit more color on some of those projects? It sounds like maybe just slipping into 2024; have any of those been lost? Or is it just kind of more of a project timing? And then you kind of talked about accelerating momentum? Just maybe some of the areas that you're looking for as we head into '24?

Kenny Young, CEO

Yeah, well, actually, even though we're in November here, we're talking about Q3 on this call. I would say some of those are slipping more into Q4, maybe into 2024. It just depends as we work through negotiations on a few projects that we're trying to complete. As referenced in my comments, some of those delays are referred to as increasing some scope and activity potentially for B&W, as some of the projects we're looking at larger upgrades and enhancements. Some of our customers are now trying to ascertain how they can extend out the life of these plants longer than maybe they had anticipated. So it's caused them to relook at some of the scope in a positive way as it relates to B&W, and so we're excited about that. But those negotiations continue. We have full intent to get those booked still in Q4. But one or two of those may slip out into 2024, as well. It's more of a timing from a negotiations aspect. As the customers reevaluate their approach to some of these technologies and the lifespan of the plants, which in the long run bodes well for us as an aftermarket provider. So that's how we look at it. I think worldwide, obviously, some new build opportunities in particular, I would say in renewable energy and waste-to-energy. Some of those are delayed a little bit because of the interest rate increases and timing of capital expenditures. But not for any other reason. So there are a few that will probably extend into next year, overall. For us, as we talked about on the business, as reducing the overhead associated with large new builds, which this is an opportunity for us to do that, we also see potentially increasing opportunities around licensing and some of our waste-to-energy technologies in support of some of the new direction that we want to take in the company. So we'll balance that as we transition more towards licensing and less on specific large new build opportunities.

Aaron Spychalla, Analyst

Understood. Thanks for taking the questions. I'll turn it over.

Operator, Operator

Thank you, Mr. Spychalla. Our next question is from the line of Brent Thielman, D.A. Davidson. You may proceed.

Brent Thielman, Analyst

Hey, thanks. Good afternoon. Can you confirm the 2024 EBITDA target is $100 million to $110 million excluding Bright Lube and Climate Bright?

Kenny Young, CEO

That's correct. Yep.

Brent Thielman, Analyst

Okay. I just want to clarify, I think you mentioned that the costs associated with supporting Bright Lube and Climate Bright would be in the range of $5 million to $7 million. Is that the accurate baseline?

Kenny Young, CEO

Yeah, I think that's below $10 million, but somewhere in that range is a good number. It may tweak a little bit depending on the project financing and how we deal with that on these projects as they continue to advance, and the timing of some of the state funding that we're anticipating, as well as other SPB level and investors that would be investing in those projects. There's just an element of predictability on that tiny piece and how the revenue flows back to B&W, which could plus or minus those expenses from an EBITDA standpoint. It's a little early to predict precisely how that will work and the timing of that, but we see that pathway unfolding. So just give you some range. That's kind of how we're thinking about it.

Brent Thielman, Analyst

That's helpful. And I guess, particularly in regard to some of these moves to boost the cash flow of the business. Can you talk about what sort of your expectations are, assuming kind of this 2024 EBITDA target range, should get some benefits from this overall strategic realignment? I assume there's less drag from certain operations as a function of this. How should we think about that '24 EBITDA converting into cash flow?

Lou Salamone, CFO

From our perspective, the focus on the thermal and power segments, which generate significantly more cash flow compared to new build projects, is crucial. We expect to see an improved conversion from adjusted EBITDA to cash than what we've experienced previously. A portion of this cash will be allocated to further expand our Bright Lube market presence. We anticipate converting a much higher percentage than before and achieving positive cash flow by the second quarter of next year. While I can't be too specific due to capital expenditures, I estimate the conversion rate to be around 60% in relation to cash.

Brent Thielman, Analyst

Starting in Q2, is that Bright Lube?

Lou Salamone, CFO

Yeah, I'd say middle of Q2, we'll start seeing that. Plus Q1, as you know, Brent, Q1 is always a slow quarter for us, as well as others in this industry.

