Canadian Natural Resources Ltd Q1 FY2021 Earnings Call

Good morning. We would like to welcome everyone to the Canadian Natural Resources First Quarter 2021 Earnings Conference Call and Webcast. Presentation slides are available to view with the webcast and in PDF format at www.cnrl.com. After the presentation, we will conduct a question-and-answer session. Instructions will be given at that time. Please note that this call is being recorded to May 6, 2021 at 9:00 a.m. Mountain Time. I would now like to turn the meeting over to your host for today's call, Corey Bieber, Executive Advisor. Please go ahead, Mr. Bieber.

Thank you, operator, and good morning, everyone, and welcome to Canadian Natural's first quarter 2021 corporate update conference call. As mentioned, to facilitate today's call, you'll find a copy of the presentation slides on our website, which I would encourage you to download now in order to follow along. Canadian Natural had a strong first quarter financially and operationally. Our asset base is unique among our peer group, underpinned by long-life low decline assets, complemented by our conventional assets that allow significant flexibility, and all of which can generate substantial free cash flow. Beyond our robust asset base, there is a corporate strategy that focuses on generating real returns for shareholders and a driven management team and corporate culture that emphasizes being effective and efficient. Over the years, Canadian Natural has demonstrated its robustness, sustainability, and the strength of its business plan. For 2021 and beyond, I believe we are one of the few companies capable of delivering meaningful economic growth, increasing returns to shareholders, and reducing absolute debt in a responsible manner. For today's call, Tim McKay, our President, will first provide a corporate update. Mark Stainthorpe, our Chief Financial Officer, will then provide an update on our 2021 financial outlook as well as our strong financial position. Tim will then provide a summary prior to opening up for questions. Before we kick off, I would like to remind you of our forward-looking statements shown on Slide 3, and our reporting disclosures shown on Slide 4. Of note in our reporting disclosures is that everything will be in Canadian dollars unless otherwise stated. And as well, we report our reserves and production before royalties. I would also suggest you review our comments on non-GAAP disclosures. So with that, I'll turn it over to you, Tim.

