Noble Corp plc Q2 FY2024 Earnings Call

Thank you for standing by. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Noble Corporation's Second Quarter 2024 Financial Results 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. And I would now like to turn the conference over to Ian McPherson, Vice President of Investor Relations.

Thank you, operator and welcome everyone to Noble Corporation's second quarter 2024 earnings conference call. You can find a copy of our earnings report along with the supporting statements and schedules on our website at noblecorp.com. This conference call will be accompanied by a slide presentation that you can also find located at the Investor Relations section of our website. Today's call will feature prepared remarks from our President and CEO, Robert Eifler, as well as our CFO, Richard Barker. Also joining on the call are Blake Denton, Senior Vice President of Marketing and Contracts; and Joey Kawaja, Senior Vice President of Operations. During the course of this call, we may make certain forward-looking statements regarding various matters related to our business and companies that are not historical facts. Such statements are based upon current expectations and assumptions of management and are therefore subject to certain risks and uncertainties. Many factors could cause actual results to differ materially from these forward-looking statements, and Noble does not assume any obligation to update these statements. Also note that we are referencing non-GAAP financial measures on the call today. You can find the required supplemental disclosure for these measures, including the most directly comparable GAAP measure and associated reconciliation in our earnings report issued yesterday filed with the SEC. Now, I'll turn the call over to Robert Eifler, President and CEO of Noble.

Welcome, everyone, and thank you for joining us on today's call. I'll start with an overview of our second quarter results and recent contract awards, then share some insights on the market before handing the call over to Richard for the financial details. Finally, before we go to Q&A, I'll give a brief update on our acquisition of Diamond, which we are very enthusiastic about. Beginning with the Q2 results, we had a strong quarter with adjusted EBITDA of $271 million, almost a 50% increase from $183 million in Q1, largely due to the commencement of several key contracts, including the Noble Regina Allen in Argentina in early May and the Noble Discoverer in Colombia in mid-June. After the quarter ended, the Noble Fay Kozak began its contract in Brazil in mid-July. Each of these rigs required extensive contract preparations, and I want to commend our project teams for executing these shipyard programs effectively. Given these reduced risks associated with the upcoming contract starts, we are now refining our EBITDA guidance for the year to a range of $950 million to $1 billion. In June, our Board of Directors approved a 25% dividend increase to $0.50 per share for the third quarter of 2024. This upcoming distribution in September will bring our total capital returns to shareholders since our Q4 2022 merger to $470 million, solidifying Noble as the top dividend payer among U.S.-listed oilfield services companies. While this is a positive beginning, we are confident in the potential for higher free cash flow in the coming years and are committed to returning nearly all of our free cash flow through dividends and share buybacks as this trend develops. As noted in our fleet status report published last night alongside our earnings release, our total backlog is currently $4.2 billion, down from $4.4 billion last quarter. It's important to remember that our backlog consists primarily of long-term contracts in Guyana and Norway, which do not refresh frequently, leading to fluctuations in our backlog figures. In the Gulf of Mexico, Murphy has extended the Noble Stanley Lafosse's contract by five additional wells for a total value of $177 million. On the jackup side, the Noble Resolve has secured two additional contracts, one with Central European Petroleum offshore Poland and another for a 13-well scope in Spain starting in Q2 2025. Additionally, the Noble Resilient has landed a short-term job in the North Sea, while the Noble Innovator's contract with BP in the U.K. North Sea has been extended through December 2025 at a rate of $155,000 per day. Together, these contracts represent about $275 million in total value, including mobilization payments. Now, let’s look at the broader market outlook. Our semiannual review reveals that the contracted count of UDW floaters rated for water depths of 7,500 feet or more stands at 105 rigs, one more than last quarter, with a utilization rate of 94% of the marketed fleet. This level has remained stable over the past year, though industry expectations for the next uptick in activity are somewhat restrained due to limited rig capacity and extended timelines for certain contracts. Despite a recent slowdown in activity, leading indicators support continued growth, including a robust pipeline of FIDs and significant subsea orders. The open demand level we've noted over recent quarters has now increased to over 110 rig years, a reflection of the low conversion rate of tenders to contracted work. We understand there are concerns about the slower pace of contract awards, which can be attributed to several factors, including capital discipline and complexities in stakeholder alignment, supply chain constraints from heightened project backlogs, and short-term impacts from upstream consolidation activities recently noted in the Gulf of Mexico. We do not foresee any structural deferrals in drilling programs, but the slow pace of rig contract awards is contributing to ongoing utilization challenges, particularly in the sixth generation and lower market segments that may extend into 2025 more than anticipated earlier this year. Examining industry backlog trends over the past few years, we see a significant expansion of 40% to 50% in the UDW fleet backlog from early 2022 to mid-2023, but since then, total backlog has stabilized and is likely to remain so into 2025. While this slower pace has persisted longer than we hoped, all leading indicators suggest strong future activity. We expect the next rise in industry backlog to become clear next year. Regarding our market outlook, the Golden Triangle of South America, the Gulf of Mexico, and West Africa makes up over 75% of the global UDW market, with Brazil now accounting for 34 rigs, a rise from 27 last year. Other regions in South America, such as Guyana and Colombia, have five and one rigs, respectively. By 2026, Brazil's rig count could increase to 45 based on visible demand. In the Gulf of Mexico, current demand for UDW stands at 24%, with the U.S. side showing slight growth, while activity in Mexico has declined. Overall, demand in the Gulf is expected to remain stable. West Africa currently has 18 contracted UDW rigs, a slight decrease from last year's numbers, with Angola leading the way. Namibia is expected to mature into a three to five-rig market by 2026, contributing to overall demand in the region. The Mediterranean and Black Sea region is expected to remain flat, while the Far East market currently supports seven units of demand, with potential growth anticipated in Indonesia starting in late 2025 or 2026. The harsh environment markets of Norway, the U.K., and Canada are expected to stay steady. In summary, the market appears relatively flat or increasing only slightly through early 2025, and we are taking a patient and disciplined approach during this time. We remain hopeful for wins with our intervention work and anticipate that day rates for Tier 1 drillships will stay in the high $400,000 to low $500,000 range near-term, with potential for increases as demand rises by 2026. With that, I will pause and hand it over to Richard for the financial highlights.

