Tidewater Inc Q4 FY2022 Earnings Call

Thank you, Cheryl. Good morning, everyone, and welcome to Tidewater's Full Year and Q4 2022 Earnings Conference Call. I'm joined on the call this morning by our President and CEO, Quintin Kneen; our Chief Financial Officer, Sam Rubio; and our Vice President of Sales and Marketing, Piers Middleton. During today's call, we'll make certain statements that are forward-looking and referring to our plans and expectations. There are risks and uncertainties and other factors that may cause the company's actual performance to be materially different from that stated or implied by any comment that we make during today's conference call. Please refer to our most recent Form 10-K for additional details on these factors. These documents are available on our website at tdw.com or through the SEC at sec.gov. Information presented on this call speaks only as of today, February 28, 2023. Therefore, you're advised that any time-sensitive information may no longer be accurate at the time of any replay. Also during the call, we'll present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures can be found on our website at tdw.com and is included in yesterday's press release. And now with that, I'll turn the call over to Quintin.

Thank you, West. Good morning, everyone, and welcome to the Fourth Quarter 2022 Tidewater Earnings Conference Call. I want to begin today's call by highlighting the significant changes we've experienced in our industry and the progress we've made throughout 2022. This year has been a pivotal moment in the offshore vessel market. Our revenue rose nearly 75% compared to 2021, primarily due to a major acquisition and a notable increase in average day rates. For the full year, average day rates improved by over $2,400 per day, a pace of enhancement we haven't witnessed in the last two decades, and we anticipate a further improvement of over $3,000 per day in 2023. We expect average day rates to rise quarter-over-quarter throughout 2023, and while it’s early to discuss full-year day rate increases for 2024, we don’t foresee any obstacles to this acceleration. Historically, year-over-year improvements in up-cycle days were around $1,500 per day. Our vessel operating margins increased by over 10 percentage points year-over-year, and our adjusted EBITDA nearly quadrupled compared to 2021. We recorded positive net income in the third and fourth quarters of 2022. We successfully closed and integrated a significant acquisition over the past year. Overall, 2022 was a landmark year for Tidewater, and we are excited to share our successes. I will now hand over to Piers and Sam for more details on regional performance. I also want to address a few nonroutine topics today. First, I want to explain how we approach forward guidance, which we resumed this quarter. Next, I will outline our current capital allocation philosophy, which is becoming increasingly important as we generate more free cash flow. Additionally, I’ll discuss the state of consolidation in our industry and provide some comments regarding the Jones Act warrants and merger integration. For many of you new to Tidewater, it's essential to understand a critical internal process we use to manage our business. We reforecast our business weekly by capturing anticipated changes in day rates, new contract additions, shifts in forecasted utilization, unexpected expenses, general price level increases, and various other factors. This systematic weekly review helps us refine our outlook for the coming 12 months. Although some may think this seems excessive, we find it to be a valuable tool for developing our chartering strategy. Given the historical volatility of day rates in our industry, we believe that frequent sampling is crucial. Piers has mentioned in previous calls that we are chartering on shorter terms. This strategy is supported by our close monitoring of global day rate trends. Sam will discuss mobilization costs we incurred in the fourth quarter and our strategy for relocating vessels based on prevailing day rates in our operations. This meticulous weekly forecasting process has enhanced our accuracy in business forecasting. The guidance Sam will provide later is derived from these reports, which we also present to our Board. This guidance reflects our current, honest assessment for the year. We provide calendar year guidance with a range and will clarify that range as the year progresses. We will update you quarterly and are confident that the information provided represents the best possible outlook at the given time. As you consider the 2023 outlook, it's clear that the business is set to generate substantial free cash flow over the next several years. We are virtually unlevered, making it a good time to discuss our capital allocation strategy. The expected