Thank you, Corey. Good morning, everyone. Starting with Slide 5. Canadian Natural is in a very strong position. We have great assets, operating excellence, and with our capital, the ability to strengthen our balance sheet and deliver returns to our shareholders. This also applies to the environmental, social, and governance side of the business, ESG, where we are delivering industry-leading performance across the board, a significant factor in our long sustainability. Canadian Natural takes a long-term view on ESG, aimed at creating long-term value, ensuring we identify, assess, quantify, adopt, align ourselves, and then execute. We are developing plans to address these risks by applying technology and innovation so we can continuously improve our performance in the near, mid, and long term, always ensuring it's adding value. Moving to Slide 6, if you look at the overall ESG performance in terms of investment priority, it's very clear that Canada is a world leader and scores the highest in every category and should be an investment priority. A few weeks ago, our federal government had two announcements. First, on April 19, was the federal budget, which recognizes that carbon capture, utilization, and storage, CCUS, is an important pathway for Canada to achieve its environmental goals. Additionally, a few days later, the federal government announced that Canada will be increasing its goal from 40% to 45% reduction in GHG emissions by 2030. As part of the federal government's budget announcement, we will participate in the consultation process with respect to CCUS, and we will work to align with these new goals. Next slide. Canada's oil and gas sector recognizes the need to reduce GHG emissions, and we have been able to leverage technology and Canadian ingenuity to deliver impressive results. Canadian Natural has invested approximately $3.9 billion in R&D since 2009, using this investment to reduce our environmental footprint, unlock reserves, and drive ever more effective and efficient operations, investing now to do even better in the future. As we've seen on Slide 9, our third party has reviewed our oil sands emissions and determined that for Scope 1 emissions, Canadian Natural was 35% lower than our peer average. While this is a good starting point, we are still progressing projects that will continue to drive our GHG intensity down. Slide 10, for CCUS, Canadian Natural is using state-of-the-art carbon capture reduction technologies and is a leader in the oil and gas industry globally. With this infrastructure in place, we can leverage them to capture more CO2. These three facilities are currently operating and are capturing approximately 2.7 million tons of CO2 per year, equivalent to taking approximately 576,000 cars off the road annually. Next slide. Another promising technology is solvents in both SAGD and the potential at Primrose in the steam flood area. At Kirby South, the pilot continues to perform well with GHG intensity reduction of approximately 45% within the targeted range, and we'll continue to monitor its performance in 2021. The pilot at Primrose is targeted for commencement in Q4 2021. Similar to Kirby South, it will take a few years to evaluate its performance. In both cases, this technology can be applied to similar properties and can reduce our GHG intensity by up to 50%, and have targeted operating cost savings of approximately $1 per barrel. Moving to Slide 12, getting to net zero takes the ability to leverage technology, be innovative, using Canadian ingenuity. As well, we have defined actions in the near, mid, and long term. Canadian Natural has a huge technology funnel with just a few of those activities listed here as we progress our journey to net zero. Slide 13, we have a track record of continuously improving our GHG intensity. Since 2012, we have methodically improved our GHG intensity by 32%, equivalent to taking approximately 1.9 million cars off the road annually, and we are progressing projects to continue that trend of reducing our GHG intensity. Moving to the next slide. In summary, Canadian Natural is delivering leading ESG performance. Our long-life low decline assets are advantaged as we can leverage technology, innovation, and continuous improvement to deliver ever-improving environmental performance, delivering results over the long term with a pathway to attaining net zero in the oil sands. As we work with governments, it's clear that Canadian Natural should be an ESG investment priority. Moving to our corporate update, Slide 16. Canadian Natural continues to deliver strong operational results and we are focused on delivering value for our shareholders. In the first quarter, we delivered record production of approximately 1.246 million BOEs, record liquids production of approximately 979,000 barrels a day, an increase of 6% and 4%, respectively, over Q1 '20, primarily as a result of our record oil sands mining SCO production of approximately 468,800 barrels a day and strong North American E&P production, including thermal of approximately 478,700 barrels a day. Our natural gas production was strong at approximately 1.6 Bcf, an 11% increase over Q1 '20. Operating performance in all areas was strong with oil sands mining being top tier at CAD19.82 per barrel, 5% lower than a year ago. And if you look at it from a macro perspective, it's even more impressive. Compared to a year ago, we're about 41,000 barrels a day higher. And when you exclude the cost of natural gas, the absolute dollar basis is very comparable to Q1 2020, a great job done by our oil sands mining team. Slide 17. Canadian Natural has robust economic, long-life, low decline assets. And relative to most of our peers, the ability to enhance the margins and grow production, which results in more long-term value. We have a diversified asset base with value enhancement plans for every product and basin we operate. This is driven by our effective and efficient operations, our area knowledge, ownership, and operatorship of infrastructure. Canadian Natural has a history of capital discipline, which includes flexible and effective capital allocation and our ability to be nimble to capture opportunities. We continue to simply optimize capital allocation and maximize value for our shareholders. We're ensuring we maintain a strong balance sheet. With our low maintenance capital and our culture of leveraging technology, innovation, and driving continuous improvement throughout the company gives us ever-improving operations. It's for these reasons, Canadian Natural has a leading free cash flow generation. Next slide. Canadian Natural has a balanced and diverse product mix with approximately 48% that is high value, light crude oil, SCO and NGL on a BOE basis, limiting closure to one product. For liquids production, approximately 81% from long-life, low decline assets, which require less maintenance capital than our peers. As well, we have approximately 1.6 Bcf of natural gas production or approximately 22% of our BOEs, well positioned to capture additional value as natural gas prices strengthen. Slide 19. As a result of our unique asset base, Canadian Natural's corporate decline is low at approximately 10%, with approximately 63% of our BOE production being long-life, low decline or zero decline production. Because of this, we require less maintenance capital to maintain production than our peers. Next slide. We are executing our 2021 budget, with a total budget of $3.2 billion, of which only $200 million is for growth capital. And we're growing our production by approximately 5%, strong performance given that Canadian Natural is over 1 million BOEs a day. With the first quarter behind us, we are on track and will continue to be disciplined in 2021. With improved pricing that we are seeing today, we will generate significant free cash flow and pay down our debt very quickly. Slide 21, Canadian Natural's 1P reserves are world-class among our global peers, which includes the supermajors. A strong indicator of the strength and depth of our assets was approximately 30-year reserve life index, of which approximately 61% represents long-life, no decline in SCO reserves that have lower execution risk than many of our peers. As well, I remind you that 100% of Canadian Natural reserves are externally evaluated, reviewed by an independent, qualified reserve evaluator. Moving to the next slide. When you look at net debt to 1P reserves, the lowest among global peers, as well as you saw earlier with two-thirds being long life, no decline SCO reserves, we have a lower cost structure and reserve risk. As you can see here on Slide 23, Canadian Natural has the highest free cash flow yield among our global peers, an indicator of the strength of our assets, our effective and efficient operations, and low maintenance capital. Slide 24, net debt to cash flow. We're well positioned compared to our global peers with less debt to cash flow than our peer average, and it's coming down very quickly, given our free cash flow profile for 2021. Slide 25, there are many positive factors ahead for the Canadian oil and gas industry and in our opinion, the discount to global peers should disappear. Egress is improving, heavy oil differentials are back to historical levels in the low 20%, ESG is a priority and Canada being a leader will be recognized. Canadian Natural has much lower operating and maintenance capital compared to our global peers and should not be undervalued when compared to these periods. It is for these reasons it's clear Canadian Natural should be an investment opportunity. We have a sustainable business model, a growing sustainable dividend track record of 21 years at a 20% CAGR, which is top tier compared to our global peers. Slide 26. Canadian Natural is a world-class investment opportunity. We have world-class reserves, much of it being long-life, low decline assets, which gives us a low decline of approximately 10%, meaning low maintenance capital as compared to our peers. Our top-tier effective and efficient operations and our drive for continuous improvement will ensure our balance sheet will strengthen very quickly in 2021, as Mark will show you here shortly. As you saw earlier, this gives us the largest free cash yield percentage, nearly double our global peer average. Finally, we are focused on value creation as we have grown our sustainable dividend for 21 years at 20% CAGR, impressive when compared to our global peers. I will now turn it over to Mark for our financial review.

