TMC the metals Co Inc. (TMC) Q3 2022 Earnings Call Transcript

Good afternoon, everyone. And thank you for participating in The Metals Company's second quarter 2022 Corporate Update Conference Call. Joining us today are The Metals Company's Chairman and Chief Executive Officer, Gerard Baron; and Chief Financial Officer, Craig Shesky. Following their remarks, we will open up the call for your questions. Before we go any further, I would like to turn the call over to CFO, Craig Shesky, as he reads the company’s Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements and information about the use of non-GAAP measures. Craig, please go ahead.

Thanks very much. Thanks for joining our third quarter 2022 conference call. And please note that during this call, certain statements made by the company will be forward-looking and based on management’s beliefs and assumptions from information available at this time. These statements are subject to known and unknown risks and uncertainties, many of which are beyond our control, including those set forth in our Safe Harbor provisions that can be found at the end of our third quarter 2022 corporate update press release. Such statements may also be found in our annual report on Form 10-K for the year ended December 31, 2021 and other reports subsequently filed with the SEC, all that provide further detail about the risks related to our business. Additionally, please note that the Company's actual results may differ materially from those anticipated and except as required by law, we undertake no obligation to update any forward-looking statement. Our remarks today may also include non-GAAP financial measures, including with respect to free cash flows. Additional details regarding these non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures, can be found in our slide deck being used with this call. And the slide deck is available on our website at investors.metals.co. And I'll now turn it over to Gerard Barron, The Metals Company’s Chairman and Chief Executive Officer. Gerard, please go ahead.