cash generation over the next few years is significant enough to warrant consideration of value-accretive mergers, acquisitions, dividends, and share repurchases. We will not be introducing any new vessels into our fleet; it has already been reactivated, and we have no remaining reactivation costs. Mergers and acquisitions can enhance our long-term return on capital, and we aim to increase our control over vessels currently operating to maximize their earning capacity and profitability through economies of scale. Pursuing additional vessels only makes sense if it benefits our equity holders. Our current fleet can generate substantial profits, and we can achieve even greater profits with additional vessels if they are the right acquisitions at the right price. Opportunities for consolidation like this are pursued, but they are rare. Despite the fragmentation in our industry, I do not expect we will be able to invest all the cash we anticipate generating in value-accretive acquisitions, so we will also return some capital to shareholders via dividends and share repurchases. It's also critical to ensure we are positioned correctly in terms of debt capital. With net debt at $9.6 million, we are underleveraged at this stage. We should consider using leverage appropriately to enhance value for our equity holders, which would allow for more cash allocation. We aim to manage leverage over time, aligning it with capital market conditions, utilizing long-term debt suitable for our industry's volatility. Furthermore, we are currently limited by our bond issue of $175 million that matures in November 2026, which restricts the timing and amount of cash available for shareholder returns. This is an important point to note. You may remember that in the Swire Pacific Offshore acquisition, we issued 8.1 million Jones Act warrants, all of which have now been converted into common shares during the latter half of 2022. Since the majority of the common shares issued in the warrant exchange were to U.S. citizens, we now have capacity for foreign ownership of Tidewater common equity. If you hold a small amount of credit or warrants issued in 2017, please reach out to us about converting them into common shares, noting that those warrants do not accrue dividends when the common shares do. Regarding consolidation, we've conducted extensive due diligence over the past five years, gaining valuable insights into our competitors globally. However, I want to emphasize that this diligence has resulted in only two significant deals, reflecting our disciplined acquisition approach. Future consolidation is uncertain, and I would like to highlight that we are now less inclined to use equity for acquisitions. Given our strong cash generation outlook and the company's unlevered state, I prefer opportunities that allow for cash purchases of the right vessels at the right price. These types of deals are rare. I am pleased to share that our recent acquisition of Swire Pacific Offshore was fully integrated into Tidewater's framework on January 1. Integration efforts can be challenging; we had over 50 projects running during the eight-month integration phase. It was a monumental effort by a talented team, and I’m happy to report that the newly integrated business has successfully completed its first monthly close without any issues. We are on track to realize the anticipated synergies. As we did with the GulfMark integration, we are beginning to see synergies accelerate now that we have streamlined redundant systems and eliminated certain processes. We expect to realize full synergies by the end of the third quarter. Free cash flow for the quarter stood at $53.3 million, compared to $22.2 million in the third quarter, which shows a sequential improvement of $31.1 million. I am very satisfied with the free cash flow generated in this quarter and the sequential uptick we achieved. This improvement primarily stems from our efforts to reverse the working capital investment made in the first three quarters of 2022. Furthermore, the absolute level of free cash flow generation illustrates the operational leverage of our business. We have reached a stage where our total fleet operating costs have stabilized, allowing us to produce significant incremental free cash flow as utilization and day rates trend upwards. We expect to continue making proportional investments in working capital as the business growth continues, managing working capital as we would manage any capital expenditures. We initially projected that by the end of 2022, we would have sold or reactivated all remaining stacked assets held for sale. We are still working on this, as we currently have eight vessels remaining, with negotiations underway for the sale of four of them, and we aim to resolve the remaining four in the first half of 2023.