Thank you, Robert, and good morning or good afternoon to all. In my remarks today, I will briefly review the highlights of our second quarter and then touch on the outlook for the remainder of the year. Contract Drilling Services revenue for the second quarter totaled $661 million, up 8% from $612 million in the first quarter. Adjusted EBITDA was $271 million in Q2, up from $183 million in Q1. Our adjusted EBITDA margin on total revenue improved to 39% in Q2. Cash flow from operations was $107 million, capital expenditures were $133 million and free cash flow was negative $26 million. The sequential improvement in the financial results was driven by stronger utilization across the fleet, including contract start-ups for the Noble Discoverer, Noble Resilient, and Noble Regina Allen as well as the abatement of contract preparation and startup costs that burdened contract drilling expense more heavily in the first quarter. Our 16 marketed floaters were 78% utilized in Q2, up from 76% in the first quarter. And our 13 marketed jackups were utilized 77% in the second quarter, up from 67% in the first quarter. Average earned day rates in Q2 were $436,000 per day for floaters and $156,000 per day for jackups. As summarized on Page 5 of the earnings presentation slides, our total backlog as of July 31st stands at $4.2 billion, which includes $1.2 billion that is scheduled for revenue conversion in the second half of this year and $1.7 billion that is scheduled for 2025. As a reminder, this backlog does not include reimbursable revenue or revenue from ancillary services. Referring to Page 9 of the earnings slides, we are updating our full year 2024 guidance as follows; firstly, total revenue increases and now is to a range of $2.65 billion to $2.75 billion. The slight increase in the range is driven by higher reimbursable revenue and revenue from ancillary services. Secondly, adjusted EBITDA now is to a range of between $950 million and $1 billion. The narrowing of the adjusted EBITDA range around our previous midpoint was driven by strong operational performance in Q2, offset by lingering white space in the second half for several floaters as well as a couple of weeks of additional acceptance testing preceding the Noble Fay Kozak contract commencement in mid-July. Thirdly, we are maintaining our guidance range of $400 million to $440 million for capital additions, excluding rebillable CapEx. We expect rebillable CapEx to be approximately $30 million in 2024 with $17 million spent in the first half of the year. Looking forward to the third quarter, EBITDA is currently tracking slightly lower versus Q2, with sequential revenue tailwinds from the Noble Fay Kozak and a few other rigs, offset by greater anticipated white space on the Globetrotters and the Noble Voyager. I would like to now touch briefly on our free cash flow profile. As we have previously stated, this year's free cash flow is expected to be heavily second half weighted, driven by higher CapEx in the first half and the key contract startups previously mentioned. Q2 was additionally impacted by the working capital impact associated with the Noble Regina Allen incident in late 2022. Due to the timing of some expected insurance proceeds possibly pushing into 2025, full year 2024 cash flow in the aggregate could be negatively impacted by around $50 million. With the Q2 cash flow deficit, we did draw down $35 million on the revolver in June. We expect this to be repaid in the near future. We believe that we have now reached an inflection in our free cash flow. We continue to expect full year free cash flow to be up very slightly year-on-year and exiting at a very healthy run rate in the second half. As we look towards 2025, we remain constructive on the market outlook. However, we do recognize that until we see a pickup in the pace of contract awards to our total floater rig demand increases more materially. We are likely to see lower utilization for our currently uncontracted 6G rigs well into 2025. As it relates to capital allocation, and as Robert has mentioned, with the material step-up in free cash flow expected in the second half of the year, we expect to get back into the market and start executing again on our share repurchase program as we look to return essentially all of our free cash flow to shareholders. With that, I'll turn the call back over to Robert.