Thank you, Craig, and good afternoon. Thank you all for joining us today for our third quarter corporate update call. You can follow along with our slide deck, which is also available on our website at investors.metals.co. The past few months have been filled with significant achievements for TMC, NORI, and our strategic partner, Allseas. I am speaking to you now from Mexico as we welcome back the Hidden Gem and its exceptional team from a challenging campaign testing our pilot system in the NORI-D area. Following the ISA's recommendations in September to initiate pilot nodule collection trials in NORI-D, Allseas commissioned and integrated our pilot collection system. In October, we celebrated the first successful collection of polymetallic nodules in the CCZ since the 1970s. In the weeks that followed, Allseas tested the system by operating the pilot collector over 80 kilometers along the seafloor, collecting 4,500 tonnes of nodules and bringing over 3,000 tonnes to the surface. This pilot trial is a crucial milestone in generating environmental impact data. Before the trial began, we conducted 16 offshore campaigns to gather environmental baseline data. During the pilot trials, independent researchers monitored the environmental impacts, continuing their work on site until the end of the year to assess the post-trial environment. We look forward to sharing this data with the global community soon. This quarter, we also achieved important financial milestones. In our last update call in August, we discussed the $30 million pipe financing predominantly supported by our current investors. This funding extends our cash runway for at least another 12 months. Additionally, in October, the SEC approved our $100 million universal shelf registration statement, providing us with greater financial flexibility. However, we remain committed to pursuing asset-level financing options to raise the necessary funds for production while minimizing dilution for TMC shareholders. Today, we will briefly remind you of the scale of our resource, provide a market and regulatory update, discuss the NORI-D project, recap our near-term milestones, and share some financial updates. The scale of our resources and their potential to supply metals essential for the energy transition are central to our value proposition. The NORI and TOML areas contain in situ quantities of nickel, copper, cobalt, and manganese equivalent to what is needed for about 280 million electric vehicles, which is roughly the entire U.S. passenger fleet. In contrast, the Eagle Mine in Michigan, the only currently operating nickel mine in the U.S., has resources sufficient for approximately 2.5 million EVs and is expected to wind down by 2025. The Tamarack project in Minnesota, still awaiting permits, is about the same size. Planned gigafactories and processing facilities are receiving record funding, yet they cannot produce anything without raw materials. Excluding Chinese investment, global investment in raw materials continues to lag, putting us at risk of a significant shortfall. To meet energy transition goals, countries like the U.S. must utilize conventional resources like nodules that can effectively support nickel-rich battery chemistries, or they will need to fully invest in alternative technologies. As a reminder, NORI and TOML were recently ranked by mining.com as the world's largest undeveloped nickel projects, surpassing others in Canada and the U.S., and outperforming them in terms of grade. Our NORI and TOML projects alone can compete with today's largest producers in Russia and Indonesia. Indonesia, the largest nickel producer, anticipates its growth from deposits beneath rainforests and is considering establishing an OPEC-style battery metal cartel while discussing forming an OPEC for rainforests. It will be interesting to see how they balance these conflicting goals. The instability in nickel supply and the potential of the nodule resource are gaining attention in the U.S. Earlier this year, Senator Lisa Murkowski from Alaska addressed the Department of Energy on this matter. In response, U.S. Secretary of Energy Jennifer Granholm indicated that the effects of nodule collection should be evaluated alongside onshore extraction methods, consistent with our long-held position. Secretary Granholm also mentioned that the Department of Energy is collaborating with interagency partners to explore all possible sources of critical minerals, including polymetallic nodules. I'm pleased to share that in September, we reached a labor neutrality agreement with the UAW regarding our proposed full-scale plant in the U.S. Progressive organizations like the UAW recognize the need for a stable supply of battery metals to prevent factory shutdowns, similar to what occurred last year due to semiconductor shortages. The UAW has nearly a century of experience in automotive parts production and is highly regarded for advocating worker rights, environmental protection, and social justice. Together, TMC and the UAW have the chance to cultivate a battery metals industry that benefits consumers, workers, businesses, and the planet. Discussion of nodules and TMC has been prevalent in major media outlets like the Wall Street Journal, the New York Times, BBC, and ABC News. Some of these stories even led to features on popular podcasts such as The Daily and The Journal. While many on this call may already know our story, this emerging industry is still new to a broader audience. It is likely that not everyone who encounters our coverage will be supportive, but awareness of our project is certainly growing as we achieve our milestones. Our regulatory activities in the CCZ are overseen by the International Seabed Authority (ISA), which was established in 1994 under the United Nations Convention on the Law of the Sea. The ISA is tasked with regulating seabed mineral exploration and exploitation while safeguarding the marine environment. The latest ISA council convened from October 31 to November 11 in Kingston, Jamaica, where the regulator continued refining the exploitation regulations and committed to further work on these regulations. During this session, most participating states expressed support for negotiating effective regulations to protect the marine environment and voiced concerns over France’s call for a ban on exploitation activities. Despite media emphasis