Brent Thielman, Analyst

Yeah. Okay, and then I guess, just in regard to some of the financing that you've done here recently. Maybe your thoughts, next steps just related to the capital structure that you may or may not need to take in order to sort of support the ongoing financing commitments you've got out there support the growth of that company, support Bright Lube. Do you feel like the capital structure is in place that you can do all that at this stage?

Lou Salamone, CFO

Yeah, I think the committed financing that we talked about earlier, for the $150 million for the senior credit facility, which will be both what I'll call the letters of credit facility, and the revolver, certainly helps our capital structure, as does the lower interest rate. And as Kenny mentioned, we're kind of looking at some of the strategic areas that may not fit with our new direction, and that may generate some cash.

Kenny Young, CEO

Yeah, I'll add to that just real quick though. That $100 million to $110 million EBITDA range is important to note and try to emphasize this: that we are lessening, if you will, the reliance on large new build projects as it relates to that target. That doesn't mean that we won't be entering into certain projects if it makes sense for us to enter into. We're trying to allow those to be more upside to that target, rather than a necessity in order to achieve the target. So we tried to be a little more conservative on that approach when putting that guidance or targets out there.

Brent Thielman, Analyst

Okay, great. Thank you, Kenny.

Kenny Young, CEO

Yeah.

Operator, Operator

Thank you, Mr. Thielman. Our next question is from Rob Brown with Lake Street Capital Markets. You may proceed.

Rob Brown, Analyst

Good afternoon. I would like to get more clarity on your comments about the realignment and not pursuing larger projects. Specifically, are you no longer bidding on projects? How are you approaching the market in this regard, and has your focus shifted?

Kenny Young, CEO

Yeah, it's not as complicated as it sounds. We were simply twofold, and I'll explain it further. We have certain opportunities in certain parts on waste energy, particularly international opportunities, which require certain security package levels. The certain security packages, i.e., letters of credit, associated with us come with high interest rates, right? So a lot of in waste energy, the margins are not as high on new builds—clearly not as high as our aftermarket parts and services on renewable services. But those letters of credit and the interest associated with them really compress the margins. Plus, additional risks also come into play. So, as we look at going forward, we have two aspects. There are opportunities and projects that we're in discussions and negotiations on regarding waste energy that would have higher margin potential or targets associated with them, that are well above and beyond the interest expense associated with the letters of credit. These are positive opportunities for us to pursue. But we want to remove the reliance on them in our forecasts so that they're more upside rather than a necessity, if that makes sense. Secondly, we do see an expansion opportunity on licensing; we have been licensing our waste energy technology in several markets, and that typically comes at even higher gross margins and significantly lower amounts of letters of credit. So the interest rate expenses or the costs of that are much more attractive to us from a margin standpoint. So it's not necessarily a no bid or zero bid; it's just as we continue to focus, we will reduce the overhead down to match what we think are hands-on opportunities for us from a margin and cash flow standpoint, while also increasing the licensing model that we have for our waste energy technologies.

Rob Brown, Analyst

Okay, got it. Thank you. The Bright Lube pipeline, I know you've given pretty good color on it over your last analyst kind of update. But how is that pipeline looking at this point? Are you seeing more projects come into it? What's the direction in terms of project certainty in some of those projects that we're waiting for some of the government supports and financing incentives?