Thank you, Richard. Before we turn to Q&A, I'd just like to provide a quick update on the Diamond transaction. As disclosed last week, the HSR waiting period has expired, and the definitive proxy has been filed. Completion of the transaction is subject to the satisfaction of the remaining customary closing conditions, including Diamond's shareholder vote, which is scheduled for August 27th and regulatory clearance in Australia. We are maintaining our expectation for closing by Q1 2025, although there are potential paths for closing this year. Not only are we incredibly excited about this highly complementary and accretive combination, but it has been equally encouraging to see the market's positive response to the transaction. As the leading consolidator in the industry, we believe Noble has demonstrated a clear and powerful value proposition to customers, employees, and shareholders by leveraging scale and delivering seamless integration results for all stakeholders. I'm extremely proud and appreciative that our men and women onshore and offshore have established such a strong track record, not only as drillers, but also as highly effective innovators and integrators. This has been a huge X factor in what we're trying to achieve and become. And I'm quite confident that bringing in Diamond's world-class assets and people will provide another opportunity for us to shine together. With that, operator, we're now ready to turn the call to Q&A.

Your first question comes from the line of Scott Gruber with Citi. Your line is open.

Yes. Good morning and solid quarter.

Thanks Scott.

I want to start on the macro, and I appreciate all the color around this pause we're seeing. I guess I wanted to ask about the backdrop here. Are we really seeing a transition from the infrastructure-driven development focus post-pandemic to a better balance between greenfield and tieback. It just strikes me that success in new frontiers such as Namibia is great for the industry. But does that contribute to a kind of temporary slowdown in contracting as operators process new prospects and think about resetting their future workflows?

Yes, it's a great question. I think it's central to our thinking about the medium term. Some data suggests that greenfield activity is increasing. In our own fleet drilling, we're seeing the same percentage of our fleet deployed for exploration as we have over the last couple of years. There is also third-party data indicating that greenfield projects are improving. The increase in final investment decisions we are observing aligns with our predictions that will result in higher utilization of drillships globally, driven by greenfield initiatives. Therefore, we are quite optimistic about the direction this is taking us in late 2025 and 2026.

Got it. And then just turning to the Globetrotters. You mentioned finding intervention work for them. Does that mean that you're likely to continue to focus on the Gulf of Mexico for those rigs? Or would you be willing to move those rigs out, even if you have to pay for it? And just the kind of overall thoughts on how consistent the intervention work could be for those assets here for the next year or so?

No, I think those rigs could work anywhere. We've actually pursued some intervention work well outside of the U.S. Gulf on a number of occasions. I would say that I guess the good news is that the lead time to booking intervention work is typically a lot shorter than drilling work. But I'd also say that, that's probably more the case in the U.S. where things can move more quickly and there's obviously all the infrastructure and everything right there, than elsewhere in the world where I'd say, on average, even for intervention work, there's probably a slightly longer contracting lead-time elsewhere. But we're bidding it all over and have some interesting opportunities in places outside of the U.S.