on this minority position, only about 10 out of the 167 member states are advocating for precautionary measures, while the majority support good faith negotiations around the draft exploitation regulations. During the ISA council session, our sponsoring state Nauru indicated that an application for an exploitation contract in the NORI-D area would not be submitted until the conclusion of the ISA July 2023 session as a good faith gesture while we continue working on the regulations. We expect to be ready to submit our application for the NORI-D exploitation contract in the second half of 2023. Regarding the NORI-D project, it is our first development effort, representing about 22% of our total estimated resource. To date, we have invested over a decade of work and more than $250 million. Last year, we completed our pilot pyrometallurgical pilot plant program using 70 tonnes of nodules collected from NORI-D, successfully demonstrating the transformation of nodules into valuable metal products, which mitigated the risks associated with our future onshore operations. This year brought continual progress, culminating in the successful test of our pilot collection system in the NORI-D area. I would like to present a brief video showcasing highlights from the collection tests conducted over the past few months. As we announced yesterday, Allseas and NORI accomplished all significant pilot milestones by collecting approximately 4,500 tonnes of seafloor polymetallic nodules, with over 3,000 tonnes transported through a 4.3-kilometer riser system to the Hidden Gem vessel, while an additional 1,500 tonnes were intentionally left on the seafloor. The pilot system achieved a sustained production rate of 86.4 tonnes per hour, providing us with valuable operational data for future system enhancements. The Project Zero system aims for an average production rate exceeding 200 tonnes per hour. This complex technology trial did have challenges and operational issues, but we are extremely impressed with Allseas and their remarkable achievements. The key objectives outlined for the pilot collection system were met. According to the pilot mining test agreement, Allseas is entitled to a final $10 million milestone payment, which they will receive in the form of 10 million shares at $1 each, in addition to the anticipated exercise of their warrants in the fourth quarter. The Hidden Gem has returned to port, but the post-trial environmental monitoring work will continue into December. We are pleased to report that we gathered all planned environmental data during the testing phase. To visualize what 3,000 tonnes of nodules look like, here's a small mountain of nodules in the hold of the Hidden Gem vessel. The environmental campaign that tracked every aspect of the collection process is an essential component of the $100 million NORI-D ISA program. I would now like to present a brief video highlighting this ongoing campaign featuring Katie Allen, our Environmental Associate and lead offshore representative. Katie has spent around six months at sea this year, demonstrating exceptional resilience, stamina, and dedication, just like the rest of our offshore team. As part of this ongoing campaign, we've collaborated with Kongsberg to test the first prototype of our digital twin, a precursor for our full-scale adaptive management system. This allows us to monitor real-time movements in the pilot collection system in NORI-D and track numerous operational metrics. We're currently working with Australia CSIRO and New Zealand's NIWA to establish a scientific framework for ecosystem-based environmental management. Once established, we will integrate ecosystem data and incorporate environmental management measures to implement safeguards for any future operations. The adaptive management system will facilitate real-time environmental and operational oversight of our operations, ensuring transparency with our regulator and key stakeholders. Even though we plan to operate far offshore, we will remain visible and accountable. Recent media coverage has drawn on outdated speculation from anti-deep-sea mining activists instead of referencing published research based on actual field trials. A significant plume study from MIT and Scripps, featured as the cover story of the September 23rd issue of Science Advances, concludes that the widely discussed impacts of nodule collection are far less extensive than previously thought. The study determined that 92% to 98% of the plume from the pilot nodule collection vehicle rose only two meters above the seafloor before settling close to the test area. As MIT professor Tom Peacock noted, “It's quite a different picture of what these plumes look like compared to some of the conjecture.” We anticipate being able to significantly reduce environmental and social impacts compared to land-based mining operations, as our collection methods present no social displacement, deforestation, digging, blasting, drilling, child labor issues, or tailings. The tailings issue has once again made headlines as nickel prices spiked this week due to a tailings dam leak at the Goro nickel mining operation in New Caledonia, which will have to reduce production in Q4 while they address this problem. This year, we engaged Benchmark Mineral Intelligence, a leading metal research firm, to conduct a lifecycle assessment of the environmental impacts of our NORI-D project and compare them to those of conventional land-based metal production using standard processing methods. The preliminary results indicate that the NORI-D project has the lowest environmental footprint of all assessed alternatives in terms of global warming potential per kilogram of nickel and nickel sulfate. Additionally, the lifecycle assessment outcomes for other impact categories such as ozone depletion, acidification, and water consumption show that nickel from the NORI-D project demonstrates the least impact among the evaluated processing routes. These results align with the earlier findings from our 2020 white paper but offer a more rigorous assessment based on recent NORI-D project data and comparisons to specific processing routes rather than global averages. We eagerly anticipate sharing the complete study following the conclusion of the third-party review. I'll now hand it over to Craig to discuss project economics, valuation, and our financial results.