Thank you, Quintin, and good morning, everyone. Before I talk about the market and some of Quintin's comments about Tidewater's performance into a wider global context, I wanted to mention that we'll be releasing our third sustainability report at the end of the week and just to reiterate that at our core, ESG is something that has always been and always will be an extremely important part of Tidewater's DNA. And it's great that with our latest sustainability report, we continue to showcase to our stakeholders historical as well as our future commitment to ESG. Please look out for the report when it is released. Before Sam goes through our numbers in greater detail, I wanted to talk through some of the themes we saw develop and crystallize in 2022, and what Tidewater achieved during the year and what we see happening as we go through 2023 and beyond during this up-cycle period. The big theme in 2022 was the market's realization that there was and is limited OSV supply to meet the increase of demand. Total OSV supply according to Clarksons Research was down 4% since 2016 peak in 2022 and with little scope for any additional underlying growth in '23 or 2024. Due to both the limited order book and remaining suboptimal stacked fleet, we don't expect to see any future growth in OSV supply for some time. On the demand side, sentiment continued to strengthen throughout 2022 with overall global demand for OSVs increasing 8% during 2022, with offshore brokers projecting a further 10% demand increase in 2023. On the OSV side in 2022, we continue to see the increase in demand and shortness in supply impact rates positively throughout the year. With Clarksons Research reporting new global 1-year time charter rates for the largest PSVs at around $24,501 per day levels compared to $15,131 per day in 2021 and 1-year time charter rates for large AHTSs averaging $33,456 per day compared to $23,427 per day in 2021. All positive indicators that the market as a whole is being disciplined and continued to push rates during 2022. During 2022, one of our key tenets was to stay disciplined when bidding for new work, with the focus being to push day rates by keeping to a shorter-term chartering strategy, to allow us to roll our vessels as quickly as possible onto new contracts on to higher rates. The team has remained very disciplined and has been very successful at pushing our composite fleet rate from $10,583 per day in Q4 2021 to $13,554 per day in Q4 2022, an increase of more than 28% across the whole fleet from our smallest crew boats to our largest vessels and almost double what we have achieved in previous up cycles. Working through our various regions and starting with Europe. This region had a very strong year overall with significant day rate increases across all vessel classes, with average day rates jumping from a composite fleet rate of $11,917 per day in Q4 2021 to $15,364 per day in Q4 2022. During the year, as mentioned on previous calls, we saw record high spot rates of GBP 173,750 per day for large anchor handlers in the North Sea market, which in turn drove our own anchor handlers' day rates during 2022. And as we look out to 2023 and beyond, the traditional lower season periods of Q4 and Q1, we again expect to see strong demand in this region for larger AHTSs and PSVs longer term, with forward rates continuing to improve throughout 2023 for all vessel classes, driven in part in Norway, where we saw $27.2 billion of offshore oil and gas project CapEx being approved in 2022 for new projects and work out beyond 2025. Moving into Africa, where we have our largest fleet, we saw a significant increase in activity across all the countries that we operate in during the course of 2022, which in turn led to an increase in our composite fleet rate of $9,052 per day in Q4 2021, jumping to $12,272 per day in Q4 2022, which is a 35% increase. During Q4 2022, we saw leading-edge day rates for our medium-class PSV in excess of $27,000 per day and our largest AHTS winning work on rates in excess of $32,000 per day. As we look forward through 2023, we see no let-up in activity in the region, driven both by an expected increase in floater demand through 2024, but also by a number of announcements for large subsea construction projects in the region out beyond 2025, all of which will require additional OSV supply in the region and bodes well for sustained up cycle in the offshore and OSV space. In the Middle East, the market continues to tighten. But as we've mentioned on prior calls, this is a very large and competitive market with over 500 active vessels in the region, but which still continue to see strong levels of tendering from the NOCs during 2022 that enabled us to drive our composite fleet rate for the region from $8,217 per day in Q4 2021 to $9,498 per day in Q4 2022. Leading-edge day rates for our smallest vessel class of AHTS in the region were in excess of $7,000 per day. Again, looking out to the rest of the year, we're still seeing significant tendering activity for more rigs and boats from the NOCs as well as significant demand from the construction companies to support new projects in the region that would last out beyond 2025. Similar to other areas of the world, we are seeing no signs of any slowdown in the region. In the Americas, we again saw a significant improvement throughout 2022, with the fleet composite day rate jumping from $14,603 per day in Q4 2021 to $18,271 per day in Q4 2022. Outside of the Jones Act, we saw day rates for our largest PSV class in excess of $35,000 per day during Q4 2022 and rates in excess of $35,000 per day for our largest class of AHTS during the same quarter. During 2022, we saw rates for large PSVs in excess of $40,000 per day in the Gulf of Mexico. And in Brazil, we saw a steady influx of foreign flagged tonnage being allowed to work in the country due to a lack of available Brazilian flagged tonnage support projects in the country. A very positive indicator of how delicate the supply-demand balance is, not just in Brazil but also globally. Demand in the region is expected to stay strong in 2023 and beyond, with further exploration slated in all countries in which we currently operate in the region and supply being further exacerbated by several significant construction projects in the region, primarily led by Brazil. Lastly, in Asia Pacific, 2022 started off a little slower than some of our other regions, but during the second half of the year, we started to see a pickup in demand, which we really expect to see blossom during 2023, but we were still able to push composite fleet rates from $10,683 per day in Q4 2021 to $17,868 per day in Q4 2022, a 67% increase, most of which is due to the acquisition of the SPO fleet earlier in the year. In Q4, we achieved leading edge day rates in excess of $40,000 per day for our medium-sized anchor handling class in Australia and rates in excess of $30,000 per day for our largest class of PSV in Asia. In 2023, we're seeing a strong uptick in demand in Taiwan to support wind farm projects for which we are well placed with our presence in the country, which we acquired through the Swire transaction. And in the second half of the year, we are already starting to see a much higher level of tendering activity throughout the whole region to support projects in Australia, Malaysia, and Indonesia. Again, as with all the other regions in which we operate, some very positive signs of demand for the longer term. For 2023 and beyond, we will, of course, remain focused and disciplined on continuing to push rates, but we will also be aiming to improve the contract terms that we enter into with our customers to make them more equitable for both parties and more in line with the realities of the marketplace we are in today. Overall, as mentioned by Quintin, we are very pleased with how the market continued to move in the right direction during 2022 and are very positive about how the market would develop during 2023 and into a sustained period of growth for the OSV space into the foreseeable future.