Thanks, Tim, and good morning, everyone. I'll start on Slide 28 with the Q1 financial highlights. Q1 was a very strong financial quarter as effective and efficient operations, along with the improved commodity price backdrop, led to adjusted funds flow over $2.7 billion. The free cash flow generated was over $1.4 billion after the prudent capital program and dividends in the quarter. This led to substantial balance sheet deleveraging as absolute debt was reduced by $1.4 billion compared to Q4 '20 levels. This represents $2.9 billion of debt reduction since June of 2020, further underscoring the ability of our long life low-decline assets, combined with safe, effective, and efficient operations, to generate leading free cash flow. The sustainability of our funds flow allows for consistent and increasing returns to shareholders. In March of this year, we increased our quarterly dividend by 11% to $0.47 per share, which contributed to a year-to-date shareholder return of about $1.1 billion. This year's dividend increase represents the 21st consecutive year of dividend increases at Canadian Natural. Canadian Natural's balanced approach to capital allocation, coupled with our sustainable free cash flow allows us for increasing returns to shareholders, while paying down absolute debt and growing our diverse asset base, something that sets Canadian Natural apart. This can be seen on Slide 29, the ability to deliver significant and sustainable free cash flow. As you can see, in 2020, we generated strong free cash flow in a lower commodity price environment. Now with the economic rebound and increased demand and pricing for commodities at approximately $60 WTI, Canadian Natural is targeted to deliver substantial free cash flow in the range of $5.7 billion to $6.2 billion after budgeted capital and dividends. As Tim mentioned, our free cash flow yields are tracking higher than global peers. Our long life, low decline, low risk assets continue to demonstrate why Canadian Natural should be an investment priority. On Slide 30, you can see the results and the forecast showing the impact of our free cash flow generation. At strip pricing, our absolute debt is targeted to decline significantly, while returns to shareholders over the same period are targeted to be approximately $3.2 billion. Few peers, if any, have the ability to generate and balance this level of free cash flow and create long-term shareholder value. The impact to leverage metrics is shown on Slide 31. Debt to EBITDA is targeted to exit 2021 at 1.1 times and debt to book capital is targeted to be under 30%. With a purposeful maturity profile that facilitates paying down absolute debt, you can see that so far in 2021, we have repaid and canceled over $1.6 billion of non-revolving facilities. Our history and commitment to balance free cash flow allocation is seen on Slide 32. Notwithstanding the challenging commodity environment in 2020, our assets and business model delivered. We were able to essentially maintain our net debt levels through the year while executing an accretive natural gas acquisition, maintained our March 2020 dividend increase, followed by a further 11% increase in March 2021. We repurchased shares and increased both reserves and production. These are top-tier results that improve the resilience of the Canadian Natural business model and our commitment to financial discipline. On Slide 33, you can see the sustainability of the dividend at Canadian Natural. Dividend levels are continually evaluated against internal forecasts for cash flow, capital, free cash flow generation, and our ability to remain nimble and adjust our plan if conditions warrant. This results in a business that can support a sustainable and increasing dividend over time and creates consistent value for shareholders over the long term. Slide 34 shows the five-year compound annual change in our dividend compared to global peers. Slide 35 displays this growth over 10 years. And Slide 36 shows this growth over a 20-year time frame. All of these slides illustrate the sustainability of our free cash flow generation and the company's priority to ensure ever-increasing returns to shareholders, including sustainable and growing dividends, as well as the prudent capital allocation at Canadian Natural. Slide 37 displays the history of dividend increases. As you can see, increases have varied depending on our position as it relates to cash flow and capital flexibility at any point in time, with the focus on sustainable increases. So in summary, on Slide 38, Canadian Natural has built an asset base that is unique and sustainable, and has developed a resilient business model that is flexible and can quickly adapt to changing environments. The assets and business model provide protection in challenging environments like we saw in 2020. Additionally, we are positioned to benefit exponentially when commodity prices and markets are more favorable, like what we are seeing now in 2021. Our emphasis on balancing our four pillars, our enviable and diverse asset base, and our execution-focused teams with a history of strong results are all focused on driving long-term and increasing shareholder value. With that, I'll turn it back to you, Tim.