Great. I appreciate it. I'll turn it back. Thanks.

Thanks, Sean.

Thank you, good morning everyone, and I appreciate the opportunity to ask my question. Robert, could you provide more insight into the ultra-deepwater market? It seems that the significant increase in pricing is anticipated more for 2026, while contracts for work in the first half of 2025 are being secured. In your earlier comments, you mentioned Namibia and Mozambique. Do you think those regions are key factors driving this trend? Or are there other elements at play, such as remaining contracts being quickly filled by the shipyards? I would love to hear more about your perspective on why we are observing these higher prices emerging in the next 12 to 18 months.

Yes. I have a few thoughts to share. First, many people observe ongoing tightness in the 7G market. There is an expectation that even with some new shipyard rigs coming in, the market will remain tight. We have often described the market as balanced, which certainly leads to rising day rates, as we have seen over the past two years. Regarding the next year or so, it may appear somewhat flat. With that in mind, there might be a slight tendency to offer discounts for near-term work, but I don't believe that's a significant factor right now, especially among the highest-end rigs. Overall, many view the various forward indicators we have discussed previously and are confident, like us, that demand will emerge from those indicators.

Okay, great. I was hoping you could share some insights on the contract Voyager completed in Suriname. You've mentioned a separation between the 6G and 7G markets over the past few quarters, specifically regarding the seventh-generation dual BOP rigs. What are your thoughts on potential opportunities in this area as we look ahead over the next six to twelve months?

Yes, I'll let Blake give some color on kind of where and when we're seeing opportunities. But there's always a couple of 7G rigs available in Voyager happens to be right now, and we've got a bunch of conversations behind it, but...

Yes, sure. Thanks, Greg. This is Blake. So, the Voyager did conclude its contract now. It will be performing SPS scope for the next couple of months and then be available later in the year. We're bidding it all over the world, really, some good encouraging customer conversation. I think when we look at the likelihood of picking up the next contract, those conversations turning into firm awards, we're looking more like the first half of next year.

Super helpful. Thank you for the answers.

Hey good morning, everybody.

Good morning Kurt.

Hey I always appreciate the insights and the color on the market dynamics. So if I were to broadly summarize your summary, right, it looks like you guys are looking for potentially a range of 10 rigs of incremental demand once we get out into the second half of 2025 and into 2026 with half of that effectively coming from Brazil, the other half from Africa. I just wanted to make sure that I'm not misinterpreting anything that you said or misinterpreting any of your numbers that you put forth so far?

No, that's it. I would say that we're probably looking at five to ten total. You've reiterated our description of where the ten comes from. If a few drop off in the meantime, the total incremental may decrease slightly, but it’s probably too early to determine that.

Okay. And then maybe I know you guys haven't stepped out and said anything about 2025 stand-alone yet. And obviously, that will all change once you get Diamond under your belt. But I would just venture to say that given what you've kind of mapped out right now, the second half progression on EBITDA and free cash flow probably spills over into the first half of 2025 barring any black swan events. Is that a fair way to look at things right now?

Yes, Kurt, I think that's a very good way to think about 2025. Obviously, we're kind of seeing flattish EBITDA here in the second half of the year. One element as it relates to free cash flow, I do want to point out is that we do expect CapEx next year to come down nicely, right? So we've always said that 2023 and 2024 was kind of peak CapEx. And so as you think about free cash flow in the context of 2025, that number is expected to be down nicely versus 2024.

Okay, that's great. We'll turn it over. Thank you guys.

Thanks, Kurt.

Hi good morning. Just wanted to ask on your revised EBITDA guidance here for the full year. You raised the low end of the guide from $925 million to $950 million. You previously talked about the low end of the guide being a level at which you could end up if you didn't secure more work or incremental work for your rigs. So, just curious if that is still a fair assumption today. It looks like you have three idle floaters today in the developer Globetrotter and now the Voyager. Does that low end of the guide assume no incremental work for these rigs this year? Or how should we be thinking about that?

Yes, Eddie, it's a very good question. I think that's a good way to think about it. We don't need to win any more work to get to the low end. And look, it's a somewhat tight range now. And I think there's potential or real potential to get to the midpoint of the range with our new work as well.