Thank you, Piers, and good morning, everyone. I would like to review our financial results and discuss some key points related to these results. First, I will highlight the full year activities followed by the quarterly results. For the year, we generated revenue of $647.7 million, which is an increase of 75% compared to $371 million in 2021. The rise in day rates and the inclusion of the Swire fleet were significant contributors to this revenue growth. Our vessel operating margin for the year was $244.1 million, up from $99.8 million in 2021. We reported net income in the third and fourth quarters of 2022, resulting in a net loss of $21.7 million for the year, compared to a net loss of $129 million in 2021. Notably, average day rates improved by nearly $2,400 per day for the full year, and vessel operating margins increased by 10.5 percentage points year-over-year. Adjusted EBITDA rose to $166.7 million in 2022 from $34.7 million in 2021, marking an increase of about 380%. 2022 was quite a year, and we are happy to share our achievements. As noted in our earnings release, we have once again started to provide forward guidance. Looking ahead to 2023, based on our latest forecasts, we estimate revenues to be between $890 million and $910 million, with vessel operating margins between 49% and 51%. Now, let's shift our focus to the quarterly performance. I will primarily discuss sequential quarterly results, comparing the fourth quarter of 2022 to the third quarter of 2022. For the fourth quarter, we reported a net income of $10.6 million or $0.20 per diluted share, compared to a net income of $5.4 million or $0.10 per diluted share for the third quarter. This is our first instance of consecutive net income since emerging from bankruptcy in 2017. Our fourth-quarter revenue was $186.7 million, down by $5.1 million from the third quarter's revenue of $191.8 million. This decline was mainly due to the seasonal drop in our North Sea operations during Q4 and Q1 each year. In the Asia Pacific region, we experienced vessels coming off contracts and transitioning out of the area for dry docks, affecting our overall results. Active utilization decreased slightly to 82.5% from 83.7% in Q3. Average day rates remained relatively stable at $13,554 per day in Q4 compared to $13,606 per day in Q3. Our gross margin percentage for Q4 declined to 37.8%, down from 40.7% in Q3. Vessel operating costs for the quarter were $115.5 million, an increase of $2.5 million from Q3, largely driven by higher repair and fuel costs as we continued to mobilize vessels for new contracts to enhance vessel margins. We relocated 6 vessels during the quarter, leading to nearly $700,000 in additional fuel costs. Consequently, our vessel operating cost per marketed day increased to approximately $6,936. We are still identifying operating synergies linked with the SPO acquisition. Our original target was $25 million, and so far, we have realized about $10 million. We expect to achieve the remaining synergies by Q3 of 2023. During the quarter, we sold 4 vessels, two of which were from assets held for sale, generating net proceeds of $5 million and a net gain of $1.1 million. Our operating income for the quarter was $13.1 million, down from $19.1 million in Q3 due to reduced revenue and increased operating expenses. G&A costs for the quarter totaled $28.6 million, $1.4 million higher than in Q3, which included $5.2 million in transaction costs from the SPO acquisition compared to $4.3 million in Q3. G&A costs were also impacted by about $5.8 million related to legacy SPO expenses, which remain below our initial expectations of about $8.8 million for the quarter. On an annual basis, total G&A costs amounted to $101.9 million, and we anticipate incurring additional transaction costs in Q1 of 2023. Excluding these, our estimated G&A costs for 2023 are $85 million. For the quarter, we incurred $12.1 million in deferred drydock costs, down from $12.8 million in Q3, and 539 drydock days affected utilization by 3%. For the full year, our drydock costs reached $56 million, with 2023 drydock costs expected to be about $77 million. In Q4, we also incurred approximately $4.9 million in capital expenditures related to vessel modifications, such as battery installations and IT upgrades including fuel monitoring systems. For the full year, capital expenditures were $16.6 million, and we expect to spend about $14 million in 2023. We generated $53.3 million in free cash flow this quarter, more than doubling the Q3 figure, bolstered by strong cash from operating activities and improved accounts receivable collections. As revenue grows, we expect to invest in working capital while managing this closely. In Q4 of 2019, we started classifying vessels on our balance sheet from property and equipment to assets held for sale, moving 88 vessels through this program since then. At the end of Q4 '22, 8 vessels valued at $4.2 million remained as assets held for sale, and we sold 2 vessels for proceeds of $3.3 million during this quarter. Regarding our SPO warrants, we completed the redemption with a public stock offering of about 4 million shares, allowing us to redeem the same number of remaining warrants. In total, we redeemed all 8.1 million warrants issued to Swire as part of the acquisition in 2022. Now, let's discuss the regional performance. Our Americas region reported operating income of $3.2 million for the quarter, up from $3 million in Q3, with revenue reaching $41.8 million in Q4 compared to $39.1 million in Q3. This region operated 31 vessels on average, unchanged from Q3, with active utilization at 80%. Day rates also increased by 8.1% to $18,271 from $16,901 per day in Q3, contributing to the higher operating income due to increased revenue. In the Asia Pacific region, we recorded an operating loss of $800,000 in Q4, down from an operating profit of $3.3 million in Q3. Revenue was $19.1 million in Q4, compared to $23.9 million in the prior quarter. The region operated 14 vessels on average, one less than Q3, and active utilization dropped to 79.5% from 91.4% in Q3. Day rates slightly decreased to $17,068 per day in Q4 from $18,530 per day in Q3. Lower revenues were somewhat offset by decreased operating costs due to operating one fewer vessel. The Middle East region showed an operating profit of $492,000 in Q4, down from $605,000 in Q3. The revenue remained stable at $30.6 million in Q4 compared to $31.2 million in the prior quarter, and 43 vessels were operated, one more than Q3. Active utilization stayed steady at 83%, while day rates slightly declined to $9,498 in Q4 from $9,781 in Q3, leading to decreased operating income primarily due to reduced revenue. Our Europe and Mediterranean region reported operating income of $3.9 million for Q4, down from $13.1 million in Q3. This typical seasonal decline saw revenue drop to $33.5 million in Q4 from $39.7 million in Q3. The region operated 27 vessels in Q4, an increase of one from Q3, but active utilization fell to 87.8% from 95.2% in Q3 due to lower winter activity and some dry docks that influenced overall utilization. Day rates dropped by 12% to $15,364 per day in Q4 from $17,436 in Q3, as Q3 had significant increases driven by leading-edge day rates from our North Sea anchor handler. The decrease in operating income in Q4 was mainly caused by a drop in revenue and higher operating costs from transferring and operating one additional vessel in the region. Our West Africa region reported operating income of $18.3 million in Q4, increasing from $12.3 million in Q3, with steadily rising revenues for 8 consecutive quarters. Revenue in Q4 reached $60.2 million compared to $56.3 million in Q3, despite operating 2 fewer vessels on average. Active utilization improved to 81.7% in Q4 from 79.4% in Q3, and day rates increased by 7% to $12,272 per day in Q4 from $11,467 per day in Q3. The rise in operating income from Q3 was attributed to higher revenue and lower operating costs due to operating fewer vessels in the region. In summary, we are satisfied with our Q4 results, which are typically lower than Q3 due to seasonal factors in the North Sea. Vessel relocations and numerous dry dock days impacted overall performance in the quarter. We are optimistic about the year-on-year revenue growth driven by rising day rates and the addition of SPO vessels in the latter half of the year. We also reinstated many previously stacked underutilized legacy Tidewater vessels, positioning us strongly for potential industry growth ahead. Lastly, I want to extend my gratitude to our teams for successfully implementing the transition from the legacy SPO Oracle ERP system to SAP within just 8 months. The SAP system officially went live on January 1, 2023, and we completed our first month-end close in just 4.5 days without issues.

