Earnings Call Transcript - FNV Q1 2023

Operator, Operator

Good morning, and welcome to Franco-Nevada Corporation's First Quarter 2023 Results Conference Call and Webcast. This call is being recorded on May 3, 2023. I would now like to turn the conference over to your host, Candida Hayden, Senior Analyst, Investor Relations. Please go ahead.

Candida Hayden, Senior Analyst, Investor Relations

Thank you, Joanna. Good morning, everyone. Thank you for joining us today to discuss Franco-Nevada's first quarter 2023 results. Accompanying this call is a presentation, which is available on our website at franco-nevada.com where you will also find our full financial results. The presentation is also available to view on the webcast. During our call this morning, Paul Brink, President and CEO of Franco-Nevada, will provide introductory remarks; followed by Sandip Rana, Chief Financial Officer, who will provide a brief review of our results. This will be followed by a Q&A period. Our full executive team is available to answer any questions. Participants may submit questions by telephone or via the webcast. We would like to remind participants that some of today's commentary may contain forward-looking information, and we refer you to our detailed cautionary note on Slide 3 of this presentation. I will now turn over the call to Paul Brink, President and CEO of Franco-Nevada.

Paul Brink, President and CEO

Thank you, Candida, and good morning. I'll start with a note on our ongoing director succession. At our AGM yesterday, we were sad to mark the retirement of two of our directors, Louis Gignac and Elliott Pew. Louis was one of the original Directors of Franco-Nevada and his expertise and guidance has been the foundation of many of our investment decisions. Elliott joined our Board in 2019 and was key to directing our oil and gas investments. Thank you, Louis and Elliott, for the enormous contribution that you've made to our success. Turning now to the first quarter results. Our diversified portfolio continues to generate strong cash flow and high margins, though the quarter was impacted by production disruptions at Cobre Panama and Antapaccay as well as lower energy prices. Stronger precious metal deliveries are anticipated in Q2 with the social disruptions at Antapaccay having subsided and First Quantum in the government of Panama having agreed on terms for a refreshed concession contract. The results for the quarter while lower bring home to me the robustness of our business. Despite the production impacts, the business still generated an 83% adjusted EBITDA margin and a 55% adjusted net income margin. We have no fixed costs related to our royalty and stream assets, so a temporary production hold is largely a deferral of revenue. We like to see great ore bodies get even better over time. And I think that will apply to both Cobre Panama and Antapaccay. During the quarter, we published our 2023 ESG report. Highlights include an outline of our ESG due diligence focus, increased community contributions, new board diversity goals, disclosure of Scope 3 finance emissions and details of our new climate action policy. We also published our annual asset handbook. A few numbers in the handbook stood out to me. We now have interest in 419 assets, of which 113 are cash flow producing. Those assets generated $1.3 billion of revenue in 2022. That's 8.7 times the revenue of our first full year in 2018. At year-end 2022, we had 18.8 million measured and indicated resource royalty ounces. Those are ounces that are cost-free to Franco. At current production rates, our measured and indicated resource mine life stands at 34 years. Those numbers don't include our energy assets, our exploration assets or obviously, the upside potential of the producing assets. In total, our assets cover 66,000 square kilometers on some of the world's best mineral trains. Looking forward to the balance of 2023, the expansion of Cobre Panama will be a big driver. I was impressed that despite the disruptions, First Quantum completed construction for the CP 100 expansion project ahead of schedule. They're now ramping up throughput to achieve 100 million tonnes per annum by year-end. There are three new mine starts we're looking forward to this year: Magino in Ontario, Seguela in Côte d'Ivoire and Salares Norte in Chile. And during the quarter, we commenced funding the Tocantinzinho stream deposit. The G Mining Ventures team are targeting first production in the back half of 2024, driving our next leg of growth. Lastly, our business development team is seeing good opportunities for financing new gold mines, and I'm confident they will further add to our 5-year growth outlook. With that, I'll hand it over to Sandip.