Kenny Young, CEO

Yeah. So we are excited about the opportunities in the pipeline building. When we announced the pipeline, we typically keep it to three-year projects that we think will book in the next three years. So I guess if we expanded that pipeline to total opportunities, you would see several more billions in those opportunities. And that's mainly around Bright Lube as it relates to those larger projects. So our overall opportunities in Bright Lube keep growing around that. As a result of that, we keep expanding that organization going forward in Bright Lube and Climate Bright. We haven't got to a final decision on this yet, but we're debating and discussing whether or not we should move Bright Loop and Climate Bright to a separate discussion, not necessarily a segment, going into next year. But we're not at that point yet. The short-term aspect, the opportunity, as Lou mentioned, in Ohio now is moving into a real project for us. The financing is coming into place, the offtake agreements are moving into definitive agreements for up to 10 years, take or pay on that hydrogen. Obviously, it's not a big plant, relatively speaking. But it's important because it puts commercial technology in place for us and moves it from where we were before. The state discussions that we're having with several states now continue; those applications are moving into a real status. Some of those will start to move into public domain soon, and you'll see further announcements on that. It might be a phased-in approach on some of that funding coming from states. We're also continuing discussions on the federal level. The other aspects to consider is that the hydrogen hubs just recently announced by the DOE, particularly in the Appalachian hub, tie in with some of the work we've mentioned before, particularly in Mountaineer, West Virginia. All of this will eventually feed through to us. That's going to take time, obviously, but we keep moving on. We've increased testing now; I’m going to throw out a number, we're probably up to about 30 different fuel testing samples that we're testing across a broad range both in utilizing solid fuels—such as certain coal developments—and also in biomass developments in multiple locations. All of that is going through our labs at this point in time. So we keep increasing the amount of fuel testing related to those opportunities, and we keep developing the opportunities as we keep unfolding the projects that are there before us. As mentioned in the comments today, the developments around Air Products and getting to a 10-year agreement with them represents a big step; that plus the General Hydrogen announcement puts us as an offtake for up to 220 tonnes a day. We are in negotiations on the feedstock aspect, mainly biomass in that particular location. We are also in negotiations on the lease, and then the air permitting process for that. We are also in discussions regarding funding around that project. So all corners of that pyramid are coming together. The same goes for some of the other locations, and we’ll keep announcing that as we continue to make progress. But Bright Lube continues to expand, and we're excited about those opportunities. Something I didn't talk about in the comments, but I'll say here, is that we are starting to see more early developments—so we'll identify this as we move along. What we’re starting to see, globally and potentially in the U.S., is the combination of ammonia—either net negative or net neutral—with coal-fired plants to reduce the overall CO2 offset of those coal-fired plants. We see a wide variety of activity happening across Asia. There have been some discussions around this here in the U.S. So we're really early on that application, but it's exciting for us because, as I mentioned before, many of these plants are now looking to extend their lifecycle for power generation. If we can introduce a net-neutral or net-negative ammonia production from biomass, which Bright Lube can do, these power plants can actually have a carbon offset that could take a coal plant down to net—at least net neutral—by 2030. We think that's an exciting development. We're early in that discussion, but it bodes well for us because it encompasses both aftermarket parts and services for our baseload power generation and thermal group. It also opens up offtake for the ammonia produced by net-negative carbon intensity Bright Lube utilizing biomass. So we’re excited about both ends of that spectrum, and that’s one of the decision points that went into our thinking to focus more around our thermal parts and services and our renewable parts and services as we center more on Bright Lube and Climate Bright, simultaneously reducing some of the costs associated with other areas. So all that blends into that realignment strategy.

Rob Brown, Analyst

Okay, great. Thank you for all the color. I'll turn it over.

Operator, Operator

Thank you, Mr. Brown. Our last question is on the line of Alex Rygiel with B. Riley. You may proceed.

Alex Rygiel, Analyst

Thanks. Good evening, Kenny and Lou, a lot going on here. So let's get into a couple of things. First, as it relates to the $30 million in annual cost savings. Can you comment on the timing of that? And how important is that in getting to your $100 million to $110 million next year?

Kenny Young, CEO

Yeah, some of that has already started and will help out a little bit in Q4 and clearly will kick in heavily into Q1. So that process has already begun. We are taking steps, some of the timing of that may be more in Q1 than now. But they've been identified, and those are in process to be implemented.

Alex Rygiel, Analyst

Excellent. And then there was a reference to strategic alternatives related to non-strategic assets. Is there any chance you could quantify kind of the possible value here that you could realize in making those?

Kenny Young, CEO

No, great question, Alex, I wish I could, but I'll leave that out for the moment. We are looking at various items from assets. Some of those could be property locations and other assets that are no longer strategic that we need going forward. But I don’t have a valuation or anything that we’d want to put out at this point in time.

Alex Rygiel, Analyst

Great, thank you very much.

Kenny Young, CEO

Thanks, everyone.

Sharyn Brooks, Director of Communications

Thank you for joining us today. This concludes our conference call. A replay will be available for a limited time on our website later today.

Operator, Operator

That concludes today's call. Thank you for your participation. You may now disconnect your lines.