Thanks a lot, Gerard. We've seen this slide many times before and have shared in previous update calls. In March of 2021, AMC Consultants issued an SEC regulation SK 1300 compliant initial assessment of the project economics for the NORI-D area. This initial assessment is available in the Investors section of our website. In the NORI area, the financial model can also be found beginning on Page 310 of that document at investors.metals.co. The initial assessment arrived at a net present value of $6.8 billion for the NORI-D area at the beginning of last year. But running the same model simply updated for current metal prices, the net present value of NORI-D would be approximately $16 billion, on just 22% of our total estimated resource. However, in terms of valuation, we think we're trading at a multiple of fundamental value that's effectively 20x lower than what one would expect for a preproduction base metal company at this stage of the project life, creating a huge potential rewriting opportunity as we continue to derisk this project. The peers on this page are mainly copper producers, as it's difficult to find a handful of pure play publicly traded nickel comps at similar stages of preproduction, and this further underscores the opportunity. But how do we get away from this undervalued position? This stage lays out some of the critical milestones we believe are key to unlocking the potential of the NORI-D project and the rest of the resource portfolio. We secured financing for at least another 12 months, we completed NORI-D pilot collection system trials, and we are working to lock in commercial terms for Project Zero. Some of the next critical milestones would be: one, the ISA finalizing exploitation regulation; two, NORI submitting an output application for NORI-D for an exploitation contract; three, the ISA granting NORI an exploitation contract; and then four, the beginning of commercial production shortly thereafter. In 2022, we're happy to report that we've completed most of our stated 2022 milestones, particularly those on the project development side. Things have admittedly taken a bit longer in delivering a PFS for the Project Zero plant, in part due to bottlenecks in global RKEF, that's rotary kiln electric furnace processing engineering capacity. This is holding up our ability to reach a definitive agreement for that Project Zero plan. We’re working on resolving this and expect to have more specific news to share in our next earnings call. So on to the financial results. In the third quarter of 2022, TMC reported a net loss of $27.9 million or $0.12 per share, compared to our net loss of $36.7 million or $0.18 per share for the third quarter of 2021. The net loss for the third quarter of 2022 included exploration and evaluation expenses of $22.7 million versus $23.8 million in Q3 2021. General and administrative expenses were $5.9 million versus $13.3 million in Q3 2021, partially offset by a gain of $0.4 million, due to a decrease in the value of our warrants. Exploration and evaluation expenses decreased in the third quarter of 2022 compared to the same period in 2021, as a result of a decrease in offshore environmental campaign activity following the completion of NORI Area D environmental baseline campaigns in the fourth quarter of 2021. The results also reflect a decrease in share-based compensation partially offset by an increase in the expenses incurred on the trials in the pilot mining test system and the collector tests and monitoring survey work. G&A expenses decreased in the third quarter of 2022 compared to the third quarter of 2021 reflecting reduction in share-based compensation, and a reduction in communication and advertising costs, partially offset by higher personnel, legal, and other expenses associated with being a public company. The net cash used in operating activities amounted to $8.7 million, compared to $10.4 million for the third quarter of 2021. Excluding nonrecurring items, free cash flow for the third quarter of 2022 was negative $9.2 million, compared to negative $9.3 million in the third quarter of 2021. As for our balance sheet as of September 30, 2022, we closed the quarter with a cash balance of $67 million, which includes approximately $30 million of funds raised through the August pipe financing, and again, we believe gives us at least runway for the next 12 months with that cash position. For the nine months beginning 2022, TMC reported an operating loss of $62.8 million and a net loss of $61.4 million or $0.27 per share for the first nine months of 2022 compared to the operating loss of $121.3 million and a net loss of $121.5 million or $0.61 per share for the nine months ended September 30, 2021. The net loss for the nine months ended September 30, 2022 included exploration and evaluation expenses of $40.3 million, versus $80.2 million for the same period in 2021. G&A expenses were $22.5 million versus $41.1 million for the same period in 2021, partially offset by a gain of $0.9 million due to a decrease in the value of our warrants. Exploration and evaluation expenses decreased in the first nine months of 2022 compared to the same period in 2021, due to a decrease in offshore campaign activity following the completion of NORI Area D environmental baseline campaigns in the fourth quarter last year, a decrease in share-based compensation partially offset by an increase in the expenses incurred in 2022 for the PMTS trials and collective test monitoring survey work. G&A expenses decreased in the first nine months of 2022, compared to the same period in 2021, reflecting a reduction in share-based compensation and a reduction in consulting, communication, and advertising costs, as these expenses were higher in the 2021 period due to the business combination and listing of the company on the NASDAQ. The decrease in the G&A costs in 2022 was partially offset by higher personnel, legal, and other expenses associated with being a public company. Finally, in the first nine months of 2022, the net cash used in operating activities amounted to $46.8 million, compared to $28.3 million for the first nine months of 2021. Excluding nonrecurring items, free cash flow for the first nine months of 2022 was negative $47.8 million, compared to negative $23.3 million in the same period of 2021. The increased cash spending in the first nine months of 2022 included payments made for various offshore campaigns, including a $10.5 million payment to Maersk relating to 2021 campaigns, a $10 million payment to Allseas of their second milestone payment, and increased payments for environmental monitoring costs and the PMTS trials. I'd now like to turn it back over to Gerard for some closing remarks. Then we'd be happy to take any questions.