Sandip Rana, Chief Financial Officer

Thank you, Paul. Good morning, everyone. As mentioned by Paul, our diverse portfolio continued to generate strong cash flows and high margins during the first quarter of 2023. However, our gold equivalent ounce deliveries and financial results were impacted by temporary production curtailments at two core assets, Cobre Panama and Antapaccay. In addition, with the retreated energy prices, specifically natural gas, this did result in a reduction in energy revenues and associated GEOs in the first quarter of 2023 compared to prior year. On Slide 5, we highlight the gold equivalent ounces sold for the last 5 quarters. Overall, GEOs sold for the first quarter were 145,331, down from first quarter of 2022 and fourth quarter of 2022. Of this total, precious metal GEOs were 111,238, down 14% from prior year. For the quarter, the largest contributors to the lower precious metal GEOs were Antapaccay, Antamina, Guadalupe and Goldstrike. At Antapaccay, GEOs delivered and sold were lower in Q1 2023 compared to prior year due to sociopolitical tensions in Peru that impacted operating activities and constrained logistics during the period. We do expect strong deliveries from Antapaccay in the second quarter. For Antamina, we had lower GEOs sold in prior year as the operators are currently mining lower grade ore, but this was expected with actuals for the first quarter being in line with our expectations. At Guadalupe, the operator mined fewer ounces from stream lands, resulting in lower GEOs delivered and sold. And at Goldstrike, the net profit interest was lower due to lower production from roaster maintenance and higher capital costs with the conversion of the autoclave to a conventional carbon-in-leach process. Partially offsetting the lower GEOs from the assets mentioned were stronger GEOs from Bald Mountain and Marigold. At Cobre Panama, we earned 28,663 GEOs compared to 29,495 in Q1 2022. As guided, deliveries were impacted by the temporary curtailment of operations in the quarter, partly offset by the receipt of GEOs from shipments related to Q4 2022. We do expect strong deliveries from Cobre Panama in the second quarter. For diversified assets, we recorded lower GEOs and revenue for both iron ore and energy assets as both iron ore and energy prices were lower in the first quarter of 2023 compared to the first quarter of 2022. Q1 2023 saw continued volatility in commodity prices. Other than the gold price, average commodity prices were lower year-over-year. Palladium and energy prices were down significantly. This volatility did impact our financial results for the quarter. The lower energy prices resulted in a sharp reduction in energy revenue for the quarter with energy revenue being $49 million compared to $75.6 million in prior year. Also, with the increase in the price of gold year-over-year and lower non-gold commodity prices, it did impact the conversion of non-gold commodities to GEOs. Slide 7 highlights our total revenue and adjusted EBITDA amounts for the 5 quarters beginning Q1 2022. As you can see from the bar charts, revenue and adjusted EBITDA were consistently above $300 million per quarter, but did have a pullback this quarter for the reasons explained earlier. However, our margins remained consistent with an adjusted EBITDA margin of 83% for the quarter. Revenue for the quarter was $276.3 million, while adjusted EBITDA was $229.4 million. As you turn to Slide 8, you will see the key financial results for the company. As mentioned, GEOs and revenue were lower in the quarter compared to prior year. On the cost side, we had a decrease in cost of sales which was $38.2 million compared to $43.6 million in Q1 2022. The largest component of this is the per ounce fixed cost we pay for stream ounces. We sold 82,181 stream ounces in the first quarter compared to 96,740 a year ago. Depletion decreased to $61 million versus $74.6 million a year ago. Depletion is based on actual mining GEO sold and barrels of oil equivalent received on the energy side of the business as we received fewer GEOs from Antapaccay, Antamina and Vale, which are higher per ounce depletion assets, resulting in lower overall depletion expense. For the first quarter of 2023, adjusted net income was $152.2 million or $0.79 per share. Slide 9 highlights the continued diversification of the portfolio. As shown, 77% of our Q1 2023 revenue was generated by precious metals. The geographic revenue profile has revenue sourced 89% from the Americas, with Canada and the U.S. being the largest. Regarding asset diversification, Cobre Panama was again our largest revenue generator at 20% of total revenue. The last chart highlights our operator diversity. Our largest exposure to revenue being generated by any one operator is 20%, which is First Quantum who operates Cobre Panama. Slide 10 illustrates the strength of our business to generate high margins. On the slide, you can see that cost of sales has remained fairly consistent over the period shown. The amount of cost of sales will depend on the mix of royalty versus stream GEOs, including mining and energy. During the first quarter of 2023, the cash cost per GEO, which is essentially cost of sales divided by gold equivalent ounces sold, was $263 per GEO. Corporate administration costs, including stock-based compensation, were less than 4% of revenue for the quarter. The total can fluctuate quarter-over-quarter but has tended to average approximately $8 million each quarter historically. In a rising commodity price environment, we expect to benefit fully as we do not expect our cost structure to change significantly. Slide 11 summarizes the financial resources available to the company. When including our credit facility of $1 billion, total available capital at March 31, 2023 is $2.2 billion. The company continues to be debt-free. And before I turn it over to the operator, on Slide 12, we provide an update on our audit status with CRA. As you are aware, there were 3 disputes ongoing with CRA, foreign accrual property income, domestic and transfer pricing. I'm pleased to say that on April 28, we reached a settlement with CRA on the domestic and FAPI reassessments. CRA will be vacating the reassessments entirely. The potential tax exposure related to the reassessments to be vacated was CAD 26.5 million for the domestic and CAD 11.6 million for the FAPI, including interest and penalties. With respect to the transfer pricing reassessment, the company continues to believe that these reassessments are not supported by Canadian tax law and intends to defend its tax filing position. We will continue to provide updates as needed. And now I'll pass it over to the operator as we're happy to answer any questions.