Got it. Thank you. All clear. Just my follow-up is on the Globetrotters. You've been very disciplined with reactivating this rig. Just given the conversations you're having, is it likely we'll see a contract announcement for that rig before kind of midyear next year? Or given your flat kind of demand outlook in the near-term, could the timing of that contract announcement on that rig maybe go beyond that timeframe?

Yes. Look, I think always hard to predict on something that's kind of could be way off. But I would weight it towards there not being a prediction before midyear next year. Another I think it's more likely that an announcement would come after midyear next year than before. But there's a lot in the pipeline right now, as we've described. Our customers are in budget season right now. And typically, you see a lot of tenders and negotiations that come out of that. And so we're still kind of wondering as well when we're going to see this pipeline materialize, it could be earlier than we kind of described in the call. And of course, like this year, maybe it pushes slightly later than we'd like. But yes, if I have to answer the question, I'm going to say it's not in the first half of next year.

Got it. Great. Thanks for the color.

Robert, you alluded to supply chain pinch points as one of the reasons for the slower pace of awards. I was hoping you could expand on that. Just where exactly are you seeing the bottleneck that's causing this?

I would say that this is a broader observation about the supply chain emerging from a significant increase in activity. It likely appears at various stages for different customers in different areas. As many are aware, following this prolonged downturn, inventories are quite low, and inventory management has been highly efficient. Consequently, there isn't as much available to take from stock. Additionally, further along the supply chain, while it doesn't directly impact us, our customers are facing challenges, particularly with vessels and FPSOs, as there is a significant backlog in shipyards. In some cases, this could involve FPSOs, while in others it might pertain to wellheads or possibly casing, which makes it more difficult to advance programs sooner. Thus, we have observed a gradual delay over the past year.

That's good context. And then you pointed out that the HSR has expired and you're waiting on clearance in Australia. What's the status with European regulators? Are there any European regulatory milestones you're waiting for?

No, the only remaining regulator is Australia. I should mention that was expected and it influenced our original timeline, which is why we described the first quarter as potentially slightly earlier when we made that announcement. Overall, nothing has changed regarding the total timeline because of that, but yes.

Got it. Thank you.

Thanks Doug.

Thanks. Good morning. I wanted to switch a little bit and maybe get your global perspective on the jackup market. You talked about in your prepared remarks, sort of Northern European market is characterized by improving demand and visibility in Norway in 2025 and more cautious near-term outlook in the North Sea from some policy and permitting uncertainty in the U.K. Could you expand on both of those thoughts? And then maybe just give us a walk through the global jackup market, I think that would be helpful.

Sure. Yes, I can start and then Blake jump in. So, the U.K. has long awaited the elections there and the implications arising from that. Some changes have already been made. I think that market all things considered has actually performed pretty well. I think that the changes that have come politically there already since labor took over were well understood and anticipated. And so while obviously not helpful for our business. I think we're right now not seeing any substantial negative change from what we've seen so far. I would remind you that we do think that carbon capture could provide some helpful lift in that market, maybe next year, maybe the year after, but generally in the near to medium term going forward. In Norway, it's been basically flat, and we think it stays flat for a little while longer, perhaps with an additional unit of demand next year and then perhaps a leg up from there. More globally, there's obviously a little bit of negative news out of Saudi recently. We are, as you know, not in the mix there, so not close to news flow. But I would say that the global jackup market is quite strong, and it's stayed steady. It moved healthily straight through the more significant Saudi announcement from a few months ago. And we've seen a number of those rigs be redeployed elsewhere in the globe already. And so I think that market is generally pretty consistently strong.

And then maybe you could just talk operationally on the cost side. I think your commentary, looking into the first half of 2025 was helpful on the deepwater side. But over this period of sort of softer utilization for some of the deepwater units in your fleet that are available, could you talk about how you're managing them on the cost side today. Maybe that would just be helpful things you're doing in terms of trying to maximize cash flow while you have sort of this lull in your contracting activity for some of those assets?

Yes, it's a good question. We are closely managing costs. Richard provided some insight into our remaining guidance for 2024, which largely pertains to the costs we can control. We have reduced costs where we have availability on some of the rigs, and it's essential for us to do so when we have the opportunity, especially since it seems the availability will extend beyond a short period. The organization has done an excellent job this year, and our leadership on the rigs has significantly influenced our performance metrics. They are focused and have effectively managed their operations on a rig-by-rig basis. I am very proud of the efforts put forth by everyone.