Thanks, Mark. In summary, Slide 40, Canadian Natural's ability to deliver significant free cash flow in today's environment starts with our large reserve base, of which 83% is in long life, low decline. Of our approximately 1.246 million BOEs a day, long life, low decline asset base makes up approximately 770,000 barrels a day, of which approximately 455,000 barrels a day is no decline, high value SCO production. We have a diversified product and asset that is driven by our effective efficient operations, our area knowledge, our ownership and operatorship of infrastructure, and we have low sustainable capital. We have 1.6 Bcf of natural gas and with our diverse asset's ability to add low-cost production. We have flexible and effective capital allocation and our ability to be nimble to capture opportunities. We simply optimize capital allocation to maximize value for our shareholders. Our culture of continuous improvement is unique among our peers as our teams are focused on delivering safe, reliable, active, and efficient operations across our asset base. Next slide. With oil at approximately $60 per barrel, in 2021, Canadian Natural can deliver leading free cash flow generation of approximately $5.7 billion to $6.2 billion, which supports our sustainable growing dividend of 21 years. We have significant debt reduction, improving our already strong balance sheet. Finally, across the company, our teams are focused on reducing our environmental footprint through technology and innovation, and we look forward to participating in the federal government consultation period. With that, I'll turn it over for questions. Thank you.

Your first question comes from Menno Hulshof from TD Securities.

I'll start with a question on the balance sheet. So your debt metrics, as you talked about, they're coming down really quickly. And you've made it very clear that the balance sheet will continue to attract the vast majority of free cash flow over the near term. So my question is, what is the endgame in terms of the leveraging process? Pre-COVID, I believe you're targeting 1.5 times and $15 billion of total debt. So do those targets still apply? And at what point can we reasonably expect buybacks to ramp back up again?

I think that when you look at the free cash flow generation, there is a lot of optionality going forward here. As you have recognized, the focus, though, is going to be on the balance sheet or on absolute debt repayment in the near term. We evaluate this all the time and we'll continue to do that going forward. As far as the buyback, right now, we're looking at really just offsetting our dilution through the rest of this year, and that's the target today.

And then my follow-up would be on base and egress. Maybe we could just get your thoughts on current market access, including any thoughts on apportionment and inventories and how that is impacting your very early thoughts, I suppose, on pure maintenance versus growth into 2022.

There's a lot of uncertainty around this topic due to various news items emerging today. However, we expect to gradually see improvements in egress. Line 3 is projected for Q4, while TMX may take a bit longer but is still progressing. There are concerns regarding Line 5 and possibly the Dakota Access, but it's premature to make any assumptions. Currently, Alberta's light oil has no apportionment, making it difficult to predict the effects of these two issues. Undoubtedly, apportionment and discounts could negatively affect Alberta. As for the Dakota Access, if oil starts flowing through Cromer again, it may have an impact, although I believe those using Dakota Access have likely made necessary arrangements in advance. Overall, there are several factors at play, but I'm still very optimistic that many egress issues will continue advancing.