Operator, Operator

The first question comes from Cosmos Chiu at CIBC.

Cosmos Chiu, Analyst

Great. Thanks, Paul, Sandip. Maybe my first question is on taxes and it's certainly good to see a CRA resolution here and FAPI and also the domestic reassessment. I guess my question is, is there any kind of read-through from the CRA resolution on April 28 into the transfer pricing for its subsidiary file at least any kind of read-through in terms of timing?

Sandip Rana, Chief Financial Officer

Thanks for the question, Cosmos. There's no read-through. They're all separate. So FAPI and domestic have been settled. We're going through the process on the transfer pricing, which would likely discover later this year, early next year, but no read-through.

Cosmos Chiu, Analyst

Got it. Tony raised this point, and I believe all three different issues emerged around the same time. However, Sandip, can I follow up with another question? Has the transfer pricing for foreign subsidiary files always been complex or contentious, or is that not the case?

Sandip Rana, Chief Financial Officer

I wouldn't say it's complex. It's just a different set of facts and circumstances, different legislation that CRA is looking at and making an interpretation of. So as I said, we believe we've got a very good fact pattern, and we will defend our position, but they're all independent.

Cosmos Chiu, Analyst

Of course. Without sounding too much like a tax mode show, maybe another question on taxes. As you mentioned in your press release, a global minimum tax, you made a statement on global minimum taxes pillar too. It looks like it is going ahead. As you mentioned, there's no legislation yet. You need to review the legislation when it becomes available and take a look at the impact, potential impact of Franco-Nevada. But maybe I'll ask this question anyways. If I look at the taxes paid in Q1, $23.9 million, your net income before taxes, $184 million. So that works out to about 13%. Global minimum tax is 15%. Is that how I should approach it in terms of potential impact? Or is that just too simple?

Sandip Rana, Chief Financial Officer

I guess the easiest way is whatever you have as your income taxes related to the Barbados assets because that's the only entity that they would apply to, which is approximately 50% of our revenue. And there, we pay a low tax rate less than 2% or at least that's what we record. So the incremental 13% would be related to those assets, and then you would adjust for that.

Cosmos Chiu, Analyst

Got it. Have you thought about how you will present the potential impact when the time comes? Will you include details about the Barbados subsidiary? How do you plan to communicate that impact to the market and to investors?

Sandip Rana, Chief Financial Officer

Yes. So obviously, we'll have to wait to see what the legislation entails. Once we've seen that, whatever disclosure is required by us going forward to explain that in our financial statements and MD&A and other filings, we'll do so. But at a high level, we have run some internal numbers and if it is enacted the way that the legislation internationally has been proposed, it's about a 4% to 3% to 4% impact on NAV.

Cosmos Chiu, Analyst

Got it. And then maybe switching gears a little bit. You sold 111,000 ounces precious metals GEOs in Q1. You've maintained your guidance, $490 million to $530 million for the year my own writing. Clearly, that means that Q2 was better, H2 is better. I think, Paul, you kind of mentioned that as well in terms of different factors going to it. Could you maybe help us in terms of giving us more color in terms of how that increase is going to happen? Are we going to see increases sort of quarter-over-quarter steadily? Or are we just going to see a big lift in Q2 now that Cobre and Antapaccay some of the issues are behind us?