Okay. Thanks.

Hey good morning and thank you for taking my questions.

Good morning.

So, I think we have some previously owned newbuild drillships that are being priced into the market. But I wanted to ask if you're seeing any signs of increased competition from some of the semis that have been sidelined for a while. I think there were some that previously worked in Mexico, and there are some relatively young Chinese newbuilds and whether that contributes to the comment about potential greater day rate bifurcation? Or if you're really just talking about pricing softness for the active 6-gen semis facing potential downtime?

Yes. Look, it kind of all runs together or in sync, I guess. We think on the sixth gen side, if you just look at rigs rolling off contract for the remainder of the year, as you described, we've got some active rigs that have rolled off or are rolling off and then you've got some others that have been off a little longer. So utilization probably dips before it returns to flat here in the very near-term on the six-gen side. And then, as I mentioned earlier, that some of those rigs can go into the shorter lead time type programs. And so I think there's a chance of a pretty quick recovery as customers come out of budget season, but we're just going to have to wait and see. We just don't really know right now. But it all goes in, in my opinion, it all goes into the kind of a total marketed utilization that affects bidding behavior, I don't know.

Yes. I would like to add that when we examine our benign semi-submersible rigs, we are competing at the highest level of the market. The drilling efficiencies of our D class rigs are comparable to drillships. This allows us to compete effectively with operators who consider the overall cost of ownership and include these efficiencies in their evaluations. On the other hand, the lower-spec semi-submersibles tend to compete with highly specialized operators, mostly in regional basins.

Good color. I appreciate that. And just a real quick follow-up, following up on Josh's question, specifically the improving visibility in Norway for 2025. My recollection is Norway demand for jackups tends to have longer visibility often longer-term contracts. So, I was curious if that visibility improvement for 2025 maybe includes some timework that could help from a visibility past 2025?

Yes, there's the potential for a little bit of term work and there is the potential for a little bit of shorter-term work there from what we know about. And I guess I would kind of say that a true step-up with solid term work is probably more of a 2026 thing than a 2025 thing.

Hi good morning. You've talked a good bit about sort of what the customers are thinking. And I was wondering around the capital discipline aspect of their pace of decision-making, do you give a sense more an issue of sort of notification or disclosure of their plan that is what's going on or more actual hesitation internally even commit to what they might do going forward?

Yes, it's a combination of factors. One significant aspect is capital discipline, which remains crucial across both the exploration and production side and the services side. Consequently, individuals are making very cautious investment choices, which clearly impacts the situation. Additionally, in this conservative approach, any given investment decision typically involves multiple partners, each with varying capital needs or perspectives. We're observing instances where two out of three partners may want to proceed with a project, while the third may hesitate, disrupting progress or delaying it until new information becomes available. This is a notable dynamic we're witnessing. Furthermore, our business tends to have a seasonal aspect around budget approvals, with everyone closely monitoring what will be sanctioned. In a highly disciplined environment, it may be less clear what will receive approval as organizations navigate their budgeting cycles.

Great, thanks. Regarding a related question, you mentioned the presence of white space, which is noticeable to everyone. I'm wondering about the customers on the other side of that white space. Do you have any insight into whether these customers might be less concerned about schedule delays? The potential exists to fill that white space, which could have ripple effects. Or are customers primarily focused on getting the price they want and willing to adjust to whatever happens regarding availability?

Yes, I think the current sentiment is that everyone acknowledges the availability this year. People are aware that there are a few rigs that might become available from the sidelines, often referred to as stranded shipyard rigs. The general consensus seems to be that there will be some availability in 2025, but it is expected to tighten significantly by the end of 2025 and into 2026. This situation leads to varying perspectives among people; some are more risk-averse and concerned about future developments, while others, having observed trends over the past few years, feel that obtaining a rig has been manageable, and may view it as balanced, allowing them to be patient. Overall, there is a diverse range of beliefs and strategies among stakeholders.

Great. Thanks a lot.

And there are no further questions at this time. Mr. MacPherson, I will turn the call back over to you for closing remarks.

Great. Thank you, everyone, for joining us today, and we look forward to speaking with you again next quarter. Goodbye.

This concludes today's conference call. You may now disconnect.