So fair to say that you're in a holding pattern through the end of the year?

Well, we're not changing our capital. We're basically just staying with the status quo.

Your next question comes from the line of Greg Pardy from RBC Capital Markets.

Tim, in the opening remarks, you mentioned solvents, and I would like to know if you could provide an update on where you plan to apply the solvent technology. Additionally, can you share any insights on in-pit extraction and the use of autonomous haul trucks, as I'm interested in your developments in that area?

So for the solvents, obviously, the pilot at Kirby South is very advanced. And if we look across our asset base, both the Kirby sites and the Jackfish sites could be very amenable to that technology. So we're very happy with the results today, and now it's just trying to work out a plan for going forward. In terms of Primrose, the steam plant area, that's a little more experimental. We obviously have to pilot it for a couple of years to see if that can be applied to the Primrose area and the steam plant pieces. So too early to say at Primrose, but I would say for the SAGD it looks very promising. IPEP, we continue to advance our commercial engineering. There are a lot of benefits to IPEP, but there's also a lot of capital costs upfront. So our teams are still evaluating it. And we hope to have something this year to say whether we're moving forward with it or not. It is obviously a leading technology. But again, one of the things we pride ourselves on is doing a detailed work and ensuring that the capital forecast that we use is correct. And then I guess, what was the last question there, Greg?

It’s autonomous haul trucks; I was including everything in there.

You know what, the autonomous trucks, some operators have more benefit because of the way they operate and that, and we have less benefit. But having said that, I mean, our teams are looking at electric and hydrogen technologies as well to reduce their environmental footprint. That's probably the biggest thing we see for our benefit is reducing our GHG and how to do it with either electric or hydrogen. But autonomous trucks, there is a bit of a cost piece there to that, and it really depends on how efficient you are. And our teams do a great job; they measure our performance down to the second. So I'm really proud of the way our teams have operated in the oil sands.

And just as a second question. You touched on carbon capture storage at the outset you guys have done this very early on, I think, with Horizon. And obviously, you'd mentioned AOSP and the Northwest upgrader as well. But maybe just focusing on Horizon for a moment. I think you've got that carbon capture starts right off the hydrogen plant. Would there be scope for you to increase how much of the CO2 you're capturing off of the Horizon facility overall, or are you doing much of that now? Just trying to get a sense there.

What we did early on and part of it was the sequestering of CO2 and the tailings. So off of one of the hydrogen plants, we have capture, it's not fully utilized because there's only so much CO2 that we can put into the tailings. And so there is available capacity there as well as on the second hydrogen unit that we could expand, capture and obviously increase more CO2 capture at Horizon. So there are those opportunities for sure.

Your next question comes from the line of Dennis Fong from CIBC World Markets.

The first maybe just to follow along with the solvent strategy. I appreciate that you kind of gave us a little bit more context as to the stage of development for your work at Primrose versus the SAGD component of things. And obviously, you guys have been doing quite a bit in terms of lowering your GHG intensity as well. I'm just curious as to how much of the implementation of solvent technology at Kirby and Jackfish are currently potentially within your 2025 goals of reducing GHG intensity across your platform? And secondarily, how much do you think could be incremental to that with a successful pilot out of Primrose?

It really depends on how aggressive you want to be with that target. For a typical approval process, you would likely expect the SAGD component to be operational within that timeframe. However, that would be quite ambitious. The best approach for our company would be to carefully evaluate and ensure we have done the necessary research. From a construction perspective, given that we are already halfway through 2021, aiming to start now to complete everything by 2025 seems quite challenging.

So the idea then would be that any of these technologies could provide incremental benefit versus your existing 2025 goal of GHG intensity reduction, i.e., like the benefits are not currently kind of included in your goals added yet?

Yes, that's correct. There are several technologies we are developing. In the meantime, we are also focusing on various efforts to lower our greenhouse gas emissions. Carbon capture and the use of solvents are both future technologies. The same goes for molten fuel carbonate cells. All of these advancements will contribute to reducing our overall carbon dioxide emissions.