Sandip Rana, Chief Financial Officer

Yes. So I think you'll see a stronger Q2. Obviously, at Cobre Panama, they were not making any shipments. So that stockpile has to be shipped. And so we'll see the benefit of that in the second quarter, and we sort of have guided to that at the year-end call where we said that we did expect the second quarter stronger from Cobre compared to first quarter and quarters later on in the year. And then Antapaccay with the production curtailment there, again, there'll be some catch-up deliveries in Q2. But overall, the rest of the portfolio is performing in line with our expectations. So I think you'll see a stronger Q2 and a more even Q3, Q4.

Cosmos Chiu, Analyst

Perfect. And then maybe one last question. As you mentioned, there's some new streams or new royalties coming in new contributions coming in Magino, Seguela, Salares Norte. I guess my question is, we shouldn't see any kind of lag, right, in terms of production versus revenue to Franco-Nevada? Because I believe these are all royalties. So I just want to make sure that as they produce, it hits the revenue or hit as revenue to Franco-Nevada fairly quickly.

Sandip Rana, Chief Financial Officer

Yes. So they're all royalties. So we will accrue the revenue whether we've received it in kind or in cash prior to the month or the quarter end, we will still be booking the revenue. There's no timing delays.

Operator, Operator

The next question comes from Heiko Ihle at H.C. Wainright.

Heiko Ihle, Analyst

Can you hear me okay?

Sandip Rana, Chief Financial Officer

Yes, we can hear you fine, Heiko.

Heiko Ihle, Analyst

Perfect. Yes, apologies I'm sitting in an airport lounge. So thanks to Louis and Elliott for their services in the past. Question-wise, I mean, Chile has really been pushing their lithium industry lately. Obviously, there is no direct impact on you, but I've heard some folks be fearful on the impact on the mining industry in general. Cash-strapped governments around the world looking for an easy buck. 26% of your revenue in the most recent quarter was from Mexico and Central America, 29% was South America. I assume you haven't seen or heard much that I haven't, but maybe you have. But can you share some of your thoughts in regards to the impact on your future M&A strategies?

Paul Brink, President and CEO

Thanks for that. It's Paul. I think the most notable point is that there has indeed been a shift to the left in Central and South America in recent years. Additionally, many governments around the world are facing financial challenges due to COVID. Consequently, several jurisdictions are exploring ways to fund their budgets, often targeting mining companies, particularly international ones. This has created some pressure, which factors into our capital allocation considerations globally. Fortunately, most of our significant stream interests are structured to avoid taxes in those countries, so we haven't been a target for those governments and have largely avoided those pressures. As for where we stand in this process, I believe the pendulum has swung quite far but has moved back somewhat toward the center over the last year. The initial proposals for much higher taxes in Chile have been rolled back alongside other constitutional changes, leading to a more pragmatic discussion now. There will be an increase in mining taxes through that royalty, but it appears to be something more manageable. Similarly, in Peru, the government, which was initially pushing hard for mining reforms, has relaxed its stance. You're correct that a lot of the current focus in governance is on lithium, a new area of interest for many. As of now, we don’t have any involvement in that sector, so we are not affected.

Heiko Ihle, Analyst

Okay, that's fair. I appreciate your polite response, but can we agree that mergers and acquisitions might change a bit in the future?

Paul Brink, President and CEO

We're aiming to provide a low-risk investment option in the gold market. One way we achieve this is through diversification. Unfortunately, our mining assets are fixed in location. Our strategy is to avoid concentrating too much on any single asset, although we recognize that we will face some challenges. We believe we can navigate these fluctuations as long as we maintain a strong diversification strategy.

Heiko Ihle, Analyst

Got it. And Cosmos asked my next question. But then one thing I just wanted to follow up on Slide 12 with the transfer pricing for Mexico subsidiaries in Mexico and Barbados. I appreciate the color on the exposure. Obviously, the interest and penalties are still accumulating. First of all, what's the rate at which that accumulates? And also, it says, I mean, you're vigorously defending your position not to understand it in a lawsuit. But are there settlement talks at all? Or will this become like an all-or-nothing outcome type of thing?

Sandip Rana, Chief Financial Officer

We are still in the process of going through discovery and addressing what's necessary when filing a dispute with the CRA. We are open to settling at some point, but we have not reached that stage yet. The interest accrues at a rate of 8%.