Yes, thanks, Craig. Before we wrap up, I would like to extend an official welcome to Andy Greig, who recently joined the TMC Board and has now assumed the role as Lead Independent Director. Andy was previously a member of the DeepGreen Board, a predecessor company, and brings extensive experience working on international construction projects in the mining sector during a 35-year career at Bechtel. I'd also like to welcome Grant Lindner on board as our Project Director for NORI. Grant has spent the last 25 years at Bechtel and BHP delivering over $26 billion in project value and holding various senior roles in mining and marine projects. He got to spend time with our entire team last month, and it's clear that he's going to fit in well as a leader at TMC. At the same time, it was with sadness that we reported our Chief Development Officer, Tony O'Sullivan’s upcoming departure due to personal and health reasons. Tony has been a pioneer in this new industry and he's a dear friend and colleague. I'm pleased that he'll be staying on for the next year in a transition period. I know I can count on his counsel and wisdom far beyond that point. Tony and the rest of the project team put the company on a path to success, and it's been great to see the fruits of those efforts culminate in some of the historic milestones achieved by TMC, NORI, and our partner Allseas over the last few months. Thank you for your interest and attention today. And with that, we'd like to turn it back over to the operator for any Q&A.

Thank you for your interest and attention today. Now, we would like to return to the operator for any questions and answers.

While we're waiting for that one to compile, we might take one of the questions from the chat. When will we release an analysis and evaluation of the metallurgical content, the 3,000 tonnes of nodules collected? I think what's important to keep in mind with those nodules is coming from the NORI-D area, we've actually moved the majority of the resource from inferred to indicated, and then some of it from indicated to measured. It's a very consistent resource in terms of the metal content for a nodule. In fact, this is a rarity if you're going to look at a similar type of deposit on land. But in going from indicated to measured, for those nodules, there's actually an increase of roughly 7% in terms of the resource size for that measured amount. So it is very consistent and we're confident that overall these 3,000 tonnes of nodules are generally similar characteristics to everything else that we've reported in our public filings.

This is Dmitry Silversteyn from Water Tower Research. I wanted to follow up on a couple of comments you made in your presentation. First, you discussed the deliverables for 2022 and mentioned there are still some ongoing items for the year. Could you elaborate on the bottlenecks you briefly mentioned and provide more detail about the status of those milestones? When do you anticipate they will be completed?

Craig, do you want to take that?

Dmitry, you're talking specifically about the milestones with respect to some of the engineering bottlenecks that we had referenced?

Correct. When you talked about sort of the improving or delivering new objectives over the next couple of years. On that slide, you still have some areas as ongoing rather than completed.

Specifically, we had referenced that some of the engineering capacity for PFS work for RKEF has a bit of a global bottleneck. But we do anticipate being able to move some of that forward in the next couple of months. We did receive proposals to that end in September. It's moving just a little bit slower than we had anticipated. It's also important to remember that for Project Zero, we have a plan for how we're going to build that facility. There is a lot of RKEF capacity around the world, and there are plenty of places that are sitting somewhat idle, given the fact that Indonesia has banned the export of raw nickel. So we're always evaluating our opportunities and the cost-benefit equation of going to a place where a new site would be built or potentially using RKEF lines through a tolling arrangement. So stay tuned on that over the next couple of months.

I have a couple of questions regarding the post-collection process. First, you indicated that approximately 1,500 tonnes of nodules were intentionally left behind. What is the reasoning for that, and how will it assist with the post-collection monitoring and the environmental studies that you plan to publish? Additionally, you mentioned that the post-collection Phase 3 will continue until the end of the year. When can we expect the environmental results from your pilot program to be published and made available?

Yes. Firstly, on the 3,000 tonnes, one of the purposes of the trial, of course, was to test the harvester, and the other was to test the riser. We were successful in both of those, and we deemed 3,000 tonnes was sufficient. We think that number will average a little bit higher than that. However, we had the problem of how to store them, unload them, and put them somewhere, because as part of our exploration contract, we're not allowed to sell them. We debated whether we didn't bring that much home, to be honest. As for the process collector monitoring, that will be done by Christmas. We will start releasing results in a gradual manner over the coming 12 months. We're very keen to get some of those results out, as we've been encouraged by what we've seen. We were able to collect all the data we were looking for, and one of the risks in these campaigns is making sure you can track the plume. Particularly in the mid-water, it's a small diluted plume. We were very successful at doing that. Our visual observations are consistent with those numbers we reported from MIT in a study monitored last year. We are keen to get those results out as quickly as possible, and many dozens of papers will be published as a result of this work that's been ongoing, not just during this campaign, but over the last years. This all comes together in our application, and we'll be keen to get that out as soon as we possibly can.