Thank you, Sam. Commercial momentum continues as our customers plan for what by all accounts appears to be another leg up in offshore activity in 2023 and into 2024. We continue to be committed to our commercial chartering strategy of staying short, to take advantage of rising day rates in all regions in all vessel classes. We continue to view this as the best strategy to drive earnings and free cash flow generation over the coming quarters. And with that, Cheryl, we will open it up for questions.

Your first question is from Hans Lund of Clarksons.

Can you perhaps provide some color on how much of the fleet in terms of percentage is committed on contracts in 2023 and 2024?

Yes. Hans, we will, hold on one second, we'll give you an idea of what that is. Sam is looking up some of the numbers right here to give you a better number. However, I will tell you that because we're going short, our intention is to minimize that number until we get to a more comfortable thing in locking up longer term.

Do you have the backlog number for 2024?

Yes. So Hans, in percentage-wise, we have 70% of 2023 contracted and 2024, it'll be 45%.

And then in terms of the backlog value of those 45% in '24, do you have that number or...

Yes, so 2023 is $586 million and 2024 is $385 million.

Perfect. And then in terms of, I guess, staying on '24, if you compare '24 to '23, do you think revenue and EBITDA could increase as such on an annual basis as you expect revenue and EBITDA to increase in '23 versus 2022? I guess what I'm asking is...

Yes, I do. In fact, I believe profitability will increase even more than proportionally. As mentioned earlier in the call, we are seeing year-over-year increases in day rates for 2023 of about $3,000, possibly a bit more. This is reflected in our guidance, as Sam mentioned. With day rates accelerating and some vessels still chartered at lower rates from previous years rolling off, I anticipate that in 2024, we will see an increase exceeding $3,000 year-over-year. This would indicate that the percentage increase could match or even surpass previous levels.

Okay. Perfect. And then just lastly, I think Sam touched upon it. But just in terms of SG&A for 2023, did you say that you expect SG&A to come in at about $85 million?

That's correct. Yes.

And then dry docks expected to be 77.

Dry docks at 77. That's correct.

I was wondering about the overall cost you anticipate at the end of 2023. We've heard from owners in Norway that the markets are tightening, and inflationary pressures are starting to affect costs. Could you provide more insight into how much you expect costs to increase in 2023 and 2024?

So Ina, we mentioned in the range of 49% to 51% as a margin for 2023.

Yes. I think implicit in that is, there's a couple of things happening. There certainly are general price level increases that we're experiencing as everybody else is for labor and other things. And that's in that 5% to 8% range. But we also have synergies rolling through on the Swire Pacific transaction that are going to bring that down. So if you're looking at the overall dollar magnitude on a per vessel basis is in that 2% to 3% range.

For '23 or '23-'24.

So 2024 is too early to make definitive predictions. The good thing about the limited supply is it doesn't add pressure to our supply chain, including labor and others. Once all the boats are operational, there won't be a need to raise rates in line with the increases in day rates. I hope to see some stabilization in 2024, but we will provide clearer guidance as we approach that timeframe.

Okay. Just like to mention a little bit utilization, average utilization you see for the next 2 years.

I definitely see an increase, but let me explain where I see the limitations. When considering utilization, it's important to look at it over a reasonable time frame. For a month, you could reach 100% utilization, but over a year, there will always be about 3% to 3.5% going for maintenance. This means your theoretical maximum is around 93%. Additionally, there will be some frictional unemployment, so I believe that as the cycle continues to strengthen, we will move from the high 80s into the low 90s. While I hope we can exceed 93% for a whole year, I do not expect that will happen.

If I understood correctly, you mentioned that you have sent one of the vessels to the Mediterranean. As we enter the strong summer season here in the North Sea, do you expect to see more vessels moving to this region?

I think we'll obviously see where the market goes. I mean the market is very strong in certain areas. So we'll move vessels accordingly as long as we're getting paid mobilization and demobilization fees. We'll be going to work where our vessels are required where we can push the highest rates. So yes, we're open to going anywhere as long as we're paid properly.

There are no further questions at this time. I will now turn the call over to Quintin Kneen for closing remarks.

Thank you, Cheryl. Thank you, everyone, and we look forward to updating you again in May. Goodbye.

This concludes today's conference call. Thank you for your participation. You may now disconnect.