Operator, Operator

Next question comes from Greg Barnes at TD Securities.

Greg Barnes, Analyst

Sandip, I just want to get an idea of what Guadalupe looks like for the rest of the year. It's a lot lower than us in the first quarter, and I'm wondering how it's trending Q2, Q3, Q4.

Sandip Rana, Chief Financial Officer

So obviously, we get guidance from them on a full year basis of what the deliveries will be for Guadalupe. Q1 was short. But at this time, we're still estimating that they'll reach their plan, and that's the best information we have.

Greg Barnes, Analyst

And you don't have a sense of where the production is coming from relative to your streamlines?

Sandip Rana, Chief Financial Officer

No, it varies from quarter to quarter because our stream doesn't encompass the entire land package. However, we have a general percentage for the year. Currently, we believe they can make up the difference, but we will have a clearer picture as the year unfolds. We will also provide an update on our guidance in the second quarter.

Operator, Operator

Thank you. Next question comes from Martin Pradier at Veritas.

Martin Pradier, Analyst

I have just two questions. Regarding the CRA, did you settle on a specific cost? If so, what was it? Or did you win without having to pay anything?

Sandip Rana, Chief Financial Officer

So with respect to the settlement, CRA basically vacated their reassessment. The only cost to us was the legal fees we incurred going through the process, but there was no other additional cost to Franco. So there were no interest or penalties paid, nothing of that sort.

Martin Pradier, Analyst

Okay. That's what I wanted to confirm. And there was a $10 million income in the financial income that was much higher than before. I guess that is related to all your cash that you have today. Are you doing something different than in the past?

Sandip Rana, Chief Financial Officer

No. As you can see, our cash balance has been growing. We do invest that through short-term safe, secure term deposits and other avenues for investing, which is the reason for the increase in finance income.

Martin Pradier, Analyst

So we should see that going forward in the next couple of quarters?

Sandip Rana, Chief Financial Officer

As long as interest rates remain stable, you should see that. However, if our cash balance decreases, it may change things. But yes, if everything remains the same, you should expect to see that going forward.

Operator, Operator

Next question comes from John Tumazos at John Tumazos Research.

John Tumazos, Analyst

Thank you. Trying to understand this 15% global minimum tax. Presumably, your incremental tax payments because of the Barbados subsidiary would be paid to Ottawa, and I guess the monies would stay in Ottawa and fund the Canadian federal budget that might make someone in Peru or wherever, who's not enjoying those tax revenues, frustrated. If the mining and exploitation is in one country and the tax revenue is in another, is there any way that you could voluntarily pay taxes in the country of origin to kind of remedy that in equity?

Sandip Rana, Chief Financial Officer

So for the first part, you are correct with the way it will be implemented with paying the lower single digit in the foreign jurisdiction, the incremental GMT payments will go to Ottawa and remain in Canada. As to the various local jurisdictions where our streams are, our streams are all offshore. They're not in those specific countries. So voluntarily, it's not something that we would do. We're not directly linked in those jurisdictions. But as I said, we haven't seen any of the legislation, and we'll evaluate everything as time goes on.

Paul Brink, President and CEO

So John, for the countries, if you take Panama or Peru or Chile, what they see is we're a metal purchaser. So it's just like they're selling the gold that they produce to some other party that is paying for that gold. So it's just a metal sale from the perspective of the countries where the mines are.

John Tumazos, Analyst

Thank you. In your press release, you give reference to higher production from three existing mines and three new mines in the next expansion in Panama. Some of us might be familiar with some of the companies, but not every one of the projects. Which of those developments might be more than a 1% impact on revenues? Or could you give us an idea as to which are the larger of the among these?

Paul Brink, President and CEO

As I mentioned, John, there is certainly strong interest in new mines, particularly Tocantinzinho and the G mining and building where we have a greater stake. Regarding ongoing business growth, we have several royalties to consider. Most of our royalties are at a 1% to 2% interest. Over the next five years, we anticipate significant mine expansions, including Detour, which we're hoping will reach up to 1 million ounces, as well as Kinross expanding Tasiast, which provides us with a 2% royalty. Additionally, the expansion of Stillwater, where we have a 5% royalty, is one of our largest and will have a considerable impact. The new mines will generally offer 1% to 2% interests. In total, looking ahead to the next five years, we could see nine new gold mines, with the possibility of one copper mine if Copper World moves forward. However, most of these interests will be at 1% or 2% royalty interest.