That's great. And then final question just on the cash position. So you did raise $30 million with the pipe investment. You mentioned that you have cash, basically, that'll last here for the next 12 months, at least. There is a possibility that ISA may take longer than July of 2023 to get their final regulations out there. If you're not in a position to sort of get into production in the second half of 2024, what are the steps you're contemplating to bridge that finance or that capital gap?

It's true that every day, as we deliver more of these milestones, we get more inquiries. As mentioned on the last earnings call and reiterated today, our preference is to raise our future capital at the asset level. This is typical for companies to offer earn-in type arrangements to other more significant companies, whether it's in the mining or oil and gas industry, where those majors will typically come and earn in to an asset. The important thing about our project is that we don't need a lot of money to get over that hurdle into production. For those familiar with the natural resources industry, these capital numbers tend to be many hundreds of millions or billions of dollars. But we already have our first production asset. We have the Hidden Gem, which will be our first look for Project Zero. As Craig alluded to, we think we can come up with a no CapEx solution for the onshore processing side as well. All I can say, Dmitry, is we're very encouraged by the conversations that are underway at the moment, and they are all focused on asset-level discussions around the NORI area.

Just to add to it, Dmitry, it's important to keep in mind that this has been a period over the last year plus of pretty expensive project development work. We're talking about nearly in the past several years, in the high teens in the number of offshore campaigns from NORI. We had a successful pilot pyrometallurgical program, showing that we could turn the nodules into valuable metals that wrapped up at the end of last year. We're going to be talking about over $100 million spent on that, when all is said and done. The discreet amount that we have to spend to get into production is in line with what Gerard mentioned last quarter, that it's circa $100 million, the additional cash that we need to get into production. When you're talking about a potential delay, let's say things were delayed a month to three months, in whatever you wanted to assume, we're a team of less than 40 people. We think we could be running this business at maybe $4 million or less per quarter in terms of cash burn if we have to be in sort of a wait-and-see mode for a very short period. Some of the financial tools we have at our disposal, the $100 million shelf registration statement, we don't want to have to put our hand into that cookie jar and go to that. We'd prefer to raise funds at the asset level. We're in a much stronger position financially, and what it takes to keep this business going, given how small our team is and how efficiently we run it, really isn't that much per quarter.

Dmitry just nailed my question. I really don't have anything else to be honest.

I'm not showing any further questions in the queue. I would like to now turn the conference back to Gerard for any closing remarks.

There are a few more questions in the chat room that I can address since we have a bit more time.

Yes, sure.

Yes. So I guess one question is, we have these 3,000 tonnes of nodules, what’s the plan? What are we going to do with them? Maybe over to you on some of those thoughts.

Yes, we're not allowed to sell them, but we are allowed to turn them into products. We've completed the onshore pyrometallurgical pilot work already. However, there is some scope to engage with more partners because we now have some additional tonnage partners who are looking to get involved in this industry. We're quite enamored with the idea of having some batteries running around made from our nodules off the license area. We wouldn't be able to sell them, but we can certainly make them and give them to people. That would be more of a marketing issue than anything. It provides a fair bit of flexibility for us. Of course, we can monetize them once we get a license, but until such time as our exploration turns into an exploitation license, they can't be turned into cash.

I see another question in here from David Larkam at Edison Research. Can you provide some granularity on the cash requirements for the next 12 months? I think we've addressed that, but one point in particular, it sounds like no further cash is required for Allseas. We did finalize the amounts for that third milestone payment. I wanted to flag that. However, we are still endeavoring, everybody's back on shore to work towards the final economic agreement for Project Zero with our partner Allseas. We already mapped out earlier this year that roughly $55 million of preproduction spending would be on TMC's account to get the system ready for production towards the end of 2024. I just wanted to flag those items, but we're looking very much forward to pushing that relationship forward and making sure that we're able to come up with an economic arrangement that makes sense for everybody on Project Zero.

Okay. Well, with that, I'd like to thank everyone for taking the time to join us on today's call. We look forward to sharing even more progress on our fourth quarter update, which will be in March 2023. Thank you, everyone.

Thanks all.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.