Following up on Menno's question about capital allocation, our main priority is to lower our total debt and achieve a more manageable leverage level. How should we approach our long-term strategy while balancing the four pillars and returning value to shareholders? Additionally, there are several projects with low capital intensity that promise substantial economic benefits. What criteria regarding leverage should we consider before progressing with initiatives like IPEP, and what factors might influence decisions on debottlenecking projects at Horizon or other low-cost projects at AOSP?

Well, the challenge here is that we would need to make some assumptions about conditions like egress or pricing, which makes it hard to provide a definitive answer. What I can say is that I don't foresee us embarking on a major capital expenditure project for Horizon expansion. If we do proceed with anything, it will likely be on a much smaller scale. We plan to utilize our existing facilities and are focusing on optimizing our gas operations. For oil, we will concentrate on minor brownfield developments. Overall, I don’t see anyone in the industry taking a bold approach towards major capital initiatives.

Your next question comes from Neil Mehta from Goldman Sachs.

You guys have proven out M&A is a core competency for your business. Tim, I just wanted your perspective on how you're seeing the A&D market at this point and are there active opportunities either to buy or to sell?

What we see in that market today is that a lot of the smaller entities are doing deals emerging and that they need to. On a bigger scale, I really don't see anything. If I look at ourselves, we have no gaps. We have lots of opportunities within our own portfolio today. So what I see is there will probably be a little more consolidation but it will still continue at the smaller company's level.

And you guys did the Painted Pony acquisition, your large natural gas producer. Just curious what your thoughts are on the market here and any comments on how the natural gas part of your business is contributing to the cash flow in 2021?

The Painted Pony asset was an opportunistic acquisition about a year ago when gas prices and forecasts were quite different. Since then, gas prices have strengthened. Most companies are now significantly more disciplined with their capital than they have been in the past. I don't anticipate any major short-term concerns regarding egress, but companies are working on improving their balance sheets, and the market price looks strong. In our budget, we initially projected about 250, and now it looks like we might be closer to 270 or 275 for the year, indicating a stronger outlook. We are also continuing with our gas program as it appears to be performing well.

Your next question comes from the line of Phil Gresh from JPMorgan.

I want to rephrase the balance sheet follow-up question. The 1.5 times leverage target has historically matched up with approximately $15 billion in net debt, which is your year-end target. At current prices, it seems to be more like $14 billion. Has your long-term net debt target changed at all since COVID? Do you still consider it a reasonable target for us to think about, especially since it seems there would still be a need for debt paydown moving forward, depending on how you shift the mix?

I mean, when we were going into 2020, we were obviously forecasting some large debt reductions in that year. Things changed a little bit, we were able to kind of enter and exit pretty much flat and do that acquisition at the end of the year, which was strong. And now as we go into 2021, we're just back on that track of paying down absolute debt. And as I mentioned, with that maturity profile to actually facilitate being able to do that on an absolute basis. So I think, yes, as we track down lower, there's always going to be an opportunity to look at that free cash flow and the optionality there to balance the four pillars. But just here in the near term, we're focused on that absolute deviation.

My second question is just around the sustaining CapEx of the business. Coming into the downturn, I think it was around $3.7 billion forecast, now it's $3 billion. And I was just wondering how much of that, in retrospect, do you view as cyclical versus structural factors that you've just improved and taken costs out? And just with your updates here around GHG, do you think that there will be incremental capital spending required to achieve these objectives that maybe would be considered sustaining capital?

The sustaining capital has many factors that can vary each year, including the overall cost of doing business and the price of steel. Currently, we are at a $3 billion level, reflecting a balance between oil and gas growth. The future program we undertake will influence our sustaining capital. It's too early to determine the capital profile related to greenhouse gas initiatives, as it largely depends on the federal government's plans following their consultation period. For now, we plan to engage in that process and later assess what the capital profile might entail. Carbon capture technology seems to be particularly suited for larger facilities, such as cement plants, oil sands operations, or fertilizer companies, which are targeting major emissions. We'll need to wait and see how that program develops in the future.

There are no further questions at this time. I turn the call back to management for closing remarks.

Thank you, operator, and that wraps up our formal presentation. I'd like to thank all of you for your participation this morning. If you do have any questions or follow-ups, please don't hesitate to give us a shout at the IR team. Thank you very much. Take care. Bye.

That concludes today's conference call. Thank you, everybody, for joining. You may now disconnect.