Operator, Operator

Thank you. Next question comes from Ralph Profiti at Eight Capital.

Ralph Profiti, Analyst

Just one question from me. Sandip, I apologize for coming back to the tax issue. But on the outstanding reassessment potential taxes and penalties, does the CRA ask you to place those monies in remittance or secure those against lines of credit? I'm just wondering what those potential impacts are in that available credit calculation of $2.2 billion.

Sandip Rana, Chief Financial Officer

Yes, they do. For the reassessments we've received, you need to set aside 50%. You can either make direct deposits with the CRA or use the credit facility to establish a line of credit. We have utilized letters of credit for the reassessments we've received so far, and this is reflected in the financial statements.

Operator, Operator

Next question comes from Tanya Jakusconek at Scotiabank.

Tanya Jakusconek, Analyst

I wanted to return to the global minimum tax discussion, Sandip. While we are waiting for legislation for more clarity, would it be safest or most conservative to assume it will be implemented in 2024 from a modeling perspective?

Sandip Rana, Chief Financial Officer

I think that's a safe bet I think that's the direction the government has put forward that it will be implemented. So on a conservative basis, January 1, 2024, is a possible date that it could be implemented.

Tanya Jakusconek, Analyst

That's helpful. And just again, coming back on the modeling side. I know on the Q4 call, we had talked about the iron ore business being , first half and second half. Should I still kind of think that it was a bit low on the iron ore side, should I kind of still think about it in that? Has that changed?

Sandip Rana, Chief Financial Officer

That has not changed.

Tanya Jakusconek, Analyst

And then the oil division, are we going to see improvement quarter-over-quarter? Or is this just a weaker quarter because of the pricing?

Jason O’Connell, Applicable Position

Tanya, it's Jason speaking. I think going forward, you can expect to see volumes fairly stable for the remainder of the year. Revenues will obviously be impacted by where prices go there, currently sitting below, I guess, the range at which we provided in our guidance, which I believe was $80 for oil and $3 for gas. So we're a little bit under that right now. But in terms of performance, I would expect you to see reasonably stable performance throughout the year.

Tanya Jakusconek, Analyst

That's helpful, Jason. And just on the overall portfolio, Sandip, as I come back from a volume perspective. As I look at the portfolio, we have that uptick in Q2 and you said Q3 and Q4 are going to be relatively the same. Is Q2 going to be materially different than Q3, Q4 because when I look at our model, it's not materially different.

Sandip Rana, Chief Financial Officer

I believe Q2 will be a significantly better quarter due to the catch-up deliveries associated with Cobre Panama and Antapaccay. I also expect Q3 and Q4 to be strong quarters. However, overall performance and deliveries, especially concerning the streams, which are our main source of revenue, will ultimately determine this. As I mentioned, we will provide an update on our guidance in the second quarter once we have a clearer understanding of how the year will unfold.

Tanya Jakusconek, Analyst

I kind of read through that Q2 is going to be better than Q1, but Q3, Q4 are going to be better than Q2.

Sandip Rana, Chief Financial Officer

I would say Q3 and Q4 at this stage will be not as good as Q2 because Q2 has catch-up deliveries coming.

Tanya Jakusconek, Analyst

Okay. No, that's helpful. And my last question, I always have to come back to the transaction environment. Just want to circle back and make sure that we're still looking at the same sort of transaction range of under $400 million and that we are still looking for precious metal opportunities. And again, it's still for new mine builds for companies that are building new projects. I'm just circling back if that's still the same or has something changed?

Eaun Gray, Applicable Position

Tanya, it's Eaun here. I think you're still accurate in your assessment there. That's largely what we're looking at.

Operator, Operator

I'll let someone else ask questions. Thank you. There are no further questions on the line. You may proceed.

Candida Hayden, Senior Analyst, Investor Relations

Thank you, Joanna. There are no questions from the webcast. This concludes our first quarter 2023 results conference call and webcast. We expect to release our second quarter 2023 results after market close on August 8, with the conference call held the following morning. Thank you for your interest in Franco-Nevada. Goodbye.

Operator, Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.